Which of the following statements regarding the schedule of cost of goods manufa

Question

Which of the following statements regarding the schedule of cost of goods manufactured and sold is true?

A) The amount of raw materials used is computed by subtracting the raw materials available for use from the ending balance in the raw materials inventory account.

B) The amount of raw materials used is subtracted from the amount of labor used to determine the total manufacturing cost.

C) The cost of goods sold is determined by subtracting the ending balance in the finished goods inventory account from the amount of the finished goods available for sale.

D) The amount of overapplied overhead is added to the cost of goods sold.

Explanation / Answer

The Answer is C - "The cost of goods sold is determined by subtracting the ending balance in the finished goods inventory account from the amount of the finished goods available for sale"

Cost of goods manufactured and sold can be computed using the following formula;

Cost of goods manufactured and sold = Cost of goofs available for sale - Closing stock of finished goods

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