Answer: $22,000
Explanation: The cost of goods manufactured is the total amount of goods that were fully produced for a given period, and are thus available for sale. This is calculated by taking the following into account:
Total maunfacturing costs - the total costs of all the resources used during the production of a good, which is further broken up into:
Direct materials - The materials that are used in the making of the good. These materials form an integral part of the product and can be easily traced directly back to the product.
Direct Labour - These are the labour costs that can be easily traced back to each individual part of making the product. For example wages.
Manufacturing overheads - These are the costs that were used in the making of the product, that cannot be easily traced to the specific unit or section of the product. For example electricity.
PLUS: Beginning Work - in - Process (WIP): These are the products that were partially completed at the end of the previous year, and carried forward to the current financial year for completion. These costs are included in this calculation because they will be completed during the year, and thus be available for sale.
MINUS: Ending Work - in - Process (WIP): These are the products that are partially completed at the end of the financial year. These costs are excluded from this calculation as the products are not complete at year end, and are thus not available for sale as yet.
The calcuatlion of the cost of goods manufactured is as follows:
Total Manufacturing costs:
Direct materials = 12,000
+ Direct Labour = 5,000
+Manufacturing overheards = 3,000
+Beginning WIP = 10,000
-Ending WIP = (8000)
= $22,000