The formula to compute cost of goods manufactured is
A)beginning Work in Process Inventory plus purchases of raw material minus ending Work in Process Inventory.
B)beginning Work in Process Inventory plus direct labor plus direct material used plus overhead incurred minus ending Work in Process Inventory.
C)direct material used plus direct labor plus overhead incurred.
D)direct material used plus direct labor plus overhead incurred plus beginning Work in Process Inventory.

Question

Quizplus · Accepted Answer

The cost of goods manufactured is the total cost of the products that were finished during the period. It includes direct materials, direct labor, and manufacturing overhead, which are all costs incurred to produce finished goods. To calculate this, we take the beginning Work in Process inventory and add any direct materials, direct labor, and manufacturing overhead incurred during the period. We then subtract the ending Work in Process inventory to arrive at the total cost of goods manufactured. Therefore, the formula B, beginning Work in Process Inventory plus direct labor plus direct material used plus overhead incurred minus ending Work in Process Inventory, is the correct formula to calculate the cost of goods manufactured.

The Formula to Compute Cost of Goods Manufactured Is