When Determining the Cost of a Manufactured Item Under an Operation-Costing

question 47

Multiple Choice

When determining the cost of a manufactured item under an operation-costing system, a company would:

• A)trace direct-material cost and actual conversion cost to each product produced.
• B)trace direct-material cost to each batch product produced and use a predetermined application rate for conversion cost.
• C)trace actual conversion cost to each product produced and use a predetermined application rate for direct material.
• D)use a predetermined application rate for both direct-material cost and conversion cost.
• E)often switches to a job-costing system to simplify record keeping procedures.

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Definitions:

Demand Curve

A graph showing the relationship between the price of a good and the quantity of that good consumers are willing and able to buy.

Perfectly Elastic

A situation in economic theory where the quantity demanded or supplied responds infinitely to changes in price.

Perfectly Inelastic

A situation in which the demand for a good or service does not change in response to changes in price.

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good, with higher elasticity indicating greater responsiveness.