Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 57

Cost of Goods Manufactured

The following data pertain to Winstead Company for the year ended December 31, 2010:

	December 31, 2009	December 31, 2010
Purchases of direct materials		$120,000
Direct labor		85,000
Indirect labor		25,000
Factory insurance		12,000
Depreciation—Factory		65,000
Repairs and maintenance—Factory		15,000
Marketing expenses		110,000
General and administrative expenses		55,000
Direct materials inventory	$25,000	35,000
Work-in-process inventory	33,000	42,000
Finished goods inventory	18,000	20,000

Sales in 2010 were $650,000.

Required Prepare a schedule of cost of goods manufactured and an income statement for 2010 for Winstead Company similar to those in Exhibit 3.15a.

Step 1 of 2

Direct costs are those costs which can be clearly related to certain good or activity. Indirect costs are those costs which cannot be clearly related to certain good or activity. Cost is expense of resource which happens when the resource is used.