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 was the cost of goods manufactured for 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 was the cost of goods manufactured for July?

Quizplus · Accepted Answer

To calculate the cost of goods manufactured for July, we start with the total manufacturing costs, which include direct materials used, direct labor, and manufacturing overhead. First, we calculate the direct materials used: Beginning materials inventory + Purchases - Ending materials inventory = $6,200 + $21,000 - $7,100 = $20,100. Then, we add direct labor of $18,000 and manufacturing overhead of $32,000 to get total manufacturing costs of $70,100. Next, we adjust for the change in work in process inventory: Beginning work in process + Total manufacturing costs - Ending work in process = $700 + $70,100 - $1,200 = $69,600.

Figure 2-5 -Refer to Figure 2-5