Which of the Following Is True About Inventory Systems

question 97

Multiple Choice

Which of the following is true about inventory systems?

• A)Periodic inventory systems require more detailed inventory records.
• B)Perpetual inventory systems require more detailed inventory records.
• C)A periodic system requires cost of goods sold to be recorded after each sale.
• D)A perpetual system determines cost of goods sold only at the end of the accounting period.

Understand and conduct a basic break-even analysis.

Identify and interpret a break-even chart.

Calculate break-even point in units and revenue.

Analyze the impact of cost and price changes on break-even points.

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Definitions:

Selling and Administrative Expense

The aggregated total of all expenses associated with selling a company's products and services, as well as managing the day-to-day operations.

Variable Expense

Costs that vary in direct proportion to changes in levels of activity or production volume.

Fixed Expense

Fixed expense refers to costs that do not fluctuate with changes in production level or sales volume.

Master Budget

A comprehensive financial planning document that includes all of a company’s budgets, projecting its financial activities over a specific period.