At the Beginning of 2011, Peters Company Installed a JIT

question 26

Multiple Choice

At the beginning of 2011, Peters Company installed a JIT purchasing and manufacturing system.The following information has been gathered about one of the company's products:
- What is the ideal conversion cost per unit?

• A) $0.9 per unit.
• B) $1.75 per unit.
• C) $25.50 per unit.
• D) $28 per unit.

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Definitions:

Differential Revenue

The amount of increase or decrease in revenue expected from a particular course of action as compared with an alternative.

Differential Cost

The amount of increase or decrease in cost expected from a particular course of action compared with an alternative.

Variable Costs

Costs that vary in proportion to changes in the activity base.

Differential Cost

The difference in total cost that will result from selecting one alternative over another in decision-making situations.