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26 January, 04:23

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:

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  1. 26 January, 04:35
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    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
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