Finished goods inventory $40,100 Additional data 1. Actual manufacturing overhea

Question

Finished goods inventory $40,100 Additional data 1. Actual manufacturing overhead for January amounted to $64,100 2. Total direct labor cost for January was $63,800. 3. The predetermined manufacturing overhead rate is based on direct labor cost. The budget for the year called for $250,000 of direct labor cost and $350,000 of manufacturing overhead costs 4. The only job unfinished on January 31 was Job No. 151, for which total direct labor charges were $6,000 (1,400 direct labor hours) and total direct material charges were $14,300 5. Cost of direct materials placed in production during January totaled $123,500. There were no indirect material requisitions during January. 6. January 31 balance in raw materials inventory was $35,000. 7. Finished goods inventory balance on January 31 was $34,700. What is the cost of goods manufactured for January? O A. $204,171 O B. $276,620 O c. $247,920 OD. $232,871

Explanation / Answer

Solution:

Predetermined overhead rate = $350,000 / $250,000 = 140% of direct labor cost

Hence option c is correct.

Computation of cost of goods manufactured Particulars Amount Direct material consumed $123,500.00 Direct labor $63,800.00 Manufacturinvg overhead applied (140% of Direct labor cost) $89,320.00 Cost incurred during the period $276,620.00 Add: Beginning WIP $0.00 Less: Ending WIP ($14,300 + $6,000 + $6,000*140%) $28,700.00 Cost of goods manufactured $247,920.00

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