Two Costs at Bradshaw Company Appear Below for Specific Months

question 7

Multiple Choice

Two costs at Bradshaw Company appear below for specific months of operation. $\begin{array}{llrl}& \underline{\text { Month }}& \underline{\text {Amount}}& \underline{\text { Units Produced }}\\\text { Delivery costs } & \text { September } & \$ 40,000 & 40,000 \\& \text { October } & 55,000 & 60,000 \\\text { Utilities } & \text { September } & \$ 84,000 & 40,000 \\& \text { October } & 126,000 & 60,000\end{array}$ Which type of costs are these?

• A) Delivery costs and utilities are both variable.
• B) Delivery costs and utilities are both mixed.
• C) Utilities are mixed and delivery costs are variable.
• D) Delivery costs are mixed and utilities are variable.

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Definitions:

Conversion Costs

The costs incurred to convert raw materials into finished products, including direct labor and manufacturing overhead.

Weighted-Average Method

The weighted-average method is a cost accounting technique used to calculate inventory and cost of goods sold by assigning an average cost to each unit, based on the weight of those units in beginning inventory and purchases made.

Equivalent Units

In cost accounting, this is a metric that represents the work accomplished by unfinished units as if they were fully completed units.

Conversion Costs

Conversion costs are the expenses incurred to convert raw materials into finished goods, typically including labor and overhead costs.