One key difference appears when comparing the income statements of a manufacturing company to a merchandising company. What is that difference? Cost of goods manufactured is subtracted from sales to get gross profit on a manufacturing income statement, while cost of goods purchased is subtracted from sales to get gross profit on a merchandising income statement. O Manufacturing companies use cost of goods manufactured and merchandising companies use cost of goods purchased. Manufacturing companies use work in process, raw materials, and finished goods inventory balances to calculate cost of goods sold, while merchandising companies use only merchandise inventory balances. Cost of goods sold equals the cost of merchandise purchased for a merchandising company, while cost of goods sold equals the cost of raw materials purchased for a manyfasturing oomnany

One key difference appears when comparing the income statements of a manufacturing company to a merchandising company. What is that difference? Cost of goods manufactured is subtracted from sales to get gross profit on a manufacturing income statement, while cost of goods purchased is subtracted from sales to get gross profit on a merchandising income statement. O Manufacturing companies use cost of goods manufactured and merchandising companies use cost of goods purchased. Manufacturing companies use work in process, raw materials, and finished goods inventory balances to calculate cost of goods sold, while merchandising companies use only merchandise inventory balances. Cost of goods sold equals the cost of merchandise purchased for a merchandising company, while cost of goods sold equals the cost of raw materials purchased for a manyfasturing oomnany

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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Similar questions

Discuss the difference between cost accumulation, tracing and allocation. Since all manufacturing cost are eventually included in the unit cost of a product, what difference does it make? Discuss why the distinction matter in the calculation of CVP or other metrics.
Standard costs are used in companies for a variety of reasons. Which of the following is a benefit of using standard costs? a. They are used to estimate the cost of inventory. b. They are used to control costs. c. They are used to plan direct materials, direct labor, and variable factory overhead. d. all of these choices
The cost of a manufactured product (product cost) generally consists of which of the following? Group of answer choices selling and administrative expenses direct material, direct labor, applied factory overhead direct labor and applied factory overhead direct material and direct labor
Tennair Corporation manufactures cooling system components. The company has gathered the following information about two of its customers: Evans Equipment and Rogers Refrigeration. Evans Equipment Sales revenue Rogers Refrigeration $ 160,000 61,000 Cost of goods sold General selling costs $ 229,000 102,000 37,000 23,800 28,500 General administrative costs 17,850 Cost-driver data used by the firm and traceable to Evans and Rogers are: Customer Activity Sales activity Order taking Special handling Special shipping Customer Activity Sales activity Order taking Special handling Special shipping Cost Driver Sales visits Sales orders Units handled Shipments Evans Equipment 12 visits 31 orders 460 units. 33 shipments Pool Rate $ 970 278 44 460 Rogers Refrigeration 9 visits 36 orders 410 units 44 shipments Required: A. Perform a customer profitability analysis for Tennair. Compute the gross margin and operating income on transactions related to Evans Equipment and Rogers Refrigeration.
Which one of the following is NOT correct about manufacturing statement? Select one: a. It includes direct and indirect labor cost. b. It reports Cost of Goods Manufactured and Cost of Goods Sold. c. It shows the financial position of a company on a specific date. d. It includes the adjustments for the opening and closing stocks of WIP and Finished Goods
When does the cost of purchasing raw materials become an expense? When the goods being produced with that inventory are finished. When the company pays for the raw materials purchased. When the goods are moved into the inventory production process. When the finished good produced with those materials is sold.
The principal difference between the income statements of a merchandising company's and a manufacturing company is the O revenue section. O cost of goods sold section. O operating income section. O operating expense section.
Calculating cost of goods sold for merchandising and manufacturing companies Below are data for two companies: Requirements Define the three business types: service, merchandising, and manufacturing. Based on the data given for the two companies, determine the business type of each one. Calculate the cost of goods sold for each company.
Which of the following is NOT true ? a. The salary of the factory manager is considered to be an indirect cost of producing one unit of product. b. An indirect cost cannot be easily traced to a particular cost object. c. The classification of a cost as direct or indirect does not depend on the cost object. d. A direct cost can be easily traced to a particular cost object.