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Cost of goods manufactured is equal to:
a) total manufacturing costs plus ending materials inventory less beginning materials inventory
b) cost of goods sold beginning work in process inventory less ending work in process inventory
c) total manufacturing costs plus ending work in process inventory less beginning work in process inventory
d) total manufacturing costs plus beginning work in process inventory less ending work in process inventory

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Answer:

The correct answer is letter "D": total manufacturing costs plus beginning work in process inventory less ending work in process inventory.

Explanation:

Costs of Goods Manufactured or COGM represents the total value of the inventory that is ready for sale given a determined period. COGM is calculated by adding the total manufacturing costs (direct materials, direct labor, and overhead) to the beginning Work-In-Progress (WIP) Inventory and subtracting the ending goods in process inventory.

COGM is helpful to determine the unitary costs of the goods being produced. After the COGM is calculated the value is transferred to the Finished Goods inventory account which is used to calculate the Cost of Goods Sold.

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