Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 1

Prepare Statements for a Manufacturing Company

The following balances are from the accounts of Secol Machining Company:

	?January 1 (Beginning)	?December 31 (Ending)
Direct materials inventory	$48,000	$59,000
Work-in-process inventory	58,000	56,000
Finished goods inventory	43,800	45,000

Direct materials purchased during the year amount to $299,000, and the cost of goods sold for the year was $1,086,200.

Required

Reconstruct a cost of goods sold statement and fill in the following missing data:

a. Cost of direct materials used during the year.

---

b. Cost of goods manufactured during the year.

---

c. Total manufacturing costs incurred during the year.

Step 1 of 5

Cost of goods manufactured

Cost of goods manufactured is the total costs incurred by company to manufacture the goods which are produced during the year. The total costs incurred includes production costs of goods.

Formula to calculate cost of goods manufactured

Cost of goods sold

Cost of goods sold is the cost which was incurred for the product which is sold by company. Cost of goods sold is the production costs incurred which are expensed now when goods are sold.

Formula to calculate cost of goods sold