Question

Cost of Goods Sold In September, Lauren Ashley Company purchased materials costing $200,000 and incurred direct labor cost of $120,000. Overhead totaled $325,000 for the month. Information on inventories was as follows: September 1 September 30 Materials$120,000 $130,000 Work in process80,000 90,000 Finished goods70,000 65,000 Required: What was the cost of goods sold for September?

Answer 1

$640,000

Step-by-step explanation:

In order to compute the cost of goods sold, first we have to determine the cost of goods manufactured which is shown below:

Cost of goods manufactured = Work in process, September 1 + Manufacturing cost - Work in process, September 30

where manufacturing cost equal to

= Purchase of direct material + Direct labor cost + Manufacturing Overhead cost

= $200,000 + $120,000 + $325,000

= $645,000

So the Cost of goods manufactured would be

= $80,000 + $645,000 - $90,000

= $635,000

And, the cost of goods sold would be

= Finished goods, September 1 + Cost of goods manufactured - Finished goods, September 30

= $70,000 + $635,000 - $65,000

= $640,000