Assume That the Net Sales for a Company Is $5,000

question 11

Multiple Choice

Assume that the net sales for a company is $5,000, cost of goods sold is $3,000, and average inventory is $1,500. Calculate the inventory turnover ratio.

• A) 2
• B) 0.5
• C) 3.3
• D) 1.3

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Definitions:

Actual Overhead

Represents the real costs associated with manufacturing overhead, including expenses such as rent, utilities, and equipment maintenance incurred during production.

Overhead Costs

The indirect costs associated with running a business that cannot be linked to a specific product or service.

Direct Materials

Raw materials that can be directly traced to a finished product and are a part of the manufacturing process.

Price Variance

The difference between the actual cost of a good or service and its expected cost, often used in budgeting and financial analysis.