SHEENA MARIE C. SIRIOS
BSMA3
E1-6 COST FLOW
•
Direct material- Direct material cost indicates the purchase price of raw material
that is used in the manufacturing of the product.
•
Direct labor- These are the costs related to the payment of wages and salaries to
workers who are involved directly in the production process.
•
Factory overheads- Involves all the direct production costs connected with the
production of goods. It shall exclude direct labor and direct materials.
E1-7 STATEMENT OF COST OF GOODS MANUFACTURED
Direct Materials
Material Inventory, beg.
$25,000
Materials purchased
21,000
Materials available for use
46,000
Less: Materials inventory, end
(22,000)
Total materials used
24,000
Less: Indirect materials used
(1,000)
Direct materials used
$23,000
Direct labor cost
18,000
Factory overhead
12,000
Total manufacturing costs
53,000
Work in process inventory, beg.
24,000
Total cost of work in process
77,000
Less: Work in process inventory, end
(20,000)
Cost of goods manufactured
$57,000
COST OF GOODS SOLD
Cost of goods manufactured
$57,000
Finished goods inventory, beg
32,000
Less: finished goods inventory, end
30,000
Cost of goods sold
$59,000
E1-9 DETERMINING MATERIALS, LABOR, AND COST OF GOODS SOLD
A.
Direct materials used
$205,000
Direct materials, end
95,000
Less: Direct materials, beg
Direct materials purchased
(90,000)
$210,000
B.
Total manufacturing costs
$675,000
Direct materials used
(205,000)
Factory overhead
(175,000)
Direct labor cost incurred
$295,000
C.
Cost of goods available for sale
Less: Finished goods, end
Cost of goods sold
$775,000
(75,000)
$700,000
D.
Sales
$900,000
Less: Cost of goods sold
(700,000)
Gross profit
$200,000