Compute the Cost of Goods Manufactured and Cost of Goods Sol

Compute the Cost of Goods Manufactured and Cost of Goods Sold for Strike MarineStrike Marine Company for the most recent year using the amounts described next. Assume that Raw Materials Inventory contains only direct materials.

I\'m having trouble understand what the Manufactoring overhead costs are. If anyone can just explain what that is and which ones they are from this problem that would be great.

Beginning End of End of of Year Year Year Raw materials inventory . . $ 22,000 $ 34,000 Insurance on plant Work in process inventory... $ 41,000 $ 27,000 Depreciation-plant building and equipment ...$ 12,600 Finished goods inventory....$ maintenance-plant .. . . . . .. . . . . $3,900 Purchases of direct materials Direct labor 13,000 21,000 Repairs and $ 88,000 General and administrative expenses .. . . $ 42,000 $ 24,500 aox . . . Print Done

Solution

Calculate cost of goods manufactured :

Manufacturing overhead includes indirect manufacturing cost which is incurred in factory like indirect labour, indirect material, dep on plant and equipment in factory, factory rent, repairs and maintenance of factory etc.

so manufacturing overhead = (42000+9500+12600+3900) = 68000

Beginning work in process	41000
Plus : Manufacturing cost incurred
Direct material used	62000
Direct labour	88000
Manufacturing overhead	68000
Total cost of work in process	259000
Less: Ending work in process inventory	(27000)
Cost of goods manufactured	232000