Question

Joes coffee uses a job costing system. During the current year, the balance in Joes finished goods inventory increased $1,129,000, the balance in Joe's work in process inventory decreased $446,000, and Joe's total manufacturing costs added were $3,020,000. What are Joe's cost of goods manufactured (COGM) and cost of goods sold (COGS)?

a.COGM equals $2,574,000 and COGS equals $1.445,000
b.COGM equals $3,466,000 and COGS equals $2,337,000
c.COGM equals $3,703,000 and COGS equals $3,257,000
d.COGM equals $2,574,000 and COGS equals $3,703,000
e.None of the above

Answer 1

Joe's cost of goods manufactured (COGM) is $3,703,000 and his cost of goods sold (COGS) is $2,574,000.

Step-by-step explanation:

To calculate Joe's cost of goods manufactured (COGM), we need to add the increase in finished goods inventory and subtract the decrease in work in process inventory from the total manufacturing costs. COGM = (Increase in finished goods inventory) + (Total manufacturing costs) - (Decrease in work in process inventory)

COGM = $1,129,000 + $3,020,000 - $446,000 = $3,703,000

To calculate Joe's cost of goods sold (COGS), we need to subtract the increase in finished goods inventory from the cost of goods manufactured. COGS = (COGM) - (Increase in finished goods inventory)

COGS = $3,703,000 - $1,129,000 = $2,574,000