Question

Beginning 1/1/20X8      Ending 12/31/2008     
Work-in-Process Inventory        $ 80,000                    $ 30,000
Finished Goods Inventory              90,000                     110,000

Raw materials used                    $362,000
Direct Labor incurred                           ???
Total Manufacturing OH                250,000
Cost of Goods Sold                      716,000

What is Direct Labor incurred for 20X8?
(Hint: use the Schedule of COGM and part of the I/S to help solve)

Question 15 options:

a)

$ 54,000

b)

$104,000

c)

$ 34,000

d)

$ 74,000

Answer 1

• Correct Answer = Option ‘d’ $ 74,000 = Direct Labor Incurred.
• Workings

--Step 1

Cost of Goods Sold	$716,000
Ending finished goods inventory	$110,000
Beginning finished goods inventory	($90,000)
Cost of Goods manufactured	$736,000

--Step 2

Cost of Goods manufactured	$736,000
Ending WIP	$30,000
Beginning WIP Inventory	($80,000)
Total cost of manufacturing	$686,000

--Step 3

Total cost of manufacturing	$686,000
Raw material used	($362,000)
Total manufacturing overhead	($250,000)
Direct Labor Incurred	$74,000 = Answer