If Net Sales Are $1,200,000 and Cost of Goods Sold

question 31

True/False

If net sales are $1,200,000 and cost of goods sold are $300,000, gross profit is $900,000.

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Definitions:

Direct Labor

The labor cost of workers directly involved in the production of goods or the provision of services, considered a variable cost.

FIFO Method

An inventory valuation method where the first goods purchased are the first to be sold, standing for "First In, First Out".

Equivalent Units

A concept used in process costing that converts partially completed units into a number of fully completed units, facilitating the calculation of unit costs.

Equivalent Units

A concept in cost accounting used to apportion costs to partially completed goods, based on the amount of work that has been put into those goods.