Manufacturing companies typically have one or more of the following three types of inventory: direct materials, work-in-process, and finished goods. The companies purchase materials and components and convert them into various finished goods. To be able to solve for the amounts required in this problem you need to understand the flow of inventory. Direct materials, direct labor and manufacturing overhead flow into work-in-process inventory as the units are being produced. When the units are completed the cost of the goods manufactured flow into finished goods. As inventory is sold the cost of goods sold flows to the income statement. Requirement 1. Calculate the cost of direct materials inventory 8 8/31/ 2017 2017. Direct materials inventory are direct materials in stock and awaiting use in the manufacturing process. The ending balance for direct materials inventory is calculated by adding in purchases made during the period and subtracting out the materials that were used. Calculate the direct materials inventory value at 8 8/31/ 2017 2017. Direct materials inventory 8/1/2017 $ 100 Direct materials purchased 330 Direct materials available for production 430 Direct materials used (390) Direct materials inventory 8/31/2017 $ 40 Requirement 2. Calculate the fixed manufacturing overhead costs for August August 2017 2017. Manufacturing overhead costs (also called indirect manufacturing costs) are all manufacturing costs that are related to the cost object, but cannot be traced to that cost object in an economically feasible way. Some examples include supplies, plant rent, and property taxes on the plant. Normally, we would add the fixed overhead and variable overhead costs to calculate the total overhead costs. In this case we will rearrange the formula and subtract variable costs from total overhead costs. Now calculate the fixed manufacturing overhead costs for August August. Total manufacturing overhead costs $ 460 Less: Variable manufacturing overhead costs (270) Fixed manufacturing overhead costs for August $ 190 Requirement 3. Calculate the direct manufacturing labor costs for August August 2017 2017. Direct manufacturing labor costs include the compensation of all manufacturing labor that can be traced to the cost object. To answer this question we need to rearrange the formula for total manufacturing costs incurred to solve for the amount needed. Calculate the direct manufacturing labor costs for the month of August August. Total manufacturing costs incurred 460 Less: Direct materials used 390 Total manufacturing overhead costs (460) Direct manufacturing labor costs for August Enter any number in the edit fields and then click Check Answer. 3 parts remaining Skip Ahead Clear All