Question

The following information is available for the first year of operations of Engle Inc., a manufacturer of fabricating equipment:

Sales $7,270,000
Gross profit 1,450,000
Indirect labor 330,000
Indirect materials 195,000
Other factory overhead 90,000
Materials purchased 5,100,000
Total manufacturing costs for the period 6,170,000
Materials inventory, end of period 480,000
Using this information, determine the following missing amounts:
A. Cost of goods sold.
B. Direct materials cost.
C. Direct labor cost.

Answer 1

A. $5,820,000

B. $4,425,000

C. $1,130,000

Step-by-step explanation:

A. Cost of goods sold.

Cost of goods sold = Sales - Gross Profit

= $7,270,000 - $1,450,000

= $5,820,000

B. Direct materials cost.

Direct materials cost = Material Purchases - Ending Material Inventory - Indirect Materials

= $5,100,000 - $480,000 - $195,000

= $4,425,000

C. Direct labor cost.

Direct labor cost = Total Manufacturing Cost - Indirect labor - indirect materials - direct materials - other factory overheads

= $6,170,000 - $330,000 - $195,000 - $4,425,000 - $90,000

= $1,130,000