Cost Behavior Analysis Focuses on How Costs

question 125

Multiple Choice

Cost behavior analysis focuses on how costs

• A) react to changes in profit.
• B) react to changes in activity level.
• C) change over time.
• D) both a and C

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Definitions:

Cost of Goods Sold

Cost of goods sold is the direct costs attributable to the production of the goods sold by a company, including the cost of materials and labor.

Periodic System

An inventory system in which the inventory level is updated and cost of goods sold is calculated at the end of an accounting period.

Perpetual Inventory

An inventory management system that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.

Periodic System

An accounting method used for tracking inventory where updates to the inventory account are made periodically, typically at the end of an accounting period.