In July, Econo Company purchased materials costing $21,000 and incurred direct labour cost of $18,000. Overhead totalled $32,000 for the month. Information on inventories was as follows:
$\begin{array}{lrr}
& \text { July 1 } & \text { July 31 } \
\text { Materials } & \$ 6,200 & \$ 7,100 \
\text { Work in process } & \$ 700 & \$ 1,200 \
\text { Finished goods } & \$ 3,300 & \$ 2,700
\end{array}$
-Refer to the Figure.What were the total manufacturing costs in July?
A)$50,000
B)$69,600
C)$70,100
D)$71,000

Question

In July, Econo Company purchased materials costing $21,000 and incurred direct labour cost of $18,000. Overhead totalled $32,000 for the month. Information on inventories was as follows:
 $\begin{array}{lrr} 
& \text { July 1 } & \text { July 31 } \
\text { Materials } & \$ 6,200 & \$ 7,100 \
\text { Work in process } & \$ 700 & \$ 1,200 \
\text { Finished goods } & \$ 3,300 & \$ 2,700
\end{array}$
-Refer to the Figure.What were the total manufacturing costs in July?
A)$50,000
B)$69,600
C)$70,100
D)$71,000

Quizplus · Accepted Answer

Total manufacturing costs for July include the costs of materials used, direct labor, and overhead. To find the cost of materials used, we subtract the ending materials inventory from the sum of the beginning inventory and purchases: $(6,200 + 21,000) - 7,100 = 20,100$. Adding direct labor ($18,000) and overhead ($32,000) gives total manufacturing costs of $20,100 + 18,000 + 32,000 = $70,100.

In July, Econo Company Purchased Materials Costing $21,000 and Incurred