Which of the Following Is True When Computing Cost Per

question 100

Multiple Choice

Which of the following is true when computing cost per equivalent unit in a FIFO process costing system?

• A) Prior period costs are combined with costs incurred in the current period and then divided by the equivalent units of production.
• B) Costs incurred in the current period are divided by the equivalent units of production.
• C) Total cost to account for is divided by the equivalent units of production.
• D) Equivalent units of production are divided by costs incurred in the current period.
• E) Equivalent units of production are divided by cost to account for.

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Definitions:

Sales Revenue

The gross income from selling products or services, prior to deducting any costs.

FOB Shipping Point

A shipping term indicating that the buyer is responsible for the goods and the shipping cost as soon as the goods leave the seller's premises.

FOB Destination

A shipping term indicating that the seller is responsible for the goods and the shipping cost until the goods reach the buyer's specified location.

Inventory

The goods and materials that a business holds for the ultimate goal of resale or production.