In Deciding Whether to Sell a Product or to Process

question 43

Multiple Choice

In deciding whether to sell a product or to process it further, which of the following costs are relevant to the decision?

• A) Material costs incurred up to the decision point.
• B) Costs incurred to process further.
• C) Overhead costs incurred up to the decision point.
• D) Direct materials and direct labor costs only.

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Definitions:

FOB Destination

A shipping term indicating that the seller bears the cost and risk of transporting goods until they are delivered to the buyer's location.

Physical Inventory

The process of counting and verifying the actual stock in a business at a specific point in time.

Perpetual Inventory System

A digital system for inventory management that immediately documents any inventory sale or purchase using electronic point-of-sale systems along with enterprise asset management software.

MasterCard and VISA

Major global payment networks and companies facilitating electronic funds transfers through branded credit, debit, and prepaid cards.