Reference:
the Following Data (In Thousands of Dollars) Have

question 51

Multiple Choice

Reference:
The following data (in thousands of dollars) have been taken from the accounting records of Karling Corporation for the just completed year. $$\begin{array} { | l | r | } \hline \text { Sales } & \$ 990 \\\hline \text { Raw materials inventory, beginning } & \$ 40 \\\hline \text { Raw materials inventory, ending } & \$ 70 \\\hline \text { Purchases of raw materials } & \$ 120 \\\hline \text { Direct labour } & \$ 200 \\\hline \text { Manufacturing overhead } & \$ 230 \\\hline \text { Administrative expenses } & \$ 150 \\\hline \text { Selling expenses } & \$ 140 \\\hline \text { Work in process inventory, beginning } & \$ 70 \\\hline \text { Work in process inventory, ending } & \$ 50 \\\hline \text { Finished goods inventory, beginning } & \$ 120 \\\hline \text { Finished goods inventory, ending } & \$ 160 \\\hline\end{array}$$
-The cost of goods sold for the year (in thousands of dollars) was:

• A)$700.
• B)$500.
• C)$660.
• D)$580.

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Definitions:

Absorption Costing

This accounting approach incorporates every manufacturing expense, such as direct materials, direct labor, plus variable and fixed overhead costs, into the product's total cost.

Variable Costing

An accounting method that only includes variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs.

Product Costs

The costs directly associated with the creation of a product, encompassing direct materials, direct labor, and manufacturing overhead.

Variable Manufacturing Costs

Costs that vary directly with the volume of production, such as raw materials and direct labor.