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:

Common Stock

A type of equity security that represents ownership in a corporation, with holders typically having voting rights and dividend eligibility.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often with fixed dividends.

Trading Securities

These are debt or equity securities that are purchased primarily for selling in the near term with the intent of generating short-term profits.

Held-to-maturity Securities

Debt securities which a company has the positive intent and ability to hold until maturity.