If Total Production Is Less Than Total Expenditures,then Business Firms

question 99

Multiple Choice

If total production is less than total expenditures,then business firms

• A) have overproduced.
• B) will cut back on production.
• C) will raise production.
• D) will experience increases in inventory.
• E) a and d

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Definitions:

Weighted-Average Method

A method for computing the cost of goods sold and the remaining inventory value that uses the mean cost of all available units.

Process Costing System

An accounting system used for homogenous products that are mass-produced, assigning costs to units of product based on the process they go through.

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, expressing the work done in terms of fully completed goods.

Weighted-Average Process

A method of accounting for inventory and production costs that averages costs over the units produced during a period, widely used in process manufacturing.