Question

(LO 3)

The formula to determine the cost of goods manufactured is:
(a)Beginning raw materials inventory + Total manufacturing costs − Ending work in process inventory.
(b)Beginning work in process inventory + Total manufacturing costs − Ending finished goods inventory.
(c)Beginning finished good inventory + Total manufacturing costs − Ending finished goods inventory.
(d)Beginning work in process inventory + Total manufacturing costs − Ending work in process inventory.

Answer 1

The correct formula for calculating the cost of goods manufactured is the beginning work in process inventory plus total manufacturing costs, minus the ending work in process inventory.

Step-by-step explanation:

The question relates to the calculation of the cost of goods manufactured, which is a crucial concept in managerial accounting and cost accounting within the context of Business studies. To find the cost of goods manufactured, the formula that should be used is:

(d) Beginning work in process inventory + Total manufacturing costs − Ending work in process inventory.

This calculates the total cost associated with producing goods over a certain period. The beginning work in process inventory is added to the total manufacturing costs, which include direct materials, direct labor, and manufacturing overhead. Finally, the ending work in process inventory is subtracted from this total to yield the cost of goods manufactured for the period.