Dolan Manufacturing Company's accounting records reflect the following inventories: During 2010, $400,000 of raw materials were purchased, direct labor costs amounted to $500,000, and manufacturing overhead incurred was $480,000.
If Dolan Manufacturing Company's cost of goods manufactured for 2010 amounted to $1,190,000, its cost of goods sold for the year is

Question

Dolan Manufacturing Company's accounting records reflect the following inventories:  During 2010, $400,000 of raw materials were purchased, direct labor costs amounted to $500,000, and manufacturing overhead incurred was $480,000.
If Dolan Manufacturing Company's cost of goods manufactured for 2010 amounted to $1,190,000, its cost of goods sold for the year is

Quizplus · Accepted Answer

To find out the cost of goods sold, we need to use the following formula:
Cost of goods manufactured + Beginning finished goods inventory - Ending finished goods inventory = Cost of goods sold

We are given the cost of goods manufactured as $1,190,000. However, we need to find out the beginning and ending finished goods inventory to calculate the cost of goods sold.

Beginning finished goods inventory = $230,000
Ending finished goods inventory = $120,000

Now, we can plug in the values in the formula as follows:
$1,190,000 + $230,000 - $120,000 = Cost of goods sold
Cost of goods sold = $1,300,000

Therefore, the correct answer is option A).

Dolan Manufacturing Company's Accounting Records Reflect the Following Inventories