Computing Cost of Manufactured and Sold Goods Compute the cost of goods manufactured and cost of goods sold for Strike Marine Company for the most recent year using the amounts described below. Assume that raw materials inventory contains only direct materials.
Beginning of End of End of
Year Year Year
Raw materials inventory
$25,000
$28,000
Insurance on plant
$9,000
Work in process inventory
$50,000
$35,000
Depreciation plant building and equipment
$13,000
Finished goods inventory
$18,000
$25,000
Repairs and maintenance
$4,000
Purchases of direct materials
$78,000
Marketing expenses
$77,000
Direct labor
$82,000
General and administrative expenses
$29,000
Indirect labor
$15,000

Cost of Goods Manufactured $ 213,000

Cost of Goods Sold $ 206,000

Explanation:

If we add and subtract the following amounts in the correct order we get the Cost of Goods Manufactured and Sold Statement .

Strike Marine Company

Cost of Goods Manufactured and Sold Statement

Raw materials inventory   Beginning   $25,000

Add Purchases of direct materials $78,000

Less Raw materials inventory Ending  $28,000

Direct Materials Used $ 75000

Direct labor $82,000

Manufacturing Overheads  $ 41,000

Insurance on plant   $9,000

Depreciation plant building and equipment $13,000

Indirect labor $15,000

Repairs and maintenance $4,000

Total Manufacturing Costs  198,000

Add Work in process inventory Beginning $50,000

Cost of Goods Available for  Manufacture $ 248,000

Less Work in process inventory Ending $35,000

Cost of Goods Manufactured $ 213,000

Add Finished goods inventory Beginning $18,000

Cost of Goods Available for Sale 231,000

Less Finished goods inventory Ending $25,000

Cost of Goods Sold $ 206,000

The Manufacturing Overheads includes all the indirect expenses related to the manufacture of the product such as the indirect labor , the insurance and depreciation of plant and also the repairs.

The following are operating expense and included in the income statement not in the Cost of Goods Manufactured and Sold Statement. These relate to marketing and selling department.

Marketing expenses $77,000

General and administrative expenses $29,000

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