A Manufacturer of Automobile Transmissions Uses Three Different Processes

question 57

Multiple Choice

A manufacturer of automobile transmissions uses three different processes. Management ordered a study of the production costs to see if there is a difference among the three processes. A summary of the findings is shown next. In an ANOVA table, what are the degrees of freedom for the error source of variation?

• A)3
• B)10
• C)27
• D)30

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Definitions:

Process Cost Accounting System

An accounting system used to track and allocate costs of production by process or department, commonly employed in manufacturing environments with continuous, homogeneous outputs.

Product Quantity

The total number of units of a product that are produced, available for sale, or sold at a given time.

Factory

A building or set of buildings where goods are manufactured or assembled chiefly by machine.

Process Cost Accounting

An accounting method that accumulates costs for each process or department within a manufacturing environment.