ITPEC IP April 2018 Question 71
ITPEC IP April 2018 — Question 71 of 100
The total cost incurred until Product B is sold is its manufacturing cost plus its selling expenses. Manufacturing cost covers resources used to make the product, while selling expenses cover activities required to market and deliver it to customers.
Answer (a)
Why not others:
- operating profit is a result remaining after costs, not an additional cost
- sales minus manufacturing cost is a form of gross margin, not total cost
- sales minus selling expenses does not isolate all costs because manufacturing cost is omitted
Key rule: Total cost through sale combines production-related cost with the expenses incurred to sell the finished product.
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