This is the cost of goods manufactured.
This is the cost of goods sold.
Total manufacturing costs are total prime costs (direct materials used + direct labor used) + manufacturing overhead applied. We are told that the direct labor was $300,000 but will need to calculate the direct materials used and the manufacturing overhead applied for January. The beginning direct materials inventory was $134,000. During the period, they purchased $189,000 of direct materials and also incurred $3,000 in transportation in costs. However, they also returned $1,000 of direct materials during the period. Adding these together we can calculate the total direct materials available during January as $325,000. Since there was an ending inventory of $124,000, they must have used $201,000 of direct materials during the period. Overhead is applied as 60% of direct labor, which totals $180,000 ($300,000 × 60%). Adding the prime costs (direct materials and direct labor) plus the overhead, we get $681,000 of total manufacturing costs.
Total manufacturing costs are total prime costs (direct materials used + direct labor used) + manufacturing overhead applied. This is only direct materials plus direct labor and does not include overhead applied.
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Alex Company applies factory overhead at a rate of 60% of direct labor cost, and any overapplied or underapplied factory overhead is deferred until the end of the year, December 31. Alex Company's total manufacturing cost for January was