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Anonymous asked in Business & FinanceOther - Business & Finance · 1 decade ago

How to find Cost of Goods Sold with this info?

Net sales $1,801,000

Selling expenses-variable $73,000

Direct materials 433,000

Selling expenses-fixed 66,000

Direct labor 354,000

Administrative expenses-variable 22,000

Manufacturing overhead-variable 321,000

Administrative expenses-fixed 62,000

Manufacturing overhead-fixed 291,000

1 Answer

  • 1 decade ago
    Favorite Answer

    Well, first, you need to remember what cost of goods sold is...

    It's the cost of the goods (products) that have been sold. In a manufacturing company, this includes Direct Materials, Direct Labor, and Overhead (costs incurred to help produce product, but aren't directly put into the product)

    Therefore, assuming the items that you've given are those relating to only those goods that were sold, you only need to add up the direct materials, direct labor, and manufacturing overhead (both variable and fixed)..

    This should give you an ending answer of $1,399,000.

    If the information you gave was for the costs incurred during the period and there were still products that you didn't sell, some portion of each of those costs would not be considered COGS.

    Selling Expenses and Admin Expenses aren't related to the product at all, rather to the administration of the business cycle (and selling the goods)...not producing them.

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