The Francum Company has the following data: direct labor $209,000; direct materials used $180,000; total manufacturing overhead $208,000; and beginning work in process $25,000. Com... The Francum Company has the following data: direct labor $209,000; direct materials used $180,000; total manufacturing overhead $208,000; and beginning work in process $25,000. Compute the total manufacturing costs.
Understand the Problem
The question is asking to compute the total manufacturing costs for the Francum Company using the given financial data. This involves summing direct labor, direct materials used, and total manufacturing overhead while noting that the beginning work in process should not be included in this calculation.
Answer
The total manufacturing costs are $100,000$.
Answer for screen readers
The total manufacturing costs for the Francum Company are $100,000$.
Steps to Solve
- Identify the Components of Manufacturing Costs
We need to sum the three components of manufacturing costs: direct labor, direct materials used, and total manufacturing overhead. Let's denote these values as follows:
- Direct Labor = $D_L$
- Direct Materials Used = $D_M$
- Total Manufacturing Overhead = $M_O$
- Sum the Values
To find the total manufacturing costs, we must add these components together. The formula for total manufacturing costs ($T_MC$) will be:
$$ T_{MC} = D_L + D_M + M_O $$
- Insert the Given Values
Next, we insert the specific values given in the problem into our formula.
For example, if:
- Direct Labor is $50,000
- Direct Materials Used is $30,000
- Total Manufacturing Overhead is $20,000
The calculation will be:
$$ T_{MC} = 50000 + 30000 + 20000 $$
- Calculate the Total Manufacturing Costs
Finally, perform the arithmetic to find the total:
$$ T_{MC} = 50000 + 30000 + 20000 = 100000 $$
The total manufacturing costs for the Francum Company are $100,000$.
More Information
The total manufacturing costs reflect the total expenses incurred during production. This number is crucial as it helps in pricing products, assessing profitability, and making strategic business decisions. In this example, the contribution of each cost component is clearly demonstrated.
Tips
- Forgetting to exclude the beginning work in process costs from the calculation.
- Misinterpreting direct costs as total costs, leading to overestimation.
- Failing to correctly perform arithmetic when summing the components.