The gross margin for Cushing Company for the first quarter of last year was $325,000 when sales were $700,000.The beginning inventory of finished goods was $60,000 and the ending inventory of finished goods was $85,000.The cost of goods manufactured for the first quarter would have been:

Question

Quizplus · Accepted Answer

Gross Margin = Sales - Cost of Goods Sold
$325,000 = $700,000 - Cost of Goods Sold
Cost of Goods Sold = $375,000

Cost of Goods Manufactured = Beginning Inventory + Purchases - Ending Inventory
Cost of Goods Manufactured = $60,000 + Cost of Goods Sold - $85,000
Cost of Goods Manufactured = $60,000 + $375,000 - $85,000
Cost of Goods Manufactured = $350,000 + $60,000 
Cost of Goods Manufactured = $410,000

Therefore, the Cost of Goods Manufactured for the first quarter was $400,000 (closest value).

The Gross Margin for Cushing Company for the First Quarter