Question

A company used $35,000 of direct materials, incurred $73,000 in direct labor cost, and had $114,000 in factory overhead costs during the period. if beginning and ending work in process inventories were $28,000 and $32,000, respectively, the cost of goods manufactured was

Answer 1

We can calculate the cost of goods manufactures using the formula:

Total Cost = Cost of Direct Materials + Direct Labor Cost + Overhead Cost – Inventory

Substituting the known values:

Total Cost = $35,000 + $73,000 + $114,000 – ($32,000 - $28,000)
Total Cost = $218,000      -----> ANSWER

We deduct the initial from the final inventory to get the balance.