Question

Santana Rey, owner of Business Solutions, decides to diversify her business by also manufacturing computer workstation furniture.
Required:
1. Classify the following manufacturing costs of Business Solutions as (a) variable or fixed and (b) direct or indirect.
2. Prepare a schedule of cost of goods manufactured for Business Solutions for the month ended January 31, 2020. Assume the following manufacturing costs:
Direct materials: $2,600
Factory overhead: $510
Direct labor: $1,200
Beginning work in process: none (December 31, 2019)
Ending work in process: $550 (January 31, 2020)
Beginning finished goods inventory: none (December 31, 2019)
Ending finished goods inventory: $400 (January 31, 2020)

Answer 1

Answer:

cost of goods manufactured= $3,760

Explanation:

1.

We weren't provided with the list

2.

Direct materials: $2,600

Factory overhead: $510

Direct labor: $1,200

Beginning work in process: none (December 31, 2019)

Ending work in process: $550 (January 31, 2020)

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

cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP

cost of goods manufactured= 0 + 2,600 + 1,200 + 510 - 550

cost of goods manufactured= $3,760