Chapter 4, Problem 1MCQ

To determine

Cost of Goods Sold:

Cost of goods sold is the total sum of all the costs which is used in the making of a product or providing a service. This cost includes the cost of materials incurred in the production and the direct labor cost incurred during the production.

To compute: The cost of goods sold.

Explanation of Solution

Option c, $357,000 is correct.

Given,

The net sales are $550,000.

The gross profit is $193,000.

The formula to calculate the cost of goods sold is,

  $\text{Cost}\text{of}\text{goods}\text{sold}=\text{Net}\text{sales}-\text{Gross}\text{profit}$

Substitute $550,000 for net sales and $193,000 for gross profit.

  $\begin{array}{c}\text{Cost}\text{of}\text{goods}\text{sold}=\$550,000-\$193,000\\ =\$357,000\end{array}$

The cost of goods sold is $357,000.

Thus, cost of goods sold is $357,000 .