how do we find cost of goods sold?

Question

Chekwa is a manufacturing company. The $66,000 was paid to purchase the following items:

Paid $4,400 cash to purchase materials that were used to make products during the year.
Paid $26,000 cash for wages of factory workers who made products during the year.
Paid $2,600 cash for salaries of sales and administrative employees.
Paid $33,000 cash to purchase manufacturing equipment. The equipment was used solely to make products. It had a 3-year life and a $7,500 salvage value. The company uses straight-line depreciation.
During 2007, Chekwa started and completed 2,500 units of product. The revenue was earned when Chekwa sold 2,000 units of product to its customers.

Sales Revenue $60,000
Cost of Goods Sold = ?
Gross Margin = ?
Administrative Expense = ?
Net Income = ?

Answer 1

You have to factor in depreciation of the mfg equipment as it was used solely to make products. Cost of equipment $33k less salvage value $7.5k divided by 3 yrs gives depn per yr of $8,500.
Cost of gds mfd = Direct materials + direct labor + mfg overhead, so
Cost of gds mfd = $4,400 + $26,000 + $8,500 = $38,900. It cost $38,900 to manufacture 2,500 units, but only 2,000 were sold, so the cost of gds sold = 2000/2500 x $38,900 = $31,120, and the goods not sold (remaining in ending inventory = 500/2500 x $ 38,900 = $7,780)

Sales Revenue $60,000
Cost of Goods Sold = $31,120
Gross Margin = $28,880
Administrative Expense = $2,600
Net Income = $26,280

Answer 2

60,000/2000 = $30 per item sale price
44,000(check for error)/2,500 =$17.60 per item material cost
26,000/2,000 = $10. 40 per item factory worker cost

Cost:
35,200 = 17.60 x 2,000 = Material cost
20,800 = 10.4 x 2,000 = Wages for factory workers
2,600 = Administrative expense

Sales Revenue $60,000
Cost of Goods Sold = 56,000 = 35,200+20,800
Gross Margin = 4,000
Administrative Expense = 2,600
Net Income = 1,400

15,000 = 500 units unsold x $30 = Inventory left

Depreciation equipment per year(Don't belong here)
33,000/3 yrs = 11,000 per year
11,000 = year 1
11,000 = year 2
2,500 = 11,000-7,500 = year 3