Why Is Units Shipped Instead of Units Produced Used as the Denominator

question 75

Multiple Choice

Why is units shipped instead of units produced used as the denominator in the calculation of product costs for value streams with multiple products?

• A)It reduces conversion costs assigned to the value stream.
• B)It motivates managers to reduce inventories.
• C)Units shipped are always greater than units produced.
• D)Units produced encourages managers to increase inventory.

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