Quote:
The following data relate to the Shirley Company:
----------------------------------------Inventories
-----------------------------------ENDING
BEGINNING
Finished goods
95,000
.. 10,000
Work in process
.
. 80,000
.. 70,000
Direct material
.
95,000
... 90,000
Costs incurred during the period:
Costs of goods available for sale
.
X
........684,000
Total manufacturing costs
.
..X
.....
..584,000
Factory overhead
.
..X
.....
..167,000
Direct materials used
.
..X
.......193,000
Required: Statement of cost of goods sold, including all beginning and ending inventories.
While making Cost of goods sold Statement, I am able to do everything perfectly but when it comes to 'Cost of goods available for sale', my calculated value is 564,000, and mentioned in problem is 684,000. There is a variance of 120,000. Is this amount to be adjusted somewhere in the statement? like under or ovr applied FOH or some other element? Where do I adjust this 120,000?
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The following are only tricky points in the question. The following three workings would help u easily solve rest of the problems.
Workings:
Material available for use:
DM used (given) +ending inventory of DM
=193000+95000=288000
Material purchases:
Material available for sale less opening inventory of DM
=288000-90000=198000
Cost of labor:
Manufacturing cost less DM used (given) and factory overhead(given)
=584000-193000-167000=224000
Regards.