Question

You’ve been given the following data for Liang Industries, a manufacturer, for the month of January:

Direct materials used	$160,000
Factory supervisors’ salaries	5,000
Direct wages	205,000
Sales office rent and utilities	22,000
Factory Equipment depreciation	30,000
Secretary to the Chief Executive Officer’s salary	3,000
Factory insurance	15,000

Compute the total manufacturing costs.

Answer 1

Ans- To compute the total manufacturing cost we will compute the Factory overhead first:-

Factory overheads:-

Factory supervisor's salary	$5,000
Factory Equipment depreciation	$30,000
Factory Insurance	$15,000
Total Factory Overheads	$50,000

The Total Manufacturing Costs:-

Direct Material used	$160,000
Direct Wages	$205,000
Factory Overheads	$50,000
Total Manufacturing Costs	$415,000

Note:- Sales office rent and utilities and Secretory to the chief Executive Officer's salary will not be considered in the total manufacturing costs because these are not related to the manufacturing of products, only the costs related to the production is considered to the total manufacturing costs.

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