The Following Data Are from the Income Statement of Rathbun

question 127

Multiple Choice

The following data are from the income statement of Rathbun Company: $\begin{array}{ll}\text { Sales } & \$ 800 \\\text { Cost of Goods Sold } & (500) \\\text { Other Expenses } & (200) \\\text { Net Income }&\$100\end{array}$ The company's gross margin percentage is:

• A) 12.5%.
• B) 37.5%.
• C) 62.5%.
• D) 60.0%.

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Definitions:

Units Transferred

The amount of finished or semi-finished products moved from one stage of production to another, or to the final inventory.

FIFO Method

An inventory valuation method that assumes the first items purchased (First-In) are the first ones sold (First-Out), affecting the cost of goods sold and inventory valuation.

Cost Reconciliation

The process of verifying the cost of goods sold by comparing the beginning and ending inventories, plus purchases, with the total goods available for sale.

Work in Process Inventory

This represents the cost of unfinished goods in the manufacturing process at a certain point in time.