A Product Is Sold for $130

question 162

Multiple Choice

A product is sold for $130. Its cost consists of $25 of direct materials, $10 of direct labor, and $30 of manufacturing overhead. What is the throughput margin?

• A) $105
• B) $95
• C) $130
• D) $65

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Definitions:

After-Sales Department

A division of a business that handles customer service, support, and warranty claims after the sale of a product.

Direct Method

A way of preparing the cash flow statement where actual cash flows from operating activities are listed, instead of adjusting net income on an accrual basis.

Service Department

A division within a company that provides support services rather than producing goods, such as IT or human resources.

Information Technology

The use of computers and software to manage information, including processing, securing, and exchanging data.