₹
Opening Stock 17,000
Purchases 61,400
Direct Expenses 9,600
Indirect Expenses 10,400
Closing Stock 18,000
Calculate the 'Cost of Goods sold'.​

Correct option is C

The correct answer is (c) ₹70,000

Explanation:
• Formula:
Cost of Goods Sold (COGS) = Opening Stock + Purchases + Direct Expenses – Closing Stock
• Substituting the values:
= ₹17,000 + ₹61,400 + ₹9,600 – ₹18,000
= ₹70,000
• Hence, COGS = ₹70,000
• (Note: Indirect expenses are not included in COGS—they are charged to the Profit & Loss Account.)

Information Booster:
• COGS represents the total cost incurred to produce goods sold during a period.
• It includes direct costs like materials, labour, and manufacturing expenses.
• Closing stock reduces COGS as it represents unsold goods.
• Gross Profit = Sales – COGS.
• Accurate COGS helps determine true profitability.

Additional Knowledge:
• Opening Stock: Unsold goods from the previous year.
• Purchases: Total goods bought for resale during the year.
• Direct Expenses: Related directly to production (e.g., wages, carriage inward).
• Indirect Expenses: Office, administrative, or selling expenses not part of COGS.