O'Leary Company Manufactures Product Z in a Two-Stage Production Cycle

question 66

Multiple Choice

O'Leary Company manufactures Product Z in a two-stage production cycle in Departments A and B.Materials are added at the beginning of the process in Department B.O'Leary uses the weighted-average method.Conversion costs for Department B were 40% complete as to the 5,000 units in the beginning work-in-process (WIP) inventory and 50% complete as to the 7,000 units in the ending work-in-process inventory.10,000 units were completed and transferred out of Department B during October.An analysis of the costs relating to work-in-process inventories and production activity in Department B for October follows:
$$\begin{array} { c c c } \begin{array} { c } \text { Transferred- } \\\text { in Costs }\end{array} & \begin{array} { c } \text { Materials } \\\text { Costs }\end{array} & \begin{array} { c } \text { Conversion } \\\text { Costs }\end{array} \\\$ 10,000 & \$ 3,000 & \$ 1,000 \\24,000 & 5,500 & 4,400\end{array}$$ The total cost per equivalent unit transferred-out for October of Product Z, rounded to the nearest penny, was:

• A) $2.75.
• B) $2.80.
• C) $2.85.
• D) $2.90.
• E) $2.95.

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Definitions:

Competitive

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Harry Stack Sullivan

An American psychiatrist known for his theory of interpersonal relationships and his contributions to the development of psychoanalytic and psychodynamic theories of personality.

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