Question

The following information is available about the August transactions of the Helpful Tool Company: Invoices for product costs paid during the month $ 493,000 Product costs charged to Work in Process $ 737,000 Cost of finished goods manufactured $ 718,000 Cost of goods sold $ 739,000 The product costs to be deducted from revenue in August amount to:

Answer 1

Cost of Goods Sold= $739,000

Step-by-step explanation:

The Costs of Goods Sold (COGS) is a derived figure when preparing an Income Statement. It is more comprehensive than the other figures because it is arrived at as follows:

Cost of Goods Sold = Opening Inventory + Purchase of inventory (if any)+ goods manufactured (if any)- closing inventory.

Costs of finished goods manufactured represents a part of COGS

Invoices for product costs during the month is usually a part of the purchase of inventory or purchase of raw material for finished goods manufactured

Product Costs charged to Work In Progress is also a fraction of costs for the period.

Therefore, the most comprehensive product cost for August is the Cost of Goods Sold which aggregates other costs.