the item that would notbe added when computing cash flows from operations using the indirect method.

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Chapter 12, Problem 7MC

To determine

To identify: the item that would notbe added when computing cash flows from operations using the indirect method.

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Grass Reed Bayou is a bottling company in The Netherlands. The company uses a normal costing system in which factory overhead is applied on the basis of direct labor costs. Budgeted factory overhead for the year was $680,000, and management budgeted $320,000 of direct labor costs. During the year, the company incurred the following actual costs. Direct materials used $ 382,000Direct labor 313,000Factory overhead 650,700The January 1 balances of inventory accounts are shown below. Materials-all direct $ 64,000Work-in-process 41,400Finished goods 25,600The December 31 balances of these inventory accounts were ten percent lower than the balances at the beginning of the year. The cost of goods manufactured during the year is: