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Q16-9SE

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Found in: Page 888

### Horngren'S Financial And Managerial Accounting

Book edition 6th
Author(s) Tracie L. Miller-Nobles, Brenda L. Mattison
Pages 992 pages
ISBN 9780134486833

# Computing cost of goods manufactured Use the following inventory data for Caddy Golf Company to compute the cost of goods manufactured for the year: Direct Materials Used $12,000 Manufacturing Overhead 21,000 Work-in-Process Inventory: Beginning Balance 1,000 Ending Balance 5,000 Direct Labor 9,000 Finished Goods Inventory: Beginning Balance 18,000 Ending Balance 4,000 The cost of goods manufactured is computed as$38,000

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## Definition of direct material used

Direct materials are defined as raw materials which are used in or associated with the production process directly.

## Computation of cost of goods manufactured

 Caddy Golf Company Cost of goods manufactured Amount ($) Amount ($) Work in Process, Beginning $1,000 Direct Material Used$12,000 Direct Labor $9,000 Manufacturing Overhead$21,000 Total manufacturing cost incurred during the year $42,000 Total manufacturing costs to account for$43,000 Work in process, Ending -$5,000 Cost of goods manufactured$38,000