QUESTION 7 Chavez Corporation reported the following data fo

QUESTION 7 Chavez Corporation reported the following data for the month of july: Inventories:. Beginning Ending 27,00 $0 Raw materials Work in process Finished goods s 30,00 16,00 17,00 s32,00 47,.00 Additional information: $66,000 $91,000 $ 59,000 8,000 $ 58,000 Raw materials purchases Direct labor cost Manufacturing overhead cost incurred Indirect materials included in manufacturing overhead cost incurred Manufacturing overhead cost applied to Work in Process

Solution

Beginning Work in Process 16000 Direct materials 55000 =66000+27000-30000-8000 Direct labor 91000 Manufacturing overhead applied 58000 Total manufacturing costs 204000 Total costs of work in process 220000 Less: Ending Work in Process 17000 Cost of goods manufactured 203000 Beginning finished goods inventory 32000 Cost of goods manufactured 203000 Cost of goods available for sale 235000 Less: Ending finished goods inventory 47000 Cost of goods sold 188000 Add: Underapplied overhead 1000 =59000-58000 Adjusted Cost of goods sold 189000 Option 3 is correct