The revenue and throughput contribution is subtracted to calculate the __________?
Correct answer: C. direct material cost of goods sold
- A. indirect labor cost of goods sold
- B. direct labor cost of goods sold
- C. direct material cost of goods sold
- D. indirect material cost of goods sold
Explanation
Throughput contribution equals revenue minus direct material cost, so direct material cost of goods sold is found by subtracting throughput contribution from revenue. Labor and other conversion costs are treated as operating expenses in throughput accounting.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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