Question

Justine Industries is calculating its Cost of Goods Manufactured at year-end. The company’s accounting records show the following: The Raw Materials Inventory account had a beginning balance of $17,000 and an ending balance of $12,000. During the year, the company purchased $55,000 of direct materials. Direct labor for the year totaled $121,000, while manufacturing overhead amounted to $151,000. The Work Process Inventory account had a beginning balance of $22,000 and an ending balance of $21,000. Assume that Raw Materials Inventory contains only direct materials. Compute the Cost of Goods Manufactured for the year. (Hint: The first step is to calculate the direct materials used during the year.)

Answer 1

Answer:

$333,000

Explanation:

The computation of the cost of goods manufactured is shown below:

Cost of goods manufactured = Opening balance in work in process  + Manufacturing cost - ending balance in work in process

where manufacturing cost equal to

= Direct material used + Direct labor cost + Manufacturing Overhead cost

The direct material used

= Opening balance in raw material inventory + purchase made - ending balance in raw material inventory

= $17,000 + $55,000 - $12,000

= $60,000

Now the manufacturing cost is

= $60,000 + $121,000 + $151,000

= $332,000

So the Cost of goods manufactured would be

= $22,000 + $332,000 - $21,000

= $333,000