Coldplay Corporation incurred the following costs while manufacturing its produc
ID: 2434456 • Letter: C
Question
Coldplay Corporation incurred the following costs while manufacturing its product.Materials used in product $105,000 Advertising expense $51,000
Depreciation on plant 62,000 Property taxes on plant 21,000
Property taxes on store 7,800 Delivery expense 30,000
Labor costs of assembly-line workers 120,000 Sales commissions 38,000
Factory supplies used 33,000 Salaries paid to sales clerks 60,000
Work-in-process inventory was $13,900 at January 1 and $16,600 at December 31. Finished goods inventory was $66,000 at January 1 and $55,900 at December 31.
(a) Compute cost of goods manufactured.
(b) Compute cost of goods sold.
Explanation / Answer
Factory supplies used $33,000 Property taxes on store $7,800Since manufacturing overhead includes all those indirect costs that are incurred when a product is manufactured. These costs include Depreciation on plant, property taxes on plant and all other factory-related costs.
Preparing cost of goods sold: We know that Total manufacturing costs (+) Beginning work-in-progress (-) Ending work-in-progress ------------------------------------
Cost of goods manufactured
----------------------------------- $348,800 + $13,900 - $16,600 = $346,100 Therefore, cost of goods manufactured = $346,100 Schedule of cost of goods sold: Beginning finished goods (+) Cost of goods manufactured -------------------------------------
Goods available for sale
(-) Ending finished goods ---------------------------------- Cost of goods sold --------------------------------
By substituting the values in this above format, we can get the cost of goods sold. Beginning finished goods $66,000
Cost of goods manufactured $346,100 --------------------------------------------------- Goods available for sale $412,100 (-) Ending finished goods $55,900 -------------------------------------------------- Cost of goods sold $356,200 --------------------------------------------------