If We Observe Both an Increase in the Price of Flour

question 203

Multiple Choice

If we observe both an increase in the price of flour and in the number of units sold, this could be explained by:

• A)​an increase in the demand for flour.
• B)​a decrease in the demand for flour.
• C)​a decrease in the supply of flour.
• D)​an increase in the supply of flour.

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Definitions:

Conversion Costs

The combination of direct labor and manufacturing overhead costs incurred to convert raw materials into finished goods.

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, measuring them in terms of the amount of completed goods they represent.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and are allocable to that product.

Job Order Manufacturing

A production system in which products are manufactured individually or in batches based on specific customer orders.