Companies That Use a Process-Cost Accounting System Would

question 38

Multiple Choice

Companies that use a process-cost accounting system would:

• A) establish a separate Work-in-Process Inventory account for each manufacturing department.
• B) establish a separate Finished-Goods Inventory account for each manufacturing department.
• C) pass completed production directly to Cost of Goods Sold.
• D) charge goods produced with actual overhead amounts rather than applied overhead amounts.
• E) eliminate the need for the Finished-Goods Inventory account.

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Definitions:

Marginal Revenue

The additional income that is generated by selling one more unit of a product or service.

Nondiscriminating Monopolist

A monopolist that charges all consumers the same price for its product or service.

Demand Schedule

A table that shows the quantity of a product or service demanded at various prices.

Profit-maximizing

A strategy in business where the main goal is to increase profits to the highest possible level given the constraints of the market.