Question

Indigo Company reported the following information for December:

Direct materials $36,000
Direct labor 20,000
Manufacturing overhead 38,000
Beginning work-in-process inventory 23,000
Ending work-in-process inventory 25,000
The cost of goods manufactured in December is: a) $94,000
b) $99,000
c) $114,000
d) $129,000

Answer 1

The Cost of Goods Manufactured (COGM) for the Indigo Company in December is calculated by adding direct materials, direct labor, and manufacturing overhead and then adjusting for the work-in-process inventory. The actual calculation shows a COGM of $92,000, which is not on the student's provided list, indicating a potential typo in the question or the answer choices.

Step-by-step explanation:

The student has asked how to determine the Cost of Goods Manufactured (COGM) for the Indigo Company in December. The calculation of COGM involves adding direct materials, direct labor, and manufacturing overheads together, and then adjusting for the change in work-in-process (WIP) inventory. The formula is as follows:

COGM = Direct Materials + Direct Labor + Manufacturing Overhead + Beginning WIP Inventory - Ending WIP Inventory

Applying the provided values:

COGM = $36,000 + $20,000 + $38,000 + $23,000 - $25,000

COGM = $92,000

Therefore, the closest answer provided on the student's list is (b) $99,000; however, based on the calculation the actual COGM would be $92,000. This may be a typo in the question or one of the provided options, and it would be best for the student to double-check whether there is an error in the given information or the answer choices.