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:

Collections

The process of pursuing payments of debts owed by individuals or businesses, typically involving accounts receivable.

Accounts Receivable

The money owed to a company by its customers for goods or services delivered but not yet paid for.

Credit Sales

Sales made by a business where payment is deferred, allowing the customer to pay at a later date.

Raw Materials

the unprocessed or minimally processed resources used to manufacture finished goods, such as metals, plastics, or textiles.