A Company Is Evaluating Which of Two Alternatives Should Be

question 19

Multiple Choice

A company is evaluating which of two alternatives should be used to produce a product that will sell for $35 per unit. The following cost information describes the two alternatives. The break-even volume for Process B is

• A) 50,000 units.
• B) 62,500 units.
• C) 30,000 units.
• D) 20,000 units.

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Definitions:

Standard Hours

Standard hours refer to the set amount of time expected to complete a task or job based on efficiency standards.

Work in Process Inventory

Represents goods that are partially completed in the manufacturing process, not yet ready for sale.

Direct Labor Variances

The difference between the estimated cost of direct labor and the actual direct labor cost incurred.

Controllable Variance

Controllable variance is a measure used in managerial accounting to assess the differences between actual and budgeted amounts that management can influence or control.