On page B2-34 (Becker 2013), Becker says that the cost of goods manufactured represents the sum of the budgets for 1) direct labor, 2) direct material used, and 3) factory overhead applied. But that doesn't seem correct to me. The sum of those three amounts would equal total manufacturing cost for the year. You would then have to add that sum to beginning WIP inventory and subtract ending WIP inventory to reach cost of goods manufactured. The only instance where I could see where that sum equaled COGM is if there is no beginning and ending inventory. On the exam, how will you know whether or not to add beginning inventory and subtract ending inventory?
Thank you!