Chop Shop Manufacturing Company makes specialty tools. In July, Chop Shop incurred manufacturing costs of $4,000,000 for direct materials, direct labour, and overhead. 30% of the total costs represents overhead applied. The overhead rate is $1 for every $0.50 of direct labour costs incurred. Inventory balances were:

July 1July 31

Raw materials........................................$100,000$ 80,000

Work in process...........................................90,00095,000

Finished goods.........................................120,000130,000

Instructions

a)Determine the cost of raw materials purchased in July.

b)Prepare a cost of goods manufactured schedule for July 2016.

c)Where does the cost you calculated in part b appear in the financial statements at year-end? Explain.