Question

Primare Corporation has provided the following data concerning last month’s manufacturing operations.

Purchases of raw materials	$	30,000
Indirect materials included in manufacturing overhead	$	5,000
Direct labor	$	58,000
Manufacturing overhead applied to work in process	$	87,000
Underapplied overhead	$	4,000

Inventories	Beginning		Ending
Raw materials	$	12,000	$	18,000
Work in process	$	56,000	$	65,000
Finished goods	$	35,000	$	42,000

Required:

1. Prepare a schedule of cost of goods manufactured for the month.

2. Prepare a schedule of cost of goods sold for the month. Assume the underapplied or overapplied overhead is closed to Cost of Goods Sold.

Answer 1

Solution

Primare Corporation
Schedule of Cost of Goods manufactured
Direct Material
Direct Material Inventory Beginning	$ 12,000
Direct material Purchased	$ 30,000
Direct material available for use	$ 42,000
Less: Indirect Material used	$ 5,000
Less: Direct material Inventory Ending	$ 18,000
Direct Material Used		$ 19,000
Direct labor		$ 58,000
Manufacturing Overheads applied		$ 87,000
Total manufacturing Cost		$ 164,000
Add: Beginning Work in Progress		$ 56,000
Total Cost of Work in Progress		$ 220,000
Less: Ending Work in progress		$ 65,000
Cost of Goods Manufactured		$ 155,000

..

Primare Corporation
Schedule of cost of goods sold
Beginning Finished Goods Inventory		$       35,000.00
Add: Cost of goods manufactured		$   155,000.00
Goods Available for sale		$   190,000.00
Less :Ending Finished goods Inventory		$       42,000.00
Unadjusted Cost of Goods Sold		$   148,000.00
Underapplied Manufacturing overheads		$         4,000.00
Adjusted cost of goods sold		$   152,000.00