Any underapplied or overapplied manufacturing overhead is closed out to cost of goods sold. The cost of goods manufactured for July is:

Question Completion:

Chavez Corporation reported the following data for the month of July: What is the cost of goods manufactured for July?

Inventories:             Beginning    Ending

Raw materials          $29,000    $31,000

Work in process         17,000      19,000

Finished goods         33,000      48,000

Additional information:

Raw materials purchases                                 $67,000

Direct labor cost                                               $92,000

Manufacturing overhead cost incurred          $60,000

Indirect materials included in manufacturing

overhead cost incurred                                     $8,400

Manufacturing overhead cost

applied to Work in Process                             $59,000

Any underapplied or overapplied manufacturing overhead is closed out to cost of goods sold.

The cost of goods manufactured for July is:

A) $205,600

B) $218,600

C) $207,600

D) $219,600

Chavez Corporation

Cost of Goods Manufactured for July is:

A) $205,600

Explanation:

T-accounts as workings:

Raw materials

Account Titles               Debit      Credit

Beginning balance    $29,000

Purchases                    67,000

Work in Process                        $56,600

Manufacturing overhead              8,400

Ending balance                          $31,000

Totals                       $96,000  $96,000

Work in Process

Account Titles               Debit      Credit

Beginning balance     $17,000

Raw materials             56,600

Direct labor cost         92,000

Overhead applied      59,000

Finished Goods                      $205,600

Ending balance                          $19,000

Totals                    $224,600 $224,600

Finished Goods

Account Titles               Debit      Credit

Beginning balance    $33,000

Work in Process       205,600

Cost of Goods Sold                   $190,600

Ending balance                           $48,000

Totals                     $238,600  $238,600

Manufacturing Overhead

Account Titles               Debit      Credit

Cash                          $51,600

Raw materials               8,400

WIP: overhead applied                  $59,000

Cost of Goods Sold                            1,000

Totals                       $60,000       $60,000

Cost of Goods Sold

Account Titles                       Debit      Credit

Finished Goods             $190,600

Manufacturing overhead    1,000

Income Statement                          $191,600

Total                               $191,600   $191,600

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