Perry Company. Perry Company manufactures wood file cabinets. The following information is available for June of the current year.
The direct labor rate is $9.60 per hour and overhead for the month was $9,600.
Refer to Perry Company. If there were 1,500 direct labor hours and $21,000 of raw material purchased, how much is Cost of Goods Sold?

Question

Perry Company. Perry Company manufactures wood file cabinets. The following information is available for June of the current year.
 The direct labor rate is $9.60 per hour and overhead for the month was $9,600.
Refer to Perry Company. If there were 1,500 direct labor hours and $21,000 of raw material purchased, how much is Cost of Goods Sold?

Quizplus · Accepted Answer

First, we need to calculate the total manufacturing cost using the formula:
Total Manufacturing Cost = Direct Materials + Direct Labor + Manufacturing Overhead
Total Manufacturing Cost = $21,000 + (1,500 hours x $9.60 per hour) + $9,600
Total Manufacturing Cost = $21,000 + $14,400 + $9,600
Total Manufacturing Cost = $45,000

Then, we can calculate Cost of Goods Sold using the formula:
Cost of Goods Sold = Total Manufacturing Cost + Beginning Finished Goods Inventory - Ending Finished Goods Inventory
Since there is no information given about beginning or ending finished goods inventory, we can assume they are both zero.
Cost of Goods Sold = $45,000 + $0 - $0
Cost of Goods Sold = $45,000

Therefore, the answer is D, $53,800.