Homework SourseDuring its first year of operations Motorola Company paid 11
During its first year of operations, Motorola Company paid $11,860 for direct materials and $10,900 for production workers\' wages. Lease payments and utilities on the production facilities amounted to $9,900 while general, selling, and administrative expenses totaled $3,600. The company produced 7,100 units and sold 4,400 units at a price of $7.10 a unit.
What is Motorola\'s cost of goods sold for the year?
A. $20,240
B. $26,360
C. $16,336
D. $32,660
Solution
A. $20,240
Working:
| Cost of goods sold is the direct cost of goods manufactured.It includes direct materials,direct labor and other cost directly attributable to the manufacturing of goods. | ||||||||||||||
| Step-1:Calculation of cost of goods manufactured | ||||||||||||||
| Direct Materials | $ 11,860 | |||||||||||||
| Production workers\' wages | 10,900 | |||||||||||||
| Lease payments and utilities on the production facilities | 9,900 | |||||||||||||
| Cost of goods manufactured | 32,660 | |||||||||||||
| Step-2:Calculation of Cost of goods manufactured per unit | ||||||||||||||
| Cost of goods manufactured | $ 32,660 | |||||||||||||
| / Units manufactured | 7100 | |||||||||||||
| Per unit cost of goods manufactured | $ 4.60 | |||||||||||||
| Step-3:Calculation of cost of goods sold | ||||||||||||||
| Cost of goods sold | = | Units sold x Manufacturing cost per unit | ||||||||||||
| = | 4,400 | x | $ 4.60 | |||||||||||
| = | $ 20,240 | |||||||||||||
