Molina Company has beginning and ending work in process inventories of $130,000 and $145,000 respectively. If total manufacturing costs are $680,000, what is the total cost of goods manufactured?a. $810,000.b. $825,000.c. $665,000.d. $695,000.

The correct option is c: $665,000

Explanation:

Cost of goods manufactured:

The cost of goods manufactured (COGM), also called cost of goods completed.It calculates the total value of inventory that was produced during the period and is ready for sale. In other words, this is the total amount of expenses incurred to turn work in process inventory into finished goods.

Calculation method:

The cost of goods manufactured equation is calculated as follows:

adding the total manufacturing costs; including all direct materials, direct labor, and factory overhead; to the beginning work in process inventory and subtracting the ending goods in process inventory. This formula will leave you with only the cost of goods that were completed during the period.

Calculation:

Opening work in process inventory = $130,000

Closing work in process inventory = $145,000

Total manufacturing cost = $680,000

Total cost of goods manufactured = Opening WIP + Total manufacturing cost - Closing WIP

Total cost of goods manufactured = $130,000 + $680,000 - $145,000

Total cost of goods manufactured = $665,000