Dacosta Corporation had only one job in process on May 1. The job had been charged with $1,800 of direct materials, $6,966 of direct labor, and $9,936 of manufacturing overhead cost. The company assigns overhead cost to jobs using the predetermined overhead rate of $18.40 per direct labor-hour. During May, the following activity was recorded:
Work in process inventory on May 30 contains $3,741 of direct labor cost. Raw materials consist solely of items that are classified as direct materials.The cost of goods manufactured for May was:
A) $97,110
B) $110,600
C) $98,770
D) $100,535

Question

Dacosta Corporation had only one job in process on May 1. The job had been charged with $1,800 of direct materials, $6,966 of direct labor, and $9,936 of manufacturing overhead cost. The company assigns overhead cost to jobs using the predetermined overhead rate of $18.40 per direct labor-hour. During May, the following activity was recorded:
 Work in process inventory on May 30 contains $3,741 of direct labor cost. Raw materials consist solely of items that are classified as direct materials.The cost of goods manufactured for May was:
A) $97,110 
B) $110,600 
C) $98,770 
D) $100,535

Quizplus · Accepted Answer

To calculate the cost of goods manufactured, we need to add up all the costs incurred during the period and deduct the ending work in process inventory.

Direct materials cost = $1,800
Direct labor cost = $6,966
Manufacturing overhead cost = $9,936
Total manufacturing cost = $18,702

The total direct labor hours worked during the period can be calculated by dividing the manufacturing overhead cost by the predetermined overhead rate:

Total direct labor hours = $9,936 ÷ $18.40 per hour = 540 hours

We can then calculate the total cost of goods started during the month by adding the beginning work in process inventory to the total manufacturing cost:

Total cost of goods started = $18,702 + $0 = $18,702

To calculate the cost of goods completed, we need to subtract the ending work in process inventory from the total cost of goods started:

Cost of goods completed = $18,702 - $3,741 = $14,961

Therefore, the cost of goods manufactured for May was $14,961. The closest answer choice to this amount is D) $100,535.

Dacosta Corporation Had Only One Job in Process on May