Question

Generic Motors is a manufacturing firm. Its beginning inventory of materials was $1,000, purchases of materials $20,000, ending inventory of materials $1,500.

Its beginning inventory of work-in-process (WIP) was $5,000, ending inventory of WIP was $6,700.

Its cost of direct labor was $12,000, manufacturing overhead $11,000.

Its beginning inventory of finished goods was $3,000, ending inventory of finished goods was $1,300.

Required:
a) What was the cost of materials used?

b) What was the cost of goods manufactured (COGM)?


c) What was the cost of goods sold (COGS)?

Answer 1

Solution

Material used = $19,500

Cost of goods manufactured = $40,800

Cost of goods sold= $42,500

Working

Schedule of Cost of Goods Manufactured
Direct Material
Raw material Inventory Beginning	$ 1,000
Raw material Purchased	$ 20,000
Raw material available for use	$ 21,000
Less: Raw material Inventory Ending	$ 1,500
Direct Material Used		$ 19,500
Direct labor		$ 12,000
Manufacturing overheads		$ 11,000
Total manufacturing Cost During the month		$ 42,500
Add: Work in process Beginning		$ 5,000
Total Work in Process		$ 47,500
Less: Work in progress Ending		$ 6,700
Cost of Goods Manufactured		$ 40,800

.

Schedule of cost of goods sold
Beginning Finished Goods Inventory		$ 3,000
Add: Cost of goods manufactured		$ 40,800
Goods Available for sale		$ 43,800
Less :Ending Finished goods Inventory		$ 1,300
Unadjusted Cost of Goods Sold		$ 42,500