Production costs assist management to determine:
A) sales revenue.
B) cost of goods sold.
C) gross profit.
D) net profit.

Question

Quizplus · Accepted Answer

Production costs are a key component in determining the cost of goods sold. By calculating the total production costs and subtracting them from total sales revenue, a company can determine its gross profit. From there, further deductions can be made to determine net profit. However, production costs in and of themselves do not directly assist in determining sales revenue or net profit.

Production Costs Assist Management to Determine