Question

Worth Company reported the following year-end information: beginning work in process inventory, $180,000; cost of goods manufactured, $866,000; beginning finished goods inventory, $252,000; ending work in process inventory, $220,000; and ending finished goods inventory, $264,000. Worth Company’s cost of goods sold for the year is _______.

Answer 1

Worth Company's cost of goods sold for the year is calculated by adding the beginning finished goods inventory to the cost of goods manufactured, then subtracting the ending finished goods inventory. The resulting COGS is $854,000.

Step-by-step explanation:

To calculate Worth Company’s cost of goods sold (COGS) for the year, we need to adjust the cost of goods manufactured by the changes in both the work in process inventory and the finished goods inventory. The formula to calculate COGS is:

COGS = Beginning Finished Goods Inventory + Cost of Goods Manufactured - Ending Finished Goods Inventory

Using the information provided:

• Beginning Finished Goods Inventory = $252,000
• Cost of Goods Manufactured = $866,000
• Ending Finished Goods Inventory = $264,000

Plugging these numbers into the formula gives us:

COGS = $252,000 + $866,000 - $264,000

COGS = $854,000

Therefore, Worth Company’s COGS for the year is $854,000.