COST OF GOODS

SOLD STATEMENT
P R O F M A R K L E S T E R T. B A L A S A , C PA
CLASSIFICATION OF COSTS
 XXX COMPANY
STATEMENT OF COST OF GOODS SOLD
FOR THE YEAR 2020
Direct Materials, Beginning P xxx
Add: Purchases xxx
Materials Available for Use xxx
Less: Direct Materials, Ending (xxx)
Direct Materials Used P xxx
Direct Labor xxx
Manufacturing (factory) overhead xxx
Total Manufacturing Cost P xxx
Add: Work-in Process, Beginning xxx
Cost of Goods Put/Placed Into Process P xxx
Less: Work-in Process, Ending (xxx)
Cost of Goods Manufactured P xxx
Finished Goods, Beginning xxx
Cost of Goods Available for Sale P xxx
Finished Goods, Ending xxx
COST OF GOODS SOLD P xxx
PROBLEM - COST ASSIGNMENT METHODS
IamLesterrific Company makes industrial cleaning solvents. Various chemicals, detergent and water are
mixed together and then bottled in 10-gallon drums. IamLesterrific provided the following information for last
year:
Raw materials purchases P250,000 Administrative Salaries P150,000
Direct Labor 140,000 Indirect labor salaries 156,000
Depreciation on factory equipment 45,000 Sales office salaries 90,000
Depreciation on factory building 30,000 Beg. Bal, Raw Materials 124,000
Depreciation on headquarters building 50,000 Beg. Bal, W-IP 124,000
Factory insurance 50,000 Beg. Bal, FG 84,000
Property Taxes on Factory 20,000 End, Bal Raw Materials 102,000
Property Taxes on Headquarters 18,000 End Bal, W-IP 130,000
Utilities for factory 34,000 End, Bal FG 82,000
Utilities for sales office 1,800
Last year, IamLesterrific completed 100,000 units. Sales revenue equaled P1,200,000 and IamLesterrific paid a
sales commission of 5 percent of sales. Provisional Tax is 30%.
REQUIRED:

• 1. Calculate the Direct material used in production for last year.

• II. Calculate the total prime cost
• III. Calculate the total conversion cost
• IV. Prepare a cost of goods manufactured statement for last year.
• V. Prepare a cost of good sold statement for last year
 IAMLESTERRIFIC COMPANY
STATEMENT OF COST OF GOODS MANUFACTURED
FOR LAST YEAR
Direct Materials, Beginning P 124,000
Add: Purchases 250,000
Materials Available for Use 374,000
Less: Direct Materials, Ending (102,000)
Prime Cost DM+DL
Direct Materials Used P 272,000 P412,000
Direct Labor 140,000
Conversion Cost
Manufacturing (factory) overhead 335,000 DL+FOH P475,000
Total Manufacturing Cost P 747,000
Add: Work-in Process, Beginning 124,000
Cost of Goods Put/Placed Into Process P 871,000
Less: Work-in Process, Ending (130,000)
Cost of Goods Manufactured P 741,000
Add: Finished Goods, Beginning 84,000
Cost of Goods Available for Sale 825,000
End: Finished Goods, End (82,000)
COST OF GOODS SOLD P 743,000
OVERHEAD COST
• Depreciation on factory equipment P 45,000
• Depreciation on factory building 30,000
• Factory insurance 50,000
• Property Taxes on Factory 20,000
• Utilities for factory 34,000
• Indirect labor salaries 156,000
• Total Overhead Cost P335,000
 XXX COMPANY
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR 2020
Net Sales Pxxx
Less: Cost of Goods Sold ( xxx)
Gross Profit xxx
Less: Operating Expenses (xxx)
Net Income before tax xxx
Less: Provision for Taxes (xxx)
Net Income after tax xxx
Other Comprehensive Income xxx
Total Comprehensive Income xxx
PROBLEM - COST ASSIGNMENT METHODS
IamLesterrific Company makes industrial cleaning solvents. Various chemicals, detergent and water are
mixed together and then bottled in 10-gallon drums. IamLesterrific provided the following information for last
year:
Raw materials purchases P250,000 Administrative Salaries P150,000
Direct Labor 140,000 Indirect labor salaries 156,000
Depreciation on factory equipment 45,000 Sales office salaries 90,000
Depreciation on factory building 30,000 Beg. Bal, Raw Materials 124,000
Depreciation on headquarters building 50,000 Beg. Bal, W-IP 124,000
Factory insurance 50,000 Beg. Bal, FG 84,000
Property Taxes on Factory 20,000 End, Bal Raw Materials 102,000
Property Taxes on Headquarters 18,000 End Bal, W-IP 130,000
Utilities for factory 34,000 End, Bal FG 82,000
Utilities for sales office 1,800
Last year, IamLesterrific completed 100,000 units. Sales revenue equaled P1,200,000 and IamLesterrific paid a
sales commission of 5 percent of sales. Provisional Tax is 30%.
 XXX COMPANY
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR 2020
Net Sales Pxxx
Less: Cost of Goods Sold ( xxx)
Gross Profit xxx
Less: Operating Expenses (xxx)
Net Income before tax xxx
Less: Provision for Taxes (xxx)
Net Income after tax xxx
Other Comprehensive Income xxx
Total Comprehensive Income Pxxx
 XXX COMPANY
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR 2020
Net Sales P1,200,000 Total OPEX:
Depreciation on headquarters Bldg 50,000
Less: Cost of Goods Sold ( 743,000) Property Taxes on headquarters 18,000
Gross Profit 457,000 Admin Salaries 150,00
Total General and Admin Exp P218,000
Less: Operating Expenses (369,800)
Net Income before tax 87,200 Utilities for Sales Office 1,800
Sales Office Salaries 90,000
Less: Provision for Taxes (30%) (26,160) Sales Commission 5% of
Sales 60,000
Net Income after tax P 61,040
Total Selling Expenses P151,800
Other Comprehensive Income ------
Total Comprehensive Income P61,040
ILLUSTRATION:
 DO IT YOURSELF
Administrative Expenses P 1,125,000 QUESTIONS:
Cost of Goods Sold 6,000,000 1. Total FG Beginning
Direct Labor 2,250,000 II. Total Cost of Goods Put
Direct materials used 1,875,000 into Process
Factory Overhead 2,625,000 III. Net Income
Finished Goods Inventory, End 2,850,000
Gross Profit 9,375,000
Raw materials Purchases 3,000,000
Sales 15,375,000
Selling Expenses 1,500,000
Work in Process, beg 750,000
Work in Process, end 937,500