The Denominator in the Calculation for Basic Earnings Per Share

question 49

True/False

The denominator in the calculation for basic earnings per share is net income less preferred dividends.

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Definitions:

Conversion Costs

The combined cost of direct labor and manufacturing overhead involved in transforming materials into finished goods.

Equivalent Units

A concept in cost accounting used to calculate the number of complete units that could have been produced given the total amount of raw materials and effort expended.

Total Materials Costs

The sum of all costs associated with the materials required to manufacture a product.

Work In Process Inventories

Inventories that represent goods that are partially completed in a manufacturing process.