TechCom Inc. manufactures laptops. Last month, direct materials (e.g., computer components) costing $600,000 were put into production. Direct labour of $900,000 was incurred, overhead equalled $500,000, and selling and administrative costs totalled $400,000. The company manufactured 10,000 laptops during the month. Assume the company had no beginning or ending work-in-process balances.
-Refer to the Figure.What was the amount of cost of goods manufactured last month?
A)$1,250,000
B)$1,300,000
C)$1,750,000
D)$2,000,000

Question

Quizplus · Accepted Answer

The cost of goods manufactured includes direct materials, direct labor, and manufacturing overhead costs. Therefore, the calculation is $600,000 (direct materials) + $900,000 (direct labor) + $500,000 (overhead) = $2,000,000. Selling and administrative costs are not included in the cost of goods manufactured.