Jensen Manufacturing Company makes specialty tools. In January, Jensen incurs manufacturing costs of $12,000,000 for direct materials, direct labor, and overhead. 20% of the total costs represents overhead applied. The overhead rate is $1 for every $2 of direct labor costs incurred. Inventory balances were:

January 1 January 31

Raw materials $300,000 $500,000

Work in process 600,000 400,000

Finished goods 400,000 200,000

At the end of January, there was $1,000 of overapplied overhead. Instructions (a) Determine the cost of raw materials purchased in January. (b) Prepare a cost of goods manufactured schedule for January 2013. (c) Compute the cost of goods sold for January.