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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 1 July 31
Raw materials $100,000 $ 80,000
Work in process 90,000 95,000
Finished goods 120,000 130,000
Instructions
Question a) Determine the cost of raw materials purchased in July.
Question b) Prepare a cost of goods manufactured schedule for July 2016.
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