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19 February, 06:36

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

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  1. 19 February, 07:41
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    All figures are imaginary.

    Explanation:

    West Nautical Company

    Cost of Goods Manufactured (in millions). and Sold

    Dr Cr

    (000) (000)

    Direct Materials (opening Inventory) 30,000

    Add Purchases 10,000

    Less Ending Inventory 6000

    Direct Materials Used 34,000

    Conversion Costs

    Add Direct Labor 21,000

    Factory Over Head

    Indirect Materials 50

    Indirect Labor 14,000

    Rent On Factory Building 3000

    Depreciation (equip) 5000

    Utilities 4000

    Property Tax 2000

    Insurance 1000

    Total Factory Overhead / Total Manufacturing Costs 29,050

    Deduct Under applied Overhead 250

    Overhead applied to work in process 28,800

    Total Manufacturing Costs 83,800

    Add Beginning Work In Process 4000

    Total Goods in Process 87,800

    Less Ending Work In Process 39,800

    Cost Of Goods Manufactured 48000

    Add opening Finished Goods 12,000

    Cost of Goods Available for Sale 60,000

    Less Closing Finished Goods 24000

    Cost Of Goods Sold 36000

    Add underapplied overhead 250

    Cost of goods Sold (adjusted for under applied overhead**) 36,250

    * * The company closes under applied or over applied overhead into cost of goods sold. Hence, $ 250 balance in under applied overhead is added to the cost of goods sold for the month.
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