Question

Cost data for Disksan Manufacturing Company for the month ended January 31 are as follows:

Inventories January 1 January 31

Materials...........................$180,000.....................$145,500
Work in process....................334,600.....................290,700
Finished goods.....................675,000.....................715,000
Direct labor.........................................................$2,260,000
Materials purchased during January....................1,375,000
Factory overhead incurred during January:
Indirect labor......................................................115,000
Machinery depreciation.......................................90,000
Heat, light, and power.........................................55,000
Supplies..............................................................18,500
Property taxes.....................................................10,000
Miscellaneous costs............................................33,100
a. Prepare a cost of goods manufactured statement for January.
b. Determine the cost of goods sold for January.

Answer 1

Answer and Explanation:

a. The preparation of the cost of goods manufactured statement for January is presented below:

Diskan Manufacturing Company

Statement of Cost of Goods Manufactured

For the month ended January 31

Work In Progress Inventory, January 1 $334,600

Direct Material:

Material Inventory, Jan 01 $180,000

Add; Purchases during January $1,375,000

Cost of Materials available for use $1,555,000

Less; Material Inventory, Jan 31 (Ending Inventoy) $145,500

Cost of Direct Materials used in Production $1,409,500

Direct Labor $2,260,000

Factory Overhead:

Indirect Labor $115,000

Machinery depreciation $90,000

Heat, Light and Power $55,000

Supplies $18,500

Property Taxes $10,000

Miscelleneous Costs $33,100

Total Factory Overhead $321,600

Total Manufacturing Cost Incurred during January $3,991,100

Total Manufacturing Costs $4,325,700

Less: Work In Progress Inventory, January 31 $290,700

Cost of Goods Manufatured $4,035,000

b. The cost of goods sold is

= Opening balance of finished goods inventory + cost of goods manufactured - ending balance of finished goods inventory

= $675,000 + $4,035,000 - $715,000

= $3,995,000