Question

The following cost data relate to the manufacturing activities of Chang Company during the just completed year:

Answer 1

Answer:

cost of goods manufactured= $890,000

Explanation:

Giving the following information:

Applied Overhead= $485,000

Other costs incurred:

Purchases of raw materials (both direct and indirect) - $400,000

Direct labor costs - $60,000

Inventories:

Raw materials, beginning - $20,000

Raw materials, ending - $30,000

Work in process, beginning - $40,000

Work in process, ending - $70,000

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

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

Direct material used= beginning inventory + purchases - ending inventory

Direct material used= 20,000 + (400,000 - 15,000) - 30,000

Direct material used= 375,000

I deduct the indirect material included in manufacturing overhead.

cost of goods manufactured= 40,000 + 375,000 + 60,000 + 485,000 - 70,000

cost of goods manufactured= $890,000