The Juarez Corporation incurred the following transactions during its first year of operations. (Assume all transactions involve cash).Acquired $1,000 of capital from the owners.Purchased $400 of direct raw materials.Used $300 of these direct raw materials in the production process.Paid production workers $400 cash.Paid $200 for manufacturing overhead.Started and completed 200 units of inventory.Sold 50 units at a price of $6 each.Paid $40 for selling and administrative expenses.The amount of cost of goods manufactured would be:
A) $1,000.
B) $900.
C) $800.
D) $600.

Question

Quizplus · Accepted Answer

The formula for calculating the cost of goods manufactured is:
Direct Materials + Direct Labor + Manufacturing Overhead = Total Manufacturing Cost

In this case, the direct materials used in production were $300 (given in the transactions). The direct labor was $400 (given in the transactions). The manufacturing overhead was $200 (given in the transactions). Therefore, the total manufacturing cost was $900.

The Juarez Corporation Incurred the Following Transactions During Its First