In the Calculation of Product Costs for Value Streams with Multiple

question 77

Multiple Choice

In the calculation of product costs for value streams with multiple products, units shipped instead of units produced is used as the denominator because

• 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 shipped is not used.

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Definitions:

Industrial Products

Goods and services sold to other industries or businesses for the production of goods, maintenance of operations, or resale.

Business Products

Goods and services that are sold by businesses to other businesses as inputs for production, not typically bought by consumers for personal use.

Resale Products

Goods purchased with the intention of selling them to another party, often at a markup, without significant modification.

Commodities

Basic goods used in commerce that are interchangeable with other goods of the same type, often used as inputs in the production of other goods or services.