Preparing a Schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold is essential for any manufacturing company to monitor and manage its production costs and track the expenses associated with the goods sold. In this scenario, we’ll follow the steps to create both schedules for Primare Corporation, incorporating the provided data.

Schedule of Cost of Goods Manufactured (COGM)

The COGM schedule summarizes all the costs incurred during the manufacturing process and calculates the total cost of goods manufactured during a specific period. Let’s break down the components of COGM for Primare Corporation:

Direct Materials Used

• Purchases of raw materials: $32,000
• Add: Beginning Raw Materials Inventory: $12,000
• Less: Ending Raw Materials Inventory: $19,200

Direct Materials Used = $32,000 + $12,000 – $19,200 = $24,800

Direct Labor: $59,300

Manufacturing Overhead Applied

• Manufacturing overhead applied to work in process: $88,900
• Less: Underapplied overhead (assuming it’s closed to COGS): $4,100

Manufacturing Overhead Applied = $88,900 – $4,100 = $84,800

Now, we can calculate COGM:

COGM = Direct Materials Used + Direct Labor + Manufacturing Overhead Applied COGM = $24,800 + $59,300 + $84,800 = $168,900

Schedule of Cost of Goods Sold (COGS)

The COGS schedule calculates the cost of goods sold during a specific period. In this case, we’ll assume that the underapplied overhead of $4,100 is closed to COGS, as stated in the requirement.

COGS = Beginning Finished Goods Inventory + COGM – Ending Finished Goods Inventory COGS = $33,800 + $168,900 – $43,100 = $159,700

Conclusion

Primare Corporation’s Schedule of Cost of Goods Manufactured (COGM) indicates that the total cost of goods manufactured for the last month was $168,900. This cost includes direct materials used, direct labor, and applied manufacturing overhead.

The Schedule of Cost of Goods Sold (COGS) shows that the cost of goods sold for the same period was $159,700. This cost considers the beginning and ending balances of finished goods inventory and includes the underapplied overhead, which was closed to COGS.

These schedules provide valuable insights into the company’s production costs and cost of goods sold, helping Primare Corporation make informed decisions regarding pricing, inventory management, and profitability. It’s crucial for the company to keep these records accurate and up-to-date for effective financial management.