Multiple Choice
Which of the following is a direct cost of manufacturing an automobile?
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4. Merchandising Operations
Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory
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Which of the following types of inventory are items that are ready to be sold?
A
Raw materials inventory
B
Supplies inventory
C
Work-in-process inventory
D
Finished goods inventory
Verified step by step guidance1
Understand the different types of inventory classifications: Raw materials inventory refers to the basic materials used in production, Supplies inventory includes items used in the production process but not part of the final product, Work-in-process inventory consists of partially completed goods, and Finished goods inventory includes items that are fully completed and ready for sale.
Identify the key characteristic of the inventory type that matches the description 'items that are ready to be sold.' This characteristic is that the goods are fully completed and do not require further processing.
Compare each inventory type to the description provided: Raw materials inventory and Work-in-process inventory are not ready for sale as they require further processing. Supplies inventory is not part of the final product and is not sold directly.
Recognize that Finished goods inventory is the correct type because it consists of items that are fully completed and ready to be sold to customers.
Conclude that the correct answer to the question is Finished goods inventory, as it matches the description of items ready to be sold.
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