Reference: 04-12
GK Manufacturing Had Inventory at May 1 of 5,000

question 86

Multiple Choice

Reference: 04-12
GK Manufacturing had inventory at May 1 of 5,000 units which were 70% complete as to conversion costs. The
May 1 inventory had total costs of $ 69,900 which included $ 21,500 direct materials, $ 38,775 direct labour and
$ 9,625 factory overhead.
Costs added to work in process in May were as follows:
$$\begin{array} { | l | l | } \hline \text { Direct materials } & \$ 298,800 \\\hline \text { Direct labour } & \$ 540,800 \\\hline \text { Factory overhead } & \$ 135,400 \\\hline\end{array}$$ During May, 49,200 units were completed, including those in inventory on May 1. On May 30, the inventory of work in process consisted of 5,600 units which were 3/8 completed as to conversion costs. Inventories are costed by the first-in, first-out method and all materials are added at the beginning of the process.
-What amount below was the total cost of units completed during May closest to

• A)$1,044,900.
• B)$981,755.
• C)$911,685.
• D)$975,000.

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Definitions:

Indirect Pay

Compensation that includes benefits not given directly as cash, such as health insurance, retirement plans, and paid time off.

Income Tax Treatment

Refers to the way tax laws are applied to an individual's or entity's income, including deductions, exemptions, and the calculation of taxes owed.

Direct Pay

The monetary compensation received by employees for their work, including wages, salaries, bonuses, and commissions.

Competitive Pressure

The influence and constraints exerted by competition within a market, which force companies to continuously improve.