Question

For the year, Redder Company has cost of goods manufactured of $600,000, beginning finished goods inventory of $200,000, and ending finished goods inventory of $250,000. The cost of goods sold is:

(a)$450,000.
(b)$500,000.
(c)$550,000.
(d)$600,000.

Answer 1

The cost of goods sold for Redder Company is calculated by adding the beginning finished goods inventory to the cost of goods manufactured and subtracting the ending finished goods inventory, resulting in $550,000.

Step-by-step explanation:

To calculate the cost of goods sold (COGS) for Redder Company, we need to consider the cost of goods manufactured during the year along with the changes in the finished goods inventory. The formula for COGS is:

Cost of Goods Sold = Beginning Finished Goods Inventory + Cost of Goods Manufactured - Ending Finished Goods Inventory

Using the figures provided:

• Beginning Finished Goods Inventory: $200,000
• Cost of Goods Manufactured: $600,000
• Ending Finished Goods Inventory: $250,000

COGS = $200,000 + $600,000 - $250,000

COGS = $800,000 - $250,000

COGS = $550,000

Therefore, the correct answer is (c) $550,000.