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29 July, 18:21

Dess Inc., a manufacturing company, has provided the following data for the month of August. The balance in the Work in Process inventory account was $10,000 at the beginning of the month and $22,000 at the end of the month. During the month, the used direct materials cost was $63,000, and direct labor cost was $39,000. The manufacturing overhead cost was $43,000. The cost of goods manufactured for August was:

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  1. 29 July, 18:32
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    The cost of goods manufactured for August was: $133,000.

    Explanation:

    The cost of goods sold = Opening working in progress + Direct materials + direct labor + manufacturing overheads - Closing work in progress

    The cost of goods sold = 10,000 + 63,000 + 39,000 + 43,000 - 22,000

    = $133,000.

    The work in progress at the end represent the costs incurred on production units which are yet to be finally completed. As such they are deducted.

    On the other hand, the opening inventory represents units started last period (July) but completed in the current period (august). Hence, the cost is added.
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