Question

Daniel is struggling to determine the company's key costs for this month's income statement. He knows the following: total manufacturing costs $51,200; beginning and ending WIP Inventory, $9,200 and $6,200, respectively; and beginning and ending FG Inventory, $5,800 and $7,400, respectively. How much is Cost of Goods Manufactured and Cost of Goods Sold? Cost of goods manufactured $ Cost of goods sold $

Answer 1

The Cost of Goods Manufactured is calculated as $54,200, by summing the total manufacturing costs with the beginning WIP inventory and subtracting the ending WIP inventory. The Cost of Goods Sold totals $52,600, found by adjusting the COGM with the beginning and ending FG inventory.

Step-by-step explanation:

Daniel needs to calculate both the Cost of Goods Manufactured (COGM) and the Cost of Goods Sold (COGS) for the income statement. To compute the COGM, we start with the total manufacturing costs and adjust for the change in Work-in-Process (WIP) inventory:

• Total Manufacturing Costs: $51,200
• Plus: Beginning WIP Inventory: $9,200
• Less: Ending WIP Inventory: $6,200

Therefore, COGM = (Total Manufacturing Costs + Beginning WIP Inventory) - Ending WIP Inventory = ($51,200 + $9,200) - $6,200 = $54,200.

To determine the COGS, adjust the COGM for the change in Finished Goods (FG) Inventory:

• COGM: $54,200
• Plus: Beginning FG Inventory: $5,800
• Less: Ending FG Inventory: $7,400

So, COGS = (COGM + Beginning FG Inventory) - Ending FG Inventory = ($54,200 + $5,800) - $7,400 = $52,600.

Daniel's company has a COGM of $54,200 and a COGS of $52,600 for this month.