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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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2-30 Cost of Goods Manufactured

Morning Smiles Coffee Company manufactures Stoneware French Press coffee makers. During the month of March, the company purchased $350,000 of materials. Also during the month of March, Morning Smiles incurred direct labor cost of $74,000 and manufacturing overhead of $190,000. Inventory information is as follows:

Chapter 2, Problem 30BEB, 2-30 Cost of Goods Manufactured Morning Smiles Coffee Company manufactures Stoneware French Press

Required:

  1. 1. Calculate the cost of goods manufactured for the month of March.
  2. 2. Calculate the cost of one coffee maker assuming that 8,100 coffee makers were completed during March.

1.

To determine

Compute the amount of cost of goods manufactured in March.

Explanation

Cost of Goods Manufactured:

Cost of goods manufactured can be defined as the total amount of cost sustained by a company to manufacture the goods and transfer the manufactured goods to the finished goods inventory.

Use the following formula to calculate the cost of goods manufactured:

Cost of goods manufactured=(Direct material used+Direct labor+Manufacturing overhead+Beginning WIPEnding WIP)

Substitute $335,000 for direct material used, $74,000 for direct labor, $190,000 for manufacturing overhead, $55,000 for beginning WIP (work in process), and $46,500 for ending WIP in the above formula.

Cost of goods manufactured=($335,000+$74,000+$190,000

2.

To determine

Compute one coffee maker’s cost.

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