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The following information relates to a business at its year end Item Amount (Sh) Item Amount (Sh) Sales 600,000 Opening stocks: Purchases of raw materials 100,000 Raw materials 20,000 Returns inwards 10,000 Work in progress 4,000 Returns outwards 15,000 Finished goods 68,000 Carriage inwards 8,000 Closing stocks: Carriage outwards 12,000 Raw materials 22,000 Direct labour 80,000 Work in progress 8,000 Factory overheads 150,000 Finished goods 60,000 Determine the following: (Write your answers with commas, e.g. 10,000 not 10000) 1. Cost of manufacturing during the year = Sh 2. Cost of goods manufactured = Sh 3. Cost of goods sold = Sh 4. Gross profit = Sh

Question

The following information relates to a business at its year end

Item

Amount (Sh)

Item

Amount (Sh)

Sales

600,000

Opening stocks:

Purchases of raw materials

100,000

Raw materials

20,000

Returns inwards

10,000

Work in progress

4,000

Returns outwards

15,000

Finished goods

68,000

Carriage inwards

8,000

Closing stocks:

Carriage outwards

12,000

Raw materials

22,000

Direct labour

80,000

Work in progress

8,000

Factory overheads

150,000

Finished goods

60,000

Determine the following: (Write your answers with commas, e.g. 10,000 not 10000)

  1. Cost of manufacturing during the year = Sh

  2. Cost of goods manufactured = Sh

  3. Cost of goods sold = Sh

  4. Gross profit = Sh

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Solution 1

Sure, let's calculate each of these step by step:

  1. Cost of manufacturing during the year: This is the total cost incurred in the production process. It includes the cost of raw materials, direct labor, and factory overheads.

    Cost of raw materials = Opening stock of raw materials + Purchases of raw materials - Closing stock of raw materials = 20,000 + 100,000 - 22,000 = Sh 98,000

    Cost of manufacturing = Cost of raw materials + Direct labor + Factory overheads = 98,000 + 80,000 + 150,000 = Sh 328,000

  2. Cost of goods manufactured: This is the total cost of producing the goods that were completed during the year. It includes the cost of manufacturing and the cost of work in progress.

    Cost of work in progress = Opening stock of work in progress + Cost of manufacturing - Closing stock of work in progress = 4,000 + 328,000 - 8,000 = Sh 324,000

  3. Cost of goods sold: This is the total cost of all goods that were sold during the year. It includes the cost of goods manufactured and the cost of finished goods.

    Cost of finished goods = Opening stock of finished goods + Cost of goods manufactured - Closing stock of finished goods = 68,000 + 324,000 - 60,000 = Sh 332,000

  4. Gross profit: This is the total profit made from selling goods before deducting any selling and administrative expenses. It is calculated by subtracting the cost of goods sold from sales.

    Gross profit = Sales - Cost of goods sold = 600,000 - 332,000 = Sh 268,000

So, the answers are:

  1. Cost of manufacturing during the year = Sh 328,000
  2. Cost of goods manufactured = Sh 324,000
  3. Cost of goods sold = Sh 332,000
  4. Gross profit = Sh 268,000

This problem has been solved

Solution 2

Sure, let's calculate each of these step by step:

  1. Cost of manufacturing during the year: This is the total cost incurred in the production process. It includes the cost of raw materials, direct labor, and factory overheads.

    Cost of raw materials = Opening stock of raw materials + Purchases of raw materials - Closing stock of raw materials = 20,000 + 100,000 - 22,000 = Sh 98,000

    Cost of manufacturing = Cost of raw materials + Direct labor + Factory overheads = 98,000 + 80,000 + 150,000 = Sh 328,000

  2. Cost of goods manufactured: This is the total cost of producing the goods that were completed during the year. It includes the cost of manufacturing and the cost of work in progress at the beginning and end of the year.

    Cost of goods manufactured = Cost of manufacturing + Opening work in progress - Closing work in progress = 328,000 + 4,000 - 8,000 = Sh 324,000

  3. Cost of goods sold: This is the total cost of all goods that were sold during the year. It includes the cost of goods manufactured and the cost of finished goods at the beginning and end of the year.

