The following information relates to the operations of Cruz Manufacturing during the current year: $\begin{array}{llr}
\text { Raw materials used } &\$20,000\
\text { Direct labor wages } &60,000\
\text { Sales salaries and commissions } &50,000\
\text { Depreciation on production equipment } &4,000\
\text { Rent on manufacturing facilities } &30,000\
\text {Packaging and shipping supplies } &6,000\
\text { Sales revenue } &190,000\
\text {Units produced and sold } &10,000\
\text { Selling price per unit } &\$20.00\
\end{array}$
Based on this information, what is the company's cost of goods sold?
A) $86,000
B) $120,000
C) $114,000
D) $170,000

Question

The following information relates to the operations of Cruz Manufacturing during the current year: $\begin{array}{llr}
  \text { Raw materials used } &\$20,000\
 \text { Direct labor wages } &60,000\
 \text { Sales salaries and commissions } &50,000\
 \text { Depreciation on production equipment } &4,000\
 \text { Rent on manufacturing facilities } &30,000\
 \text {Packaging and shipping supplies  } &6,000\
 \text { Sales revenue } &190,000\
 \text {Units produced and sold  } &10,000\
 \text { Selling price per unit } &\$20.00\
\end{array}$
 Based on this information, what is the company's cost of goods sold?
A) $86,000
B) $120,000
C) $114,000
D) $170,000

Quizplus · Accepted Answer

Cost of goods sold is calculated as beginning inventory plus purchases minus ending inventory. In this case, beginning inventory is given as $15,000, purchases are $124,000, and ending inventory is $25,000. So the cost of goods sold for Cruz Manufacturing during the current year is $114,000 (i.e., $15,000 + $124,000 - $25,000 = $114,000).

The Following Information Relates to the Operations of Cruz Manufacturing