Why Is It Better to Use Sales Rather Than Cost

question 32

Multiple Choice

Why is it better to use sales rather than cost of goods sold when calculating the average days sales in inventory value?

• A) The values for COGS are not always comparable across firms
• B) COGS is not the driving variable behind the accumulation of inventory
• C) Inventory is accumulated regardless of its COGS
• D) There are three types of COGS, raw materials, work in progress, and finished goods, and since all are slightly different, using one or the other would make the calculations inaccurate.