Compute the total manufacturing cost for a manufacturer with the following information for the month. Raw materials purchased $ 47,200 Direct materials used 56,000 Direct labor used 15,600 Factory supervisor salary 10,000 Salesperson commissions 8,200 Depreciation expense-Factory building 3,700 Depreciation expense-Delivery equipment 2,500 Indirect materials 1,800

Cost of goods manufactured = $87100

Explanation

Total manufacturing cost is the aggregate amount of cost incurred by a business to produce goods in a reporting period.

Generally accepted accounting principles require that the cost of goods sold shall consist of:

the cost of direct materials

the cost of direct labor

the cost of manufacturing overhead

Expenses that are outside of the manufacturing facilities, such as selling, general and administrative expenses, are not product costs. They are reported as expenses on the income statement in the accounting period in which they occur.

In this exercise:

Cost of goods manufactured:

Direct materials = $56,000

Direct Labor=$15,600

Factory overhead=Factory supervisor salary + Depreciation expense+Indirect materials = 10,000 + 3,700+1,800 = $15,500

Total = $87100

Note: Salesperson commissions and Depreciation expense Delivery equipment are not included in factory overhead