Question

Which of the following represents the correct formula for calculating cost of goods manufactured?

A) Direct materials used + direct labor + factory overhead + beginning work in process + ending work in process.

B) Direct materials used + direct labor + factory overhead + beginning work in process - ending work in process.

C) Direct materials used + direct labor + factory overhead - beginning work in process + ending work in process.

D) Direct materials used + direct labor + factory overhead - beginning work in process - ending work in process.

E) Direct materials used + direct labor - factory overhead + beginning work in process - ending work in process.

Answer 1

Answer:

B) Direct materials used + direct labor + factory overhead + beginning work in process - ending work in process.

Explanation:

The formula to compute the  cost of goods manufactured is shown below:

= Direct material used + Direct labor + Manufacturing Overhead

where,

Manufacturing Overhead equal to

= Factory overhead + Beginning work-in-process - Ending work-in-process

Or we can say that

Direct material used + direct labor + factory overhead + beginning work in process - ending work in process