When Finished Goods Are Sold, the Entry to Record the Cost

question 38

Multiple Choice

When finished goods are sold, the entry to record the cost of goods sold includes

• A)a debit to Finished Goods Inventory and a credit to Cost of Goods Sold.
• B)a debit to Cost of Goods Sold and a credit to Finished Goods Inventory.
• C)a debit to Cost of Goods Sold and a credit to Sales.
• D)a debit to Finished Goods Inventory and a credit to Sales.

Analyze variances between actual and estimated costs and their implications.

Understand the flow of costs in manufacturing accounts and how they affect financial statements.

Recognize the role of time tickets and machine hours in attributing costs to jobs.

Understand the treatment of underapplied or overapplied overhead in financial records.

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Definitions:

Simulation Models

Computational models that mimic the operations of real-world processes or systems for the purpose of analysis or decision-making.

Flexible Capacity

Denotes the ability of a business or production system to adjust output levels or operations in response to changes in demand or market conditions.

Demand Uncertainty

The inability to accurately forecast consumer demand, leading to challenges in supply chain planning and inventory management.

Price Uncertainty

The unpredictability of the cost of goods or services in the future, affecting budgeting and planning.