Question

Crane Company reported the following year-end information: beginning work in process inventory, $130000; cost of goods manufactured, $866000; beginning finished goods inventory, $192000; ending work in process inventory, $170000; and ending finished goods inventory, $214000. Crane Company's cost of goods sold for the year is______________.

Answer 1

Answer:

$844,000

Explanation:

From the question, we can let:

CGS = cost of goods sold = ?

BWIP = beginning work in process inventory = $130,000

CGM = cost of goods manufactured = $866,000

BFGI = beginning finished goods inventory = $192,000

EWIP = ending work in process inventory = $170,000

EFGI = ending finished goods inventory = $214,000

In accounting, CGS is calculated by deducting EFGI from the addition of BFGI and CGM as follows:

CGS = BFGI + CGM - EFGI

        = ($192,000 + $866,000) - $214,000

        = $1,058,000  - $214,000

        = $844,000  

Therefore, Crane Company's cost of goods sold for the year is $844,000.

Note:

Both BWIP and EWIP have already been used under Manufacturing Accounts to obtain CGM. Therefore, they cannot be used again to calculate the CGS.

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