The following data pertain to Graham Company's operations in May:
May 1 May 31
Work in process inventory $7,800 $12,200
Raw materials inventory $15,500 ?
Finished goods inventory ? $20,800

Other data:
Raw materials used $42,500
Sales $208,000
Cost of goods manufactured $139,000
Manufacturing overhead cost $55,000
Raw materials purchases $38,400
Gross margin $62,800


The beginning finished goods inventory was:



$38,400

$19,330

$27,000

$15,500

I don't need the answer to the question. I have the equation so it is easy enough to figure out.

Beg. Inv+COGM-End Inv =COGS

However I cannot figure out how to calculate COGS properly for this particular question. No matter how I add things up I cannot find one of the answers to the equation.

COGS is supposed to be costs directly related to the creation of the product but apparently I am doing something wrong.

Thanks a bunch.

Lot's of information provided are to confuse the student. All that matters to answer this question is the value of Sales, Gross Margin, COGM and Finished Goods Closing Inventory.

1st Step
Sales - Gross Margin = COGS
208,000 - 62,800 = 145,200
COGS = 145,200

2nd Step
X = FG Op. Bal.
X + COGM - FG Cl. Bal. = COGS
X + 139,000 - 20,800 = 145,200
X = 145,200 - 139,000 + 20,800
X = 27,000

So the Value of Beginning Balance Finished Goods Inventory is 27,000

I hope you got it friend and also hope I am right. For any further clarification, you can mail me at [email protected]

All The Best