Question

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

Sales $1,344,600
Gross profit 363,000
Indirect labor 121,000
Indirect materials 49,800
Other factory overhead 22,900
Materials purchased 685,700
Total manufacturing costs for the period 1,484,400
Materials inventory, end of period 49,800
Using the above information, determine the following amounts:
a. Cost of goods sold $_________-
b. Direct materials cost $__________
c. Direct labor cost $__________

Answer 1

a. Cost of goods sold $981,600

b. Direct materials cost $635,900

c. Direct labor cost $654,800

Step-by-step explanation:

Direct Material Cost Calculation :

Opening Materials Inventory 0

Add Purchases of Materials 685,700

Less Closing Materials Inventory (49,800)

Direct Materials Cost 635,900

Direct Labor Cost ; Total Manufacturing Account

Direct Materials Cost 635,900

Indirect labor 121,000

Indirect materials 49,800

Other factory overhead 22,900

Manufacturing Costs before Direct Labor Cost 829,600

Direct Labor (Balancing Figure) 654,800

Total manufacturing costs 1,484,400

Cost of Goods Sold Calculation

Sales $1,344,600

Less Gross Profit ($363,000)

Cost of Goods Sold $981,600