Fireox Company's selected cost data for 2015 are shown below: $$\begin{array} { | l | r | }
\hline \text { Work-in-Process Inventory, Jan. 1, 2015 } & \$ 5,640 \
\hline \text { Direct Materials Used } & 105,000 \
\hline \text { Work-in-Process Inventory, Dec. } 31,2015 & 2,870 \
\hline \text { Cost of Goods Manufactured } & 193,200 \
\hline
\end{array}$$ Assuming manufacturing overhead costs of $27,850, what is the amount of direct labor incurred by Fireox Company in 2015?

Question

Fireox Company's selected cost data for 2015 are shown below: $$\begin{array} { | l | r | } 
\hline \text { Work-in-Process Inventory, Jan. 1, 2015 } & \$ 5,640 \
\hline \text { Direct Materials Used } & 105,000 \
\hline \text { Work-in-Process Inventory, Dec. } 31,2015 & 2,870 \
\hline \text { Cost of Goods Manufactured } & 193,200 \
\hline
\end{array}$$ Assuming manufacturing overhead costs of $27,850, what is the amount of direct labor incurred by Fireox Company in 2015?

Quizplus · Accepted Answer

The formula for calculating Cost of Goods Manufactured is:

Cost of Goods Manufactured = Beginning Work-in-Process Inventory + Direct Materials Used + Direct Labor + Manufacturing Overhead - Ending Work-in-Process Inventory

Plugging in the given values, we get:

193,200 = 5,640 + 105,000 + Direct Labor + 27,850 - 2,870

Solving for Direct Labor, we get:

Direct Labor = 193,200 - 5,640 - 105,000 - 27,850 + 2,870

Direct Labor = 57,580

Therefore, the amount of direct labor incurred by Fireox Company in 2015 is $57,580 which is option C.

Fireox Company's Selected Cost Data for 2015 Are Shown Below