A composite cost unit is defined as?

A composite cost unit is defined as?

• A. The cost unit is defined as a unit of output
• B. A unit used to measure overheads
• C. Cost unit made up of two parts
• D. A unit of output used for pricing

Answer: (C)

A composite cost unit is defined by its two-part structure. In costing, this means a single unit of output that actually comprises two components or elements (for example, a bundled product made up of two items, or a finished item plus a by-product that are treated together for costing). The idea is that costs are allocated using a unit that reflects these two parts rather than a single, homogeneous unit. This makes sense because the word “composite” literally signals something built from more than one part, which is the defining feature here. The other options describe general ideas about cost units or their use, but they don’t capture the distinctive two-part nature that characterizes a composite cost unit.

A composite cost unit is defined by its two-part structure. In costing, this means a single unit of output that actually comprises two components or elements (for example, a bundled product made up of two items, or a finished item plus a by-product that are treated together for costing). The idea is that costs are allocated using a unit that reflects these two parts rather than a single, homogeneous unit.

This makes sense because the word “composite” literally signals something built from more than one part, which is the defining feature here. The other options describe general ideas about cost units or their use, but they don’t capture the distinctive two-part nature that characterizes a composite cost unit.