Cost Flow Relationships The following information is available for the first mon
ID: 2469287 • Letter: C
Question
Cost Flow Relationships
The following information is available for the first month of operations of Kellman Inc., a manufacturer of art and craft items: Sales $3,600,000 Gross profit 650,000 Indirect labor 216,000 Indirect materials 120,000 Other factory overhead 45,000 Materials purchased 1,224,000 Total manufacturing costs for the period 2,640,000 Materials inventory, end of period 98,800 Using this information, determine the following missing amounts:
a. Cost of goods sold $
b. Direct materials cost $
c. Direct labor cost $
Explanation / Answer
Cost of goods sold =sales -Gross profit
= 3,600,000 - 650,000
= $ 2,950,000
Direct material cost : Material purchased -ending inventory -Indirect material
= 1,224,000 - 98800 - 120000
= $ 1,005,200
Direct labor cost = Total manufacturing cost - Direct material cost - Overhead cost
= 2,640,000 - 1,005,200 - (216000+120000+45000)
= $ 1,253,800