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Matlin Corp.'s trial balance of income statement accounts for the year ended December 31, 2011 included the following:

-Cost of goods manufactured is
A)$70,000.
B)$82,000.
C)$53,000.
D)$50,000.

Question

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Matlin Corp.'s trial balance of income statement accounts for the year ended December 31, 2011 included the following:
 
-Cost of goods manufactured is
A)$70,000. 
B)$82,000. 
C)$53,000. 
D)$50,000.

Quizplus · Accepted Answer

Cost of goods manufactured is calculated by adding the beginning inventory of finished goods to the cost of goods manufactured and then subtracting the ending inventory of finished goods. From the trial balance, we can see that Matlin Corp. had a beginning finished goods inventory of $12,000, an ending finished goods inventory of $14,000, and direct labor costs of $50,000. Thus, the cost of goods manufactured is:
Beginning finished goods inventory + Direct labor costs = Cost of goods manufactured
$12,000 + $50,000 = $62,000
Ending finished goods inventory = $14,000
Cost of goods sold = Beginning finished goods inventory + Cost of goods manufactured - Ending finished goods inventory
Cost of goods sold = $12,000 + $62,000 - $14,000 = $60,000
Therefore, the cost of goods manufactured is $62,000 - $60,000 = $2,000. Adding this to the beginning raw materials inventory of $80,000 gives a total cost of goods manufactured of $82,000. So, the correct answer is B.

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