Emerson Electric Formed an Operating Group of Several Otherwise Autonomous

question 22

Multiple Choice

Emerson Electric formed an operating group of several otherwise autonomous business units that make different types of electrical motors and tools.By sharing production facilities,marketing activities and a common sales force,the group was able to reduce the costs of both per-unit production and marketing.Emerson Electric is trying to:

• A)gain operating synergies through sharing resources
• B)preserve its position in established product markets
• C)generate excess cash to support its product and market development efforts
• D)devote a proportion of resources to the development of new product markets

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Definitions:

FIFO Method

A cost flow assumption for inventory valuation where the first items acquired (First In) are the first sold or used (First Out), affecting the cost of goods sold and inventory on financial statements.

Process Costing

A costing method used in manufacturing where costs are assigned to products based on the processes or stages they go through.

Equivalent Units

A technique used in process costing that converts partially completed goods into a number of fully completed units.

Conversion Costs

The sum of direct labor and manufacturing overhead costs, representing the expenses incurred to convert raw materials into finished products.