Multiple Choice
Which of the following is an advantage of using the perpetual inventory system over the periodic inventory system when calculating Cost of Goods Sold (COGS)?
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4. Merchandising Operations
Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory
Multiple Choice
Which of the following costs are most likely to be controllable at the production supervisor level?
A
Direct labor costs
B
Depreciation on factory equipment
C
Property taxes on the manufacturing facility
D
Insurance expense for the entire company
Verified step by step guidance1
Understand the concept of controllable costs: Controllable costs are those that a manager or supervisor can influence or change within their area of responsibility during a specific time period.
Analyze each cost provided in the problem: Direct labor costs, depreciation on factory equipment, property taxes on the manufacturing facility, and insurance expense for the entire company.
Evaluate direct labor costs: These are typically controllable at the production supervisor level because the supervisor can manage the number of workers, their hours, and productivity levels.
Consider depreciation on factory equipment: Depreciation is a fixed cost and is not controllable by the production supervisor, as it is determined by accounting policies and the useful life of the equipment.
Assess property taxes and insurance expense: Both property taxes and insurance expense are fixed costs that are determined externally (by government or insurance companies) and are not controllable by the production supervisor.
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