The production budget shows expected unit sales are 100,000. the required production units are 104,000. what are the beginning and desired ending finished goods units, respectively? beginning units ending units a. 10,000 6,000 b. 6,000 10,000 c. 4,000 10,000 d. 10,000 4,000 a

Known: purchase = 100,000

COGS = 104,000

Asked: Initial unit = r?

End unit = p?

Using this formula: COGS = Initial inventory + purchase - ending inventory

Simply adjust to the formula above

COGS = Initial inventory + purchase - ending inventory

104,000 = r + 100,000 - p

104,000 = 10,000 + 100,000 - 6,000

So, for the initial unit = 10,000 and for the final unit = 6,000. The answer is A.

Trading companies are companies whose main business is buying goods from suppliers and selling them back to consumers without changing the shape of the goods. For example, we usually find grocery stores and supermarkets. Both types of businesses buy daily necessities from suppliers and resell them to consumers.

Determine the Cost Components for Sales of Trading Companies

Some components determine the cost of goods sold by a trading company. All of the following components affect the cost of goods sold. Some of them are:

1. Initial inventory of merchandise

The initial inventory of merchandise is the inventory of goods available at the beginning of the current period or financial year. The initial inventory balance of merchandise can be seen in the current account balance or the company's initial balance sheet or the previous year's balance sheet.

2. Final inventory of merchandise

Merchandise ending inventory is inventory available at the end of the current period or end of the financial year. This inventory balance is usually known in the company adjustment data at the end of the period.

3. Net purchases

Net purchases are all purchases of goods made by the company, both purchases of goods in cash or credit, plus the cost of transportation purchases minus the purchase discounts and returns on purchases that occur.

The cost of goods sold or COGS is a term used in financial and tax accounting to describe the direct costs arising from goods produced and sold in business activities. This includes the cost of raw materials, direct labor, and overhead costs and does not include period (operating) costs such as sales, advertising or research and development.

For trading companies, the method of calculating the cost of goods sold is:

Cost of goods sold (COGS) = initial inventory + net purchases - ending inventory  

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definition of A trading company

components affect the cost of goods sold

definition of The cost of goods sold or COGS

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Grade: College

Subject: Business

keywords: A trading company, The cost of goods sold or COGS

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