Q16-9SE - Horngren'S Financial And Managerial Accounting

Question

Computing cost of goods manufactured 

Use the following inventory data for Caddy Golf Company to compute the cost of goods manufactured for the year: 

Direct Materials Used $ 12,000 

Manufacturing Overhead 21,000 

Work-in-Process Inventory: 

Beginning Balance 1,000 

Ending Balance 5,000 

Direct Labor 9,000 

Finished Goods Inventory: 

Beginning Balance 18,000 

Ending Balance 4,000

Step-by-Step Solution

Answer

The cost of goods manufactured is computed as $38,000

Definition of direct material used

Direct materials are defined as raw materials which are used in or associated with the production process directly.

Computation of cost of goods manufactured

Caddy Golf Company
Cost of goods manufactured
	Amount ($)	Amount ($)
Work in Process, Beginning		$1,000
Direct Material Used	$12,000
Direct Labor	$9,000
Manufacturing Overhead	$21,000
Total manufacturing cost incurred during the year		$42,000
Total manufacturing costs to account for		$43,000
Work in process, Ending		-$5,000
Cost of goods manufactured		$38,000