What are some risks of adding a new product?

Why is the cost of goods sold account part of a trading business only? The cost of goods sold account is part of a trading busin

ELEN [110]

COGS is sometimes referred to as cost of sales and refers to the production costs for products manufactured and sold or purchased and re-sold by the company. These costs are an expense of the business, and they reduce the revenue the company makes from selling its products.

For example, say your business assembles a completed widget from various inventory parts and sells it online for $15. The parts of the widget and the direct labor required to assemble them cost $10.

The $10 cost is deducted from the widget's sale price to determine the gross profit it generates, and the taxes on that profit. The IRS allows you to include a variety of costs in this calculation.

Cost of goods sold is determined annually by showing changes in the company's balance of "goods" or inventory, from the beginning to the end of the company's fiscal (financial) year, and it is included in the company's income statement. The income statement information is included on the business tax return and used to calculate adjusted gross income as well as net income for tax purposes.

What's Included in Cost of Goods Sold

Cost of goods sold includes the direct cost of producing the product or the wholesale price of goods resold and the direct labor costs to produce the product. Specifically, it can include:

Cost of raw materials.

Cost of items purchased for resale.

Cost of parts used to construct a product.

COGS also includes other direct costs such as labor to produce the product, supplies used in manufacture or sale, shipping costs, costs of containers, freight in, and overhead costs directly related to the manufacture or production activity (like rent and utilities for the manufacturing facility).

Finally, COGS includes indirect costs such as distribution costs and sales force costs that are also directly related to the products the company sells.

8 0

3 years ago

Taylor takes her employees' opinions into consideration via reasoning and discussion when making departmental decisions. Which o

qwelly [4]

Answer:

A. Flexible

Explanation:

Taylor takes her employees' opinions into consideration via reasoning and discussion when making departmental decisions. She is very much flexible with her role models. She listens to her employees, takes advises from them and then accordingly make divisions. She is the best example of a leader who learn from others and make plans with the help of others in the changing situations. An effective leader and manager should be flexible in order to make their employees and followers comfortable with them. In this way, they can share and coordinate quite effectively.

6 0

3 years ago

Listed below are several transactions that took place during the first two years of operations for the law firm of Pete, Pete, a

NARA [144]

Answer:

Answer in Attachment

Explanation:

Download xls

8 0

4 years ago

Suppose a city is considering placing a ceiling on rent for one-bedroom apartments, at $1,000 per apartment.

Dafna1 [17]

Answer:

(a) The market equilibrium rent is $1,400 and the equilibrium quantity is 15 thousand apartments.

(b) With the price ceiling, the rent is $1,000 per apartment and the quantity rented is 10 thousand apartments.

(c) The excess demand for apartments with the price ceiling is 20

Explanation:

(a) At equilibrium, demand function equals supply function

1700 - 20Q = 80Q + 200

1700 - 200 = 80Q + 20Q

100Q = 1500

Q = 1500/100 = 15

Substitute the value of Q in the demand function

P = 1700 - 20Q = 1700 - 20(15) = 1700 - 300 = 1400

Equilibrium rent = $1,400

Equilibrium quantity is 15 thousand apartments

(b) Rent with price ceiling is $1,000 per apartment

Substitute the value of P in the supply function

P = 80Q + 200

1000 = 80Q + 200

1000 - 200 = 80Q

80Q = 800

Q = 800/80 = 10

Quantity rented is 10 thousand apartments

(c) Quantity demanded (Q) with price ceiling = (1700 - P)/20

P = 1000

Q = (1700 - 1000)/20 = 700/20 = 35

Excess demand = 35 - 15 = 20

4 0

3 years ago

Lower-of-Cost-or-Market

RSB [31]

Answer:

1-a. The total amount to be assigned to the ending inventory under FIFO is $300.

1-b. The total amount to be assigned to the ending inventory under Weighted-average is $242.50.

2-a. The total amount to be assigned to the ending inventory under FIFO lower-of-cost-or-market is $260.

2-b. The total amount to be assigned to the ending inventory under weighted-average lower-of-cost-or-market is $242.50.

Explanation:

1-a. Calculate the total amount to be assigned to the ending inventory under FIFO.

First In First Out (FIFO) method, the units purchased first are sold first and the units purchased last are sold last.

Since there are 10 units of inventory on hand on December 31 and Dec. 8 3rd purchase has 10 units, this implies that the total amount to be assigned to the ending inventory is $300 which is total amount of units of Dec. 8 3rd purchase.

Therefore, the total amount to be assigned to the ending inventory under FIFO is $300.

1-b. Calculate the total amount to be assigned to the ending inventory under Weighted-average (round calculations to two decimal places.).

Total cost = $970

Total units = 40

Weighted-average per unit = Total cost / Total units = $970 / 40 = $24.25

Cost of ending inventory = Weighted-average per unit * Units of ending inventory = $24.25 * 10 = $242.50

Therefore, the total amount to be assigned to the ending inventory under Weighted-average is $242.50.

2-a. Calculate the total amount to be assigned to the ending inventory under FIFO lower-of-cost-or-market.

Market price per unit = $26

Total amount of ending inventory using market price per unit = Market price per unit * Units of ending inventory = $26 * 10 = $260

Total amount of ending inventory using FIFO = $300

FIFO lower-of-cost-or-market = Total amount of ending inventory using market price per unit = $260

Therefore, the total amount to be assigned to the ending inventory under FIFO lower-of-cost-or-market is $260.

2-b. Calculate the total amount to be assigned to the ending inventory under Weighted-average lower-of-cost-or-market.

Market price per unit = $26

Total amount of ending inventory using market price per unit = Market price per unit * Units of ending inventory = $26 * 10 = $260

Total amount of ending inventory using weighted-average = $242.50

Weighted-average lower-of-cost-or-market = Total amount of ending inventory using weighted-average = $242.50

Therefore, the total amount to be assigned to the ending inventory under weighted-average lower-of-cost-or-market is $242.50.

4 0

3 years ago