During July, Neptune Company had actual sales of $144,000 compared to budgeted sales of $156,000. Actual cost of goods sold was $108,000, compared to a budget of $109,200. Monthly operating expenses, budgeted at $22,400, totaled $20,000. Interest revenue of $2,000 was earned during July but had not been included in the budget. In reviewing the decrease in COGS, the manager concludes:

Question

Quizplus · Accepted Answer

The decrease in COGS (Cost of Goods Sold) from the budgeted $109,200 to the actual $108,000 could be attributed to a one-time special purchase made at a discount, which would lower the cost of goods sold without necessarily indicating a change in inventory accounting methods or product scarcity.

During July, Neptune Company Had Actual Sales of $144,000 Compared