A Company Should Use Process Costing, Rather Than Job Costing

question 35

Multiple Choice

A company should use process costing, rather than job costing, if:

• A) production is only partially completed during the accounting period.
• B) the product is manufactured in batches only as orders are received.
• C) the product is composed of mass-produced homogeneous units.
• D) the product goes through several steps of production.

Understand how net book value affects the interpretation of investment return.

Recognize the advantages of using residual income over other performance measures.

Define and calculate return on investment (ROI).

Distinguish between intrinsic and extrinsic rewards.

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Definitions:

Interest Rate

The proportion of a total amount of money that is charged for borrowing it, frequently presented as a yearly rate.

Marginal Efficiency

Marginal efficiency relates to the additional utility or benefit gained from consuming or producing one more unit of a good or service.

Inventory Investment

The purchase of goods that are not sold immediately but are held for future sales, contributing to a company's assets.

Inventory

The total amount of goods and materials held in stock by a business or company.