In July, Econo Company purchased materials costing $21,000 and incurred direct labour cost of $18,000. Overhead totalled $32,000 for the month. Information on inventories was as follows:
$\begin{array}{lrr}
& \text { July 1 } & \text { July 31 } \
\text { Materials } & \$ 6,200 & \$ 7,100 \
\text { Work in process } & \$ 700 & \$ 1,200 \
\text { Finished goods } & \$ 3,300 & \$ 2,700
\end{array}$
-Refer to the Figure.What was the cost of goods manufactured for July?
A)$69,100
B)$69,600
C)$70,500
D)$70,700

Question

In July, Econo Company purchased materials costing $21,000 and incurred direct labour cost of $18,000. Overhead totalled $32,000 for the month. Information on inventories was as follows:
 $\begin{array}{lrr} 
& \text { July 1 } & \text { July 31 } \
\text { Materials } & \$ 6,200 & \$ 7,100 \
\text { Work in process } & \$ 700 & \$ 1,200 \
\text { Finished goods } & \$ 3,300 & \$ 2,700
\end{array}$
-Refer to the Figure.What was the cost of goods manufactured for July?
A)$69,100
B)$69,600
C)$70,500
D)$70,700

Quizplus · Accepted Answer

The cost of goods manufactured for July can be calculated as follows: 1. Total Manufacturing Costs = Direct Materials Used + Direct Labor + Manufacturing Overhead   - Direct Materials Used = Beginning Materials Inventory + Purchases - Ending Materials Inventory   = $6,200 + $21,000 - $7,100 = $20,100   - Direct Labor = $18,000   - Manufacturing Overhead = $32,000   - Total Manufacturing Costs = $20,100 + $18,000 + $32,000 = $70,1002. Total Cost of Goods Manufactured = Total Manufacturing Costs + Beginning Work in Process Inventory - Ending Work in Process Inventory   = $70,100 + $700 - $1,200 = $69,600

In July, Econo Company Purchased Materials Costing $21,000 and Incurred