Given that the total revenue is $25,000 and the throughput contribution amounts to $12,000, what is the direct material cost included in the cost of goods sold?

Multiple choice question for Capacity Analysis and Inventory Costing. Select an option, then review the explanation below.

Explanation

Since throughput contribution is calculated as revenue minus direct material cost, the direct material cost equals revenue minus throughput contribution: $25,000 - $12,000 = $13,000.

Practice related questions from the same subject.

1.What term describes the operational capacity that is below the theoretical maximum capacity?
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3.What does the denominator represent in the fixed manufacturing cost rate calculation?
4.Which of the following is used to determine product capacity, cost analysis, performance assessment, and compliance with regulations?
5.In absorption costing, which format does the income statement typically use?

Given that the total revenue is $25,000 and the throughput contribution amounts to $12,000, what is the direct material cost included in the cost of goods sold?

Explanation

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