Solt Corporation uses a job-order costing system and has provided the following partially completed T-account summary for the past year. The Cost of Goods Manufactured for the year was $415,000. The unadjusted Cost of Goods Sold for the year was:
A) $503,000
B) $415,000
C) $403,000
D) $453,000

Question

Solt Corporation uses a job-order costing system and has provided the following partially completed T-account summary for the past year.  The Cost of Goods Manufactured for the year was $415,000. The unadjusted Cost of Goods Sold for the year was:
A) $503,000 
B) $415,000 
C) $403,000 
D) $453,000

Quizplus · Accepted Answer

The unadjusted Cost of Goods Sold can be calculated by adding the beginning balance of Work in Process inventory (which is not given in the problem), to the cost of goods manufactured (which is $415,000), and subtracting the ending balance of Work in Process inventory (which is $3,000). The equation would be: 
Beginning Work in Process inventory + Cost of Goods Manufactured - Ending Work in Process inventory = Cost of Goods Sold. 
Since the beginning Work in Process inventory is not given, we cannot calculate the exact Cost of Goods Sold. However, we can see from the T-account summary that the ending balance of Work in Process inventory is $3,000, which means that some amount of product was not yet completed at the end of the year. Therefore, we know that the Cost of Goods Sold must be less than $415,000. The only answer choice that is less than $415,000 is C, $403,000, so that is the best choice.

Solt Corporation Uses a Job-Order Costing System and Has Provided