Compute the Cost of Goods Manufactured and Cost of Goods Sold for Strike Marine Company for the most recent year using the amounts described next. Assume that Raw Materials Inventory contains only direct materials. Beginning End of End of of Year Year YearRaw materials inventory $ 22,000 $34,000 Insurance on plant $9,500Work in process inventory 41,000 27,000 Depreciation-plant building and equipment 12,600Finished goods inventory 13,000 21,000 Repairs and maintenance-plant 3,900Purchases of direct materials 74,000 Marketing expenses 84,000Direct labor 88,000 General and administrative expenses 24,500Indirect labor 42,000Required:Calculate the Cost of Goods Manufactured. Calculate the Cost of Goods Sold.

Instructions are below.

Explanation:

First, we need to calculate the direct material used and the manufacturing overhead:

Direct material used= beginning inventory + purchases - ending inventory

Direct material used= 22,000 + 74,000 - 34,000

Direct material used= $62,000

Manufacturing overhead:

Insurance on plant $9,500

Depreciation-plant building and equipment 12,600

Repairs and maintenance-plant 3,900

Indirect labor 42,000

Total overhead= $68,000

Now, we can determine the cost of goods manufactured:

cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP

cost of goods manufactured= 41,000 + 62,000 + 88,000 + 68,000 - 27,000

cost of goods manufactured= 232,000

Finally, the cost of goods sold:

COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory

COGS= 13,000 + 232,000 - 21,000

COGS= $224,000