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Which of these is added to cost of goods sold to reach cost of sales?
ASelling and distribution overheads
BDirect material consumed in the period
COpening stock of work in progress
DDirect employee cost of the factory
Answer & Solution
Correct answer: A. Selling and distribution overheads
1. Cost of sales is the total cost of making the product available to the customer.
2. It starts from cost of goods sold.
3. To that are added general administrative overheads, selling overheads, secondary packing and distribution overheads.
4. Direct material and direct labour were already absorbed much earlier, inside prime cost.
_Source: ICAI Cost and Management Accounting Ch6 'Cost Sheet', section 6.3.4_
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