Question

Happy Feet Shoe Company makes loafers. During the most recent year, Happy Feet incurred total manufacturing costs of $26, 100,000. Of this amount, $2, 100,000 was direct materials used and $19, 800,000 was direct labor. Beginning balances for the year were Raw Materials Inventory, $500,000; Work-in-Process Inventory, $1,000,000; and Finished Goods Inventory, $500,000. At the end of the year, balances were Raw Materials Inventory, $600,000; Work-in-Process Inventory, $1, 400,000; and Finished Goods Inventory, $920,000.

Requirements
Analyze the inventory accounts to determine:
1. Cost of raw materials purchased during the year.
2. Cost of goods manufactured for the year.
3. Cost of goods sold for the year.
4. Cost of raw materials purchased during the year.
Direct Materials
Direct Materials Used
Beginning Raw Materials Inventory
Ending Raw Materials Inventory
Purchases

Answer 1

Instructions are below.

Step-by-step explanation:

Giving the following information:

Manufacturing costs= $26,100,000

Direct materials used= $2,100,000

Direct labor= $19,800,000

Beginning inventory:

Raw Materials= $500,000

Work-in-Process= $1,000,000

Finished Goods= $500,000

Ending inventory:

Raw Materials= $600,000

Work-in-Process= $1, 400,000

Finished Goods= $920,000.

1) First, we need to calculate the raw materials purchased during the period:

Direct material used= beginning inventory + purchases - ending inventory

2,100,000= 500,000 + purchases - 600,000

2,200,000= purchases

2) We need to determine the cost of goods manufactured:

cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP

cost of goods manufactured= 1,000,000 + 26,100,000 - 1,400,000

cost of goods manufactured= $25,700,000

3) To calculate the cost of goods sold, we need to use the following formula:

COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory

COGS= 500,000 + 25,700,000 - 920,000

COGS= 25,280,000