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3 September, 15:54

Current information for the Healey Company follows:

Beginning raw materials inventory $15,200

Raw material purchases 60,000

Ending raw materials inventory 16,600

Beginning work in process inventory 22,400

Ending work in process inventory 28,000

Direct labor 42,800

Total factory overhead 30,000

All raw materials used were traceable to specific units of product. Healey Company's Cost of Goods Manufactured for the year is:

$125,800.

$128,600.

$131,400.

$137,000.

$139,000.

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Answers (1)
  1. 3 September, 19:54
    0
    The correct answer would be option A, $125800.

    Explanation:

    Cost of goods manufactured = Total costs + beginning work in process - Ending work in process

    Total costs include Direct Materials, Direct labor and Factory Overheads. So the Above formula can be written as:

    CGM = (Direct materials + Direct Labor + Factory overhead) + Beginning WIP - Ending WIP

    Now

    Direct Materials = Beginning raw materials + Purchased Raw Materials - Ending Raw materials

    = 15200+60000-16600 = 58600

    Now Direct labor given is = 42800

    And Factory Overheads = 30000

    So,

    Total costs = direct materials + Direct Labor + Factory Overhead

    Total Costs = 58600 + 42800 + 30000

    = 131400

    Beginning work in process = 22400

    Ending work in process = 28000

    NOW Costs of Goods Manufactured/CGM = Total Cost + Beginning WIP - Ending WIP

    = 131400+22400-28000

    =$125800
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