Regarding the Flow of Costs Through the Inventory Accounts,which of the Following

question 130

Multiple Choice

Regarding the flow of costs through the inventory accounts,which of the following statements is incorrect?

• A) The final amount at each stage is added at the beginning of the next stage.
• B) The costs flow from Raw Materials Inventory to Work-in-Process Inventory to Finished Goods Inventory.
• C) Purchases and freight in are debited to the Work-in-Process Inventory account.
• D) The format for computing the amount used, manufactured, or sold is the same for all three inventory accounts.

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Definitions:

Total Cost

The total expenses a company incurs to produce a specific quantity of goods, encompassing both constant and fluctuating costs.

Marginal Output

The additional output that results from the use of one more unit of a production input, assuming other inputs are constant.

AVC

Average Variable Cost, the per unit cost of variable inputs divided by the total output produced, indicating the variable cost for each unit of output.

ATC

Stands for Average Total Cost, which is the sum of all production costs divided by the quantity of output produced.