The budgeted finished goods inventory and cost of goods sold for a manufacturing company for the year are as follows: January 1 finished goods,$765,000; December 31 finished goods,$640,000; and cost of goods sold,$2,560,000.The budgeted costs of goods manufactured is

Question

Quizplus · Accepted Answer

The equation to calculate the cost of goods manufactured is:

Beginning inventory of work in process + Total manufacturing costs - Ending inventory of work in process = Cost of goods manufactured

We are given the beginning and ending finished goods inventory, and the cost of goods sold. Therefore, we need to use the following equation to calculate the cost of goods manufactured:

Beginning finished goods inventory + Cost of goods manufactured - Ending finished goods inventory = Cost of goods sold

Substituting the given values, we get:

$765,000 + Cost of goods manufactured - $640,000 = $2,560,000

Solving for Cost of goods manufactured, we get:

Cost of goods manufactured = $2,435,000 (Option C)

The Budgeted Finished Goods Inventory and Cost of Goods Sold