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

Net Sales

Financial Accounting

4. Merchandising Operations

Net Sales

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Multiple Choice

Which of the following best describes how net sales are used to evaluate the actual weekly labor cost for a 13-person team compared to the target?

Net sales are subtracted from actual weekly labor cost to determine if the team is over or under budget.

Actual weekly labor cost is multiplied by net sales to find the variance from the target.

Net sales are only used to set the target, and actual labor cost is not compared to net sales.

Actual weekly labor cost is divided by net sales to calculate the labor cost percentage, which is then compared to the target percentage.

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Verified step by step guidance

Understand the concept of net sales: Net sales represent the total revenue generated by a company after deducting returns, allowances, and discounts. It is a key metric used to evaluate performance and efficiency.

Understand the concept of labor cost percentage: Labor cost percentage is calculated by dividing the actual labor cost by net sales. This percentage helps assess how efficiently labor costs are managed relative to sales revenue.

Identify the formula for labor cost percentage: The formula is \( \text{Labor Cost Percentage} = \frac{\text{Actual Weekly Labor Cost}}{\text{Net Sales}} \times 100 \). This formula expresses labor cost as a percentage of net sales.

Compare the calculated labor cost percentage to the target percentage: Once the labor cost percentage is calculated, it is compared to the target percentage set by the company to determine if the team is over or under budget.

Evaluate the significance of the comparison: If the labor cost percentage exceeds the target percentage, it indicates inefficiency or overspending on labor. If it is below the target, it suggests efficient labor cost management.