Question

The following costs and inventory data were taken from the accounts of Simon Company for 2010:
January 1, 2011 December 31, 2011
Inventories:
Raw materials $ 8,000 $ 7,000
Work in process 15,000 13,000
Finished goods 16,000 12,000
Costs incurred at the end of December 31, 2011:-
Raw materials purchases $83,000
Direct labor 42,000
Factory rent 8,000
Factory utilities 10,000
Indirect materials 4,000
Indirect labor 6,000
Operating expenses 17,000
Instructions
a. Prepare a schedule showing the amount of direct materials used in production during the year.
b. Compute the amount of manufacturing overhead incurred during the year.
c. Prepare a schedule of Cost of Goods Manufactured for Simon Company for the year ended December 31, 2011 in good form.
d. Prepare the Cost of Goods Sold section of the Income Statement for Simon Company for the year ended December 31, 2011 in good form.

Answer 1

Answer:

Part a

Direct Materials Schedule

Beginning Materials                               $ 8,000

Add Purchases                                      $83,000

Less Ending Materials                          ($ 7,000)

Less Indirect materials                          ($4,000)

Direct Materials Used in Production    $80,000

Part b

Overheads Incurred during the year

                                     $

Factory rent                  8,000

Factory utilities            10,000

Indirect materials          4,000

Indirect labor                 6,000

Total Overheads       $28,000

Part c

Cost of Goods Manufactured Schedule

Direct Materials                                   $80,000

Direct labor                                          $42,000

Overheads                                           $28,000

Add Opening Work In Process           $15,000

Less Closing Work In Process           ($13,000)

Cost of Goods Manufactured           $152,000

Part d

Cost of Goods Sold

Beginning Finished goods Inventory       $16,000

Add Cost of Goods Manufactured         $152,000

Less Ending Finished Goods Inventory ($12,000)

Cost of Goods Sold                                 $156,000

Explanation:

The following steps must be done to reach the cost of goods sold :

1. Use the Manufacturing Cost Schedule to calculate the Cost of Goods Manufactured
2. Use the Finished Goods Inventory Account to calculate the Cost of Goods Sold.

See the calculations and schedules prepared above.