Buck Manufacturing's Work in Process Inventory at January 1, 2010, is $300,000. Buck estimates that $150,000 of raw material, $200,000 of direct labor, $30,000 of overhead, and $25,000 of administrative costs will be incurred during 2010. December 31, 2010, WIP Inventory is budgeted to be $135,000. What is Buck's estimated cost of goods manufactured for 2010?

Question

Quizplus · Accepted Answer

The estimated cost of goods manufactured for 2010 is calculated by adding the beginning work in process inventory to the total manufacturing costs (raw materials, direct labor, and overhead) and then subtracting the ending work in process inventory. This equals $300,000 (beginning WIP) + $150,000 (raw materials) + $200,000 (direct labor) + $30,000 (overhead) - $135,000 (ending WIP) = $545,000. Administrative costs are not included in the calculation of cost of goods manufactured.