Dolan Company's accounting records reflect the following inventories: $\begin{array}{lrr}&\text { Dec. } 31,2013&\text { Dec. } 31,2012\
\text { Raw materials inventory } & \$ 310,000 & \$ 260,000 \
\text { Work in process inventory } & 300,000 & 160,000 \
\text { Finished goods inventory } & 190,000 & 150,000
\end{array}$ During 2013, $600,000 of raw materials were purchased, direct labor costs amounted to $500,000, and manufacturing overhead incurred was $480,000.
-If Dolan Company's cost of goods manufactured for 2013 amounted to $1,390,000, its cost of goods sold for the year is
A)$1,500,000.
B)$1,250,000.
C)$1,350,000.
D)$1,430,000.

Question

Quizplus · Accepted Answer

The cost of goods sold is equal to the cost of goods manufactured plus the beginning finished goods inventory minus the ending finished goods inventory. The cost of goods manufactured is equal to the beginning work in process inventory plus the cost of raw materials used plus the direct labor costs plus the manufacturing overhead incurred minus the ending work in process inventory. The cost of raw materials used is equal to the raw materials purchased minus the ending raw materials inventory. Therefore, the cost of goods sold is equal to $1,390,000 + $150,000 - $190,000 = $1,350,000.

Dolan Company's Accounting Records Reflect the Following Inventories During 2013, $600,000 of Raw Materials Were Purchased, Direct Labor