Work in process inventory on December 31, 2011, is $42,000. Work in process inventory decreased by 40% during 2011. Total manufacturing costs incurred in 2011 amount to $260,000. What is cost of goods manufactured?
A) $232,000
B) $302,000
C) $288,000
D) $190,000

Question

Quizplus · Accepted Answer

To calculate the cost of goods manufactured, we need to find out the total manufacturing costs for the year, which is $260,000, less the decrease in the work in process inventory, which is 40% of the beginning balance ($42,000 x 40% = $16,800).

So, the cost of goods manufactured is:

$260,000 - $16,800 = $243,200

However, we need to remember to add the beginning work in process inventory:

$243,200 + $42,000 = $285,200

Therefore, the closest option is C, $288,000.

Work in Process Inventory on December 31, 2011, Is $42,000