Question

Freeman Furnishings has summarized its data as shown. Direct labor hours will be used as the activity base to allocate overhead: Raw materials purchased = $320,000 Raw materials, beginning inventory = 15,000 Raw materials, ending inventory = 14,000 Work in process, beginning inventory = 35,000 Work in process, ending inventory = 37,000 Estimated overhead = 300,000 Depreciation of factory building = 50,000 Factory real estate taxes = 7,382 Factory utility expenses = 45,000 Indirect materials = 20,000 Indirect labor = 11,000 Direct labor cost =100,000 Direct labor hours incurred = 24,000 Estimated direct labor hours = 25,000

Compute the cost of goods manufactured.

Answer 1

Cost of goods Manufactured Schedule
Direct Materials:
Raw Materials, Beginning	$15,000
Add: Raw Materials Purchases	$320,000
Total Raw materials available for use	$335,000
Less: Raw Materials, Ending	($14,000)
Direct Materials Used		$321,000
Direct Labor		$100,000
Factory overhead applied [24,000 actual labor hours x $12*]		$ 288,000
Total Manufacturing Costs		$709,000
Add: Work in process, beginning		$35,000
Less: Work in process, ending		($37,000)
Cost of goods Manufactured		$707,000

*Factory overhead rate = $300,000 estimated overhead ÷ 25,000 Estimated direct labor hours = $12 per direct labor hour