In the Calculation of Product Costs for Value Streams with Multiple

question 77

Multiple Choice

In the calculation of product costs for value streams with multiple products, units shipped instead of units produced is used as the denominator because

• A)it reduces conversion costs assigned to the value stream.
• B)it motivates managers to reduce inventories.
• C)units shipped are always greater than units produced.
• D)units shipped is not used.

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Definitions:

Fixed Inputs

Resources used in production that cannot be easily increased or decreased in the short term, such as buildings or machinery.

Variable Inputs

Resources or factors of production whose quantity can be changed in the short term to influence output.

Fixed

Fixed typically refers to costs or assets that do not change in the short term, regardless of the level of output or activity.

Short Run

A period in economic analysis during which at least one input is fixed, limiting the ability of firms to adjust to changes in market conditions.