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Abracadabra Co. manufactures magic sets. The sales planned for next year are 22,000 sets. Beginning material inventory is sufficient to produce 5,000 sets. Beginning work in process inventory is 1,000 sets that are 100 percent complete as to materials and 60 percent complete as to labor and overhead; there is no ending inventory. The finished goods inventory has a beginning inventory of 3,000 sets and a target inventory of 5,000 sets for December 31. The sets sell for $75. Direct materials cost $15; direct labor is $10; and manufacturing overhead is $12.
-What will be the amount of cost of goods sold?

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To calculate the cost of goods sold (COGS) for Abracadabra Co., we first determine the total number of sets that need to be produced. The company plans to sell 22,000 sets and wants to increase its finished goods inventory from 3,000 to 5,000 sets, meaning it needs to produce 24,000 sets (22,000 to be sold + 2,000 additional for inventory). The cost per set is the sum of direct materials, direct labor, and manufacturing overhead, which is $15 + $10 + $12 = $37. Therefore, the COGS is 24,000 sets * $37 = $888,000.

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