For Which of the Following Do We Prepare Calculations for Equivalent

question 96

Multiple Choice

For which of the following do we prepare calculations for equivalent units?

• A)Both direct labor and manufacturing overhead
• B)Both direct materials and conversion costs
• C)Both direct labor and direct materials
• D)Neither direct materials nor conversion costs

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Definitions:

Economic Loss

A situation where total costs exceed total revenues, indicating that a firm is not covering its opportunity costs.

Accounting Profit

The calculated income of a business or company after subtracting all explicit costs from total revenues.

Average Variable Cost

Calculated by dividing the total variable costs by the quantity of output produced, representing the variable cost per unit of output.

MR = MC

The condition where marginal revenue equals marginal cost, often used to determine the profit-maximizing output level for a firm.