Countertops Unlimited, a manufacturer of kitchen and bath countertops, had the following information for production last period: Beginning Work in Process Inventory $25,000
Ending Work in Process Inventory $30,000
Beginning Materials Inventory $16,000
Ending Materials Inventory $14,000
Materials Purchased $205,000
Direct Labor $65,000
Indirect Labor $20,000
Indirect Materials Used $55,000
Factory Rent $35,000
Utilities (Rent and Utilities relate to production facilities) $15,000
Office Supplies $10,000
Administrative Salaries $105,000

Assuming that all manufacturing overhead was applied to Work in Process inventory, Total Manufacturing Costs for the period was:

a. $217,000
b. $125,000
c. $342,000
d. $367,000
e. None of the above

c. $342,000

Explanation:

Prepare a Manufacturing Cost Schedule to determine the Total Manufacturing Costs.

Manufacturing Cost Schedule :

Direct Material used ($207,000 - $55,000)                      $152,000

Direct Labor                                                                           $65,000

Indirect Labor                                                                        $20,000

Indirect Materials Used                                                        $55,000

Factory Rent                                                                          $35,000

Utilities (Rent and Utilities relate to production facilities)   $15,000

Total Manufacturing Costs                                                 $342,000

Raw Materials T - Account (calculation of materials transferred to production)

Debit  :

Opening Balance                                                              $16,000

Purchases                                                                       $205,000

Totals                                                                               $221,000

Credit :

Closing  Balance                                                               $14,000

Transferred to Work In Process (Balancing figure)      $207,000

Totals                                                                               $221,000

Conclusion :

Total Manufacturing Costs for the period was : $342,000

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