Items Should Be Included as Part of the Company's Inventory

question 208

Multiple Choice

Items should be included as part of the company's inventory if they are

• A)purchased from a creditor, although not paid for by year end.
• B)held in anticipation of an increase in market value.
• C)determined to be part of cost of goods sold.
• D)sold during the period.

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Definitions:

Cost-plus Pricing

A pricing strategy where the selling price is determined by adding a specific markup to a product's cost.

Return on Investment

A financial metric used to evaluate the efficiency or profitability of an investment, calculated by dividing net profit by the investment's cost.

Markup

A markup on the base cost of goods intended to cover the expenses of operation and ensure a profit margin.

Absorption Costing

This financial documentation style accounts for all costs arising from manufacturing activities, encompassing direct materials, direct labor, and all overhead costs, both variable and fixed, in the product cost calculation.