Stewart Company has the following information at the end of the current year: Direct Materials Used $12,000 Beginning Work-in-Process Inventory 10,000 Ending Work-in-Process Inventory 8,000 Direct Labor 5,000 Manufacturing Overhead 3,000 What is the cost of goods manufactured?

Question

Nasir Wallace

Business

15 September, 09:33

Stewart Company has the following information at the end of the current year: Direct Materials Used $12,000 Beginning Work-in-Process Inventory 10,000 Ending Work-in-Process Inventory 8,000 Direct Labor 5,000 Manufacturing Overhead 3,000 What is the cost of goods manufactured?

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Answers (2)

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Cheesestick · Answer 1

Answer: $22,000

Explanation:

Given that,

Direct Materials Used = $12,000

Beginning Work-in-Process Inventory = $10,000

Ending Work-in-Process Inventory = $8,000

Direct Labor = $5,000

Manufacturing Overhead = $3,000

Cost of goods manufactured:

= Direct Materials Used + Beginning Work-in-Process Inventory + Direct Labor + Manufacturing Overhead - Ending Work-in-Process Inventory

= $12,000 + $10,000 + $5,000 + $3,000 - $8,000

= $22,000

Elizabeth Wilkins · Answer 2

Answer: $22,000

Explanation: The cost of goods manufactured is the total amount of goods that were fully produced for a given period, and are thus available for sale. This is calculated by taking the following into account:

Total maunfacturing costs - the total costs of all the resources used during the production of a good, which is further broken up into:

Direct materials - The materials that are used in the making of the good. These materials form an integral part of the product and can be easily traced directly back to the product.

Direct Labour - These are the labour costs that can be easily traced back to each individual part of making the product. For example wages.

Manufacturing overheads - These are the costs that were used in the making of the product, that cannot be easily traced to the specific unit or section of the product. For example electricity.

PLUS: Beginning Work - in - Process (WIP) : These are the products that were partially completed at the end of the previous year, and carried forward to the current financial year for completion. These costs are included in this calculation because they will be completed during the year, and thus be available for sale.

MINUS: Ending Work - in - Process (WIP) : These are the products that are partially completed at the end of the financial year. These costs are excluded from this calculation as the products are not complete at year end, and are thus not available for sale as yet.

The calcuatlion of the cost of goods manufactured is as follows:

Total Manufacturing costs:

Direct materials = 12,000

+ Direct Labour = 5,000

+Manufacturing overheards = 3,000

+Beginning WIP = 10,000

-Ending WIP = (8000)

= $22,000