Yvonne is planning a coffee shop. The cost of producing the coffee should be included in the _____ section of the pro forma financial statements.

Question

Quizplus · Accepted Answer

The cost of producing the coffee should be included in the cost of goods sold (COGS) section of the pro forma financial statements. COGS includes all the direct costs associated with producing and selling the products or services, such as raw materials, labor, and manufacturing or overhead expenses. The other choices are not as accurate because variable expense refers to costs that may change based on business activity, amount of sales does not include production costs, and operating expenses are indirect costs associated with running the business (e.g. rent, utilities, marketing).

Yvonne Is Planning a Coffee Shop