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how to work out the cost of sales?

meibakermeibaker Trusted RegularRegistered Posts: 481
trial balance extract
opening inventories 150,000
purchases 470,000
closing inventories 250,000
admin exp 185,000
distribution 240,000
addition info:
the depreciation charges for theyear ended are to be apportioned as following
cost of sales 60%
distribution 20%
administrative 20%
how to work out cost of sales?? thanks

Comments

  • beaneygirlbeaneygirl Feels At Home Registered Posts: 79
    Opening inventories + purchases - closing inventories= cost of sales
  • meibakermeibaker Trusted Regular Registered Posts: 481
    beaneygirl wrote: »
    Opening inventories + purchases - closing inventories= cost of sales

    but the answers add the depreciation as well? i am not sure why and how!
    suggested answer as following:
    opening inventories .....150
    dep ..........................18
    purchases .................470
    less closing inventories (250)
    =cost of sales ............388
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    Depreciation is sometimes charged to administration, although it makes more sense to charge it to cost of sales as its likely to be depreciation on machines.
  • meibakermeibaker Trusted Regular Registered Posts: 481
    PGM wrote: »
    Depreciation is sometimes charged to administration, although it makes more sense to charge it to cost of sales as its likely to be depreciation on machines.

    thanks PGM, i never know dep is charged to admin. i thought its only happen to machinery etc. but do you know how the depreciation is calculated in this question??
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    It must tell you the depreciation amount in the question?

    Then you can split it by the % given.
  • meibakermeibaker Trusted Regular Registered Posts: 481
    PGM wrote: »
    It must tell you the depreciation amount in the question?

    Then you can split it by the % given.

    no, it didn't! only give the depreciation for land and building!
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