Net Sales Times the Historical Gross Profit Percentage Yields the Estimated

question 94

Multiple Choice

Net sales times the historical gross profit percentage yields the estimated:

• A) ending inventory.
• B) beginning inventory.
• C) gross profit.
• D) cost of goods sold.
• E) net income.

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Definitions:

Direct Labor

Labor costs directly attributed to the production of goods or services, such as wages of workers on the assembly line.

Fixed Manufacturing Overhead

Costs associated with manufacturing that do not change with the level of production, such as salaries of supervisors and factory rent.

Raw Materials

Basic substances in their natural, modified, or semi-processed state, used as inputs for manufacturing.

Standard Cost System

A cost accounting system that uses standard costs for inventory valuation and cost control, comparing actual costs to standard costs to assess performance.