A manager can decrease reported cost of goods sold by: Increasing selling price Increasing production levels...

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A manager can decrease reported cost of goods sold by: Increasing selling price Increasing production levels...

A manager can decrease reported cost of goods sold by: Increasing selling price Increasing production levels Decreasing production levels Decreasing selling price

business accounting

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Answer 1

Answer #1

Correct answer---Increasing production levels.

.

Increasing production level can decrease overall cost of goods sold because of high value of ending inventory and apportionment of fixed production cost to ending inventory.

Assume a situation below to understand this better.

Production (In units)	50000	75000
Units sold	45000	45000
Ending Inventory ( In Units)	5000	30000
Fixed Production cost	$ 27,00,000.00	$ 27,00,000.00
Fixed cost per unit produced	$ 54.00	$ 36.00
Variable cost per Inventory	$ 75.00	$ 75.00
Ending inventory value (Fixed and variable )	$ 6,45,000.00*	$ 33,30,000.00
Cost of goods sold	$ 58,05,000.00	$ 49,95,000.00

*(75+54) x 5000

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Answer 2

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In a vertical analysis, the base for cost of goods sold is a. total selling expenses...

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