Question

Industries is calculating its Cost of Goods Manufactured at​ year-end. Justine's accounting records show the​ following: The Raw Materials Inventory account had a beginning balance of $ 18 comma 000 and an ending balance of $ 16 comma 000. During the​ year, the company purchased $ 67 comma 000 of direct materials. Direct labor for the year totaled $ 115 comma 000​, while manufacturing overhead amounted to $ 157 comma 000. The Work in Process Inventory account had a beginning balance of $ 23 comma 000 and an ending balance of $ 22 comma 000. Assume that Raw Materials Inventory contains only direct materials. Compute the Cost of Goods Manufactured for the year. ​(Hint​: The first step is to calculate the direct materials used during the​ year.)

Answer 1

Cost of goods= $342

Step-by-step explanation:

We have the following information:

Direct materials:

Beginning inventory= $18

Purchase= $67

Ending Inventory=16

Direct material used in during the year= Beginning+purchase-final inventory= 18+67-16= $69

Direct labor= $115

Manufacturing overhead= $157

Work in process:

Beginning WIP= $23

Ending WIP= $22

To calculate the cost of goods we need to use the following formula:

Cost of goods= Beginning WIP+Direct material+direct labor+ M.overhead - Ending WIP

We discount ending work in process because it is computable to the next period.

Cost of goods= 23+69+115+157-22= $342