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Cost of production is 8,00,000, opening finished goods 60,000 and closing finished goods 90,000. Cost of goods sold is
A8,30,000
B8,00,000
C7,50,000
D7,70,000
Answer & Solution
Correct answer: D. 7,70,000
1. Cost of goods sold = cost of production plus opening finished goods less closing finished goods.
2. Add opening stock: 8,00,000 + 60,000 = 8,60,000.
3. Deduct closing stock: 8,60,000 - 90,000 = 7,70,000.
4. Stock rose by 30,000 over the period, so goods sold cost 30,000 less than goods produced.
5. Reversing the two adjustments gives 8,30,000, the trap.
_Source: ICAI Cost and Management Accounting Ch6 'Cost Sheet', section 6.3.3_
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