The following account balances at the beginning of January w

The following account balances at the beginning of January were selected from the general ledger of Fresh Bagel Manufacturing Company Work in process inventory Raw materials inventory Finished goods inventory So $28,300 $40,400 Additional data: 1. Actual manufacturing overhead for January amounted to $64,800. 2. Total direct labor cost for January was $63,800 3. The predetermined manufacturing overhead rate is based on direct labor cost. The budget for the year called for $240,000 of direct labor cost and $336,000 of manufacturing overhead costs 4. The only job unfinished on January 31 was Job No. 151, for which total direct labor charges were $5,400 (1,800 direct labor hours) and total direct material charges were $14,900. 5. Cost of direct materials placed in production during January totaled $124,000. There were no indirect material requisitions during January. 6. January 31 balance in raw materials inventory was $35,000. 7. Finished goods inventory balance on January 31 was $34,700 What is the cost of goods manufactured for January? OA. S249,260 ( B. S233.371 oc. s205511 O D. $277,120

Solution

Solution:

The correct option is A. $249,260

Here is the working ---

Schedule of Cost of Goods Manufactured

$$

Direct materials used in production

$124,000

Direct Labor Costs

$63,800

Applied Manufacturing Overhead (Refer Note 1)

$89,320

Total Manufacturing Costs

$277,120

Plus: Beginning Inventory Work In Process

$0

Total cost of work in process

$277,120

Less: Ending Work in Process Inventory (refer Note 2)

$27,860

Cost of Goods Manufactured

$249,260

Note 1 –

Overhead Rate per direct labor dollar = Total Estimated Manufacturing Costs $336,000 / Total Estimated Direct Labor Cost $240,000 = $1.40 per direct labor dollar

Total Applied Manufacturing Overhead Costs = Total Direct Labor Cost incurred $63,800 * Overhead Rate $1.40

= $89,320+

Note 2 –

Calculation of Ending Work In Process

Direct materials charges

$14,900

Plus: Direct labor costs

$5,400

Applied Manufacturing Overhead (refer note 1 for overhead rate)

($5,400 Direct labor cost x $1.40 per Direct labor Dollar overhead rate)

$7,560

Total Cost

$27,860

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Schedule of Cost of Goods Manufactured
	$$
Direct materials used in production	$124,000
Direct Labor Costs	$63,800
Applied Manufacturing Overhead (Refer Note 1)	$89,320
Total Manufacturing Costs	$277,120
Plus: Beginning Inventory Work In Process	$0
Total cost of work in process	$277,120
Less: Ending Work in Process Inventory (refer Note 2)	$27,860
Cost of Goods Manufactured	$249,260