Question

Hagrid Gardening Corporation manufactures gardening products. The following information relates to the current period:

DM Purchased $14,900
DM Inventory, Jan 1 $12,700
DM Inventory, Dec 31 $16,100
DL $6,400
MOH $16,700
Period Costs $10,500
WIP Inventory, Jan 1 $2,500
WIP Inventory, Dec 31 $8,000
FG Inventory, Jan 1 $19,500
FG Inventory, Dec 31 $4,800
A total of 5,000 products were sold for $25 each. Based on this information, please calculate the following:
1. Total manufacturing costs
2. Cost of Goods Sold
3. Operating Income

Answer 1

To calculate the total manufacturing costs, add DM purchased and DM inventory, minus ending DM inventory. To calculate cost of goods sold, subtract beginning FG inventory and add manufacturing cost. To calculate operating income, subtract cost of goods sold and period costs from revenue.

Step-by-step explanation:

To calculate the total manufacturing costs, we need to add up the direct materials (DM) purchased, the beginning inventory of DM, and subtract the ending inventory of DM. Total manufacturing costs = DM Purchased + DM Inventory, Jan 1 - DM Inventory, Dec 31.

To calculate the cost of goods sold, we need to subtract the beginning inventory of finished goods (FG) from the ending inventory of FG and add the cost of manufacturing the products sold. Cost of Goods Sold = FG Inventory, Jan 1 - FG Inventory, Dec 31 + Total manufacturing costs.

To calculate the operating income, we need to subtract the cost of goods sold and period costs from the revenue generated. Operating Income = Revenue - Cost of Goods Sold - Period Costs.