Suppose That a Company Adds Material at the Beginning of Production

question 87

Multiple Choice

Suppose that a company adds material at the beginning of production and that conversion costs are incurred evenly throughout production. In May, the beginning work in process inventory was 20% complete and the ending work in process inventory was 30% complete. Under the FIFO method, the number of equivalent units of production for conversion costs for May is equal to the number of units

• A) Started in May
• B) Started and completed in May plus 30% times the number of units in ending inventory for May
• C) Started and completed in May plus 20% times the number of units in beginning inventory plus 30% times the number of units in ending inventory for May
• D) Started and completed in May plus 80% times the number of units in beginning inventory plus 30% times the number of units in ending inventory for May

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Definitions:

U-Shaped

A descriptive term often used in economics and statistics to describe a graph or curve that resembles the shape of the letter "U", indicating a particular kind of relationship or trend.

Positive Amount

A value that is greater than zero, indicating a quantity that adds to a total rather than subtracting from it.

Price

The financial charge expected, required, or dispensed as payment for a product.

Marginal Cost Curve

A graph that shows the change in the total cost of producing one additional unit of a good or service.