Question

Compute cost of goods E14.8 (LO 3) Lopez Corporation incurred the following costs while manufacturing its product. manufactured and sold. Materials used in product $120,000 Advertising expense $45,000 Depreciation on plant 60,000 Property taxes on plant 14,000 Property taxes on store 7,500 Delivery expense 21,000 Labor costs of assembly-line workers 110,000 Sales commissions 35,000 Factory supplies used 23,000 Salaries paid to sales clerks 50,000 Work in process inventory was $12,000 at January 1 and $15,500 at December 31. Finished goods inventory was $60,000 at January 1 and $45,600 at December 31. Instructions a. Compute cost of goods manufactured. b. Compute cost of goods sold.

Answer 1

Materials used in production Add: Direct Labor Add: Manufacturing overhead Total manufacturing costs Add: Work in process inventory, Jan 1 $120,000 $110,000 $128,000 $358,000 $12,000 $370,000 $15,500 $354,500 Less: Work in process inventory, Dec 31 a. Cost of goods manufactured Cost of goods manufactured Add: Finished goods inventory, Jan 1 Finished goods available Less: Finished goods inventory, Dec 31 b. Cost of goods sold $354,500 $60,000 $414,500 $45,600 $368,900 Working Mnufacturing overhead Depreciation on plant Factory supplies used Property taxes on plant Total Manufacturing overhead $60,000 $23,000 $45,000 $128,000