1- Retail stores have one cost of goods sold. Manufacturing firms have three types of cost...

1- Retail stores have one cost of goods sold. Manufacturing firms have three types of cost of goods sold. Explain the differences among the three manufacturing types of cost of goods sold.

2-Explain the concept of sunk costs and explain how sunk costs sometimes lead to poor decisions by businesses in regard to products that are well into development but are not successful

3-Describe how the inventory sections of the balance sheet vary for retailers/wholesalers vs. manufacturers

4-Describe at least two methods used for pricing decisions.

Expert Solution

Since Manufacturing is a process it require coversion of input (Raw material) into Output (Finished goods). Accordingly Manufacturing concern have to have three types of cost of goods sold, which include:

1. Cost of goods sold of raw material: It means the cost of input material that have been used in the production period. It is calculated by formula: opening stock of raw material+purchases-Closing stock of raw material.

2.Cost of goods sold of Work in progess: Since manufacturing is a continuous process there is always some work which is partially done and require to be completed in next period. Such inventory is called Work-in-progress. It is calculated by formula:

opening stock of work in progress+purchases-Closing stock of work in progress.

3.Cost of goods sold of finished goods: Once goods are completely manufactured, they are finished goods and ready for sale in the market. However, all that is manufactured may not be able to sell in the same period and carried forward to next period.

It is calculated by formula:

opening stock of Fnished goods+purchases-Closing stock of Finished goods.

ekkarill92 answered 2 years ago

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