Work in process inventory on December 31 is $42,000. Work in process inventory decreased by 40% during the year. Total manufacturing costs incurred amount to $260,000. What is the cost of goods manufactured?
A) $232,000
B) $302,000
C) $288,000
D) $190,000

Question

Quizplus · Accepted Answer

To find the cost of goods manufactured, we need to use the formula:

Beginning Work in Process Inventory + Total Manufacturing Costs - Ending Work in Process Inventory = Cost of Goods Manufactured

Plugging in the given values:

$42,000 (Beginning WIP) x 0.6 (decrease in WIP) = $16,800 (Ending WIP)

$42,000 (Beginning WIP) - $16,800 (Ending WIP) = $25,200 (WIP used)

$25,200 (WIP used) + $260,000 (Total Manufacturing Costs) = $285,200 (Total Manufacturing Costs to account for)

$285,200 (TMC to account for) - $42,000 (Beginning WIP) = $243,200 (COGM)

Therefore, the answer is C) $288,000

Work in Process Inventory on December 31 Is $42,000