Manufacturing firms must calculate their cost of goods sold based on how much they manufacture and how much it costs them to manufacture those goods. This requires manufacturing firms to prepare an additional statement before they can prepare their income statement. This additional statement is the Cost of Goods Manufactured statement. Once the cost of goods manufactured is calculated, the cost is then incorporated into the manufacturing firm’s income statement to calculate its cost of goods sold. One thing manufacturing firms must consider in their cost of goods manufactured is that, at any given time, they have products at varying levels of production: some are finished and others are still process. The cost of goods manufactured statement measures the cost of the goods actually finished during the period, whether or not they were started during that period. True / False Even though the income statements for the merchandising firm and the manufacturing firm appear very similar at first glance, there are many more costs to be captured by the manufacturing firm. True / False A fixed cost is an unavoidable operating expense that does not change in total over the short term, even if a business experiences variation in its level of activity. Whereas a variable cost is one that varies in direct proportion to the level of activity within the business. However fixed costs on a per unit basis do change because you are spreading total fixed cost over more or less units. While variable costs remain the same per unit, but change in total relative to the level of activity in the business. True / False One way management considers their costs is as average costs. Under this approach, managers can calculate both average fixed and average variable costs. Average fixed cost (AFC) is the total fixed costs divided by the total number of units produced, which results in a per-unit cost. Average variable cost (AVC) is the total variable costs divided by the total number of units produced, which results in a per-unit cost. Management knows that long as the price they receive for their products is greater than the per-unit AVC, they are not only covering the variable cost of production, but each boat is making a contribution toward covering fixed costs. True / False Product costs are all those associated with the acquisition or production of goods and products. When products are purchased for resale, the cost of goods is recorded as an asset on the company’s balance sheet. It is not until the products are sold that they become an expense on the income statement. By moving product costs to the expense account for the cost of goods sold, they are easily matched to the sales revenue income account. Period costs are simply all of the expenses that are not product costs, such as all selling and administrative expenses. Period costs are treated as expenses in the period in which they occur. They follow the rules of accrual accounting practice by recognizing the cost (expense) in the period in which they occur regardless of when the cash changes hands. True / False can you please help me to see if i got them right . thank you! 1.false 2.true 3.false 4.false 5. false

Manufacturing firms must calculate their cost of goods sold based on how much they manufacture and how much it costs them to manufacture those goods. This requires manufacturing firms to prepare an additional statement before they can prepare their income statement. This additional statement is the Cost of Goods Manufactured statement. Once the cost of goods manufactured is calculated, the cost is then incorporated into the manufacturing firm’s income statement to calculate its cost of goods sold. One thing manufacturing firms must consider in their cost of goods manufactured is that, at any given time, they have products at varying levels of production: some are finished and others are still process. The cost of goods manufactured statement measures the cost of the goods actually finished during the period, whether or not they were started during that period. True / False Even though the income statements for the merchandising firm and the manufacturing firm appear very similar at first glance, there are many more costs to be captured by the manufacturing firm. True / False A fixed cost is an unavoidable operating expense that does not change in total over the short term, even if a business experiences variation in its level of activity. Whereas a variable cost is one that varies in direct proportion to the level of activity within the business. However fixed costs on a per unit basis do change because you are spreading total fixed cost over more or less units. While variable costs remain the same per unit, but change in total relative to the level of activity in the business. True / False One way management considers their costs is as average costs. Under this approach, managers can calculate both average fixed and average variable costs. Average fixed cost (AFC) is the total fixed costs divided by the total number of units produced, which results in a per-unit cost. Average variable cost (AVC) is the total variable costs divided by the total number of units produced, which results in a per-unit cost. Management knows that long as the price they receive for their products is greater than the per-unit AVC, they are not only covering the variable cost of production, but each boat is making a contribution toward covering fixed costs. True / False Product costs are all those associated with the acquisition or production of goods and products. When products are purchased for resale, the cost of goods is recorded as an asset on the company’s balance sheet. It is not until the products are sold that they become an expense on the income statement. By moving product costs to the expense account for the cost of goods sold, they are easily matched to the sales revenue income account. Period costs are simply all of the expenses that are not product costs, such as all selling and administrative expenses. Period costs are treated as expenses in the period in which they occur. They follow the rules of accrual accounting practice by recognizing the cost (expense) in the period in which they occur regardless of when the cash changes hands. True / False can you please help me to see if i got them right . thank you! 1.false 2.true 3.false 4.false 5. false

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Manufacturing firms must calculate their cost of goods sold based on how much they manufacture and how much it costs them to manufacture those goods. This requires manufacturing firms to prepare an additional statement before they can prepare their income statement. This additional statement is the Cost of Goods Manufactured statement.

Once the cost of goods manufactured is calculated, the cost is then incorporated into the manufacturing firm’s income statement to calculate its cost of goods sold.

One thing manufacturing firms must consider in their cost of goods manufactured is that, at any given time, they have products at varying levels of production: some are finished and others are still process.

The cost of goods manufactured statement measures the cost of the goods actually finished during the period, whether or not they were started during that period.

True / False

Even though the income statements for the merchandising firm and the manufacturing firm appear very similar at first glance, there are many more costs to be captured by the manufacturing firm.

True / False

A fixed cost is an unavoidable operating expense that does not change in total over the short term, even if a business experiences variation in its level of activity. Whereas a variable cost is one that varies in direct proportion to the level of activity within the business. However fixed costs on a per unit basis do change because you are spreading total fixed cost over more or less units. While variable costs remain the same per unit, but change in total relative to the level of activity in the business.

True / False

One way management considers their costs is as average costs. Under this approach, managers can calculate both average fixed and average variable costs. Average fixed cost (AFC) is the total fixed costs divided by the total number of units produced, which results in a per-unit cost. Average variable cost (AVC) is the total variable costs divided by the total number of units produced, which results in a per-unit cost. Management knows that long as the price they receive for their products is greater than the per-unit AVC, they are not only covering the variable cost of production, but each boat is making a contribution toward covering fixed costs.

True / False

Product costs are all those associated with the acquisition or production of goods and products.

When products are purchased for resale, the cost of goods is recorded as an asset on the company’s balance sheet.

It is not until the products are sold that they become an expense on the income statement.

By moving product costs to the expense account for the cost of goods sold, they are easily matched to the sales revenue income account.

Period costs are simply all of the expenses that are not product costs, such as all selling and administrative expenses.

Period costs are treated as expenses in the period in which they occur. They follow the rules of accrual accounting practice by recognizing the cost (expense) in the period in which they occur regardless of when the cash changes hands.

True / False

can you please help me to see if i got them right . thank you!

1.false

2.true

3.false

4.false

5. false

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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