Why Do Accountants Normally Calculate Cost Per Unit as an Average

question 24

Multiple Choice

Why do accountants normally calculate cost per unit as an average?

• A) Determining the exact cost of a product is virtually impossible.
• B) Some manufacturing-related costs cannot be accurately traced to specific units of product.
• C) Even when producing multiple units of the same product, normal variations occur in the amount of materials and labor used.
• D) All of these are justifications for computing average unit costs.

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Definitions:

Contract Price

The amount of money agreed upon by parties involved in a contract for services or goods to be provided or delivered.

Delegatee

A person or party that is designated to act or make decisions on behalf of another, typically in a specified capacity or for particular issues.

Performance Duty

The obligation of a party to a contract to fulfill the terms of the agreement as specified.

Contract Right

A legal entitlement embedded within a contract that grants parties specific abilities or enforces particular obligations.