An electric device delivers a current of [tex]$15.0 A$[/tex] for 30 seconds. How many electrons flow through it?
Answer (1)
Calculate the cost of direct raw materials consumed: $28 , 000 + $358 , 000 = $386 , 000 .
Calculate total factory overheads: $88 , 000 + $104 , 000 + $82 , 000 + $36 , 000 = $310 , 000 .
Calculate the cost of production: $360 , 000 + $386 , 000 + $310 , 000 + $58 , 000 = $1 , 114 , 000 .
Calculate the cost of goods sold: $1 , 114 , 000 + $33 , 000 = $1 , 147 , 000 .
Explanation
Understanding the Problem We are given a table of financial data and asked to determine the cost of goods sold. To do this, we will follow a standard accounting formula, calculating each component step by step.
Calculating Cost of Direct Raw Materials Consumed First, we need to calculate the cost of direct raw materials consumed. This is found by adding the beginning stock of direct raw materials to the purchases of direct raw materials, and then subtracting the ending stock of direct raw materials. Since the ending stock is not provided, we will assume it is zero. Thus: C os t e wl in eo f e wl in eD i rec t e wl in e R a w e wl in e M a t er ia l se wl in e C o n s u m e d = B e g innin g e wl in e St oc k + P u rc ha ses − E n d in g e wl in e St oc k
C os t e wl in eo f e wl in eD i rec t e wl in e R a w e wl in e M a t er ia l se wl in e C o n s u m e d = $28 , 000 + $358 , 000 − $0 = $386 , 000
Calculating Total Factory Overheads Next, we calculate the total factory overheads by summing the indirect wages, license fees, property expenses, and canteen expenses: T o t a l e wl in e F a c t orye wl in e O v er h e a d s = I n d i rec t e wl in e Wa g es + L i ce n see wl in e F ees + P ro p er t ye wl in e E x p e n ses + C an t ee n e wl in e E x p e n ses T o t a l e wl in e F a c t orye wl in e O v er h e a d s = $88 , 000 + $104 , 000 + $82 , 000 + $36 , 000 = $310 , 000
Calculating Cost of Production Now, we calculate the cost of production. This is the sum of direct factory wages, the cost of direct raw materials consumed, total factory overheads, and the beginning work-in-progress stock, minus the ending work-in-progress stock. Since the ending work-in-progress stock is not provided, we will assume it is zero. Thus: C os t e wl in eo f e wl in e P ro d u c t i o n = D i rec t e wl in e F a c t orye wl in e Wa g es + C os t e wl in eo f e wl in eD i rec t e wl in e R a w e wl in e M a t er ia l se wl in e C o n s u m e d + T o t a l e wl in e F a c t orye wl in e O v er h e a d s + B e g innin g e wl in e W or k − in − p ro g resse wl in e St oc k − E n d in g e wl in e W or k − in − p ro g resse wl in e St oc k C os t e wl in eo f e wl in e P ro d u c t i o n = $360 , 000 + $386 , 000 + $310 , 000 + $58 , 000 − $0 = $1 , 114 , 000
Calculating Cost of Goods Sold Finally, we calculate the cost of goods sold. This is the sum of the cost of production and the beginning finished goods stock, minus the ending finished goods stock. Since the ending finished goods stock is not provided, we will assume it is zero. Thus: C os t e wl in eo f e wl in e G oo d se wl in e S o l d = C os t e wl in eo f e wl in e P ro d u c t i o n + B e g innin g e wl in e F ini s h e d e wl in e G oo d se wl in e St oc k − E n d in g e wl in e F ini s h e d e wl in e G oo d se wl in e St oc k C os t e wl in eo f e wl in e G oo d se wl in e S o l d = $1 , 114 , 000 + $33 , 000 − $0 = $1 , 147 , 000
Final Answer Therefore, the cost of goods sold is $$1,147,000.
Examples
Understanding the cost of goods sold (COGS) is crucial for any business as it directly impacts profitability. For example, a bakery needs to know its COGS to determine the actual cost of producing its goods, including ingredients, direct labor, and factory overheads. By accurately calculating COGS, the bakery can set appropriate prices for its products, manage its expenses effectively, and ensure it remains profitable. This calculation provides a clear picture of the direct costs associated with production, enabling informed financial decisions.
