What Inventories Are Included in Determining the Cost of Goods

question 79

Multiple Choice

What inventories are included in determining the cost of goods sold?

• A) Beginning and ending finished goods
• B) Beginning and ending raw materials
• C) Beginning and ending work-in-process
• D) Supplies.

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Definitions:

Margin Of Safety Percentage

A financial ratio that measures the difference between actual or projected sales and the break-even point, expressed as a percentage of sales.

Contribution Margin

The amount remaining from sales revenue after variable production costs are deducted, contributing to covering fixed costs and generating profit.

High-Low Method

A technique used in accounting to estimate variable and fixed costs based on the highest and lowest levels of activity.

Mixed Cost

A cost that contains both variable and fixed cost elements, making its total cost vary with changes in activity, but not proportionately.