COST ACCOUNTING
INTRODUCTION TO COST ACCOUNTING
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Question
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LCB Corp transferred P72, 000 of raw materials to its production department in February and incurred P37, 000 of conversion costs (P22, 000 of direct labor and P15, 000 of overhead). At the beginning of the period, P14, 000 of inventory (materials and conversion costs) were in process. At the end of the period, P18, 000 of inventory were in process. What is the cost of goods manufactured?
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105, 000
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109, 000
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123, 000
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141, 000
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Explanation:
Detailed explanation-1: -The term work-in-progress (WIP) is a production and supply-chain management term describing partially finished goods awaiting completion. WIP refers to the raw materials, labor, and overhead costs incurred for products that are at various stages of the production process.
Detailed explanation-2: -Direct materials. Add the total cost of materials purchases in the period to the cost of beginning inventory, and subtract the cost of ending inventory. The result is the cost of direct materials incurred during the period.
Detailed explanation-3: -Conversion costs include direct labor and overhead expenses incurred as a result of the transformation of raw materials into finished products.
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