Question

Sales revenue$ 4,000Purchases of direct materials$ 400Direct labor$ 450Manufacturing overhead$ 620Operating expenses$ 650Beginning raw materials inventory$ 200Ending raw materials inventory$ 180Beginning work in process inventory$ 320Ending work in process inventory$ 410Beginning finished goods inventory$ 250Ending finished goods inventory$ 200What was cost of goods sold?A) $1,450B) $1,350C) $1,470D) $ 790

Answer 1

Answer:

A) $1,450

Explanation:

beginning finished goods + COGM = ending finished goods + COGS

to know COGS we need cost of goods manufactured

COGM = beginning WIP + cost added - ending WIP

to knwo COGM we need to know cost added

cost added = labor + materials + overehead

to know that we need to know materials used:

used into production= beginning raw+purchase - ending raw

used = 200 + 400 - 180 = 420

and now we go backwards in the loop to fill the blank and solve for COGS

cost added = 450 + 420 + 620 = 1490

COGM = 320 + 1490 - 410 = 1400

and we now return to the formula to find COGS

250 + 1400 = 200 + COGS

1650 - 200 = COGS = 1,450