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Cost of goods sold is arrived at by adjusting cost of production for
Aopening and closing stock of raw material
Bopening and closing work in progress only
Copening and closing stock of finished goods
Dselling and distribution overheads only
Answer & Solution
Correct answer: C. opening and closing stock of finished goods
1. Cost of production covers everything up to goods being ready for sale.
2. Goods sold in a period are not the same as goods produced in it.
3. So cost of production is adjusted by adding opening finished goods stock and deducting closing finished goods stock.
4. Raw material stock is already handled earlier, inside direct material consumed.
_Source: ICAI Cost and Management Accounting Ch6 'Cost Sheet', section 6.3.3_
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