Consider an Industry with Two Firms Producing Similar Products

question 60

Multiple Choice

Consider an industry with two firms producing similar products. Each firm's total cost (in dollars) is given below. Mega Corp: TC = 5,000 + 100Q
Big Inc: TC = 4,000 + 200Q
When each firm produces 8 units, ________ has a lower total cost, and when each firm produces 12 units, ________ has a lower total cost.

• A)Big Inc; Mega Corp
• B)Mega Corp; Big Inc
• C)Big Inc; Big Inc
• D)Mega Corp; Mega Corp

---

Definitions:

Process Costing System

An accounting methodology used for homogenous products, allocating costs across all units produced.

Journal Entry

A record of a financial transaction in an accounting system, ensuring the debits and credits balance.

Finishing Department

The final stage in the manufacturing process where products are completed and prepared for sale.

Transferred Out

In cost accounting, refers to the costs that have been moved from one production department to another in the process of manufacturing.