Question

the following information pertains to franklin manufacturing company for march year 3. assume actual overhead equaled applied overhead. march 1 inventory balances raw materials $ 124,600 work in process 118,000 finished goods 76,500 march 31 inventory balances raw materials $ 85,500 work in process 146,200 finished goods 80,400 during march costs of raw materials purchased $ 119,900 costs of direct labor 101,800 costs of manufacturing overhead 62,500 sales revenues 352,000 required prepare a schedule of cost of goods manufactured and sold. calculate the amount of gross margin on the income statement.

Answer 1

To prepare a schedule of cost of goods manufactured and sold, we need to calculate the changes in inventory balances and the costs incurred during the month. This involves calculating the cost of goods manufactured and the cost of goods sold. The gross margin on the income statement can be calculated by subtracting the cost of goods sold from the sales revenue.

Step-by-step explanation:

To calculate the cost of goods manufactured and sold, we need to consider the changes in the inventory balances and the costs incurred during the month. The cost of goods manufactured is the sum of direct materials used, direct labor, and manufacturing overhead, minus the change in work in process inventory. In this case, the cost of goods sold is the sum of the cost of goods manufactured and the change in finished goods inventory. The gross margin is calculated by subtracting the cost of goods sold from the sales revenue.

Schedule of Cost of Goods Manufactured:

1. Direct materials used: Opening raw materials + Purchases - Closing raw materials
2. Direct labor: Cost of direct labor
3. Manufacturing overhead: Costs of manufacturing overhead
4. Total manufacturing costs: Direct materials used + Direct labor + Manufacturing overhead
5. Add: Opening work in process inventory
6. Less: Closing work in process inventory
7. Cost of goods manufactured: Total manufacturing costs + Opening work in process inventory - Closing work in process inventory

Cost of Goods Sold:

1. Cost of goods manufactured
2. Add: Opening finished goods inventory
3. Less: Closing finished goods inventory
4. Cost of goods sold: Cost of goods manufactured + Opening finished goods inventory - Closing finished goods inventory

Gross Margin:

• Gross margin = Sales revenue - Cost of goods sold