Materials used in product $120,000 Advertising expense $45,000 Depreciation on plant 60,000 Property taxes on plant 14,000 Property taxes on store 7,500 Delivery expense 21,000 Labor costs of assembly-line workers 110,000 Sales commissions 35,000 Factory supplies used 23,000 Salaries paid to sales clerks 50,000

Cost of Goods Manufactured  = 120,000+110,000+(23,000+14,000+60,000)+12,000-15,500 = $323,500

Cost of Goods Sold = 60,000 + 323,500 - 45,600

Explanation:

Lopez Corporation incurred the following costs while manufacturing its product.

Materials used in product$120,000  

Advertising expense  $45,000

Depreciation on plant  60,000  

Property taxes on plant  14,000

Property taxes on store7,500  

Delivery expense          21,000

Labor costs of assembly-line workers  110,000  

Sales commissions  35,000

Factory supplies used  23,000  

Salaries paid to sales clerks 50,000

Work in process inventory was $12,000 at January 1 and $15,500 at December 31.

Finished goods inventory was $60,000 at January 1 and $45,600 at December 31.  

Compute cost of goods manufactured.

Cost of goods Sold

1. Cost of goods manufactured.

COGM = Direct Material + Direct Labor + Manufacturing Overhead + Beginning Work In process - Ending Work in process.

COGM = 120,000+110,000+(23,000+14,000+60,000)+12,000-15,500 = $323,500

2. Cost of Goods Sold

COGS = Beginning Inventory of Finished Goods + Cost of Goods Manufactured - Ending Inventory of Finished Goods

COGS = 60,000 + 323,500 - 45,600

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