Questions: The Work-in-Process Inventory of the Model Fabricating Corporation was 3,000 higher on December 31, 2022, than it was on January 1, 2022. This implies that in 2022 Multiple Choice cost of goods manufactured was higher than cost of goods sold. cost of goods manufactured was less than total manufacturing costs. manufacturing costs were higher than cost of goods sold.

The answer is the third one: manufacturing costs were higher than cost of goods sold.

Explanation for each option:

1. Cost of goods manufactured was higher than cost of goods sold:

   • This option is incorrect. If the cost of goods manufactured was higher than the cost of goods sold, it would imply that the Work-in-Process Inventory would decrease, not increase. Since the Work-in-Process Inventory increased by $3,000, this option does not align with the given information.

2. Cost of goods manufactured was less than total manufacturing costs:

   • This option is also incorrect. The total manufacturing costs include the cost of goods manufactured plus the change in Work-in-Process Inventory. The increase in Work-in-Process Inventory does not directly imply a relationship between cost of goods manufactured and total manufacturing costs.

3. Manufacturing costs were higher than cost of goods sold:

   • This option is correct. The increase in Work-in-Process Inventory indicates that not all manufacturing costs incurred during the year were converted into finished goods. Therefore, the total manufacturing costs (which include the increase in Work-in-Process Inventory) were higher than the cost of goods sold.

Summary: The increase in Work-in-Process Inventory by $3,000 implies that the manufacturing costs were higher than the cost of goods sold for the year 2022.