Which of the Following Statements Is (Are)true

question 16

Multiple Choice

Which of the following statements is (are) true?

• A)The geometric average rate of return will always be greater than the arithmetic average rate of return.
• B)The arithmetic average rate of return will always be greater than the geometric average rate of return.
• C)The difference between the geometric and arithmetic average rate of returns will be greater, the greater the variability of the annual returns.
• D)Both A and C are true statements.

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Definitions:

Conversion Costs

The sum of direct labor and manufacturing overhead costs, representing the costs to convert raw materials into finished products.

Direct Materials

The raw materials that are directly traced and integrated into the final product and are a significant part of the manufacturing cost.

Weighted-Average Method

is an inventory costing method that assigns the average cost of goods available for sale to both ending inventory and cost of goods sold.

Conversion Costs

The sum of direct labor and manufacturing overhead costs, representing the costs incurred to convert raw materials into finished products.