Sunday, 7 April 2013

How to find Cost of Good Manufature ???


Remember this….
Now on Cost Accounting….
 

Example:Canseco Company
No

Beginning of
2011
End of
2011
1
Direct Material Inventory
$ 22000
$26000
2
Work in process inventory
  21000
20000
3
Finished goods inventory
18000
23000
4
Purchases of direct materials

75000
5
Direct manufacturing labor

25000
6
Transportation in

3000
7
Purchase discount

5%
8
Indirect manufacturing labor

15000
9
Plant insurance

9000
10
Depreciation-plant, building, equipment

11000
11
repairs and maintenance-plant

4000
12
Marketing, distribution and customer service costs

93000
13
General and administrative cost

29000

1. Revenue for the 2011 were $300 million, prepare the income statement for 2011
2. Prepare a schedule for the cost of goods manufactured for 2011   





                                                          

D'Answer


1.    Income statement

Conseco company

Income statement

For the year ended December 31,2011

Revenues                                                                                                                                            $1000,000
Cost of Goods Sold
      Beginning Finished Goods Inventory                                                 $  18,000 
      Cost of Goods Manufactured         (see the schedule!!)                        127,250
      Cost Of Goods Available For Sale                                                        145,250
      Ending Finished Goods Inventory                                                        (23000)
          Cost Of Goods Sold                                                                                                                   122,250
Gross Profit
Operating Expense
     Marketing, distribution and customer service expense                         93,000
     General and administrative cost                                                            29,000
                Total Operating Expense                                                          (122,000)
Net Income                                                                                               $999.750



2.    Schedule of COGM

Canseco Company

Schedule of Cost of Goods manufactured

For the year ended December 31,2011

Direct Materials                                                                                                                              
Beginning Inventory                                                                                                       $22,000
Purchases of direct materials
Purchase                                                                                             $75,000
Transportation in                                                                               $3,000
Purchase discount                                                                           ($3750)
Total                                                                                                                      74,250
Cost of direct Materials available for use                                                                         88,250
Ending Inventory                                                                                                             (26,000)
Direct Materials Used                                                                                                       62,250
Direct Manufacturing Labor                                                                                                          25,000
Manufacturing Overhead                                                                                                            
            Indirect Manufacturing Labor                                                        15,000                  
Plant Insurance                                                                                 9,000
Depreciation-plant, building, equipment                                        11,000
Repairs and maintenance-plant                                                        4,000
                                      Total Manufacturing Overhead Cost                                                            39,000         
Manufacturing Cost Incurred during 2011                                                                            126,250
Add: Beginning Work-in-process Inventory                                                                           21,000
Less: Ending Work in process Inventory                                                                               (20,000)
Cost of Goods Manufactured                                                                                             $127,250