Reference: 04-03 Madsen Company Uses the Weighted-Average Method in Its Process Costing

question 58

Multiple Choice

Reference: 04-03
Madsen Company uses the weighted-average method in its process costing system. During October, the Mixing Department transferred out 40,000 units. The October 31 work in process inventory in the Mixing Department consisted of 4,000 equivalent units of material and 5,000 equivalent units of labour and overhead. The cost per equivalent unit was $2.50 for materials and $6.25 for labour and overhead.
-The "Cost to account for" section of the production report for October will show a total amount equal to

• A)$110,000.
• B)$428,750.
• C)$350,000.
• D)$391,250.

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Definitions:

Allowance Method

An accounting technique used to estimate and account for potential uncollectible accounts receivable.

Write-off

The accounting action of declaring that an asset or receivable value is reduced or eliminated, often due to uncollectibility or obsolescence.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the amount of receivables that may not be collectible.

Accounts Receivable

The total amount of money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.