The Sumter Company Recently Had a Fire in Its Accounting

question 22

Multiple Choice

The Sumter Company recently had a fire in its accounting office, destroying most of its records. Only the following information could be salvaged for 2018: $$\begin{array} { l r } \text { Direct labor } & \$ 400,000 \\\text { Factory overhead } & 200,000 \\\text { Cost of goods sold } & 800,000 \\\text { Work in process, January 1 } & 80,000 \\\text { Finished goods, January 1 } & 160,000 \\\text { Work in process, December } 31 & 100,000 \\\text { Finished goods, December } 31 & 120,000\end{array}$$
The cost of direct materials used in production during 2018 is

• A)$140,000.
• B)$180,000.
• C)$200,000.
• D)$260,000.

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Definitions:

Profit

The difference between the amounts received from customers for goods or services provided and the amounts paid for the inputs used to provide the goods or services.

Contribution Margin Ratio

A measure that calculates the portion of sales revenue that exceeds variable costs, expressed as a percentage.

Sales Dollar

The total revenue generated from selling goods or services, measured in dollars.

Operating Income

Earnings before interest and taxes (EBIT), representing the income generated from normal business operations.