Chapter 14, Problem 7QS

To determine

Inventory:

Inventory refers to the stock or goods which will be sold in the near future and thus is an asset for the company. It comprises of the raw materials which are yet to be processed, the stock which is still going through the process of production and it also includes completed products that are ready for sale. Thus inventory is the biggest and the important source of income and profit for the business.

Raw Materials:

The materials which are yet to go through the production process so to reshape into end products are the raw materials. They form a part of the inventory and are recorded as current asset in the balance sheet.

Cost of Goods Sold (COGS):

Cost of goods sold is the total expense or the cost incurred by the business during the process of manufacturing of goods and is directly related to the production. It generally includes the cost of material, labor and other manufacturing support costs.

Cost of Goods Available for Sale:

It basically includes the cost of inventory which is ready for sale within an accounting period. It mainly includes the cost of beginning inventory as well as the stock purchased in that year and the production within that period (if any).

Cost of Goods Manufacture (COGM):

Cost of goods manufacture is the cost related with the goods which were being manufactured within a fiscal year. The following cost covers labor cost, unprocessed material used cost and any other support cost which helped to reshape the unfinished into end goods or materials which have entered the production process thus have consumed of reasonable cost.

To Compute: Cost of goods sold for the year 2015.