Verer Custom Carpentry Manufactures Chairs in Its Processing Department

question 61

Multiple Choice

Verer Custom Carpentry manufactures chairs in its Processing Department. Direct materials are included at the inception of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Inspection takes place as units are placed into production. After inspection, some units are spoiled due to undetectable material defects. Spoiled units generally constitute 4% of the good units. Data provided for March 2017 are as follows:

What are the normal and abnormal spoilage units, respectively, for March when using FIFO?

• A) 3204 units; 1396 units
• B) 1968 units; 1420 units
• C) 9749 units; 1540 units
• D) 530 units; 2032 units

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Definitions:

Invested Capital

The total amount of money that has been invested into a company by its owners and creditors, often used in ROI calculations.

Investment Centre

A business unit or division within an organization that is responsible for its own revenues, expenses, and assets, and is evaluated based on its return on investment.

Profit Margin

A financial metric indicating the percentage of revenue that exceeds the cost of goods sold, used to assess a company's financial health.

Capital Invested

Capital deployed by a business to purchase or improve tangible assets like real estate, factories, or machinery.