CAF-5 · Chapter 1 · Question 8 of 10
Which of the following formulas correctly calculates the "Cost of Goods Manufactured"?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Prime Cost + Factory Overheads + Opening WIP – Closing WIP
Explanation
The Cost of Goods Manufactured is derived by taking the Prime Cost, adding Factory Overheads (which gives the total manufacturing cost), and then adjusting for the movement in Work in Progress (adding Opening WIP and deducting Closing WIP).
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