Boitumelo owns a manufacturing business. The following information is available for the year ended 31…

Question

Boitumelo owns a manufacturing business. The following information is available for the year ended 31 December 2017.

ScanSolve AI Tutor · Accepted Answer

Here are the calculations for the Cost of Goods Manufactured and Cost of Goods Sold based on the provided information.

Assumptions:

Rent and insurance (M 14 550) is considered entirely a factory overhead cost.
No depreciation expense for factory machinery for the year is provided, so it is not included in manufacturing overhead.

Calculate Direct Materials Used.
$\begin{align*} \text{Beginning Raw Materials Inventory} &= \text{M } 8\,080 \\ \text{Add: Purchases of Raw Materials} &= \text{M } 48\,730 \\ \text{Less: Ending Raw Materials Inventory} &= \text{M } 6\,590 \\ \text{Direct Materials Used} &= \text{M } 8\,080 + \text{M } 48\,730 - \text{M } 6\,590 \\ &= \text{M } 50\,220 \end{align*}$
Calculate Total Manufacturing Overhead.
$\begin{align*} \text{Direct factory expenses} &= \text{M } 1\,160 \\ \text{Factory power} &= \text{M } 5\,320 \\ \text{Indirect factory wages and salaries} &= \text{M } 18\,430 \\ \text{Maintenance and storage costs} &= \text{M } 2\,760 \\ \text{Rent and insurance} &= \text{M } 14\,550 \\ \text{Total Manufacturing Overhead} &= \text{M } 1\,160 + \text{M } 5\,320 + \text{M } 18\,430 + \text{M } 2\,760 + \text{M } 14\,550 \\ &= \text{M } 42\,220 \end{align*}$
Calculate Total Manufacturing Costs.
$\begin{align*} \text{Direct Materials Used} &= \text{M } 50\,220 \\ \text{Direct Labour} &= \text{M } 37\,290 \\ \text{Total Manufacturing Overhead} &= \text{M } 42\,220 \\ \text{Total Manufacturing Costs} &= \text{M } 50\,220 + \text{M } 37\,290 + \text{M } 42\,220 \\ &= \text{M } 129\,730 \end{align*}$
Calculate Cost of Goods Manufactured (COGM).
$\begin{align*} \text{Beginning Work in Progress Inventory} &= \text{M } 3\,310 \\ \text{Add: Total Manufacturing Costs} &= \text{M } 129\,730 \\ \text{Less: Ending Work in Progress Inventory} &= \text{M } 4\,180 \\ \text{Cost of Goods Manufactured} &= \text{M } 3\,310 + \text{M } 129\,730 - \text{M } 4\,180 \\ &= \boxed{\text{M } 128\,860} \end{align*}$
Calculate Cost of Goods Sold (COGS).
$\begin{align*} \text{Beginning Finished Goods Inventory} &= \text{M } 12\,400 \\ \text{Add: Cost of Goods Manufactured} &= \text{M } 128\,860 \\ \text{Less: Ending Finished Goods Inventory} &= \text{M } 10\,880 \\ \text{Cost of Goods Sold} &= \text{M } 12\,400 + \text{M } 128\,860 - \text{M } 10\,880 \\ &= \boxed{\text{M } 130\,380} \end{align*}$

Boitumelo owns a manufacturing business. The following information is available for the year ended 31 December 2017.

Step-by-step solution

Calculate Direct Materials Used.

Calculate Total Manufacturing Overhead.

Calculate Total Manufacturing Costs.

Calculate Cost of Goods Manufactured (COGM).

Calculate Cost of Goods Sold (COGS).

Still stuck on this one?

More Accounting Questions