A Firm Has an Average Accounts Payable Balance of $132,000

question 118

Multiple Choice

A firm has an average accounts payable balance of $132,000.The average number of days that the firm takes to pay its debt is 22 days.What is its average daily cost of goods sold?

• A)$4,000
• B)$132,000
• C)$126,000
• D)$6,000
• E)$6,600

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Definitions:

Predetermined Manufacturing Overhead

An estimated overhead rate calculated before the accounting period begins, used to allocate manufacturing overhead costs to products.

Machine-hours

A measure of production time, used in cost accounting, representing the hours that a machine operates.

Predetermined Overhead Rate

This refers to the rate used to allocate manufacturing overhead costs to individual products or job orders, calculated before the accounting period begins based on estimated costs and activity levels.

Machine-hour

A measure of the amount of time a machine is operated, used in calculating manufacturing costs and setting production schedules.