Understanding the Relationship between Cost Flows, Inventories, and Cost of Goods Sold Ivano Company has collected cost accounting information for the following subset of items for Years 1 and 2.
Required:
Calculate the values of the missing items.
Year 1 Year 2
Item:
Direct materials used in production $ $50,000
Direct materials: Beginning inventory $10,000 $
Direct materials purchases 45,000 $
Direct materials: Ending inventory 15,000 17,000
Direct labor used in production $ 53,000
Manufacturing overhead costs used in production 80,000 76,000
Work in process: Beginning inventory 17,000 14,000
Work in process: Ending inventory 14,000 19,000
Finished goods: Beginning inventory 8,000 7,000
Finished goods: Ending inventory 7,000 11,000
Cost of goods sold 169,000 $

KINDLY CHECK explanation

Explanation:

From the Given information above :

The direct material used in production for year 1:

(Direct material:beginning inventory + direct material purchases - direct material:ending inventory) = $(10,000 + 45,000 - 15,000) = $40,000

2.)Direct labor used in production year 1:

(COGS - beginning finished goods + ending finished goods - direct materials used in production - manufacturing overhead - beginning WIP + Ending WIP)

$(169,000 - 8000 + 7000 - 40000 - 80000 - 17000 + 14000) = $45,000

Direct material : beginning inventory Year 2 = Direct material : ending inventory Year 1 = $15,000

Direct material purchases :

Direct materialnused in production + direct material : ending inventory - direct material : beginning inventory

= 50,000 + 17000 - 15000 = $52,000

COGS Year 2 :

(COGS - beginning finished goods + ending finished goods - direct materials used in production - manufacturing overhead - beginning WIP + Ending WIP) = direct labor used in production

COGS - 7000 + 11000 - 50,000 - 76000 - 14000 + 19000 = 53000

COGS - 117000 = 53000

COGS = 53000 + 117000 = $170000

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