Maryville, Inc, incurred the following costs during August Raw materials used Di

Question

Maryville, Inc, incurred the following costs during August Raw materials used Direct labor Manufacturing overhead, actual Seling expenses Administrative expenses Interest expense $37 700 55,400 44,400 22,680 20,420 9,600 Durning the month, 5,500 units of product were manufactured and 3,600 units of product were sold. On August 1, Maryville, Inc., carmed no inventories. On August 31, there were no inventories other than finished goods Required: a. Calculate the cost of goods manufactured during August and the average cost per unit of product manufactured Cost of goods manufactured ge cost per unit b. Calculate the cost of goods sold during August e-1. Calculate the diterence between cost of goods marufactured and cost of goods sold c-2. How will this amount be reported in the fnancial statements? Finished goods inventory O Work in progress inventory Raw materials inventory d. Prepare a tradtional (absorption) income statement for Maryvile, Inc, for the month of August Assume that sales for the month were S234.129 and the company's effective income tax rate was 30% LLE Absorption Income Statement For the moeth of August

Explanation / Answer

Solution a:

Solution b:

Cost of goods sold during august = Nos of units sold * Cost per unit = 3600 * $25 = $90,000

Solution c-1:

Difference between cost of goods manufactured and cost of goods sold = $137,500 - $90,000 = $47,500

Solution c-2:

This amount will be reported in financial statement as finished goods inventory.

Solution d:

Computation of cost of goods manufactured and average cost per unit Particulars Amount Raw material used $37,700.00 Direct labor $55,400.00 Manufacturing overhead, actual $44,400.00 Cost of goods manufactured $137,500.00 Nos of units produced 5500.00 Average cost per unit $25.00

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