How is the cost of goods manufactured calculated?
A) sales - cost of goods sold
B) gross margin - other expenses
C) direct materials cost + direct labour cost + manufacturing overhead cost
D) total product costs incurred during the current period + beginning work-in-process - ending work-in-process

Question

Quizplus · Accepted Answer

The cost of goods manufactured represents the total product costs incurred during the current period plus the beginning work in process inventory minus the ending work in process inventory. This formula reflects the direct materials cost, direct labor cost, and manufacturing overhead cost required to manufacture the goods. Option A is incorrect because it calculates the gross profit, not the cost of goods manufactured. Option B is incorrect because it subtracts expenses other than the cost of goods manufactured. Option C is incorrect because it only adds up the direct materials cost, direct labor cost, and manufacturing overhead cost, but does not include work in process inventory.

How Is the Cost of Goods Manufactured Calculated