Question

Chavez Corporation reported the following data for the month of July: Inventories: Beginning Ending Raw materials $ 31,000 $ 32,000 Work in process $ 18,000 $ 21,000 Finished goods $ 34,000 $ 49,000 Additional information: Raw materials purchases $ 68,000 Direct labor cost $ 93,000 Manufacturing overhead cost incurred $ 61,000 Indirect materials included in manufacturing overhead cost incurred $ 8,800 Manufacturing overhead cost applied to Work in Process $ 60,000 Any underapplied or overapplied manufacturing overhead is closed out to cost of goods sold. The cost of goods manufactured for July is:

Answer 1

Answer:

cost of goods manufactured= $217,000

Explanation:

Giving the following information:

Inventories:

Beginning Ending

Raw materials $ 31,000 $ 32,000

Work in process $ 18,000 $ 21,000

Additional information:

Raw materials purchases $68,000

Direct labor cost $ 93,000

Manufacturing overhead cost applied to Work in Process $ 60,000

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

First, we need to calculate the direct material used in production.

Direct material used= beginning inventory + purchases - ending inventory

Direct material used= 31,000 + 68,000 - 32,000= 67,000

Now, we can calculate the cost of goods manufactured:

cost of goods manufactured= 18,000 + 67,000 + 93,000 + 60,000 - 21,000

cost of goods manufactured= $217,000