COST ACCOUNTING
INVENTORY AND PRODUCTION MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Inventory or inventory, Direct labor (direct labor cost), overhead costs (overhead cost)
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Inventory or inventory, Direct labor cost, HPP
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Direct labor (direct labor cost), HPP, Inventory
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COGS, Inventory, Final Inventory
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Detailed explanation-1: -Cost of Goods Sold (COGS) measures the “direct cost” incurred in the production of any goods or services. It includes material cost, direct labor cost, and direct factory overheads, and is directly proportional to revenue.
Detailed explanation-2: -The main categories of costs included in COGS are direct materials, direct labor, factory overhead, and production supplies.
Detailed explanation-3: -Cost of goods sold (COGS) includes all of the costs and expenses directly related to the production of goods. COGS excludes indirect costs such as overhead and sales & marketing. COGS is deducted from revenues (sales) in order to calculate gross profit and gross margin.
Detailed explanation-4: -COGS includes all direct costs incurred to create the products a company offers. Most of these are the variable costs of making the product-for example, materials and labor-while others can be fixed costs, such as factory overhead.