Sanger Corp

question 96

Multiple Choice

Sanger Corp.uses a process costing system in which direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process.Beginning inventory for January consisted of 1,000 units that were 40% completed.10,000 units were started into the process during January.On January 31,the inventory consisted of 500 units that were 70% completed.What would be the equivalent units for conversion cost using the FIFO method?

• A)10,000
• B)10,450
• C)10,850
• D)11,000

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Definitions:

Average Cost

A method of cost valuation that calculates the cost of goods sold and inventory based on the average cost of all similar items in inventory.

Fixed Manufacturing Overhead

Costs that do not vary with the level of production, such as rent, salaries, and equipment depreciation, associated specifically with manufacturing.

Financial Advantage

The benefit gained in financial terms, which can result in better profitability or cost savings.

Fixed Manufacturing Expenses

Costs associated with production that do not vary with the level of output, including salaries of permanent staff and depreciation of machinery.