Which of the following statements is true regarding the schedule of cost of goods manufactured under a perpetual inventory system compared to a periodic inventory system?

• A. The periodic system updates the cost of goods manufactured continuously throughout the period.
• B. Only the perpetual system requires a schedule of cost of goods manufactured.
• C. The perpetual system excludes manufacturing overhead from the cost of goods manufactured schedule.
• D. Both systems calculate the cost of goods manufactured in the same way, using direct materials, direct labor, and manufacturing overhead.

Answer: (D)

Verified step by step guidance

1. Understand the concept of the schedule of cost of goods manufactured: It is a detailed report that calculates the total manufacturing costs incurred during a period, including direct materials, direct labor, and manufacturing overhead.
2. Recognize the difference between perpetual and periodic inventory systems: The perpetual system continuously updates inventory records, while the periodic system updates inventory records at the end of the accounting period.
3. Clarify that the schedule of cost of goods manufactured is not exclusive to either system: Both systems use the same components (direct materials, direct labor, and manufacturing overhead) to calculate the cost of goods manufactured.
4. Note that manufacturing overhead is always included in the cost of goods manufactured schedule, regardless of the inventory system used.
5. Conclude that the correct statement is: Both systems calculate the cost of goods manufactured in the same way, using direct materials, direct labor, and manufacturing overhead.