Question

2-26A Compute Cost of Goods Manufactured and Cost of Goods Sold Learning Objective 5) Compute the Cost of Goods Manufactured and Cost of Goods Sold for West Nautical Company for the most recent year using the amounts described next. Assume that the Raw Materials Inventory contains only direct materials Beginning End Year of Year End of Year of Raw materials inventory Work in process inventory Finished goods inventory $23,000 $25,000 Insurance on plant..$ 11,500 $35,000 $31,000 Depreciation-plant building and equipment.. $ 13,400 S 3,700 $20,000 $22,000 Repairs and maintenance-plant.... Purchases of direct materials.... $74,000 Marketing expenses... $86,000 General and administrative expenses. $28,500 $42,000 S77,000 Direct labor

Answer 1

Note: Organized question is attached below

Compute cost of goods manufactured

Beginning work in process 35000

Beginning raw material 23000

Direct material purchase 74000

Less: Ending raw material -25000

Direct material used 72000

Direct labor 86000

Manufacturing overhead

Indirect labor 42000

Insurance of plant 11500

Dep. Plant, building & equip 13400

Repairs and maintenance-Plant 3700

Total manufacturing overhead 70600

Total manufacturing cost 228600

Total cost of work in process 263600

Less: Ending work in process -31000

Cost of goods manufactured 232600

b) Cost of goods sold = Beginning Finished goods inventory + Cost of goods manufactured - Ending Finished goods inventory = 20000 + 232600 - 22000 = 230600

c) Income statement

Sales (34000*12) 408000

Less: Cost of goods sold -230600

Gross profit 177400

Less: Marketing expense -77000

Less: General and administrative expenses -28500

Net operating income 71900