Finished Goods Inventory Is $190,000

question 115

Multiple Choice

Finished goods inventory is $190,000. If overhead applied to these goods is $72,000, and the overhead rate is 120% of direct labor, how much direct materials cost was incurred in producing the inventory?

• A) $58,000.
• B) $31,600.
• C) $86,400.
• D) $56,000.
• E) $60,000.

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Definitions:

Balance Sheet

A financial statement that provides a snapshot of a company's financial position, showing assets, liabilities, and shareholders' equity at a specific point in time.

Net Income

The total profit of a company after all expenses, including taxes and operational costs, have been subtracted from its total revenue.

Cost of Goods Sold

Direct spending associated with producing the merchandise a company trades, including both materials and manpower costs.

Worksheet

A columnar device used by accountants to aid them in completing the accounting cycle—often just referred to as "spreadsheet." It is not a formal report.