MACROSOFT Decided to Start Developing the New Word Processor

question 7

Multiple Choice

MACROSOFT decided to start developing the new word processor. After six months, the R&D phase is completed . If MACROSOFT's managers are risk-neutral, they should abandon the project if the expected revenues from sales of the new software are:

• A) $599,000.
• B) $449,000.
• C) $299,000.
• D) $399,000.

---

Definitions:

Equivalent Units

A concept used in cost accounting to convert partially completed units of production into a number of fully completed equivalent units.

Process Costing System

A process costing system is an accounting method used to allocate costs to units of product in continuous or repetitive processes, suitable for industries producing homogeneous products.

Conversion Costs

Conversion costs are manufacturing expenses incurred in converting raw materials into finished products, including direct labor and manufacturing overhead.

First-In, First-Out

An inventory valuation method where the oldest inventory items are recorded as sold first.