Cost of goods manufactured is calculated as follows:
A) Beginning WIP + direct materials used + direct labor + manufacturing overhead + ending WIP.
B) Direct materials used + direct labor + manufacturing overhead - beginning WIP + ending WIP.
C) Beginning WIP + direct materials used + direct labor + manufacturing overhead - ending WIP.
D) Direct materials used + direct labor + manufacturing overhead - ending WIP - beginning WIP.

Question

Quizplus · Accepted Answer

The cost of goods manufactured is the total cost of all goods completed during the period. It includes all costs incurred in the production process such as direct materials used, direct labor, and manufacturing overhead. The formula for calculating the cost of goods manufactured is the sum of the beginning work in process (WIP) inventory, direct materials used, direct labor, manufacturing overhead, less the ending work in process inventory. Therefore, option C correctly states the formula for calculating the cost of goods manufactured.

Cost of Goods Manufactured Is Calculated as Follows