In Order to Obtain More Accurate Product Costs, How Do

question 14

Multiple Choice

In order to obtain more accurate product costs, how do many companies allocate overhead?

• A)They use activity-based costing.
• B)They use enterprise resource planning systems.
• C)They use just-in-time methods.
• D)They use total-quality management systems.

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Definitions:

Work In Process

Inventory that includes goods that are in the production process but are not yet completed.

Factory Overhead

All indirect costs associated with manufacturing, including utilities, rent, and salaries for managers.

Direct Materials

Basic substances that can be directly linked and attributed to the creation of particular products or services.

Direct Labor

The work of factory employees that can be directly associated with converting raw materials into finished goods.