Question

Mustafa manufacturing company began operations on january 1. During the year, it started and completed 3, 000 units of product. The financial statements are prepared in accordance with GAAP. The company incurred the following costs:

Raw materials purchased and used—$6,200.
Wages of production workers—$7,400.
Salaries of administrative and sales personnel—$3,000.
Depreciation on manufacturing equipment—$4,400.
Depreciation on administrative equipment—$2,200.

Required
a. Determine the total product cost for the year.
b. Determine the total cost of the ending inventory.
c. Determine the total of cost of goods sold.

Answer 1

Answer and Explanation:

The computation is shown below;

a. The total product cost is

Raw materials purchased and used $6,200

Wages of production workers $7,400

Depreciation on manufacturing equipment $4,400

Total Product Cost $18,000

b. The total cost of the Inventory is

Units Completed = 3,000 units

Units Sold = 2,400 units

SO, the Units in ending inventory units is 600 units

Now the Total cost of the Inventory is

= $18,000 × [600 ÷ 3,000 ]

= $3600

c. The total cost of goods sold is

= $18,000 × [2,400 ÷ 3,000 ]

= $14,400