    Cost of goods sold = Cost of goods manufactured + Opening finished goods - Closing finished goods = 324,000 + 68,000 - 60,000 = Sh 332,000

  4. Gross profit: This is the total profit made from selling goods before deducting any selling and administrative expenses. It is calculated by subtracting the cost of goods sold from sales.

    Gross profit = Sales - Cost of goods sold = 600,000 - 332,000 = Sh 268,000

So, the answers are:

  1. Cost of manufacturing during the year = Sh 328,000
  2. Cost of goods manufactured = Sh 324,000
  3. Cost of goods sold = Sh 332,000
  4. Gross profit = Sh 268,000

This problem has been solved

Solution 3

Sure, let's calculate each of these step by step:

  1. Cost of manufacturing during the year: This is the total cost incurred in the production process. It includes the cost of raw materials, direct labor, and factory overheads.

    Cost of raw materials = Opening stock of raw materials + Purchases of raw materials - Closing stock of raw materials = 20,000 + 100,000 - 22,000 = Sh 98,000

    Cost of manufacturing = Cost of raw materials + Direct labor + Factory overheads = 98,000 + 80,000 + 150,000 = Sh 328,000

  2. Cost of goods manufactured: This is the total cost of producing the goods that were completed during the year. It includes the cost of manufacturing and the cost of work in progress at the beginning and end of the year.

    Cost of goods manufactured = Cost of manufacturing + Opening work in progress - Closing work in progress = 328,000 + 4,000 - 8,000 = Sh 324,000

  3. Cost of goods sold: This is the total cost of all goods that were sold during the year. It includes the cost of goods manufactured and the cost of finished goods at the beginning and end of the year.

    Cost of goods sold = Cost of goods manufactured + Opening finished goods - Closing finished goods = 324,000 + 68,000 - 60,000 = Sh 332,000

  4. Gross profit: This is the total profit made from selling goods before deducting any selling and administrative expenses. It is calculated by subtracting the cost of goods sold from sales.

    Gross profit = Sales - Cost of goods sold = 600,000 - 332,000 = Sh 268,000

So, the answers are:

  1. Cost of manufacturing during the year = Sh 328,000
  2. Cost of goods manufactured = Sh 324,000
  3. Cost of goods sold = Sh 332,000
  4. Gross profit = Sh 268,000

This problem has been solved

Solution 4

Sure, let's calculate each of these step by step:

  1. Cost of manufacturing during the year: This is the total cost incurred in the production process. It includes the cost of raw materials, direct labor, and factory overheads.

    Cost of raw materials = Opening stock of raw materials + Purchases of raw materials - Closing stock of raw materials = 20,000 + 100,000 - 22,000 = Sh 98,000

    Cost of manufacturing = Cost of raw materials + Direct labor + Factory overheads = 98,000 + 80,000 + 150,000 = Sh 328,000

  2. Cost of goods manufactured: This is the total cost of producing the goods that were completed during the year. It includes the cost of manufacturing and the cost of work in progress at the beginning and end of the year.

    Cost of goods manufactured = Cost of manufacturing + Opening stock of work in progress - Closing stock of work in progress = 328,000 + 4,000 - 8,000 = Sh 324,000

  3. Cost of goods sold: This is the total cost of all goods that were sold during the year. It includes the cost of goods manufactured and the cost of finished goods at the beginning and end of the year.

    Cost of goods sold = Cost of goods manufactured + Opening stock of finished goods - Closing stock of finished goods = 324,000 + 68,000 - 60,000 = Sh 332,000

  4. Gross profit: This is the total profit made from selling goods before deducting any operating expenses. It is calculated by subtracting the cost of goods sold from the total sales.

    Gross profit = Sales - Cost of goods sold = 600,000 - 332,000 = Sh 268,000

So, the answers are:

  1. Cost of manufacturing during the year = Sh 328,000
  2. Cost of goods manufactured = Sh 324,000
  3. Cost of goods sold = Sh 332,000
  4. Gross profit = Sh 268,000

This problem has been solved

Similar Questions

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