Paper For Above instruction
The Schedule of Cost of Goods Manufactured (COGM) is a detailed calculation that determines the total production cost of goods completed during a specific period. It accounts for direct materials, direct labor, manufacturing overhead, and changes in inventory levels. For Larden Corporation, the data provided allows us to construct this schedule with accuracy, serving as a vital component in preparing the company's income statement and assessing cost control efficiency.
To prepare the COGM schedule, we begin by calculating the direct materials used, then incorporate direct labor and manufacturing overhead to find the total manufacturing costs incurred. Adding beginning raw materials inventory and subtracting ending raw materials inventory provides the raw materials used in production. We then adjust for changes in work-in-process inventory to arrive at the cost of goods manufactured.
Step 1: Calculate Raw Materials Used
Beginning raw materials inventory: $70,000
Purchases of raw materials: $170,000
Ending raw materials inventory: $80,000
Raw materials used = Beginning inventory + Purchases – Ending inventory
= $70,000 + $170,000 – $80,000 = $160,000
Step 2: Calculate Total Manufacturing Costs Incurred
Direct materials used: $160,000
Direct labor: $210,000
Manufacturing overhead: $220,000
Total manufacturing costs = Sum of direct materials, direct labor, and manufacturing overhead
= $160,000 + $210,000 + $220,000 = $590,000
Step 3: Calculate Work-in-Process (WIP) Inventory Adjustment
Beginning WIP inventory: $30,000
Ending WIP inventory: $20,000
Cost of Goods Manufactured (COGM) = Total manufacturing costs + Beginning WIP inventory – Ending WIP inventory
= $590,000 + $30,000 – $20,000 = $600,000
The final COGM for Larden Corporation is $600,000. This figure represents the total cost of goods completed during the accounting period, factoring in raw materials, labor, overhead, and inventory adjustments.
Conclusion
The Schedule of Cost of Goods Manufactured is essential for understanding manufacturing efficiency and controlling costs. For Larden Corporation, the COGM of $600,000 provides critical insight into production costs, serving as a foundation for further financial analysis and income statement preparation.
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