Nolte Manufacturing Company reported the following year-end information:Beginning work in process inventory $360,000Beginning raw materials inventory $100,000Ending work in process inventory $300,000Ending raw materials inventory $160,000Raw materials purchased $320,000Direct labour $300,000Manufacturing overhead $200,000Nolte Manufacturing Company's cost of goods manufactured for the year is:Question 8Answera.$820,000b.$880,000c.$700,000d.$760,000
Question
Nolte Manufacturing Company reported the following year-end information:Beginning work in process inventory 100,000Ending work in process inventory 160,000Raw materials purchased 300,000Manufacturing overhead 820,000b.700,000d.$760,000
Solution
To calculate the cost of goods manufactured, we need to add up all the costs involved in the production process. This includes the cost of raw materials used, direct labor, and manufacturing overhead.
Here's how to calculate it:
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Calculate the total cost of raw materials used in production. This is done by adding the beginning raw materials inventory to the raw materials purchased and then subtracting the ending raw materials inventory.
Total Raw Materials Used = Beginning Raw Materials Inventory + Raw Materials Purchased - Ending Raw Materials Inventory Total Raw Materials Used = 320,000 - 260,000
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Add the direct labor and manufacturing overhead to the total raw materials used. This gives us the total manufacturing costs for the year.
Total Manufacturing Costs = Total Raw Materials Used + Direct Labor + Manufacturing Overhead Total Manufacturing Costs = 300,000 + 760,000
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To get the cost of goods manufactured, we add the beginning work in process inventory to the total manufacturing costs and subtract the ending work in process inventory.
Cost of Goods Manufactured = Beginning Work in Process Inventory + Total Manufacturing Costs - Ending Work in Process Inventory Cost of Goods Manufactured = 760,000 - 820,000
So, the cost of goods manufactured for Nolte Manufacturing Company for the year is 820,000.
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