The following information is for X Company, a merchandiser, for 2016: ...
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Accounting
The following information is for X Company, a merchandiser, for 2016:
Revenue
$372,233
Merchandise purchases
107,015
Receiving costs
23,577
Store rent
27,741
Utility costs
12,378
Advertising costs
27,485
Store manager salary
18,308
Cashier salaries
10,998
The Merchandise Inventory account had a January 1 balance of $24,626 and a December 31 balance of $39,286. What was Cost of Goods Sold in 2016?
I tried:
Direct materials used=inventory begining+purchases-Ending
=$24,626+$107,015-$39,286
=$92,355
Cost of Goods Sold =direct materials cost+receiving costs+utility costs+store rent+store manager salary
=$92,355+$23,577+$12,378+$27,741+$18,308
=$174,359
and it was wrong.
I also tried:
1. The computation of direct materials used is correct;
2. In Cost of Goods sold, store manager salary will not come. Direct expenses are those which aid in production of goods. As auch, the wages of workers engaged in produxtion only will form part of cost of good sold and not store manager's salary.
Hence, Cost of Goods Sold =direct materials cost+receiving costs+utility costs+store rent
=$92,355+$23,577+$12,378+$27,741
=$ 156,051
and that was wrong too.
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