Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M. Datar Madhav V. Rajan Farah Ahamed

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solutions-manual-to-bhimani-et-al-management-and-cost-accounting-pearson-2012-1

Step 3: Use cost of goods sold formula Case 1 Case 2

2.20
Finding unknown balances. (20–25 min)
Let G = given, I = inferred.
Step 1: Use gross margin formula
Case 1
Case 2
Revenues
G
£31,800G
Cost of goods sold
A I
20,000G
Gross margin
G C I
Step 2: Use schedule of cost of goods manufactured formula
Case 1
Case 2
Direct materials used
G
£2,000G
Direct manufacturing labour costs
G
5,000G
Indirect manufacturing costs
G
D I Manufacturing costs incurred
II Add opening work in progress, 1 January
G
800G
Total manufacturing costs to account for
II Deduct closing work in progress, 31 December
G
3,000G
Cost of goods manufactured
II
Step 3: Use cost of goods sold formula
Case 1
Case 2
Opening finished goods stock, 1 January
G
£4,000G
Cost of goods manufactured
II Cost of goods available for sale
II Closing finished goods stock, 31 December
B I
5,300G
Cost of goods sold
I
20,000G
For case 1, do steps 1, 2 and 3 in order. For case 2, do steps 1, 3 and then 2.

Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
24
© Pearson Education Limited 2012

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