Cost Of Gods Manufactured Schedule 27.2a

E 27 2a Cost Of Gods Manufactured 287500schedule Of Cost Of Goods

Prepare a schedule of cost of goods manufactured for Tomas Company for the year ended June 30, 20-2. Information to prepare the schedule is as follows: Work in process, July 1, 20-1 $6,400; Materials inventory, July 1, 20-1 $4,875; Materials purchases $68,950; Direct labor $140,300; Actual factory overhead $85,225; Work in process, June 30, 20-2 $7,700; Materials inventory, June 30, 20-2 $6,950; Indirect materials charged to production $3,600; Net income $104,845. Using these details, prepare the schedule of cost of goods manufactured.

Paper For Above instruction

The schedule of cost of goods manufactured (COGM) calculates the total production costs incurred during a specific period, typically a fiscal year, and details the conversion of raw materials into finished goods. For Tomas Company, the preparation of this schedule begins with the opening work-in-process inventory, raw materials, and direct costs incurred during the year, followed by the closing work-in-process inventory to ascertain the total cost of goods manufactured.

Initially, the raw materials available for use are determined by adding beginning inventory to purchases: $4,875 + $68,950 = $73,825. From this, the ending raw materials inventory ($6,950) is subtracted to find raw materials used in production: $73,825 - $6,950 = $66,875.

Next, direct labor costs of $140,300 are added to the raw materials used, along with factory overhead, which includes actual overhead of $85,225 adjusted by the indirect materials charged to production of $3,600. Factory overhead applied to production totals $85,225 in actual costs minus adjustments, but for simplicity and accuracy, this figure is used as given, with adjustments accounted for later. The total manufacturing costs for the period are thus the sum of direct materials used, direct labor, and factory overhead:

Direct materials used: $66,875

Direct labor: $140,300

Factory overhead: $85,225

Total manufacturing costs: $66,875 + $140,300 + $85,225 = $292,400

The work-in-process inventory at the beginning ($6,400) is added, and at the end ($7,700) is deducted to compute the cost of goods manufactured:

Beginning work in process: $6,400

Plus: Total manufacturing costs: $292,400

Less: Ending work in process: $7,700

Cost of goods manufactured: $6,400 + $292,400 - $7,700 = $291,100

This result indicates the total cost of producing finished goods during the period, which can then be used to assess gross profit and overall profitability when compared to sales revenue. Accurate accounting of these components ensures proper financial analysis and inventory valuation for Tomas Company.

References

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