You Run a Concession Stand at the Local Park During

question 326

Multiple Choice

You run a concession stand at the local park during the summer months. At the beginning of the season, you purchased several cases of frozen hamburger. The summer is unusually cold and thus you have decided to add chili to your current menu which consists of hot dogs, hamburgers, chips, and ice cream. Because of the weather, your sales to date have been less than you anticipated and thus you feel that you will end the season with unsold hot dogs and hamburger patties. Thus, you decide to use some of your previously purchased hamburger in the chili. The cost of the hamburger _____ be included in your cost of the chili because the hamburger used in the chili is a(n) _____ cost.

• A) should; erosion
• B) should; opportunity
• C) should; sunk
• D) should not; sunk
• E) should not; opportunity

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Definitions:

Equivalent Units Of Production

The number of production units that could have been completed within a given accounting period, given the resources consumed.

First-In, First-Out

An inventory accounting method where goods first purchased or manufactured are the first ones to be sold.

Completion Percentage

In project management and accounting, it refers to the ratio of work completed to the total scope of work, often used for progress billing and revenue recognition.

Equivalent Units

A concept in cost accounting used to convert partially completed goods into an equivalent number of fully completed units for inventory accounting purposes.