The Percentage-Of-Completion Method

question 35

Multiple Choice

The percentage-of-completion method

• A) is used in valuing inventories.
• B) is applicable for long-term construction projects.
• C) must be used by all companies.
• D) should only be used if reliable estimates of total costs are not available.

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Definitions:

Marginal Cost

The extra expense that arises when one more unit of a product or service is produced.

Diminishing Returns

A principle in economics where each additional unit of input yields less and less extra output.

Average Variable Cost

The total variable cost divided by the number of units produced, representing the variable cost per unit of output.

Purely Competitive Market

A market structure characterized by a large number of sellers offering identical products, where no single seller can influence the market price.