In Its First Year of Operations, a Company Has Sales

question 62

Multiple Choice

In its first year of operations, a company has sales of $110,000, ending finished goods inventory of $12,000, variable manufacturing costs of $48,000, and fixed manufacturing costs of $30,000 for the year. Assuming the company uses direct costing, the manufacturing margin for the year is

• A)$62,000.
• B)$74,000.
• C)$50,000.
• D)$80,000.

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Definitions:

Remeasuring

The process of adjusting financial statements to reflect fair values or changes in exchange rates, often used in foreign currency translation and in fair value accounting.

Financial Statements

Reports that provide an overview of a company's financial condition, including the balance sheet, income statement, and cash flow statement.

Temporal Method

An accounting technique used to convert the financial statements of a subsidiary in a foreign currency to the parent company's reporting currency, using exchange rates based on the timing of the underlying transactions.

Historical Rates

Exchange rates used in the valuation of foreign currency transactions and translations, based upon the rates at the time of the original transaction.