Multiple Choice
In the context of Cost of Goods Sold under perpetual and periodic inventory systems, cost allocation is the process of assigning which types of costs?
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4. Merchandising Operations
Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory
Multiple Choice
Which of the following items would NOT be reported on the statement of cost of goods manufactured?
A
Manufacturing overhead
B
Cost of goods sold
C
Direct labor
D
Direct materials used
Verified step by step guidance1
Understand the purpose of the statement of cost of goods manufactured: This statement is used to calculate the total cost incurred to produce goods during a specific period. It includes direct materials, direct labor, and manufacturing overhead.
Review the components of the statement: The statement typically includes direct materials used, direct labor, manufacturing overhead, and the beginning and ending inventory of work-in-progress to calculate the total manufacturing costs.
Identify the item that does not belong: Cost of goods sold is not part of the statement of cost of goods manufactured. Instead, it is reported on the income statement and represents the cost of goods that have been sold during the period.
Clarify the distinction: Cost of goods sold is calculated after the cost of goods manufactured and is used to determine the gross profit. It is not part of the production cost calculation but rather the cost of goods that have left inventory.
Conclude: The correct answer is 'Cost of goods sold' because it is not included in the statement of cost of goods manufactured, which focuses solely on production costs.
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