Question

Consider Derek's budget information: materials to be used, $64,750; direct labor, $198,400; factory overhead, $394,800; work in process inventory on January 1, $189,100; and work in progress inventory on December 31, $197,600. What is the budgeted cost of goods manufactured for the year? a.$1,044,650 b.$657,950 c.$649,450 d.$197,600

Answer 1

Answer:

Option (c) is correct.

Explanation:

Given that,

Materials to be used = $64,750;

Direct labor = $198,400;

Factory overhead = $394,800;

Work in process inventory on January 1, = $189,100;

Work in progress inventory on December 31, = $197,600

Firstly, we are calculating the manufacturing cost by adding direct material, direct labor cost and factory overhead. It is calculated as follows:

= Direct material + Direct labor + Factory overhead

= $64,750 + $198,400 + $394,800

= $657,950

Cost of goods manufactured determine the value of goods produced during a period of time. It refers to the cost that is incurred to convert the raw material into the finished goods.

Therefore, the cost of goods manufactured is calculated as follows:

= Manufacturing cost + Opening work in process - Closing work in in process inventory

= $657,950 + $189,100 - $197,600

= $649,450