What Would Be the Effect on His Cost of Food

question 19

Multiple Choice

What would be the effect on his cost of food formula if a manager accidentally overstated the value of his operation's ending inventory?

• A) Total Cost of Sales would be overstated
• B) Total Cost of Sales would be understated
• C) Total Cost of Food Available for Sale would be overstated
• D) Total Cost of Food Available for Sale would be understated

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Definitions:

Budgeted Cost PURCHASES

The projected expenses associated with acquiring materials or goods needed for production or sale.

Raw Materials Purchases

The total cost incurred by a company for buying the raw materials required in the production process.

Budgeted Accounts Receivable

The expected amount of money owed to a company by its customers for goods or services delivered, as forecasted in the budget.

Regular Pattern of Collection

A systematic approach to gathering data or information at consistent intervals.