Which of the Following Statements Is Correct Concerning the Days

question 163

Multiple Choice

Which of the following statements is correct concerning the Days' sales in raw materials inventory?

• A) Most companies generally prefer a higher number of days' sales in raw materials inventory.
• B) A measure of how long it takes raw materials to be used in production.
• C) Reveals how many times a company turns over its raw materials inventory in a period.
• D) The ratio is not useful for a manufacturer.
• E) Is calculated by taking the Raw materials used/Average raw materials inventory.

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Definitions:

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours allowed for the work done, multiplied by the standard labor rate, indicating the efficiency of labor used in production.

Work in Process Inventory

The cost of unfinished goods in production, including labor, raw materials, and overhead.

PP&E (Net) Account

Property, Plant, and Equipment (Net) account shows the net book value of a company's fixed assets less accumulated depreciation.

Direct Labor Costs

Expenses associated with employees who are directly involved in the production process, including wages and benefits, forming a major component of product costs.