Cost data for Disksan Manufacturing Company for the month ended January 31 are as follows: Inventories January 1 January 31

Materials$180,000$145,500
Work in process334,600290,700
Finished goods675,000715,000
Direct labor$2,260,000
Materials purchased during January1,375,000
Factory overhead incurred during January:
Indirect labor115,000
Machinery depreciation90,000
Heat, light, and power55,000
Supplies18,500
Property taxes10,000
Miscellaneous costs33,100
a. Prepare a cost of goods manufactured statement for January.
b. Determine the cost of goods sold for January.

Answer and Explanation:

a. The preparation of the cost of goods manufactured statement for January is presented below:

Diskan Manufacturing Company  

Statement of Cost of Goods Manufactured  

For the month ended January 31  

Work In Progress Inventory, January 1  $334,600

Direct Material:    

Material Inventory, Jan 01  $180,000  

Add; Purchases during January $1,375,000  

Cost of Materials available for use $1,555,000  

Less; Material Inventory, Jan 31 (Ending Inventoy) $145,500  

Cost of Direct Materials used in Production  $1,409,500  

Direct Labor $2,260,000  

Factory Overhead:    

Indirect Labor$115,000  

Machinery depreciation $90,000  

Heat, Light and Power $55,000  

Supplies$18,500  

Property Taxes $10,000  

Miscelleneous Costs $33,100  

Total Factory Overhead $321,600  

Total Manufacturing Cost Incurred during January $3,991,100

Total Manufacturing Costs $4,325,700

Less: Work In Progress Inventory, January 31 $290,700

Cost of Goods Manufatured  $4,035,000

b. The cost of goods sold is

= Opening balance of finished goods inventory + cost of goods manufactured - ending balance of finished goods inventory

= $675,000 + $4,035,000 - $715,000

= $3,995,000

c is the correct answer.