Question

The RacingStripe Company uses job order costing and began the period with a balance of $13,000 in its work-in-process (WIP) account. During the period the company incurred $16,000 in direct labor costs, requisitioned $10,000 in direct materials, and applied $17,000 in manufacturing overhead. Actual overhead costs for the period were $18,500. If the balance in the WIP account at the end of the period was $22,000 then cost of goods manufactured for the period was:

Answer 1

The cost of goods manufactured for the period is calculated by adding the beginning WIP balance, direct labor costs, direct materials, and manufacturing overhead applied, then subtracting the ending WIP balance.

Step-by-step explanation:

The student has asked about the calculation of the cost of goods manufactured for the period using job order costing data provided by the RacingStripe Company.

To calculate the cost of goods manufactured we start with the beginning balance of the work-in-process (WIP) account, add all costs incurred during the period which include direct labor, direct materials, and manufacturing overhead applied to the WIP, and then subtract the ending balance of the WIP account.

Using the provided information, the calculation would be as follows:

Beginning WIP balance: $13,000

• + Direct labor costs: $16,000
• + Direct materials requisitioned: $10,000
• + Manufacturing overhead applied: $17,000
• - Ending WIP balance: $22,000

Summing the beginning WIP balance with the total costs added during the period and then subtracting the ending WIP balance gives us the cost of goods manufactured:

$13,000 + $16,000 + $10,000 + $17,000 - $22,000 = $34,000