Inventory balances for the James Enterprises in February are as follows:
$\begin{array}{lrr}
&\text { February } 1&\text { February } 28\
\text { Raw materials } & \$ 27,000 & \$ 21,000 \
\text { Work in process } & 48,000 & 37,200 \
\text { Finished goods } & 108,000 & 90,000
\end{array}$ During February,purchases of direct materials were $36,000.Direct labour and factory overhead costs were $60,000 and $84,000,respectively.
-Refer to the figure.What is the cost of goods manufactured?
A)$180,000
B)$186,000
C)$194,000
D)$196,800

Question

Quizplus · Accepted Answer

The cost of goods manufactured is calculated by adding the beginning work in process to the total manufacturing costs and then subtracting the ending work in process. Total manufacturing costs include direct materials used, direct labor, and factory overhead. 1. Direct materials used = Beginning raw materials + Purchases of direct materials - Ending raw materials = $27,000 + $36,000 - $21,000 = $42,000.2. Total manufacturing costs = Direct materials used + Direct labor + Factory overhead = $42,000 + $60,000 + $84,000 = $186,000.3. Cost of goods manufactured = Beginning work in process + Total manufacturing costs - Ending work in process = $48,000 + $186,000 - $37,200 = $196,800.

Inventory Balances for the James Enterprises in February Are as Follows