Question

Lopez Corporation incurred the following costs while manufacturing its product.

Materials used in product $129,400 Advertising expense $46,700
Depreciation on plant 63,100 Property taxes on plant 19,100
Property taxes on store 8,510 Delivery expense 29,900
Labor costs of assembly-
line workers 114,900 Sales commissions 38,300
Factory supplies used 27,900 Salaries paid to sales clerks 59,000
Work in process inventory was $13,300 at January 1 and $17,000 at December 31. Finished goods inventory was $69,700 at January 1 and $48,400 at December 31.
Compute cost of goods manufactured.
Cost of goods manufactured $ _______
Compute cost of goods sold.
Cost of goods sold $ _________

Answer 1

The cost of goods manufactured is calculated by adding direct materials, direct labor, and manufacturing overhead, and then adjusting for the work in process inventory. The cost of goods sold is calculated by adding the cost of goods manufactured to the beginning finished goods inventory and subtracting the ending finished goods inventory. The calculated cost of goods manufactured is $350,700, and the calculated cost of goods sold is $372,000.

Step-by-step explanation:

To compute the cost of goods manufactured and the cost of goods sold, we'll need to categorize costs into product and period costs, and then calculate accordingly. Product costs include all costs involved in acquiring or making a product, which are direct materials, direct labor, and manufacturing overhead. Period costs are not included in the calculation of cost of goods sold as they are not directly associated with the production process.

Here's how to calculate the cost of goods manufactured:

1. Add beginning work in process inventory to total manufacturing costs.
2. Deduct the ending work in process inventory from the sum obtained in step 1 to get the cost of goods manufactured.

Let's put the numbers in:

• Total Manufacturing Costs = Direct Materials + Direct Labor + Manufacturing Overhead
• Direct Materials Used: $129,400
• Direct Labor: $114,900
• Manufacturing Overhead: Factory Supplies + Depreciation on Plant + Property Taxes on Plant = $27,900 + $63,100 + $19,100 = $110,100
• Total Manufacturing Costs = $129,400 + $114,900 + $110,100 = $354,400
• Cost of Goods Manufactured = (Beginning Work in Process + Total Manufacturing Costs) - Ending Work in Process = ($13,300 + $354,400) - $17,000 = $350,700

Now, to compute the cost of goods sold, we need to consider the finished goods inventory.

• Cost of Goods Sold = Beginning Finished Goods Inventory + Cost of Goods Manufactured - Ending Finished Goods Inventory
• Cost of Goods Sold = $69,700 + $350,700 - $48,400 = $372,000

Answer 2

Cost of goods manufactured= $350,700

Cost of goods sold= $372,000

Step-by-step explanation:

The cost of goods manufactured can be calculated as follows

= Direct materials utilized + factory supplies utilized + direct labor + depreciation on plants + property taxes on plant + work in process. January 1 - work in process December 31

= 129,400 + 27,900 + 114,900 + 63,100 + 19,100 + 13,300 -17,000

= $350,700

The cost of goods sold can be calculated as follows

= finished goods on January 1 + cost of goods manufactured - finished goods on December 31

= 69,700 + 350,700 - 48,400

= $372,000