How Is the Cost of Goods Manufactured Calculated

question 175

Multiple Choice

How is the cost of goods manufactured calculated?

• A)total product costs incurred during the current period + beginning work in process − ending work in process
• B)direct materials cost + direct labour cost + overhead cost
• C)sales − cost of goods sold
• D)gross margin - other expenses

---

Definitions:

Merchantable Quality

Refers to the basic level of quality and functionality that consumers can reasonably expect from a specific good being sold.

Warranty

A guarantee, typically provided by a manufacturer or seller, assuring certain conditions or qualities of a product or service.

Security Interest

A legal claim on assets granted to a creditor to secure a loan, providing the creditor rights to the collateral if the debtor defaults.

Encumbrances

Legal claims or liens on a property or asset that may affect the title or restrict the owner's ability to use the property freely.