Figure 2-5.In July, Econo Company purchased materials costing $21,000 and incurred direct labor cost of $18,000. Overhead totaled $32,000 for the month. Information on inventories was as follows:
$\begin{array}{lcc}&\text { July } 1&\text { July } 31\
\text { Materials } & \$ 6,200 & \$ 7,100 \
\text { Work in process } & \$ 700 & \$ 1,200 \
\text { Finished goods } & \$ 3,300 & \$ 2,700
\end{array}$
-Refer to Figure 2-5. What were the total manufacturing costs in July?

Question

Figure 2-5.In July, Econo Company purchased materials costing $21,000 and incurred direct labor cost of $18,000. Overhead totaled $32,000 for the month. Information on inventories was as follows:
 $\begin{array}{lcc}&\text { July } 1&\text { July } 31\
\text { Materials } & \$ 6,200 & \$ 7,100 \
\text { Work in process } & \$ 700 & \$ 1,200 \
\text { Finished goods } & \$ 3,300 & \$ 2,700
\end{array}$
-Refer to Figure 2-5. What were the total manufacturing costs in July?

Quizplus · Accepted Answer

Total manufacturing costs include direct materials used, direct labor, and overhead. Direct materials used = Beginning materials + Purchases - Ending materials = $6,200 + $21,000 - $7,100 = $20,100. Total manufacturing costs = Direct materials used + Direct labor + Overhead = $20,100 + $18,000 + $32,000 = $70,100.

Figure 2-5 -Refer to Figure 2-5