Question

Work in process inventory on December 31 is $42,000. Work in process inventory decreased by 40% during the year. Total manufacturing costs incurred amount to $260,000. What is the cost of goods manufactured? Please show your work.
a) $232,000

b) $302,000

c) $288,000

d) $190,000

Answer 1

Answer:

c) $288,000

Explanation:

The computation of the  cost of goods manufactured is shown below:

Cost of goods manufactured = Opening balance of Work in process + Manufacturing cost - Ending balance of Work in process

where,

Opening balance of Work in process equal to

= $42,000 × 100 ÷ 40

= $70,000

So, the cost of goods manufactured is

= $70,000 + $260,000 - $42,000

= $288,000