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2-26A Compute Cost of Goods Manufactured and Cost of Goods Sold Learning Objective 5) Compute the Cost of Goods Manufactured and Cost of Goods Sold for West Nautical Company for the most recent year using the amounts described next. Assume that the Raw Materials Inventory contains only direct materials Beginning End Year of Year End of Year of Raw materials inventory Work in process inventory Finished goods inventory $23,000 $25,000 Insurance on plant..$ 11,500 $35,000 $31,000 Depreciation-plant building and equipment.. $ 13,400 S 3,700 $20,000 $22,000 Repairs and maintenance-plant.... Purchases of direct materials.... $74,000 Marketing expenses... $86,000 General and administrative expenses. $28,500 $42,000 S77,000 Direct labor

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Answer:

Note: Organized question is attached below

     Compute cost of goods manufactured

Beginning work in process                                      35000

Beginning raw material            23000

Direct material purchase          74000  

Less: Ending raw material      -25000

Direct material used                                72000

Direct labor                                                86000  

Manufacturing overhead    

Indirect labor                                42000

Insurance of plant                        11500

Dep. Plant, building & equip       13400

Repairs and maintenance-Plant   3700

Total manufacturing overhead                70600

Total manufacturing cost                                         228600

Total cost of work in process                                    263600

Less: Ending work in process                                   -31000

Cost of goods manufactured                                   232600

b) Cost of goods sold = Beginning Finished goods inventory + Cost of goods manufactured - Ending Finished goods inventory = 20000 + 232600 - 22000 = 230600

c) Income statement

Sales (34000*12)                                              408000

Less: Cost of goods sold                                -230600

Gross profit                                                       177400

Less: Marketing expense                                -77000

Less: General and administrative expenses -28500

Net operating income                                      71900

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