At the Beginning of the Year a Company Has $140

question 55

Multiple Choice

At the beginning of the year a company has $140 in inventory and at the end of the year the inventory on the balance sheet is $110.If the firm reports cost of goods sold on the income statement of $400, then the inventory turnover ratio would be:

• A)1.60
• B)2.86
• C)3.20
• D)3.64

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Definitions:

Budget Variance

The difference between the actual fixed overhead costs and the budgeted fixed overhead costs for the period.

Applied

Refers to the process of allocating or assigning costs to a specific cost object in a manner that is consistent with the usage or benefits derived from it.

Denominator Activity Level

A term used in cost accounting to represent the total activity or volume that is used to allocate fixed costs to units of output.

Standard Cost System

A cost accounting system that uses cost units determined in advance for materials, labor, and overhead to estimate the cost of production.