During the month of May, Cassidy Manufacturers incurred £30,000, £40,000 and £20,000 of direct material, direct labour and manufacturing overhead costs respectively. If the cost of goods manufactured was £95,000 and the ending work in process inventory was £15,000, the beginning inventory of work in process must have been
A)£ 10,000.
B)£ 20,000.
C)£110,000.
D)£ 5,000.

Question

Quizplus · Accepted Answer

The formula for calculating the cost of goods manufactured is:

Cost of goods manufactured = Direct material + Direct labor + Manufacturing overhead + Beginning work in process inventory - Ending work in process inventory

Therefore:

£95,000 = £30,000 + £40,000 + £20,000 + Beginning work in process inventory - £15,000

Solving for Beginning work in process inventory:

Beginning work in process inventory = £20,000

Therefore, the answer is B: £20,000.

During the Month of May, Cassidy Manufacturers Incurred £30,000, £40,000