Computing Cost of Goods Manufactured?

Question

Using the following information, compute cost of goods manufactured, which is the cost of Inventory transferred to Finished Goods Inventory

Work-in-process inventory, beginning balance $132,425

Work-in-process inventory, ending balance 126,300

Direct materials costs 350,080

Direct labor costs 365,225

Actual manufacturing overhead cost 287,200

Applied manufacturing overhead costs 285,900

Answer 1

The easy way to do this is simply Beginning WIP - Ending WIP plus all Direct costs and applied overhead.  You get $1,007,330.

If you have a more elaborate accounting system you might be pro-rating your direct materials and labor costs, but this adds complexity to the calculation that doesn't help you much from a cost accounting analysis perspective.

Also you have an overhead discrepancy of $1300 that will be pushed into another accounting cycle.  Important to note, but you're probably calculating figures for a business quarter and this discrepancy will be reconciled in the annual reports.