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

Exercise 23

Find the Unknown Information

Just before class starts, you realize that you have mistakenly recycled the second page of your cost accounting homework assignment. Fortunately, you still have the first page of printout from your spreadsheet (shown below) and you remember that you were able to determine the items on the recycled page from this information.

	A	B	?C
1	Direct materials inventory, January 1	$ 2,520
2	Direct materials inventory, December 31	2,088
3	Work-in-process inventory, January 1	5,440
4	Work-in-process inventory, December 31	6,110
5	Finished goods inventory, January 1	22,320
6	Finished goods inventory, December 31	25,520
7	Cost of goods manufactured during this year	598,400
8	Total manufacturing costs	612,320
9	Direct labor	270,400
10	Manufacturing overhead	225,000
11	Average selling price per unit	18
12	Gross margin percentage (as a percentage of sales)	38%
13

Required

Find the following:

a. Cost of goods sold.

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b. Direct materials used.

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c. Purchases of direct materials.

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d. Sales revenue

Step 1 of 4

a.

Cost of goods sold:

It is the cost of the goods sold during the year. Cost of goods sold is calculated by adjusting the opening and ending finished goods inventory to the cost of goods manufactured. It is determined as follows:

Cost of goods manufactured	$598,400
Add: Beginning finished goods inventory, January 1	$22,320
Less: Ending finished goods inventory, December 31	$25,520
Cost of goods sold	$595,200