Figure 2-16 A small engine repair shop purchased materials costing $9,000 in July. The beginning inventory of material parts was $4,500 and the ending inventory of material parts was $4,000. Payments for direct labor for July totaled $27,000, secretarial costs were $2,000, and overhead of $5,000 was incurred. In addition, $5,000 was spent on advertising and $2,000 for the franchise name. Revenue for July was $50,000.
Refer to Figure 2-16. What is the cost of services sold for July?
A) $41,500
B) $43,500
C) $50,500
D) $40,500

Question

Quizplus · Accepted Answer

The cost of services sold is calculated as: Beginning Inventory ($4,500) + Purchases ($9,000) - Ending Inventory ($4,000) + Direct Labor ($27,000) + Overhead ($5,000) = $41,500.

Figure 2-16 a Small Engine Repair Shop Purchased Materials Costing