This accounting problem is solved step by step below, with detailed explanations to help you understand the method and arrive at the correct answer.
ScanSolve AI Answer
To find the cost of finished goods available for sale, we first need to determine the Cost of Goods Manufactured (COGM). The information provided is: • Prime cost = D 36,700 • Factory overheads = D 6,600 • Work-in-progress (1/1/2024) (Opening WIP) = D 4,300 • Work-in-progress (31/12/2024) (Closing WIP) = D 3,600 • Cost of goods sold = D 38,000 Step 1: Calculate the Total Manufacturing Cost. Total Manufacturing Cost = Prime Cost + Factory Overheads Total Manufacturing Cost = D 36,700 + D 6,600 Total Manufacturing Cost = D 43,300 Step 2: Calculate the Cost of Goods Manufactured (COGM). Cost of Goods Manufactured = Total Manufacturing Cost + Opening WIP - Closing WIP Cost of Goods Manufactured = D 43,300 + D 4,300 - D 3,600 Cost of Goods Manufactured = D 47,600 - D 3,600 Cost of Goods Manufactured = D 44,000 Step 3: Determine the Cost of Finished Goods Available for Sale. The formula for Cost of Finished Goods Available for Sale (COGAFS) is: COGAFS = Opening Finished Goods Inventory + Cost of Goods Manufactured The problem does not provide a value for Opening Finished Goods Inventory. In such cases, it is a common accounting practice to assume that the opening finished goods inventory is zero unless stated otherwise. Assuming Opening Finished Goods Inventory = D 0: COGAFS = D 0 + D 44,000 COGAFS = D 44,000 This value matches option B. The Cost of Goods Sold (D 38,000) is additional information that could be used to calculate closing finished goods inventory (D 44,000 - D 38,000 = D 6,000), but it is not needed to find the Cost of Finished Goods Available for Sale under the assumption of zero opening finished goods inventory. The cost of finished goods available for sale is D 44,000. That's 2 down. 3 left today — send the next one.