In a Recession

question 20

Multiple Choice

In a recession:

• A) Budgets can be relaxed as there is more capital available.
• B) The number of failing organizations reduces.
• C) Retrenchment strategies are frequently required as demand falls and costs need containing.
• D) Strategies become obsolete.

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Definitions:

Equivalent Units

A concept in cost accounting that converts partially completed units into a comparable number of fully completed units.

Conversion Costs

The sum of labor and overhead costs that are necessary to turn raw materials into finished products.

FIFO Method

First In, First Out; an inventory valuation method where the costs of the earliest goods purchased or produced are the first to be expensed.

Process Costing

A method of costing used for homogenous products, where it calculates the cost of each process or stage of production.