In What Category Is the Purchase of a Computer by a Person

question 178

Multiple Choice

In what category is the purchase of a computer by a person for household use in national income accounting?

• A)It is counted as consumption.
• B)It is counted as consumption if the computer was manufactured in the United States; otherwise it is ignored.
• C)It is included as part of investment.
• D)The purchase is not included at all, but the value of services the computer gives is included in consumption each year.

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Definitions:

Process Costing

An accounting methodology used for homogenous products, allocating production costs based on processing departments or cycles.

Conversion Costs

The costs incurred in the process of converting raw materials into finished goods, typically including direct labor and manufacturing overhead.

Cutting Department

A specific section within a manufacturing facility where materials (often fabric) are cut to size before being assembled into final products.

Equivalent Unit

A concept in cost accounting used to apportion costs among finished goods and goods in process, based on work completed.