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CA Intermediate · Cost and Management Accounting · Cost Sheet

Which of the following is included in 'cost of goods sold' in a cost sheet but is NOT part of 'cost of production'?

Opening stock of finished goods is added only when moving from cost of production to cost of goods sold. Factory rent, direct wages and plant depreciation are manufacturing costs that already form part of cost of production itself.

  1. AFactory rent
  2. BOpening stock of finished goodsCorrect
  3. CDirect wages
  4. DDepreciation on plant

Explanation

Cost of production covers manufacturing costs adjusted for work-in-progress. Cost of goods sold = cost of production + opening finished goods stock - closing finished goods stock. So opening finished goods stock enters only at the cost of goods sold stage. Factory rent, direct wages and plant depreciation are all already in cost of production.

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