The Cervantes Company Uses the Same Method of Depreciation for Its

question 48

Multiple Choice

The Cervantes Company uses the same method of depreciation for its equipment in each fiscal period. This practice is an example of

• A)materiality.
• B)matching.
• C)consistency.
• D)conservatism.

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Definitions:

Product Costs

Expenses directly associated with the manufacture of a product, including materials, labor, and overhead.

Factory Overhead Allocated

The portion of factory overhead costs assigned to each unit of production, based on a predetermined formula.

Multiple Production

Involves producing multiple products or variants from the same base of raw materials or through similar production processes, aimed at diversification and efficient resource use.

Direct Labor Hours

The cumulative hours spent by workers directly engaged in manufacturing products or delivering services.