[amp_mcq option1=”Cost of production + opening stock of finished goods – closing stock of finished goods” option2=”Prime cost + factory overhead cost + work in progress at the beginning – works in progress closing” option3=”Opening stock of raw materials + purchase of raw materials – closing stock of raw materials” option4=”Cost of production + administrative expenses + work in progress closing – work in progress beginning E. Opening stock of work in progress + opening stock of finished goods + works expenses – closing stock of finished goods” correct=”option1″]<\/p>\n
The correct answer is: A. Cost of production + opening stock of finished goods – closing stock of finished goods.<\/p>\n
Cost of goods sold (COGS) is the direct costs attributable to the production of the goods sold by a company. It includes the costs of the materials, labor, and overhead directly associated with the production of the goods.<\/p>\n
The cost of production is the total cost of the materials, labor, and overhead used to produce the goods. The opening stock of finished goods is the value of the finished goods that were on hand at the beginning of the period. The closing stock of finished goods is the value of the finished goods that were on hand at the end of the period.<\/p>\n
COGS is calculated by adding the cost of production to the opening stock of finished goods and subtracting the closing stock of finished goods.<\/p>\n
Option B is incorrect because it includes factory overhead cost, which is an indirect cost.<\/p>\n
Option C is incorrect because it includes the purchase of raw materials, which is not a direct cost.<\/p>\n
Option D is incorrect because it includes administrative expenses, which are not a direct cost.<\/p>\n
Option E is incorrect because it includes work expenses, which are not a direct cost.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”Cost of production + opening stock of finished goods – closing stock of finished goods” option2=”Prime cost + factory overhead cost + work in progress at the beginning – works in progress closing” option3=”Opening stock of raw materials + purchase of raw materials – closing stock of raw materials” option4=”Cost of production + administrative … <\/p>\n