Assume a Company Produces Three Products: A,B,and C It Can

question 88

Multiple Choice

Assume a company produces three products: A,B,and C It can only sell up to 3,000 units of each product.Production capacity is unlimited.The company should produce the product (or products) that has (have) the highest

• A)contribution margin per hour of machine time.
• B)gross margin per unit.
• C)contribution margin per unit.
• D)sales price per unit.

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Definitions:

Process Cost System

An accounting method used to track cost related to processes or departments when mass-producing identical or similar products.

Work In Process Inventory

The value of partially completed goods or products that are in the process of being manufactured.

Perpetual Inventory System

The inventory system in which each purchase and sale of merchandise is recorded in the inventory account and related subsidiary ledger; therefore, the inventory records are updated continuously.

Conversion Cost

The combined cost of direct labor and manufacturing overheads which are incurred to convert raw materials into finished goods.