Question

The following account balances at the beginning of January were selected from the general ledger of Fresh Bagel Manufacturing Company Work in process inventory Raw materials inventory Finished goods inventory $0 $28,800 $40,700 Additional data: 1. Actual manufacturing overhead for January amounted to $64,900. 2. Total direct labor cost for January was $63,300. 3. The predetermined manufacturing overhead rate is based on direct labor cost. The budget for the year called for $240,000 of direct labor cost and $336,000 of manufacturing overhead costs. 4. The only job unfinished on January 31 was Job No. 151, for which total direct labor charges were $5,700 (1,200 direct labor hours) and total direct material charges were $14,500. 5. Cost of direct materials placed in production during January totaled $124,000. There were no indirect material requisitions during January O A. $224,700 B. $253.140 OC. $200,429 OD. $317,000

Answer 1

To calculate unadjusted cost of goods sold for January, first we will calculate Cost of Goods Manufactured in the following manner:

Cost of goods manufactured = manufacturing overhead cost + direct labour cost + direct material + opening WIP inventory - closing WIP inventory

Now, Direct labour cost to manufacturing overhead cost percentage = $336000/$240000 = 140%

Closing WIP inventory = ($5700 × 140%) + $5700 + $14500

= 7980 + 5700 + 14500 = $28180

Now, Cost of goods manufactured = (63,300 * 140%) +63,300 + 124,000 + 0 - 28,180

= 88,620 +63,300 + 124,000 - 28,180

= $ 247,740

Unadjusted cost of goods sold = Finished goods Inventory in Begining +  Cost of goods manufactured - Finished goods inventory in the end

= 40,700 + 247,740 - 35,300

= $ 253,140

So, option B is correct.