In a manufacturing company, the cost of goods manufactured (COGM) is:

• A. The total cost of goods completed during the period and transferred out of work in process.
• B. The total cost of goods remaining in finished goods inventory at the end of the period.
• C. The total cost of goods sold to customers during the period.
• D. The total cost of raw materials purchased during the period.

Answer: (A)

Verified step by step guidance

1. Understand the concept of Cost of Goods Manufactured (COGM): COGM represents the total cost of goods completed during the period and transferred out of work-in-process inventory to finished goods inventory. It does not include costs related to goods sold, raw materials purchased, or finished goods inventory at the end of the period.
2. Identify the components of COGM: COGM is calculated by summing up direct materials used, direct labor, and manufacturing overhead, and then adjusting for changes in work-in-process inventory.
3. Break down the formula for COGM: The formula is: \( \text{COGM} = \text{Direct Materials Used} + \text{Direct Labor} + \text{Manufacturing Overhead} + \text{Beginning Work-in-Process Inventory} - \text{Ending Work-in-Process Inventory} \).
4. Clarify the distinction between COGM and other terms: COGM is specifically related to the costs of goods completed during the period. It is different from Cost of Goods Sold (COGS), which pertains to goods sold, and raw materials purchased, which are part of inventory costs.
5. Apply the formula to calculate COGM: To solve a problem involving COGM, gather the necessary data (direct materials used, direct labor, manufacturing overhead, beginning and ending work-in-process inventory) and substitute them into the formula provided above.