Question

During the accounting period, the company purchased $234,000 of direct raw materials. it incurred $180,000 of direct labor costs for the year and allocated $260,000 of manufacturing overhead costs to work in process. there was no overapplied or underapplied overhead. revenue from goods sold during the year was $800,000.the amount of cost of goods manufactured (amount transferred from wip to finished goods) was

Answer 1

Calcualtion of Cost of goods manufactured:

(Note: It is assumed that the Cost of Material used is equal to the Cost of Material Purchased $234,000)

Total manufacturing cost = Cost of Material used + Direct labor costs + Allocated manufacturing overhead costs

Total manufacturing cost = 234,000+180,000+260,000 = $674,000

It is also assumed that there were no beginning or ending work in process inventory, that means Total manufacturing cost shall be equal to Cost of goods manufactured.

Hence, Cost of goods manufactured = $674,000