Please Show All Work The following data (in thousands of dollars) have been take
ID: 2416000 • Letter: P
Question
Please Show All Work
The following data (in thousands of dollars) have been taken from the accounting records of Karmana Corporation for the just-completed year.
Sales ........................................................................ $1,000
Raw materials inventory, beginning ........................$130
Raw materials inventory, ending ................................$90
Purchases of raw materials ........................................$220
Direct labor ..................................................................$240
Manufacturing overhead ..........................................$210
Administrative expenses ...........................................$200
Selling expenses ............................................... .........$240
Work-in-process inventory, beginning ....................$25
Work-in-process inventory, ending ..........................$45
Finished goods inventory, beginning .....................$200
Finished goods inventory, ending ...........................$160
Use these data to prepare (in thousands of dollars) a schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold for the year. In addition, elaborate on the relationship between these schedules as they relate to the flow of product costs in a manufacturing company. (Points : 25)
Explanation / Answer
Calculation of cost of Goods manufactured Raw Material Inventory Beginning 130 Raw Material Purchase 220 Raw Material Inventory ending (90) Total Rawmaterial Cost 260 Direct Labour 240 Manufacturing Overheads 210 Add: Work in Progress Inventory Beginning 25 Less: Work in Progress Inventory ending -45 Cost of goods Manufactured 690 Add: Finished Goods Inventory Beginning 200 Less: Finished Goods Inventory ending -160 Cost of goods Sold 730 The cost of goods manufactured schedule is used to calculate the cost of producing products for a period of time. The cost of goods manufactured amount is transferred to the finished goods inventory account during the period and is used in calculating cost of goods sold on the income statement. The cost of goods manufactured schedule reports the total manufacturing costs for the period that were added to workinprocess, and adjusts these costs for the change in the workinprocess inventory account to calculate the cost of goods manufactured.