Kinston Industries Has an Average Accounts Payable Balance of $220,000

question 46

Essay

Kinston Industries has an average accounts payable balance of $220,000.Its annual cost of goods sold is $5,475,000,and it receives terms of 2/10,net 30 from its suppliers.Kinston chooses to forgo this discount.Is Kinston managing its accounts payables well?

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Definitions:

Factory Overhead

All indirect costs associated with manufacturing, including costs related to operating the factory such as utilities, maintenance, and salaries of indirect labor.

Product Costs

The costs directly associated with the production of goods, including direct material, direct labor, and manufacturing overhead expenses.

Sales and Administrative Expenses

Costs related to the selling of products and the management of the company, excluding production costs.

Direct Labor

Direct labor involves the work of employees that is directly attributable to the production of goods or services, such as the labor of a factory worker assembling a product.