Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory

Financial Accounting

4. Merchandising Operations

Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory

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Multiple Choice

Which of the following is typically included in the unit product cost under both perpetual and periodic inventory systems?

Interest expense and income tax expense

Only direct materials and direct labor

Selling and administrative expenses

Direct materials, direct labor, and manufacturing overhead

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Verified step by step guidance

Understand the concept of unit product cost: Unit product cost refers to the total cost incurred to produce a single unit of product. It typically includes direct materials, direct labor, and manufacturing overhead.

Clarify the difference between perpetual and periodic inventory systems: Both systems track inventory, but the method of recording transactions differs. However, the components of unit product cost remain the same under both systems.

Identify the components of unit product cost: Direct materials (raw materials used in production), direct labor (wages paid to workers directly involved in production), and manufacturing overhead (indirect costs like factory utilities and depreciation) are included.

Exclude non-manufacturing costs: Selling and administrative expenses, interest expense, and income tax expense are not part of unit product cost because they are not directly related to the production process.

Conclude that under both perpetual and periodic inventory systems, the unit product cost includes direct materials, direct labor, and manufacturing overhead, as these are the costs directly tied to manufacturing the product.