A Perpetual Inventory System Is Most Often Used When

question 62

Multiple Choice

A perpetual inventory system is most often used when

• A) Inventory has a small number of items with relatively high value
• B) Inventory has a small number of items with relatively low value
• C) Inventory has a large number of items with relatively low value
• D) Inventory has a large number of items with relatively high value

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Definitions:

Cost of Goods Manufactured

The total expense incurred in manufacturing goods, including materials, labor, and overhead, up to the point of completion.

Raw Materials

Primary components used to produce or fabricate products.

Direct Labor

The wages and expenses directly associated with workers who physically produce goods or provide services.

Work in Process Inventory

Represents goods that are in the process of being manufactured but are not yet completed.