Rags to Riches Selected Data from the Financial Statements Are

question 26

Multiple Choice

Rags to Riches Selected data from the financial statements are provided below:
$\begin{array}{ll}& \underline{ 2015 } & \underline{ 2014 } \\ \text { Accounts Receivable } &\$ 120,000 & \$ 76,000 \\ \text { Inventory } &24,000 & 32,000 \\ \text {Total Assets } &900,000 & 760,000 \\ \text { Net Sales } &760,000 & 540,000 \\ \text { Cost of Goods Sold } &320,000 & 420,000\end{array}$
-Refer to Rags to Riches.Which of the following would result from a horizontal analysis of the company's income statement?

• A)Cost of goods sold is 42.1% of net sales for 2015.
• B)Gross profit is 57.9% of net sales for 2015.
• C)Cost of goods sold decreased 23.8% from 2014 to 2015.
• D)Inventory decreased $4,000 or 20% during 2014.

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Definitions:

Unit-Level Activity

Activities that vary directly with the volume of production units, such as processing, assembly, or packaging activities in manufacturing.

Activity-Based Costing

A costing methodology that assigns manufacturing costs to products based on the activities that go into producing them.

Manufacturing Overhead Costs

Indirect costs associated with manufacturing that cannot be directly traced to specific products, such as factory rent, utilities, and maintenance.

Overapplied Overhead

A credit balance in the Manufacturing Overhead account that occurs when the amount of overhead cost applied to Work in Process exceeds the amount of overhead cost actually incurred during a period.