Chapter 5, Problem 1MCQ

To determine

Determine the cost of goods sold.

Answer to Problem 1MCQ

Option c. $357,000.

Explanation of Solution

Cost of goods sold: Cost of goods sold is the total of all the expenses incurred by a company to sell the goods during the given period.

Gross margin (gross profit): Gross margin is the amount of revenue earned from goods sold over the costs incurred for the goods sold.

Determine the cost of goods sold.

$\begin{array}{c}\text{Cost of goods sold}=\text{Net sales}-\text{Gross profit}\\ \text{=\$550,000}-\$193,000\\ =\$357,000\end{array}$

From the above explanation, Options a., b., d. and e. are incorrect answers. Thus, Option c. is the correct answer.

Conclusion

Hence, the correct answer is Option c. $357,000.