Question

In the Schedule of Cost of Goods Manufactured, which of the following statements is true?

1. Cost of goods manufactured = Total manufacturing costs + Beginning work in process inventory- Ending work in process inventory.
2. Total raw materials available = Ending raw materials inventory + Purchases of raw materials.
3. Raw materials used in production - Beginning raw materials inventory. Purchases of raw materials - Ending raw materials inventory.
4. Total direct materials = Raw materials used in production - Ending raw materials inventory.
a) Both statements I and III are true.
b) Both statements II and Ill are true
c) Both statements I and II are true.
d) Both statements II and IV are true.

Answer 1

In the Schedule of Cost of Goods Manufactured, true statements are that the cost of goods manufactured equals total manufacturing costs plus beginning work in process inventory minus ending work in process inventory.

Step-by-step explanation:

In the Schedule of Cost of Goods Manufactured, certain statements are made regarding the calculations involved in determining the cost of goods manufactured and raw materials accounting. Let's examine the provided statements:

Statement 1: Cost of goods manufactured = Total manufacturing costs + Beginning work in process inventory - Ending work in process inventory.

Statement 2: Total raw materials available = Ending raw materials inventory + Purchases of raw materials.

Statement 3: Raw materials used in production = Beginning raw materials inventory + Purchases of raw materials - Ending raw materials inventory.

Statement 4: Total direct materials = Raw materials used in production - Ending raw materials inventory.

The correct calculations are as follows:

Cost of goods manufactured equals total manufacturing costs plus beginning work in process inventory minus ending work in process inventory.

Total raw materials available for use equals beginning raw materials inventory plus purchases of raw materials.

Raw materials used in production equals beginning raw materials inventory plus purchases of raw materials minus ending raw materials inventory.

Total direct materials used in production does not equate to raw materials used minus ending raw materials inventory; rather, it should include raw materials beginning balance plus purchases minus ending inventory to reflect usage.

Therefore, the correct answer is that both statements I and III are true. This corresponds to option (a).