Outose Concept Manufactures Small Tables in Its Processing Department

question 121

Multiple Choice

Outose Concept manufactures small tables in its Processing Department. Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some units are spoiled due to undetectable materials defects. Spoiled units generally constitute 3% of the good units. Data for December 2017 are as follows:

What is the total cost per equivalent unit using the weighted-average method of process costing? (Round any cost per unit calculations to the nearest cent.)

• A) $3.86
• B) $3.69
• C) $7.90
• D) $4.04

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Definitions:

Earnings and Profits

A measure used for tax purposes to determine a corporation's ability to pay dividends to its shareholders out of its net assets.

Distributions

Payments made from a fund or account to its beneficiaries, such as dividends or withdrawals.

Dividend

A portion of a company's earnings distributed to its shareholders.

Capital Loss Carryforward

The process of applying net capital losses to future tax years to reduce taxable income, subject to limitations.