Compute cost of goods sold for the period using the following information. Finished goods inventory, beginning $ 352,000 Work in process inventory, beginning 83,500 Work in process inventory, ending 75,600 Cost of goods manufactured 972,700 Finished goods inventory, ending 286,000 Cost of Goods Sold is Computed as: Cost of goods manufactured Add: Work in process inventory, beginning Cost of goods available for sale Add: Finished goods inventory, beginning Cost of goods sold Copy and paste your question here… How soon do you need an Answer? Have a Referral code? Attach Files Get Answer Solve your Math Problem with one click Type a math problem SOLVE Cose = sine 0 $ 0
The Correct Answer and Explanation is :
To compute the Cost of Goods Sold (COGS) for the period, we need to follow the formula and incorporate the information provided. Here’s the breakdown of the steps:
Formula for COGS:
[
\text{Cost of Goods Sold} = \text{Cost of Goods Manufactured} + \text{Work in Process Inventory, Beginning} – \text{Work in Process Inventory, Ending} + \text{Finished Goods Inventory, Beginning} – \text{Finished Goods Inventory, Ending}
]
Given Data:
- Cost of Goods Manufactured = $972,700
- Work in Process Inventory, Beginning = $83,500
- Work in Process Inventory, Ending = $75,600
- Finished Goods Inventory, Beginning = $352,000
- Finished Goods Inventory, Ending = $286,000
Step-by-Step Calculation:
- Compute the Cost of Goods Available for Sale:
[
\text{Cost of Goods Available for Sale} = \text{Cost of Goods Manufactured} + \text{Work in Process Inventory, Beginning}
]
[
= 972,700 + 83,500 = 1,056,200
] - Add Finished Goods Inventory, Beginning:
[
\text{Total Available for Sale} = 1,056,200 + 352,000 = 1,408,200
] - Subtract Finished Goods Inventory, Ending:
[
\text{Cost of Goods Sold} = 1,408,200 – 286,000 = 1,122,200
]
Final Answer:
The Cost of Goods Sold (COGS) for the period is $1,122,200.
Explanation:
The Cost of Goods Sold is the direct costs of producing goods that were sold during the period. It includes the cost of manufacturing and the inventory adjustments at the beginning and end of the period. We started with the Cost of Goods Manufactured (which is the total cost of production during the period), then adjusted for the inventory changes to calculate the actual amount of goods sold. By subtracting the ending inventories from the total available for sale, we arrived at the final COGS figure.
This process helps businesses understand their profit margin and production efficiency, as COGS is subtracted from sales to calculate the gross profit.