Cost Of Goods Sold And Cost Of Goods Manufactured ✓ Solved
Cost Of Goods Sold Cost Of Goods Manufacturedtimbuk 3 Com
For March, determine the cost of goods manufactured. Using the data given, prepare a statement of cost of goods manufactured. For March, determine the cost of goods sold. Using the data given, prepare a statement of cost of goods sold.
Paper For Above Instructions
The financial analysis of a manufacturing company involves determining key metrics such as the Cost of Goods Manufactured (COGM) and the Cost of Goods Sold (COGS). For Timbuk 3 Company, the following data is provided for March:
- Direct materials used in production: $21,000
- Direct labor: $54,250
- Factory overhead: $35,000
To calculate the COGM and COGS, we will follow standard accounting principles.
Cost of Goods Manufactured (COGM)
The Cost of Goods Manufactured refers to the total cost of producing goods that are completed within a specified period. The formula to calculate COGM is as follows:
COGM = Direct Materials Used + Direct Labor + Factory Overhead + Beginning WIP Inventory - Ending WIP Inventory
However, the provided data lacks the values for the beginning and ending Work In Process (WIP) inventory. In order to proceed with calculations, we will assume that the WIP inventory's beginning and ending values are $0 for this analysis. This will allow us to illustrate the calculation method.
Therefore, we can calculate the COGM as follows:
COGM = $21,000 + $54,250 + $35,000 + $0 - $0
COGM = $110,250
This calculation indicates that the total cost of goods manufactured by Timbuk 3 Company for March is $110,250. Next, we would prepare the statement of cost of goods manufactured:
Statement of Cost of Goods Manufactured
Timbuk 3 Company
Statement of Cost of Goods Manufactured
For the Month Ended March 31
| Direct Materials Used | $21,000 |
| Direct Labor | $54,250 |
| Factory Overhead | $35,000 |
| Total Cost of Goods Manufactured | $110,250 |
Cost of Goods Sold (COGS)
The Cost of Goods Sold refers to the direct costs attributable to the production of the goods sold during a specific period. The formula utilized to determine COGS is:
COGS = Beginning Finished Goods Inventory + COGM - Ending Finished Goods Inventory
Similar to the WIP inventory, we have not been provided with the beginning and ending Finished Goods inventory. Thus, we assume both values are also $0 for the sake of this analysis.
Using this assumption, we proceed with the following calculation:
COGS = $0 + $110,250 - $0
COGS = $110,250
This indicates that the total Cost of Goods Sold for Timbuk 3 Company in March amounts to $110,250. Following this calculation, we can prepare the statement of cost of goods sold:
Statement of Cost of Goods Sold
Timbuk 3 Company
Statement of Cost of Goods Sold
For the Month Ended March 31
| Beginning Finished Goods Inventory | $0 |
| Cost of Goods Manufactured | $110,250 |
| Ending Finished Goods Inventory | $0 |
| Total Cost of Goods Sold | $110,250 |
Conclusion
The analysis for March reveals that Timbuk 3 Company had a Cost of Goods Manufactured of $110,250 and a Cost of Goods Sold of $110,250. These metrics provide insight into the company's production efficiency and sales activity during the month.
Accurately determining COGM and COGS is essential for evaluating the company’s profitability and managing financial performance. It is recommended that Timbuk 3 Company track its inventory levels more closely to ensure accurate financial reporting and analysis in the future.
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