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Topic: BEC - Costs of goods manufactured (

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cpa_punk
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Posted: 04 Nov 2011 at 22:30 \| IP Logged

I am getting confused of calculation of cost of goods manufactured. how come does "Indirect manufacturing labor costs" include straight to calculation for this MC?...Any hints or explanation will be greatly appreciated.

Becker - Final Review 1-2-7/29

The following information was extracted from the accounting records of Company:

Direct materials purchased: 80000

Direct material used: 76000

Direct manufacturing labor costs: 10000

Indirect manufacturing labor costs: 12000

Sales salaries: 14000

Other factory expenses: 22000

Selling and administrative expenses: 20000

What was the cost of goods manufactured?

A. A. 124000

B. B. 120000

C. C. 154000

D. D. 170000

Answer: B (76000+10000+12000+22000)

Ray11
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Posted: 04 Nov 2011 at 22:50 \| IP Logged

'Indirect manufacturing labor costs' is included in the cost of goods manufactured b'coz its part of the manufacturing overhead ..i.e. the 12,000 is used in the manufacture of the product but cannot be directly traced to the product.

UFundMyCo11ege
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Joined: 27 Jun 2011
Location: United States
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Posts: 99

Posted: 06 Nov 2011 at 09:54 \| IP Logged

Yes---same as above.

Indirect manufacturing costs are included in manufacturing (MOH).

Total manufacturing costs are needed to find COGM.

Total manufacturing costs = Raw materials (RM) + Direct Labor (DL) +
Manufacturing overhead (MOH).

Indirect costs of any type, that cannot be traced to the product itself, are
included in MOH.

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ramplacentia
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Posted: 17 Dec 2011 at 02:16 \| IP Logged

When the question is silent on "overhead applied" - we have to add all production related costs to the cost of goods manufactured account.

cpa_punk wrote:

I am getting confused of calculation of cost of goods manufactured. how come does "Indirect manufacturing labor costs" include straight to calculation for this MC?...Any hints or explanation will be greatly appreciated.

Becker - Final Review 1-2-7/29

The following information was extracted from the accounting records of Company:

Direct materials purchased: 80000

Direct material used: 76000

Direct manufacturing labor costs: 10000

Indirect manufacturing labor costs: 12000

Sales salaries: 14000

Other factory expenses: 22000

Selling and administrative expenses: 20000

What was the cost of goods manufactured?

A.     A. 124000

B.      B. 120000

C.      C. 154000

D.      D. 170000

Answer: B (76000+10000+12000+22000)

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cpa_punk
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Posted: 17 Dec 2011 at 20:37 \| IP Logged

Thank you!! now i get it!

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