Company a Has Inventory Out on Consignment and Held for Sale

question 40

Multiple Choice

Company A has inventory out on consignment and held for sale by Company B.Which Company will include the goods in their inventory?

• A)Company A
• B)Company B
• C)Either Company A or Company B
• D)Cannot be determined from the facts

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Definitions:

Activity-Based Costing

A costing method that assigns overhead and indirect costs to related products and services based on the activities that drive these costs.

Unit Product Cost

The total cost incurred to produce, manufacture, or acquire a product, divided by the number of units produced.

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process, often used as a basis for assigning costs to products.

Manufacturing Overhead

Indirect factory-related costs that support the production process but cannot be directly traced to specific products, such as maintenance and utilities.