Use the Following to Answer Questions

question 398

Multiple Choice

Use the following to answer questions:
Scenario: Real GDP
Suppose that in year 1 an economy produces 100 golf balls that sell for $3 each and 75 pizzas that sell for $8 each. The next year the economy produces 110 golf balls that sell for $3.25 each and 80 pizzas that sell for $9 each.
-(Scenario: Real GDP) Look at the scenario Real GDP. The growth rate of nominal GDP from year 1 to year 2 is:

• A)10%.
• B)7.8%.
• C)19.7%.
• D)8.8%.

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Definitions:

Weighted-Average Method

An inventory costing method that assigns an average cost to each unit on hand, calculated by dividing total cost of goods available for sale by total units available.

Work in Process Inventory

An account on the balance sheet that represents the cost of raw materials, labor, and overhead for products that are in production but not yet complete.

Equivalent Costs

The concept in cost accounting that represents the cost of materials, labor, and overheads in partially finished goods, expressed in terms of fully finished goods.

Conversion Cost

Conversion Cost refers to the combined costs of direct labor and manufacturing overheads incurred to convert raw materials into finished products.