The Following Data Relate to a Construction Job Started by Worthington

question 13

Multiple Choice

The following data relate to a construction job started by Worthington Co. during 2011:

See Worthington Co. information above. Under the completed-contract method, how much should Worthington recognize as gross profit for 2011?

• A) $0
• B) $30,000
• C) $40,000
• D) $90,000

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Definitions:

Total Cost Transferred

The aggregate cost of goods or services moved from one stage of production to another, or from production to finished goods, within a given period.

Conversion Costs

The combined costs of direct labor and manufacturing overheads that are incurred to convert raw materials into finished goods.

Cost Per Equivalent Unit

A measure in process costing that calculates the cost assigned to a unit, considering the stage of completion.

Processing Department

A division within a manufacturing facility where a specific type of process or a stage of production is carried out.