Multiple Choice
The average manufacturing overhead cost per unit usually varies from one period to the next because:
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4. Merchandising Operations
Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
In the context of inventory costing, a batch-level activity will vary with the:
A
number of purchase orders issued
B
number of products sold
C
total number of units produced
D
number of batches processed
Verified step by step guidance1
Understand the concept of batch-level activities: These are activities that are performed each time a batch of goods is handled or processed, regardless of the number of units in the batch.
Identify the key driver for batch-level activities: The cost of these activities is driven by the number of batches processed, not by the number of units, products, or purchase orders.
Analyze the options provided: (1) 'Number of purchase orders issued' relates to procurement activities, not batch-level activities. (2) 'Number of products sold' relates to sales activities, not production or batch-level activities. (3) 'Total number of units produced' relates to unit-level activities, not batch-level activities.
Focus on the correct option: 'Number of batches processed' is the correct driver for batch-level activities because these costs are incurred each time a batch is processed, regardless of the size of the batch.
Conclude that the correct answer is based on the definition and nature of batch-level activities, which vary with the number of batches processed.
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