Hawthorn Industries is calculating its Cost of Goods Manufac

Hawthorn Industries is calculating its Cost of Goods Manufactured at year-end. Hawthom\'s accounting records show the following: The Raw Materials Inventory account had a beginning balance of $12,000 and an ending balance of $18,000. During the year, the company purchased $54,000 of direct materials. Direct labor for the year totaled $123,000, while manufacturing overhead amounted to $157,000. The Work in Process Inventory account had a beginning balance of $28,000 and an ending balance of $16,000. Assume that Raw Materials Inventory contains only direct materials. Compute the Cost of Goods Manufactured for the year. (Hint: The first step is to calculate the direct materials used during the year.) Start by calculating the direct materials used during the year. Hawthorn Industries Calculation of Direct Materials Used For Current Year Plus: Less Direct materials used

Solution

Calculate direct material used :

Beginning raw material inventory	12000
Add: Raw material purchases	54000
Total raw material available	66000
Less: Ending raw material inventory	(18000)
Direct material used	48000