Last month a manufacturing company had the following operating results:
What was the cost of goods manufactured for the month?
$\begin{array}{lrr}
\text { Beginning finished goods inventory} &£ 84,000 \
\text { Ending finished goods inventory} &£ 71,000\
\text { Sales } &£ 505,000\
\text {Gross margin } &£ 63,000\
\end{array}$

A)£429,000
B)£492,000
C)£442,000
D)£455,000

Question

Last month a manufacturing company had the following operating results:
What was the cost of goods manufactured for the month?
$\begin{array}{lrr}
  \text {  Beginning finished goods inventory} &£ 84,000 \
 \text {  Ending finished goods inventory} &£ 71,000\
 \text { Sales } &£ 505,000\
 \text {Gross margin  } &£ 63,000\
\end{array}$

A)£429,000
B)£492,000
C)£442,000
D)£455,000

Quizplus · Accepted Answer

The cost of goods sold (COGS) can be calculated using the formula: Sales - Gross Margin. So, COGS = £505,000 - £63,000 = £442,000. To find the cost of goods manufactured, we use the formula: COGS = Beginning Finished Goods Inventory + Cost of Goods Manufactured - Ending Finished Goods Inventory. Rearranging gives: Cost of Goods Manufactured = COGS + Ending Finished Goods Inventory - Beginning Finished Goods Inventory = £442,000 + £71,000 - £84,000 = £429,000.

Last Month a Manufacturing Company Had the Following Operating Results