COST ACCOUNTING
PROCESS COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Increase the basic price of the product produced.
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Lowering the cost of manufactured products.
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Does not affect the cost of the product.
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Detailed explanation-1: -Higher costs of production can decrease the aggregate supply (the amount of total production) in the economy. Since the demand for goods hasn’t changed, the price increases from production are passed onto consumers creating cost-push inflation.
Detailed explanation-2: -The first step to calculating beginning inventory is to figure out the cost of goods sold (COGS). Next, add the value of the most recent ending inventory and then subtract the money spent on new inventory purchases. The formula is (COGS + ending inventory) – purchases.
Detailed explanation-3: -To qualify as a production cost, an expense must be directly connected to generating revenue for the company. Total product costs can be determined by adding together the total direct materials and labor costs as well as the total manufacturing overhead costs.