Managerial accounting?

Question

Big valley corp. has supplied the ff information for the year ended December 31,2005
Direct labour 16,480
Direct material purchase 19,260
General and Administrative expenses 14,240
Indirect manufacturing cost 16,780
Selling expenses 13,250
Begining direct material inventory 2,460
Direct materials used 2,900
Big valley corp. produces 8,000 units.There was no begiining balance or ending balance work-in -process.Ending inventory consist of 1,000 finished units.
Required:
a. prepare the inventories section of the balance sheet.
b.compute the cost of goods sold.

Answer 1

Opening Direct Materials 2,460
+ Direct Materials Purchases 19,260
– Closing Direct Materials (18,820)
Gives mat'ls used in prodn 2,900

Direct Materials Used in Production 2,900
+ Direct Labor 16,480
+ Manufacturing Overhead 16,780
Gives product cost 36,160

Total Product Cost 36,160
+ Opening WIP 0
– Closing WIP 0
Gives cost of goods manufactured 36,160

(a) It cost 36,160 to manufacture 8,000 units. Ending inventory was 1,000 units. Cost of ending inventory was 1000/8000*36,160 = 4,520.

(b) There were 7,000 units sold. COGS was 7,000/8,000*36,160 = 31,640. Alternatively you could say COGS was 36,160 - 4,520 = 31,640.

The selling, general & admin expenses appear in the income statement, not in the cost of goods mfd statement.