The computation for Cost of Goods Manufactured on the income statement is ________.(Assume there are no Work-In-Process Inventories.)
A) direct materials used plus direct production costs
B) direct materials used plus direct labor plus indirect production costs
C) direct materials used plus direct labor
D) direct materials used plus direct labor minus indirect production costs

Question

Quizplus · Accepted Answer

Cost of Goods Manufactured includes the direct materials used, direct labor cost, and indirect production costs incurred during the manufacturing process. Therefore, the correct computation for Cost of Goods Manufactured is direct materials used plus direct labor plus indirect production costs. Choice A only includes direct materials used and direct production costs, while Choice C only includes direct materials used and direct labor. Choice D subtracts the indirect production cost from the total cost of direct materials and labor, which is incorrect.

The Computation for Cost of Goods Manufactured on the Income