Multiple Choice
The amount of money paid for raw materials and products sold is called:
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4. Merchandising Operations
Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Costs which are crucial parts of the finished product are called:
A
Administrative expenses
B
Indirect materials
C
Direct materials
D
Selling expenses
Verified step by step guidance1
Understand the concept of 'Direct Materials': These are raw materials that are directly traceable to the finished product and are a crucial part of its production. For example, wood used in furniture manufacturing.
Differentiate between 'Direct Materials' and 'Indirect Materials': Indirect materials are used in the production process but are not directly traceable to the finished product, such as lubricants for machinery.
Recognize that 'Administrative Expenses' and 'Selling Expenses' are not related to the production process. Administrative expenses are costs related to the general management of the business, while selling expenses are costs incurred to market and sell the product.
Identify that the term 'Direct Materials' is the correct classification for costs that are integral to the finished product and can be directly traced to it.
Apply this understanding to similar problems by categorizing costs based on their traceability and relevance to the production process.
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