Given the information in the partial income statement above, what is the Total Cost of Goods Sold?
$45,500
$68,000
$50,000
$53.500
Answer (2)
The Total Cost of Goods Sold is calculated by subtracting Ending Inventory from Goods Available for Sale. In this case, the Total COGS is $53,500. Therefore, the correct answer is $53,500.
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The problem requires calculating the Total Cost of Goods Sold.
The formula to calculate Total Cost of Goods Sold is: Goods Available for Sale - Ending Inventory.
Substitute the given values: $67,500 - $14,000.
Calculate the result: $53 , 500 .
Explanation
Understanding the Problem We are given a partial income statement and asked to find the Total Cost of Goods Sold. We can use the information provided to calculate this value.
Setting up the Calculation The Goods Available for Sale is equal to the Cost of Goods Sold plus the Ending Inventory. Therefore, Total Cost of Goods Sold = Goods Available for Sale - Ending Inventory.
Calculating Total Cost of Goods Sold We are given that Goods Available for Sale = $67,500 and Ending Inventory = $14,000. So, we subtract the Ending Inventory from the Goods Available for Sale to find the Total Cost of Goods Sold: Total Cost of Goods Sold = $67 , 500 − $14 , 000 = $53 , 500
Final Answer Therefore, the Total Cost of Goods Sold is $53,500.
Examples
Understanding the cost of goods sold is crucial for businesses to determine their profitability. For example, a bakery can use this calculation to understand how much it costs to produce its goods. If a bakery has $67,500 worth of goods available for sale and an ending inventory of $14,000, the cost of goods sold is $53,500. This information helps the bakery determine its gross profit and make informed decisions about pricing and production.
