COST ACCOUNTING
INTRODUCTION TO COST ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Cost of goods sold
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Cost of goods available for sale
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Cost of goods manufactured
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Cost of goods placed in process
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Detailed explanation-1: -COGM includes all expenses related to the manufacturing process from inventory and factory overhead to labor. It is calculated by adding together the total costs of manufacturing and beginning work in process (or WIP) inventory and subtracting the ending WIP inventory from their sum.
Detailed explanation-2: -The total manufacturing cost is the sum of expenses associated with all the resources spent while manufacturing your finished goods inventory.
Detailed explanation-3: -To calculate total manufacturing cost you add together three different cost categories: the costs of direct materials, direct labour and manufacturing overheads. Expressed as a formula, that’s: Total manufacturing cost = Direct materials + Direct labour + Manufacturing overheads.
Detailed explanation-4: -COGS = Beginning inventory + purchases + Freight In – Ending inventory – Purchase Discounts – Purchase Returns and Allowances. Beginning inventory: this is the inventory amount at the opening of the stock period.