Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 21 - No. 17)
Which of the following is the formula to calculate the cost of goods manufactured?
Direct Materials + Direct Labor + Factory Overhead
Beginning WIP + Direct Materials + Direct Labor + Factory Overhead - Ending WIP
Beginning WIP - Ending WIP
Cost of Goods Sold + Ending Finished Goods Inventory
Explanation
Cost of goods manufactured takes the beginning WIP, adds the costs of direct materials, direct labor and factory overhead, and then deducts the ending WIP.
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