ACCT 2102 1st Edition Lecture 6 Outline of Last Lecture: I. Review II. Income Statements III. Calculating COGS for a MerchandiserOutline of Current Lecture: IV. Schedule for Calculating the COGS V. ExampleCurrent Lecture: Building Blocks of Managerial Accounting (Chapter 2, Part 4)IV. Schedule for Calculating the COGS***Memorize This!!!Raw Materials Beginning Inventory Beg. RM+ Raw Materials Purchased + P— Raw Materials Ending Inventory - End RM = Raw Materials Used/Direct Materials = RM used/DM+ Direct Labor + DL+ Manufacturing Overhead + MOH = Total Manufacturing Costs = Tot. Manu. Costs+ Work in Process Beginning Inventory + BWIP- Work in Process Ending Inventory - EWIP = Costs of Goods Manufactured = COGM+ Finished Goods Beginning Inventory +BFG- Finished Goods Ending Inventory - EFG = Costs of Goods Sold = COGSV. ExamplePine Tree Products extracted the following information from their prior year records:Direct materials purchased $175,000Direct labor used 254,000Indirect labor used 109,000Selling and Administrative salaries 133,000These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Building depreciation, utilities and property tax* 80,000Other selling and administrative expenses 195,000Other factory costs 344,000Sales revenue 1,495,000*75% of square footage devoted to production; 25% administrative officesBox 2 January 1 December 31Raw Materials Inventory $15,800 $18,200Work in Process Inventory 35,700 62,100Finished Goods Inventory 111,100 97,900Calculate the Gross Profit and Operating Income for Pine Tree.Beg. RM 15,800+ P + 175,000- End RM - 18,200 = RM used/DM 172,600+ DL + 254,000+ MOH + (109,000+60,000*+344,000)= Tot. Manu. Costs 936,000+ BWIP + 35,7000- EWIP - 62,100 = COGM 913,200+BFG + 111,100- EFG - 97,900 = COGS $926,400MOH= Indirect Labor Used + building depreciation, utilities, & property tax + other factory costs*Building depreciation, utilities, & property tax = 75% x 80,000 =60,000Calculate Gross ProfitSR 1,495,000 (price x units sold)- COGS - 926,4000 = GP $568,600- Op Exp - (133,000 + 20,000* + 195,000)= Op y 220,600Operating expense = Admin. Salaries + Bldg Dep., Utilities, & property tax + Admin. Expense*Building depreciation, utilities, & property tax = 25% x 80,000 =20,000Box 2 doesn’t give beginning or ending balances; it gives net change instead. January 1 December 31 Net ChangeRaw Materials Inventory $15,800 $18,200 increase 2,400Work in Process Inventory 35,700 62,100 increase 26,400Finished Goods Inventory 111,100 97,900 decrease 13,200If the above box is given, calculate COGS.Beg. RM $0 – made up number+ P + 175,000- End RM - 2,400 (given)= RM used/DM 172,600+ DL + 254,000+ MOH + (109,000+60,000*+344,000)= Tot. Manu. Costs 936,000+ BWIP + $0- made up number- EWIP - 26,400 (given)= COGM 913,200+BFG + 13,200 (given)- EFG - $0- made up number= COGS $926,400*Increase in account- start with $0 and end with increase (ex: RM, WIP)*Decrease in account- start with decrease and end with $0 (ex:
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