A Company Has an Average Inventory on Hand of $40,000

question 25

Multiple Choice

A company has an average inventory on hand of $40,000 and its average days in inventory are 26.4 days. What is the cost of goods sold?

• A) $553,030.
• B) $1,056,000.
• C) $486,667.
• D) $480,000.

---

Definitions:

Opening Inventory

This is the value of inventory (raw materials, work-in-progress, and finished goods) at the beginning of an accounting period.

Production Budget

An estimate of the total cost of production, including direct labor, materials, and overhead expenses, for a specific period.

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period, usually for managing liquidity.

Disbursements

Payments made by a business, often related to its operational expenses.