You and Your Sister Are Planning a Large Anniversary Party

question 49

Multiple Choice

You and your sister are planning a large anniversary party 3 years from today for your parents' 50^th wedding anniversary.You have estimated that you will need $4,500 for this party.You can earn 2.5 percent compounded annually on your savings.How much would you and your sister have to deposit today in one lump sum to pay for the entire party?

• A)$4,076.55
• B)$4,178.70
• C)$4,308.16
• D)$4,334.90
• E)$4,368.81

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Definitions:

Weighted-Average Method

A cost accounting method that calculates the cost per unit by combining the costs of two or more similar items in the inventory, and dividing the total cost by the total number of units.

Equivalent Unit

A concept used in cost accounting to express the amount of work done on inventory in terms of fully completed units.

Process Costing

An accounting methodology used in industries where production is continuous and costs can be assigned to specific processes or departments in the production cycle.

Weighted-Average Method

An inventory costing method that assigns the average cost of goods available for sale to both ending inventory and cost of goods sold.