Eban Corporation Uses the First-In, First-Out Method in Its Process

question 157

Multiple Choice

Eban Corporation uses the first-in, first-out method in its process costing system. The first processing department, the Welding Department, started the month with 18,000 units in its beginning work in process inventory that were 50% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $52,200. An additional 55,000 units were started into production during the month. There were 16,000 units in the ending work in process inventory of the Welding Department that were 20% complete with respect to conversion costs. A total of $284,160 in conversion costs were incurred in the department during the month.The cost per equivalent unit for conversion costs is closest to:

• A) $5.550
• B) $4.608
• C) $5.800
• D) $5.167

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Definitions:

Consolidation

The process of combining two or more entities into a single entity, often with the goal of improving efficiency or reducing costs.

Assets and Liabilities

The items a company owns (assets) and the debts it owes (liabilities), fundamental components of a company's financial health.

Tender Offer

An offer to purchase made by one company directly to the shareholders of another (target) company; often referred to as a “takeover bid.”

Target Company's Management

The executive and senior officers responsible for operating and making strategic decisions for a company that is being considered for acquisition or merger.