-The Increase in the Demand for Widgets, Shown in the Figure

question 511

Multiple Choice

-The increase in the demand for widgets, shown in the figure above, is the result of a decrease in the price of McBoover devices. Therefore

• A) widgets and McBoover devices are substitutes.
• B) widgets and McBoover devices are complements.
• C) widgets are a normal good.
• D) McBoover devices are a normal good.

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Definitions:

Conversion Costs

The combined costs of direct labor and manufacturing overhead, which are incurred to convert raw materials into finished products.

Assembly Department

The assembly department is a specific division within a manufacturing facility where components are assembled into finished goods.

Weighted-Average Method

A cost accounting technique that assigns the same average cost to both ending inventory and the cost of goods sold.

Process Costing System

An accounting system used to calculate the cost of a product at various stages of production, commonly used in industries that produce homogeneous goods.