Question

Messana Corporation reported the following data for the month of August:

Inventories:	Beginning	Ending
Raw materials	$36,000	$24,000
Work in process	$23,000	$17,000
Finished goods	$37,000	$55,000
Additional information:
Raw materials purchases	$61,000
Direct labor cost	$94,000
Manufacturing overhead cost incurred	$54,000
Manufacturing overhead cost applied to Work in Process	$56,000

The cost of goods manufactured for August is:

		$227,000
		$229,000
		$219,000
		$217,000

Messana Corporation reported the following data for the month of August:

Inventories:	Beginning	Ending
Raw materials	$36,000	$24,000
Work in process	$23,000	$17,000
Finished goods	$37,000	$55,000
Additional information:
Raw materials purchases	$61,000
Direct labor cost	$94,000
Manufacturing overhead cost incurred	$54,000
Manufacturing overhead cost applied to Work in Process	$56,000

The adjusted cost of goods sold that appears on the income statement for August is:

		$229,000
		$209,000
		$211,000
		$247,000

Answer 1

Raw materials available = Beg raw material inventory + Raw materials purchases - Ending raw materials inventory = 36,000+61,000-24,000 = 73,000 Raw materials used in production = 73,000 Total manufacturing Cost = Raw materials used + Direct Labor + Manufacturing Overhead applied = 73,000 + 94,000 + 56,000 = 223,000 Cost of Goods manufactured = Beginning wip + Total manufacturing costs - Ending wip = 23,000 + 223,000 - 17,000 = 229,000 Option B is the answer

Unadjusted cost of goods sold = Beginning finished goods inventory + Cost of Goods manufactured - Ending finished goods inventory = 37,000 + 229,000 - 55,000 = 211,000 Adjusted cost of goods sold = Unadjusted cost of goods sold - Over applied overhead = 211,000 - (56,000-54,000) = 211,000 - 2,000 = 209,000 Option B is the answer