Question

Dacosta Corporation had only one job in process on May 1. The job had been charged with $2,500 of direct materials, $6,966 of direct labor, and $10,132 of manufacturing overhead cost. The company assigns overhead cost to jobs using the predetermined overhead rate of $19.80 per direct labor-hour.

During May, the following activity was recorded:

Raw materials (all direct materials):
Beginning balance	$	9,200
Purchased during the month	$	38,700
Used in production	$	40,000
Labor:
Direct labor-hours worked during the month		2,600
Direct labor cost incurred	$	25,210
Actual manufacturing overhead costs incurred	$	34,000
Inventories:
Raw materials, May 30		?
Work in process, May 30	$	17,119

Work in process inventory on May 30 contains $3,867 of direct labor cost. Raw materials consist solely of items that are classified as direct materials.

The cost of goods manufactured for May was:

Multiple Choice

• $97,250

• $110,740

• $116,690

• $119,169

Answer 1

Computation the cost of goods manufactured is:

Cost of goods manufactured = Work in process in the beginning + Raw materials used in production + Direct labor cost incurred + Value of applied overhead - Work in process at the Ending

= $19,598 + $40,000 + $25,210 + $51,480 - $17,119

= $119,169

Hence, the cost of goods manufactured is $119,169, that is, the 4th option is correct.

Working notes:

1.

Computation the work in process in the beginning is:

Work in process in the beginning = Value of direct materials + Value of direct labor + Value of manufacturing overhead

= $2,500 + $6,966 + $10,132

= $19,598

Hence, the work in process in the beginning is $19,598.

2.

Computation the value of applied overhead is:

Value of applied overhead = Predetermined overhead rate * Number of direct labor hours

= $19.80 * 2,600

= $51,480

Hence, the value of applied overhead is $51,480.