The addition of prime cost, indirect cost and opening work-in-progress less the closing work-in-progress will result in cost of

Answer Details

The addition of prime cost, indirect cost, and opening work-in-progress less the closing work-in-progress will result in the cost of goods manufactured. The prime cost includes all the direct costs involved in manufacturing a product, such as the cost of raw materials and direct labor. The indirect costs, on the other hand, include all the overhead costs associated with manufacturing a product, such as rent, utilities, and insurance. The opening work-in-progress represents the value of the partially completed goods at the beginning of the production process, while the closing work-in-progress represents the value of the partially completed goods at the end of the production process. When we add the prime cost and indirect cost to the opening work-in-progress, we get the total cost of goods that were available for sale or manufacturing during the period. Then, by subtracting the closing work-in-progress from this total, we get the cost of goods that were actually manufactured during the period. Therefore, the result of the addition of prime cost, indirect cost, and opening work-in-progress less the closing work-in-progress will give us the cost of goods manufactured. This cost represents the total cost incurred by the company to produce the goods that were completed and ready for sale during the period.