Agee Company Uses a Process-Costing System for Its Single Product

question 60

Multiple Choice

Agee Company uses a process-costing system for its single product. Material A is added at the beginning of the process; in contrast, material B is added when the units are 50% complete. The firm's ending work-in-process inventory consists of 4,000 units that are 75% complete. Which of the following correctly expresses the equivalent units of production with respect to materials A and B in the ending work-in-process inventory?

• A) A, 3,000; B, 0.
• B) A, 3,000; B, 3,000.
• C) A, 4,000; B, 0.
• D) A, 4,000; B, 4,000.
• E) A, 4,000; B, 3,000.

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Definitions:

Net Present Value

A financial metric used to assess the profitability of an investment, calculating the difference between the present value of cash inflows and outflows over a period.

Internal Rate

Often refers to the internal rate of return (IRR), a metric used to evaluate the profitability of potential investments.

Investment Project

A project or activity requiring capital expenditure with the expectation of generating financial returns over time.

Discount Factor

A multiplier used in discounting to calculate the present value of future cash flows or earnings.