Which One of the Following Transactions in a Particular Year

question 228

Multiple Choice

Which one of the following transactions in a particular year is included in gross domestic product for that year?

• A) The government pays a computer services company that assisted in the delivery of Social Security payments to retirees.
• B) A car is produced in the previous year and remains in inventory for the entire year under consideration.
• C) A stay-at-home parent performs housework that the family would otherwise have paid a maid $20,000 a year to perform.
• D) Social Security payments to retirees

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Definitions:

Variable Costing

A costing method that includes variable manufacturing costs—direct materials, labor, and variable overhead—in the cost of production.

Absorption Costing

A method of accounting that encompasses all costs associated with manufacturing, such as direct materials, direct labor, and variable as well as fixed manufacturing overhead, in the pricing of a product.

Unit Product Cost

The total cost to produce a single unit of product, including direct materials, direct labor, and allocated overhead, crucial for pricing and profitability analysis.

Variable Costing

A costing method that includes only variable costs (costs that change with production volume) in product costs and treats fixed costs as period costs.