Howell Company Uses the Average Cost Method of Process Costing

question 58

Multiple Choice

Howell Company uses the average cost method of process costing.Howell had 1,000 units in beginning work-in-process which were 75% complete.Costs associated with this inventory were $3,200.When calculating the cost per equivalent unit for the month of June,Howell's controller should:

• A)Not consider the $3,200 as those costs were incurred in a prior period.
• B)Calculate the cost to complete the 1,000 items in beginning work-in-process separately.
• C)Include the $3,200 with the current month's cost to arrive at total cost for production to date.
• D)Include the equivalent units to complete the beginning work-in-process inventory to arrive at the equivalent units for the period.

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Definitions:

Recency Effect

The tendency to remember the most recently presented information best when recalling a list of items.

Short-term Memory

A type of memory that holds a small amount of information in an active, readily available state for a short period of time.

Commons Dilemma

A situation in which individuals' short-term selfish interests are in conflict with long-term group interests and common good.

Prisoner's Dilemma

A scenario in game theory in which two individuals acting in their own self-interest do not produce the optimal outcome for either party.