he following information pertains to Adams Manufacturing Company for March Year 3. Assume actual overhead equaled applied overhead. March 1 Inventory balances Raw materials $ 123,900 Work in process 118,400 Finished goods 77,400 March 31 Inventory balances Raw materials $ 85,500 Work in process 145,200 Finished goods 80,900 During March Costs of raw materials purchased $ 118,900 Costs of direct labor 100,500 Costs of manufacturing overhead 62,800 Sales revenues 356,000 Required Prepare a schedule of cost of goods manufactured and sold. Calculate the amount of gross margin on the income statement.

Instructions are below.

Explanation:

First, we need to calculate the cost of goods manufactured using the following formula:

cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP

cost of goods manufactured= 118,400 + (123,900 + 118,900 - 85,500) + 100,500 + 62,800 - 145,200

cost of goods manufactured= $293,800

Now, we can determine the cost of goods sold:

COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory

COGS= 77,400 + 293,800 - 80,900

COGS= $290,300

Finally, the gross margin:

Gross margin= sales - cogs

Gross margin= 356,000 - 290,300

Gross margin= $65,700

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