The balance of the finished goods inventory at the end of the year was:

Question

Quizplus · Accepted Answer

The balance of the finished goods inventory at the beginning of the year was $100,000. During the year, direct materials ($120,000) and direct labor ($160,000) were added, and manufacturing overhead ($200,000) was applied to work in process. The total cost of goods manufactured is the sum of these amounts, which is $580,000 ($100,000 + $120,000 + $160,000 + $200,000). The cost of goods manufactured is added to the beginning finished goods inventory balance to arrive at the cost of goods available for sale, which is $680,000 ($100,000 + $580,000). If the cost of goods sold during the year was $630,000, then the balance of the finished goods inventory at the end of the year was $50,000 ($680,000 - $630,000). Therefore, choice B is correct.

The Balance of the Finished Goods Inventory at the End