Question

TUD UUTUU ILLULL. TV Page 2 of 3 Schedule of cost of goods manufactured Artisan Furniture Ltd incurred the following actual costs during the year just ended: Direct material used $410 500 Direct labour 180 000 Manufacturing overhead 378 000 The firm's predetermined overhead rate is 210 per cent of direct labour cost. The inventory balances, on 1 January, were as follows: Raw material $47 000 Work in process 61 500 Finished goods 65 000 Each of these inventory balances was 10 per cent higher at the end of the year. Required: 1. Prepare a schedule of cost of goods manufactured. 2. What was the cost of goods sold for the year? 3. Construct an Excel spreadsheet to solve all of the preceding requirements. Show how the solution will change if the following data change: direct material used was $409 000 and raw material inventory on 1 January was $43 000.

Answer 1

Artisan Furniture Ltd. Requirement 1 47000 415200 462200 51700 Schedule of Cost of Goods Manufactured For the year ended 31 December Direct material: Raw material inventory, 1 January Add: Purchases of raw material Raw material available for use Deduct: Raw material inventory, 31 December Raw material used Direct labour Manufacturing overhead Total manufacturing costs Add: Work in process inventory, 1 January Subtotal Deduct: Work in process inventory, 31 December Cost of goods manufactured 410500 180000 378000 968500 61500 1030000 67650 962350 Applied manufacturing overhead is $378 000 ($180 000 x 210%). Actual manufacturing overhead is also $378 000, so there is no overapplied or underapplied overhead. Requirement 2 Finished goods inventory, 1 January Add: Cost of goods manufactured Cost of goods available for sale Deduct: Finished goods inventory, 31 December Cost of goods sold 65000 962350 1027350 71500 955850

Requirement 3 43000 413300 456300 47300 Schedule of Cost of Goods Manufactured For the year ended 31 December Direct material: Raw material inventory, 1 January Add: Purchases of raw material Raw material available for use Deduct: Raw material inventory, 31 December Raw material used Direct labour Manufacturing overhead Total manufacturing costs Add: Work in process inventory, 1 January Subtotal Deduct: Work in process inventory, 31 December Cost of goods manufactured 409000 180000 378000 967000 61500 1028500 67650 960850 Applied manufacturing overhead is $378 000 ($180 000 x 210%). Actual manufacturing overhead is also $378 000, so there is no overapplied or underapplied overhead- Finished goods inventory, 1 January Add: Cost of goods manufactured Cost of goods available for sale Deduct: Finished goods inventory, 31 December Cost of goods sold 65000 960850 1025850 71500 954350