Unit of Product

This is a valid example of a unit of product.

This is a valid example of a unit of product.

This is a valid example of a unit of product.

This is the correct answer. While a software subscription is a product, the unit of product is likely a single user license or a specific feature, not a duration of time.

This is not entirely accurate. Costs are allocated based on how they are related to the unit of product, but not necessarily equally.

This is a benefit of defining the unit of product but not the primary reason.

This is the correct answer. Defining the unit of product is essential for calculating the cost per unit.

This is not true. Defining the unit of product does not eliminate the need for cost accounting methods.

This is incorrect. The units can be different.

This is not always true. The units can vary in size.

This is the correct answer. The unit of purchase is how materials are bought, and the unit of product is what is actually sold to the customer.

This is incorrect. Both units are determined by the company's internal processes and needs.

This industry is more likely to use individual components or the complete car as a unit of product.

This industry might use features or lines of code as a unit of product, but not "operation."

This industry might use cubic meters of concrete or square meters of flooring as a unit of product, but not "operation."

This is the correct answer. Operations like a consulting session or a project phase are often used as units of product in the service industry.

This is a possible outcome, but not the primary purpose.

This is a possible outcome, but not the primary purpose.

This is the correct answer. Identifying the unit of product enables accurate cost estimations, better quality control, and improved production efficiency.

This is a desirable outcome, but not the primary purpose of identifying the unit of product.

Here are a few possible units of product for custom-made wooden chairs, along with their implications:

1. Individual chair:

   • Cost calculation: The cost of all materials and labor used to create one complete chair would be assigned to that chair.
   • Impact: This is a straightforward unit of product. It's good for pricing individual chairs, but it might be challenging to track costs if there are many variations in wood types and finishes.
   • Defect tracking: Easy to identify defective chairs.
   • Production planning: Production planning can be done per chair, but may be less efficient if many different chair designs are being produced.

2. Chair model:

   • Cost calculation: Cost would be calculated based on the common elements of all chairs within a specific model (e.g., "Windsor chair"). Costs of individual differences (e.g., wood type) would be added on top.
   • Impact: This is useful for standardizing cost calculations for similar chairs. It's helpful for large-scale production runs of a single model.
   • Defect tracking: May require more complex tracking systems to identify defects within specific models.
   • Production planning: Production planning can be done by model, leading to more efficient use of materials and labor.

3. "Unit of operation":

   • Cost calculation: Costs could be allocated to specific stages of production (e.g., cutting wood, assembling parts, finishing).
   • Impact: This is useful for tracking the cost of specific processes and identifying areas for potential cost savings.
   • Defect tracking: More difficult to identify the origin of defects if they occur during multiple operations.
   • Production planning: Production planning can be done by operation, but may be less efficient for tracking overall chair production.