If a Company Determines Cost of Goods Sold Each Time

question 157

Multiple Choice

If a company determines cost of goods sold each time a sale occurs, it

• A) must have a computer accounting system.
• B) must have a service business.
• C) uses a periodic inventory system.
• D) uses a perpetual inventory system.

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Definitions:

Unit Product Cost

The total cost, including materials, labor, and overhead expenses, divided by the total number of units produced.

Absorption Costing

Absorption costing is a method in accounting that includes all manufacturing costs - both direct and indirect - in the cost of a product.

Variable Costing

An accounting method where only variable production costs are included in product costs, with fixed overhead treated as a period cost.

Net Operating Income

A monetary measurement that determines an organization's profit by deducting operational costs from its operational revenue.