Cost of Goods Manufactured Slapshot Company makes ice hockey sticks. During the month of June, the company purchased $132,000 of materials. Also during the month of June, Slapshot Company incurred direct labor cost of $113,000 and manufacturing overhead of $187,000. Inventory information is as follows: June 1 June 30 Materials $48,000 $45,000 Work in process 65,000 63,000 Required: 1. Calculate the cost of goods manufactured for the month of June. $ 2. Calculate the cost of one hockey stick assuming that 1,900 sticks were completed during June. $ per hockey stick

Direct material cost is the costs of all specific materials required to product a product. For example, cost of the flour, sugar used to produce cakes. Where there exist inventory of materials at the beginning and end of a period, the cost of material used is calculated as follows:

Cost of material used is calculated as = Opening stock + Purchases - closing stock

Direct labour cost : the cost of the man hours used directly for the purpose of production. The cost of hours paid to the tailors for making garments in a clothing factory . It is arrived as the active hours used for production × wage rate per hour.

Overhead : Sum of the indirect costs. These include expenditutures on materials , labour and expenses incurred not specifically for a particular product. Example are cost of toiletries used in a bakery, salaries of the security guard , rent of the bakery, e.t.c.

Opening working in progress represents accumulated production cost incurred on goods for which production commenced in a prior period but was not concluded. These items will need to be continued in the following period, hence further production costs would be incurred.

Closing working in progress this represents the cost production work for which work is yet to be completed as the end of the current period.

Working in Progress is adjusted on the production cost in the current period as follows to determine the production cost of the completed units as thus:

Cost of the goods manufactured =

opening WIP + production cost incurred in the period - closing W.I.P.

So we are not set to apply these explanation

Direct materials (132000+48,000-45,000) 135,000.00

Direct labour 113,000.00

Manufacturing Overhead 187,000.00

Add opening W.I.P 65,000.00

less closing W.I.P (63,000.00)

Cost of goods manufactured 437,000.00

Cost of one hockey stick = cost of good manufactured / Hocky sticks produced

=$ 437,000/1900 sticks

Cost per hockey stick= $230