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LO 4.3Is the cost of goods manufactured the same as the cost of goods sold?

User Quinekxi
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1 Answer

4 votes

Answer:

No

Step-by-step explanation:

The computation of the cost of goods manufactured would be

= Direct material cost + Direct labor cost + Manufacturing Overhead cost

where,

Manufacturing Overhead would be

= Factory overhead + Beginning work-in-process - Ending work-in-process

The above equation shows a cost allocated to direct material, direct labor and the manufacturing overhead

And, the cost of goods sold would be

= Beginning balance of inventory + cost of goods manufactured - ending balance of inventory

By this above equation, we get to know that the cost of goods manufactured is a sub part of the cost of goods sold

The other formula of cost of goods sold

= Beginning balance of inventory + purchase made during the year - ending balance of inventory

User Kubwimana Adrien
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