Question

Below are data from the income statement of Brown, Inc:

Beginning inventory, finished goods ----------------$16,000
Ending inventory, finished goods ---------------------21,000
Cost of goods sold -----------------------------------43,000
Gross margin from sales ------------------------------39,000
Operating expenses - marketing and selling --------20,000
Net income --------------------------------------------19,000

What was Brown's cost of goods manufactured?

A.$37,000
B.$38,000
C.$48,000
D.$50,000

Answer 1

Brown, Inc.'s cost of goods manufactured is calculated by subtracting the ending inventory from the sum of beginning inventory and cost of goods sold, resulting in $38,000.

Step-by-step explanation:

To find Brown's cost of goods manufactured (COGM), we need to apply the following formula:

COGM = Beginning Inventory + Cost of Goods Sold (COGS) - Ending Inventory

Using Brown, Inc.'s data, we can plug in the numbers:

• Beginning Inventory of Finished Goods: $16,000
• Cost of Goods Sold: $43,000
• Ending Inventory of Finished Goods: $21,000

The calculation would then be:

COGM = $16,000 + $43,000 - $21,000

COGM = $59,000 - $21,000

COGM = $38,000

So, the cost of goods manufactured is $38,000, which corresponds to option B.