Question

The following data (in thousands of dollars) have been taken from the accounting records of Karmint Corporation for the just completed year: sales - $830; raw materials inventory, beginning - $50, raw materials inventory, ending - $40; purchases of raw materials - $150; direct labor - $140: manufacturing overhead - $160; administrative expenses - $120; selling expenses - $150; work in process inventory, beginning - $30; work in process inventory, ending - $50; finished goods inventory, beginning - $80; finished goods inventory, ending - $100.The cost of goods sold for the year (in thousand of dollars) was:A) $540.B) $420.C) $460.D) $520.

Answer 1

Answer:

B) $420

Explanation:

Raw materials inventory, beginning - $50

add: purchases of raw materials - $150

less: raw materials inventory, ending - $40

equals: raw materials used - $160

add: direct labor - $140

add: manufacturing overhead - $160

equals: Total Manufacturing Cost - $460

add: work in process inventory, beginning - $30

equals: Cost of Goods Put into Process = $490

less: work in process inventory, ending - $50

equals: Cost of Goods Manufacture - $440

add: finished goods inventory, beginning - $80

equals: Cost of Goods Available for Sale - $520

less: finished goods inventory, ending - $100

equals: Cost of Goods Sold - $420

Cost of goods sold (COGS) refers to the direct costs attributable to the production of the goods sold in a company.

This amount includes the cost of the materials used in creating the good along with the direct labor costs used to produce the good.

It excludes indirect expenses, such as distribution costs and general and selling expenses.