Question

Using the following data from both Garcon Company and Pepper Company for the year ended December 31, 2017, compute

(1) the cost of goods manufactured, and

Garcon Pepper

Company Company

Beginning finished goods inventory . . . . . . . . . . . . . . . \( 12,000 \) 16,450

Beginning work in process inventory . . . . . . . . . . . . . . 14,500 19,950

Beginning raw materials inventory . . . . . . . . . . . . . . . 7,250 9,000

Rental cost on factory equipment . . . . . . . . . . . . . . . . 27,000 22,750

Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,000 35,000

Ending finished goods inventory . . . . . . . . . . . . . . . . . 17,650 13,300

Ending work in process inventory . . . . . . . . . . . . . . . . 22,000 16,000

Ending raw materials inventory . . . . . . . . . . . . . . . . . . 5,300 7,200

Factory utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000 12,000

Factory supplies used . . . . . . . . . . . . . . . . . . . . . . . . . . 8,200 3,200

General and administrative expenses . . . . . . . . . . . . . 21,000 43,000

Indirect labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,250 7,660

Repairs—Factory equipment . . . . . . . . . . . . . . . . . . . . 4,780 1,500

Raw materials purchases . . . . . . . . . . . . . . . . . . . . . . . 33,000 52,000

Selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 46,000

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195,030 290,010

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 15,700

Factory equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . 212,500 115,825

Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . 13,200 19,450

Short answer

The cost of goods manufactured for Garcon Company is $96,680and for Pepper company is $139,680.

Step-by-step solution

Meaning of Cost of Goods Manufactured

Cost of goods manufactured refers to the costs that are incurred to manufacture products, and these costs include the costs of direct labor, material, and factory overheads.

Computation of cost of goods manufactured

Particulars	Garcon ($)	Pepper ($)
Direct Materials
Beginning Raw Materials Inventory	7,250	9,000
Add: Raw Materials purchases	33,000	52,000
Raw Material available for use	40,250	61,000
Less: Ending Raw Materials Inventory	(5,300)	(7,200)
Direct Materials Used	34,950	53,800
Direct Labor	19,000	35,000
Total factory Overhead	50,230	47,110
Total Manufacturing costs	104,180	135,910
Add: Beginning work in process Inventory	14,500	19,950
Total cost of work in process	118,680	155,860
Less: Ending work in process inventory	(22,000)	(16,000)
Cost of goods manufactured	96,680	139,860

Computation of total factory overhead

Particulars	Garcon ($)	Pepper ($)
Factory Overhead:
Indirect Labor	1,250	7,660
Factory Supplies used	8,200	3,200
Factory Utilities	9,000	12,000
Rental cost of factory equipment	27,000	22,750
Repairs Factory Equipment	4,780	1,500
Total factory Overhead	50,230	47,110