Question

Ogleby Inc.'s accounting records reflect the following inventories: Dec. 31, 2020 Dec. 31, 2019 Raw materials inventory $20,000 $ 80,000 Work in process inventory 30,000 50,000 Finished goods inventory 40,000 70,000 During 2020, 1) $70,000 of raw materials was purchased. 2) Incurred direct labor costs amounted to $120,000. 3) Applied manufacturing overhead was $180,000. Instructions: (a) Please calculate the direct raw materials was used during 2020. (b) Please calculate the total manufacturing cost (TMC) for the year 2020. (c) please calc ulate the Cost of goods manufactured (COGM) for the year 2020. (d) please calculate the Cost of goods sold (COGS) for the year 2020.

Answer 1

(a)

Calculation of Direct Materials Used
Raw materials inventory , beginning	80,000
Add: Raw materials purchases	70,000
Raw Material available for use	150,000
Less:Ending raw material inventory	-20,000
Direct material used	$130,000

The direct raw materials was used during 2020 is $130,000

(b)

Calculation of Total Manufacturing cost
Direct material used	130,000
Direct labor	120,000
Manufacturing overhead	180,000
Total manufacturing cost	$430,000

The total manufacturing cost (TMC) for the year 2020 is $430,000

(c)

Calculation of Cost of Goods Manufactured
Work in process inventory, beginning	50,000
Total manufacturing cost	430,000
Total Cost of work in process	480,000
Less: Work in process inventory, ending	-30,000
Cost of goods manufactured	$450,000

The Cost of goods manufactured (COGM) for the year 2020 is $450,000

(d)

Calculation of Cost of Goods Sold
Finished goods inventory, beginning	70,000
Cost of goods manufactured	450,000
Cost of goods available for sale	520,000
Less:Finished goods inventory, ending	-40,000
Cost of goods sold	$480,000

The Cost of goods sold (COGS) for the year 2020 is $480,000

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