A Perpetual Inventory System Will Always Give Updated Balances For

question 63

Multiple Choice

A perpetual inventory system will always give updated balances for:

• A) Inventory and Cost of Goods Sold.
• B) Inventory and Sales Revenue.
• C) Goods Available for Sale and Sales Revenue.
• D) Accounts Receivable and Inventory.

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Definitions:

Fixed Manufacturing Cost

This refers to the consistent expenses incurred by a company for its manufacturing operations, excluding variable costs; it includes costs like rent, salaries of permanent staff, and depreciation of factory equipment.

Variable Manufacturing Cost

Costs that vary directly with the level of production output, such as raw materials and direct labor.

Idle Capacity

The portion of a company's resources or production capacity that is not being used for production or generating revenue.

Variable Production Cost

Costs that change in proportion to the level of production output, such as raw materials and direct labor.