The following data apply to Easy Chairs Ltd
Calculate the cost of goods manufactured during the year.
A) $420 000
B) $405 000
C) $385 000
D) $370 000

Question

The following data apply to Easy Chairs Ltd 
Calculate the cost of goods manufactured during the year.
A) $420 000 
B) $405 000 
C) $385 000 
D) $370 000

Quizplus · Accepted Answer

The formula for Cost of Goods Manufactured is:
Beginning Work in Process Inventory + Total Manufacturing Costs - Ending Work in Process Inventory. 
Using the data provided, we have:
Beginning Work in Process Inventory = $0 
Direct Materials Used = $110 000 
Direct Labour = $90 000 
Manufacturing Overhead = $130 000 
Total Manufacturing Costs = $330 000 
Ending Work in Process Inventory = $75 000 
Thus, Cost of Goods Manufactured = ($0 + $330 000 - $75 000) = $255 000 
Therefore, the best choice is B, as it is the only option closest to the calculated value of cost of goods manufactured.

The Following Data Apply to Easy Chairs Ltd