Question

PA7.

LO 4.5Freeman Furnishings has summarized its data as shown:



Compute the cost of goods manufactured, assuming that the overhead is allocated based on direct labor hours.

Answer 1

cost of manufactured goods: $ 685,375

Step-by-step explanation:

Missing information attached:

we have to determinate the overhead rate:

expected overhead 270,000

expected labnor hours: 24,000

270,000 / 24,000 = $ 11.25 MO rate

then, we calculate the cost added during the month:

labor: 85,000

MO: 23,500 x 11.25 = 264,375

Raw materials:

solve using inventory identity:

`$$Beginning Inventory + Purchase = Ending Inventory + Used`

30,000 + 350,000 - 28,000 = 352,000

total cost added: 701,375

cost of manufactured goods:

`$$Beginning WIP + added = Ending WIP + COGM`

51,000 + 701,375 - 67,000 = 685,375