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

In a manufacturing company, which department is typically responsible for the price paid for direct materials when calculating variances in the cost of goods sold?

Human Resources Department

Production Department

Purchasing Department

Sales Department

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Verified step by step guidance

Understand the concept of cost variances: Variances in the cost of goods sold occur when there is a difference between the standard cost and the actual cost incurred. These variances can be due to price differences, quantity differences, or efficiency differences.

Identify the role of the Purchasing Department: The Purchasing Department is responsible for sourcing and procuring direct materials. They negotiate prices with suppliers, manage contracts, and ensure the company gets the best value for its purchases.

Connect the Purchasing Department to price variances: Since the Purchasing Department determines the price paid for direct materials, any variance in the price of materials (e.g., higher or lower than expected) is directly linked to their activities.

Eliminate other departments: The Human Resources Department handles employee-related matters, the Production Department oversees the manufacturing process, and the Sales Department focuses on selling products. None of these departments are responsible for negotiating or determining the price of direct materials.

Conclude that the Purchasing Department is responsible for price variances in direct materials: Variances in the cost of goods sold related to direct material prices are typically attributed to the Purchasing Department's decisions and actions.