Question

The cost of goods sold expense can be determined either by directly computing the variable cost of producing a unit times the number of units sold or by using an industry standard percentage of sales. -True -False

Answer 1

True.

The cost of goods sold (COGS) expense can be determined by either directly computing the variable cost of producing a unit times the number of units sold or by using an industry standard percentage of sales. The method chosen depends on the specific accounting and reporting practices of the business and the availability of data. Some businesses calculate COGS based on actual costs, while others use a predetermined percentage of sales revenue to estimate COGS. Both methods are acceptable as long as they accurately reflect the cost of producing the goods sold.

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