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

When using the high-low method in cost accounting, what does the slope represent?

The average cost per unit

The variable cost per unit

The total cost at the highest activity level

The total fixed cost

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Verified step by step guidance

Understand the high-low method: The high-low method is a cost accounting technique used to separate fixed and variable costs from a mixed cost. It uses the highest and lowest activity levels to calculate the variable cost per unit (slope) and fixed costs.

Identify the formula for the slope: The slope in the high-low method represents the variable cost per unit. It is calculated using the formula: slope = (Change in total cost) / (Change in activity level).

Determine the change in total cost: Subtract the total cost at the lowest activity level from the total cost at the highest activity level. This gives the numerator for the slope calculation.

Determine the change in activity level: Subtract the activity level at the lowest point from the activity level at the highest point. This gives the denominator for the slope calculation.

Interpret the slope: The slope represents the variable cost per unit, which is the cost that changes in proportion to the activity level. It does not include fixed costs, which remain constant regardless of activity level.