Which of the following is equal to the cost of goods sold?
A) the salaries and commissions paid to salespeople
B) the interest paid on debts
C) the amount spent to produce a firm's merchandise
D) the amount spent on customer refunds
E) total operating expenses
Answer: C
Explanation: C) The cost of producing a firm's merchandise for sale during a certain period is called cost of goods sold.
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New York Liberty Corporation makes miniature statues of the Empire State Building from cast iron. Sales total 50,000 units a year. The statues are finished either rough or polished, with an average demand of 60% rough and 40% polished
Iron ingots, the direct material, costs $6 per pound. Processing costs are $300 to convert 30 pounds into 60 statues. Rough statues are sold for $15 each, and polished statues can be sold for $18 or engraved for an additional cost of $5. Polished statues can then be sold for $30. Required: Determine whether New York Liberty Company should sell the engraved statutes. Why?