The Cost of a Unit Is Made Up of $120

question 55

Essay

The cost of a unit is made up of $120.00 direct material cost, $80.00 direct labor cost, and $20.00 overhead. What is the ratio that exists between the three elements of cost?

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Definitions:

Net Method

An accounting approach to the purchase of goods that incorporates discounts for early payment directly in the reported cost of purchases.

Recording Invoices

The process of documenting sales or purchases in the accounting records, typically by entering them into a journal or ledger.

Discount Recognized

The process of recording in the financial accounts the discount received or given on transactions, affecting the actual value recorded.

Periodic Inventory System

An inventory accounting practice where physical counts are performed at specific intervals to determine the cost of goods sold and ending inventory levels.