Based on the Following Production and Sales Estimates for May

question 63

Multiple Choice

Based on the following production and sales estimates for May, determine the number of units expected to be manufactured in May. $\begin{array}{l}\text { Estimated inventory (units) , May 1 } & 20,000 \\\text { Desired inventory (units) , May } 31 & 15,000\\\text { Expected sales volume (units) : }\\\text { South region } & 30,000 \\\text { West region } & 40,000 \\\text { North region } & 20,000 \\\text { Unit sales price } & \$ 10\end{array}$

• A) 85,000 units
• B) 90,000 units
• C) 95,000 units
• D) 105,000 units

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Definitions:

Equivalent Units

A concept in cost accounting used to calculate the cost of partially completed goods by converting them into a number of fully completed units.

Conversion Cost

The sum of labor and overhead expenditures incurred to convert raw materials into finished goods.

FIFO Method

"First In, First Out," an inventory valuation method where goods that are first added to inventory are the first ones considered sold, used in accounting to calculate cost of goods sold and ending inventory.

Equivalent Units

A concept in cost accounting used to express the amount of materials, labor, and overhead a company has put into production in terms of fully finished units.