Example 38: The following data should be used for the next few questions:

Raw materials inventory, January 1 $ 12,000

Raw materials inventory, December 31 16,000

Work in process, January 1 5,000

Work in process, December 31 8,000

Finished goods, January 1 17,000

Finished goods, December 31 12,000

Raw materials purchases 118,000

Direct labor 165,000

Factory utilities 64,000

Indirect labor 12,000

Factory depreciation 18,000

Selling and administrative expenses 220,000

How much is the cost of the direct materials used?

a. $118,000

b. $114,000

c. $122,000

d. $130,000

Example 39: Assume your answer to question 38 above is $130,000. How much are total manufacturing costs?

a. $389,000

b. $393,000

c. $295,000

d. $609,000

Example 40: Assume your answer to question 39 above is $400,000. How much is cost of goods manufactured?

a. $400,000

b. $389,000

c. $397,000

d. $403,000

Example 41: Assume your answer to question 40 above is $420,000. How much is cost of goods sold?

a. $420,000

b. $408,000

Page | 9

c. $295,000

d. $425,000