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Budgeted direct materials are $46,208, direct labor is $124,032 and factory overhead is $73,000. What are total manufacturing costs for the year?
A$170,240
B$197,032
C$243,240
D$286,390
Answer & Solution
Correct answer: C. $243,240
1. The first step of the cost of goods sold budget lists the three manufacturing costs.
2. Each amount comes from its own supporting budget, so no new estimating happens here.
3. The three are direct materials $46,208, direct labor $124,032 and factory overhead $73,000.
4. Total manufacturing costs for the year are $243,240.
5. $170,240 leaves out factory overhead, and $197,032 leaves out direct materials.
6. $286,390 is total work in process for the year, which also includes the opening work in process.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 7.7 Cost of Goods Sold Budget_
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