Acme Manufacturing Company's controller was classifying costs for the most recent financial statement period.Which of the following should be excluded from the calculation of gross margin?
A)Factory worker wages.
B)Materials used in assembling a product.
C)Conveyer belt maintenance for production of all products.
D)Marketing brochure for the company's new product.

Question

Quizplus · Accepted Answer

Gross margin is calculated by subtracting the cost of goods sold from revenue. Costs directly related to the production of goods, such as factory worker wages and materials used in assembling the product, should be included in cost of goods sold. Conveyer belt maintenance, while indirectly related to production, is still necessary for the production of goods and should also be included in cost of goods sold. However, marketing expenses such as a brochure for a new product are not directly related to the production of goods and should be excluded from the calculation of gross margin.

Acme Manufacturing Company's Controller Was Classifying Costs for the Most