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Work in process was $42,000 on June 1, manufacturing costs added in June were $121,000 and work in process on June 30 was $31,000. What is the cost of goods manufactured?
A$163,000
B$153,000
C$142,000
D$132,000
Answer & Solution
Correct answer: D. $132,000
1. Work in Process opens at $42,000 and receives materials, labor and factory overhead of $121,000 during June.
2. Total manufacturing costs to account for are $42,000 plus $121,000, which is $163,000.
3. Units still unfinished on June 30 are worth $31,000 and stay in Work in Process.
4. Cost of goods manufactured, the amount completed and moved to Finished Goods, is $163,000 minus $31,000, or $132,000.
5. $163,000 is the total before ending work in process is deducted, so it overstates completed production.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 1.3.1 Financial Reporting for a Manufacturer_
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