A Corporation Compiled the Information Given Below for Their Auditor

question 43

Multiple Choice

A corporation compiled the information given below for their auditor.The corporation uses a periodic inventory system. $\begin{array}{|l|l|l|}\hline &2001&2002\\\hline \text { Purchases................. } & \$ 240 & \$ 160 \\\hline \text { Goods out on consignment .... } & 0 & 80 \\\hline \text { Beginning inventory } & 900 & ? \\\hline \text { Ending inventory } & ? & ? \\\hline \text { Physical inventory count .................... } & \text { Unavailable } & 240 \\\hline \text { Cost of goods sold. ............. } & 360 & ?\\\hline \end{array}$ What was the amount of cost of goods sold for 2002?

• A)$620
• B)$700
• C)$780
• D)$900

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Definitions:

Contribution Margin

The amount by which the sales of a product exceed its variable costs, representing the portion of sales revenue that contributes to covering fixed costs and generating profit.

Unit Product Cost

The total cost (direct materials, direct labor, and overhead) to produce one unit of a product.

Absorption Costing

An accounting method that includes all manufacturing costs (direct material, direct labor, and both variable and fixed manufacturing overhead) in the cost of a product.

Net Operating Income

A company's total earnings from its operations, excluding taxes and interest.