Cost of Goods Sold Is Computed from the Following Equation

question 226

Multiple Choice

Cost of goods sold is computed from the following equation:

• A) beginning inventory - cost of goods purchased + ending inventory.
• B) sales - cost of goods purchased + beginning inventory - ending inventory.
• C) sales + gross profit - ending inventory + beginning inventory.
• D) beginning inventory + cost of goods purchased - ending inventory.

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Definitions:

Production

The process of creating goods or services by combining labor, capital, and resources to meet consumer demand.

Bushels

A unit of volume that is used primarily in the United States to measure agricultural products such as grain.

Marginal Cost

The expense of fabricating another single unit of a product or service.

Average Variable Cost

The total variable costs of production divided by the quantity of output, showing the average cost of producing each unit excluding fixed costs.