The following information applied to Howe, Inc. for 2014: Howe's 2014 inventoriable cost was
A) $380,000.
B) $383,000.
C) $386,000.
D) $391,000.

Question

The following information applied to Howe, Inc. for 2014:  Howe's 2014 inventoriable cost was
A) $380,000. 
B) $383,000. 
C) $386,000. 
D) $391,000.

Quizplus · Accepted Answer

To calculate inventoriable cost, we start with the cost of goods manufactured (COGM) and add the ending inventory of goods in process and finished goods. 
COGM = Direct Materials + Direct Labor + Manufacturing Overhead + Beginning WIP Inventory - Ending WIP Inventory
COGM for Howe, Inc. in 2014 is calculated as follows: 
Direct Materials: $80,000 
Direct Labor: $60,000 
Manufacturing Overhead: $200,000 
Beginning WIP Inventory: $50,000 
Ending WIP Inventory: $53,000 
COGM = $80,000 + $60,000 + $200,000 + $50,000 - $53,000 = $337,000 
To this, we add the ending inventory of goods in process and finished goods, which is $49,000 and $0 respectively, to get: 
Inventoriable cost = COGM + Ending Inventory 
Inventoriable cost = $337,000 + $49,000 = $386,000. Therefore, the best choice is C.

The Following Information Applied to Howe, Inc