1. A parent sells merchandise to its subsidiary at a markup of 20% on cost. In the current year, the subsidiary had $120,000 in merchandise purchased from the parent in its beginning inventory. During the current year, the subsidiary paid the parent $720,000 for merchandise, and sold merchandise purchased from the parent to outside customers for $870,000. At year-end, the subsidiary has $180,000 in merchandise purchased from the parent in its ending inventory. At what amount does the subsidiary report cost of goods sold on merchandise purchased from the parent? A. $660,000 B. $600,000 C. $720,000 D. $780,000

The subsidiary reports cost of goods sold at A. $660,000.

Explanation:

Cost of goods sold is the direct cost of producing or purchasing the goods sold by a business. The formula for cost of goods sold is as follows:

Cost of goods sold = Opening inventory + Purchases - Closing inventory

The subsidiary calculates its cost of goods sold as follows.

Opening inventory           $120,000

Add: Purchases                $720,000

Less: Closing inventory    ($180,000)

Cost of goods sold           $660,000

Therefore, the correct option is A. $660,000.

Coefficient of variation = 0.67

Explanation:

Coefficient of variation:

The coefficient of variation (CV) is the ratio of the standard deviation to the mean.

Formula:

Coefficient of variation = Standard deviation / expected return

McLeod Inc. is considering an investment that has an expected return of 15% and a standard deviation of 10%.

Therefore by putting the values in the above formula, we get

Coefficient of variation = 10% / 15%

Coefficient of variation = 0.10 / 0.15

Coefficient of variation = 0.67