Locust Systems has the following information for the most recent year of operations. The firm uses a manufacturing overhead rate of 167% of DL cost.

Direct materials beginning inventory

$23,800

Direct materials ending inventory

$29,500

Selling and administrative costs

$75,000

Beginning WIP inventory

$45,000

Ending WIP inventory

$55,000

Ending FG inventory

$30,000

Direct materials purchased during the year

$100,000

Sales revenue

$1,250,000

Direct labor cost incurred

$87,800

Beginning FG inventory

$25,000

Find the cost of goods manufactured during the year.

To find the **Cost of Goods Manufactured (COGM)**, we need to follow these steps. Here's the formula for COGM:

\[
\text{COGM} = \text{Direct Materials Used} + \text{Direct Labor} + \text{Manufacturing Overhead} + \text{Beginning WIP} - \text{Ending WIP}
\]

We'll calculate each component step by step:

### 1. **Direct Materials Used**:
\[
\text{Direct Materials Used} = \text{Beginning Direct Materials} + \text{Direct Materials Purchased} - \text{Ending Direct Materials}
\]
\[
\text{Direct Materials Used} = 23,800 + 100,000 - 29,500 = 94,300
\]

### 2. **Direct Labor Cost**:
\[
\text{Direct Labor Cost} = 87,800
\]

### 3. **Manufacturing Overhead**:
The manufacturing overhead rate is **167% of Direct Labor Cost**:
\[
\text{Manufacturing Overhead} = 1.67 \times \text{Direct Labor Cost}
\]
\[
\text{Manufacturing Overhead} = 1.67 \times 87,800 = 146,626
\]

### 4. **Beginning and Ending WIP**:
- Beginning WIP = $ 45,000 $
- Ending WIP = $ 55,000 $

### 5. **Cost of Goods Manufactured (COGM)**:

Now, we can calculate the COGM:
\[
\text{COGM} = 94,300 + 87,800 + 146,626 + 45,000 - 55,000
\]
\[
\text{COGM} = 318,726
\]

Thus, the **Cost of Goods Manufactured** during the year is **$318,726**.

---

Would you like further clarification or details?

Here are 5 related questions for expanding this topic:
1. How does the Cost of Goods Manufactured affect financial statements?
2. What role does the overhead rate play in cost allocation?
3. How would an increase in direct materials purchased impact the COGM?
4. What are the differences between COGM and Cost of Goods Sold (COGS)?
5. How do WIP inventory changes influence overall production costs?

**Tip:** Regularly reviewing and adjusting your overhead allocation can help in keeping product costs accurate.

Locust Systems has the following information for the most recent year of operations. The firm uses a manufacturing overhead rate of 167% of DL cost. Direct materials beginning inventory: $23,800. Direct materials ending inventory: $29,500. Selling and administrative costs: $75,000. Beginning WIP inventory: $45,000. Ending WIP inventory: $55,000. Ending FG inventory: $30,000. Direct materials purchased during the year: $100,000. Sales revenue: $1,250,000. Direct labor cost incurred: $87,800. Beginning FG inventory: $25,000. Find the cost of goods manufactured during the year.

Learn how to calculate the Cost of Goods Manufactured (COGM) for Locust Systems using key cost accounting concepts. Includes a step-by-step breakdown of direct materials used, direct labor cost, manufacturing overhead, and WIP inventory changes, resulting in a COGM of $318,726.

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