Which of the Following Statements Is Most Accurate

question 86

Multiple Choice

Which of the following statements is most accurate?

• A)In process costing,estimating the degree of completion of units is usually more accurate for conversion costs than for direct materials.
• B)The FIFO method includes the cost of the beginning Work in Process inventory account in calculating cost per equivalent units.
• C)The FIFO method computes equivalent units based only on production activity in the current period,ignoring the percentage of completion in beginning Work in Process inventory.
• D)The FIFO method of calculating equivalent units of production merges the work and the costs of the beginning inventory with the work and the costs done during the current period.
• E)It is not possible for there to be a significant difference between the cost of completed units between the weighted average and the FIFO methods.

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Definitions:

Contribution Margin

The amount that one unit contributes to profit. It is defined as price minus marginal cost.

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business, such as rent, salaries, or insurance premiums.

Break-Even Quantity

The amount you need to sell to at least break even (make zero profit). The formula (assuming that you can sell all you want at price and with constant marginal cost) is Q = F/(P - MC), where F is fixed costs, P is price, and MC is marginal cost.

Zero Profits

Zero profits, or normal profit, occur when a company's total revenues exactly match total costs, leaving no net profit or loss.