If Price Received Equals 5 USD/unit and the Cost of Production

question 35

Multiple Choice

If price received equals 5 USD/unit and the cost of production equals 2 USD/unit, then PS equals:

• A) 2 USD
• B) 5 USD
• C) 3 USD
• D) 7 USD

Understand and apply the concept of departmental overhead rates.

Comprehend and calculate activity-based costing.

Calculate the company's plantwide overhead rate.

Determine the total product cost and unit cost for specific product lines.

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Definitions:

Capitalization

The process of recording an expenditure as an asset on the balance sheet, rather than an expense, allowing its cost to be expensed over time.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its short-term assets.

Return On Equity

A measure of a corporation's profitability that calculates how much profit a company generates with the money shareholders have invested.

Inventory Turnover

Inventory turnover is a ratio showing how many times a company has sold and replaced inventory over a period.