The Three Sections of a Statement of Cost of Goods

question 26

Multiple Choice

The three sections of a statement of cost of goods manufactured include:

• A)raw material, direct labor, manufacturing overhead.
• B)variable expenses, contribution margin, fixed expenses.
• C)sales revenue, gross profit, selling and administrative expenses.
• D)direct costs, indirect costs, operating profit.

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Definitions:

LIFO Perpetual Cost Flow

A method of inventory valuation where the last items added to inventory are the first ones considered sold under a perpetual inventory tracking system.

Ending Inventory

Ending inventory refers to the final value or quantity of goods available for sale at the end of an accounting period, after adjustments for sales and acquisitions during the period.

Cost Of Merchandise Sold

The total cost incurred to purchase or produce the goods that a company sold during a specific period.

Average Cost Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the average cost of all similar items available during the period.