Question

Cost of Goods Sold, Cost of Goods Manufactured Timbuk 3 Company has the following information for March: Cost of direct materials used in production $21,000 Direct labor 54,250 Factory overhead 35,000 87,500 Work in process inventory, March 1 Work in process inventory, March 31 Finished goods inventory, March 1 92,750 36,750 Finished goods inventory, March 31 42,000

Answer 1

Timbuk 3 Company  

Statement of Cost of Goods Manufactured for March  

Particulars	Amount $	Amount $
Work in Progress Inventory , March 01		87,500
Add
Direct Material used in Production	21,000
Direct Labour	54,250
Factory Overhead	35,000
Manufacturing Cost Incurred During the Year	110,250	110,250
Total Manufacturing Costs		197,750
Less
Work in Progress Inventory , March 31		(92,750)
Cost of Goods Manufactured		105,000

Timbuk 3 Company  

Statement of Cost of Goods for March

Particulars	Amount $
Finished Goods Inventory , March 01	36,750
Add
Cost of Goods Manufactured ( as per Working Note 01 )	1,05,000
Total Cost of Goods Sold	1,41,750
Less
Finished Goods Inventory , March 31	(42,000)
Cost of Goods Sold	99,750

Explanation in Detailed are as fiollow for above two statements

Working Note 01 Cost of Goods Manufactured  

As per the Cost Accounting Cost of Goods Manufactured will get by the following formula :

Cost of Goods Manufactured = Opening Work in Process + Direct Material + Direct labour + Factory Overhead - Clsoing Work in Progress

In Example itself all the information had been already provided .  

Opening Work in Process as Work In Process as on 01 March as $ 87,500.

Closing Work in Procress as Work in Process as on 31 March as $  92,750.

Direct Material as Cost of Direct Material used in Production as $ 21,000

Direct Labour as $ 54,250 and Factory Overhead as $ 35,000

Now we will just puts this figure in above said formula of Cost of Goods Manufactured.  

Cost of Goods Manufactured = 87500 + 21000 + 54250 + 35000 - 92750

Cost of Goods Manufactured = $ 1,05,000

Working Note 02 Cost of Goods Sold  

Formula for find out cost of goods sold is as follow as per cost accounting .

Cost of goods Sold = Opening Finshed Stock + Cost of Goods Manufactured - Closing Stock

In Example Opening Finished Stock given as Finished Goods Inventory 01 March $ 36,750

and Closing Finished Stock given as Finishged Goods Inventory 31 March $ 42,000..

Where Cost of Goods Sold we had find out as per our above Working Note 01

Now we will just put the above said figures in formula of Cost of Goods Sold .

Cost of Goods Sold = 36750 + 105000 - 42000

Cost of Goods Sold = 99,750