Assume the Following Information for Knight Ltd What Is the Cost of Goods Sold for the Year

question 7

Multiple Choice

Assume the following information for Knight Ltd. for the year ended December 31, 2011: $\begin{array}{lr}\text { Sales } & £ 2,250 \\\text { Cost of goods manufactured for the year } & 1,350 \\\text { Beginning finished goods inventory } & 450 \\\text { Ending finished goods inventory } & 495 \\\text { Selling and administrative expenses } & 300\end{array}$ What is the cost of goods sold for the year ended December 31, 2011?

• A)£1,305
• B)£1,605
• C)£1,350
• D)£1,650

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Definitions:

Labour Rate Variance

The difference between the actual cost of labor and the standard or expected cost.

Standard Cost Per Bag

A pre-determined cost estimate for producing or purchasing a single unit of product, in this context, a bag.

Direct Material

Raw materials that are directly traceable to the manufacturing of a product and constitute a significant portion of the production cost.

Direct Labour

The workforce directly involved in the manufacturing of goods or provision of services, whose wages are directly associated with specific products or services.