When the Government Sells Something It Produces

question 51

Multiple Choice

When the government sells something it produces,

• A)revenue received must be greater than cost to justify government production
• B)revenue received must equal cost because government is a nonprofit organization
• C)the price does not always reflect the cost of producing the good
• D)the price charged is an accurate measure of the benefits generated
• E)it prices the good the same way a natural monopolist would

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Definitions:

Beginning Work in Process

The value of partially completed goods that are in production at the start of an accounting period.

Cost of Goods Manufactured

The sum of expenses for materials, labor, and overhead for goods finished in a given timeframe.

Period Costs

Period costs are those expenses not directly tied to the production process and include marketing, administration, and other overhead costs.

Beginning Work in Process Inventory

Beginning work in process inventory refers to the valuation of materials, labor, and overhead costs that have been partially completed but are not yet finished goods at the start of an accounting period.