The following information was taken from the accounts of the Gorme Manufacturing Company for 2006:
Finished goods inventory, 1/1 $50,000
Finished goods inventory, 12/31 25,000
Raw materials used 60,000
Direct labor 70,000
Factory depreciation 25,000
Sales salaries 30,000
Sales returns 8,000
Goods in process, 1/1 80,000
Goods in process, 12/31 90,000
Smith’s cost of goods sold for 2006 was
- $130,000
- $144,000
- $152,000
- $170,000
Answer:
Smith’s cost of goods sold for 2006 was= d. $170,000
Working notes for the above answer is as under
Cost of goods sold is calculated as follow
| Particular | Amount in $ | |
| Raw materials used | 60,000 | |
| Factory depreciation | 70,000 | |
| Direct labor | 25,000 | |
| Add: Opeaning | ||
| Goods in process | 80,000 | |
| Finished goods inventory | 50,000 | |
| Less:Closing | ||
| Goods in process | (90,000) | |
| Finished goods inventory | (25,000) | |
| 170,000 |
