The Statement Relating to the Determination of the Cost of Inventory

question 14

Multiple Choice

The statement relating to the determination of the cost of inventory in a computerised system that is not true is:

• A)Determining the cost of inventory is greatly simplified compared to a manual system
• B)The system can automatically produce reorder information
• C)Computerised inventory systems are now used by most firms
• D)Computerised systems generally use the periodic inventory system

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Definitions:

Contribution Format

A type of income statement where costs are segregated into variable and fixed categories, emphasizing cost behavior and contribution margin.

Cost Of Goods Sold

The direct costs attributable to the production of goods sold by a company, including material and labor expenses.

Merchandising Company

A business that purchases finished products and sells them to consumers without further processing.

Sunk Cost

Costs that have already been incurred and cannot be recovered or changed.