A Builder Bought All 20 Lots in a Subdivision from the Developer

question 48

Multiple Choice

A builder bought all 20 lots in a subdivision from the developer, who carried most of the purchase price on one loan. To sell the lots, he must include a

• A) reverse loan clause.
• B) sale-lease back clause.
• C) package mortgage clause.
• D) partial release clause.

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Definitions:

Equivalent Units

A concept used in process costing that converts partially completed units into a number of fully completed units for accounting purposes.

Weighted-Average Method

A method for determining the cost of goods sold and the value of the remaining inventory by calculating the average cost of all available units for sale.

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.