The Juarez Corporation incurred the following transactions during its first year of operations.(Assume all transactions involve cash).
1)Acquired $1,000 of capital from the owners.
2)Purchased $400 of direct raw materials.
3)Used $300 of these direct raw materials in the production process.
4)Paid production workers $400 cash.
5)Paid $200 for manufacturing overhead (applied and actual overhead are the same).
6)Started and completed 200 units of inventory.
7)Sold 50 units at a price of $6 each.
8)Paid $40 for selling and administrative expenses.
The amount of cost of goods manufactured would be:
A)$1,000.
B)$900.
C)$800.
D)$600.

Question

Quizplus · Accepted Answer

To calculate the cost of goods manufactured, we need to add all the direct materials used, direct labor, and manufacturing overhead. 
Direct materials used = $300 (transaction 3)
Direct labor = $400 (transaction 4)
Manufacturing overhead = $200 (transaction 5)
Total manufacturing cost = $900
Since 200 units were completed, the cost per unit is $900/200 = $4.50. 
Therefore, cost of goods manufactured for 200 units = 200 x $4.50 = $900. 
Hence, the best choice is B.

The Juarez Corporation Incurred the Following Transactions During Its First