James Automotive Group Is a Maker of Engines for High

question 17

Multiple Choice

James Automotive Group is a maker of engines for high performance cars and uses a process costing system.The following information pertains to the final department of James' outstanding engine called "Superior-1".
James calculates separate costs of spoilage by computing both normal and abnormal spoiled units.Normal spoilage costs are reallocated to good units and abnormal spoilage costs are charged as a loss.The units of "Superior-1" that are spoiled are the result of defects not discovered before inspection of finished units.Using the weighted-average method,what are the total conversion costs in ending inventory?

• A)$22,500.
• B)$40,000.
• C)$40,500.
• D)$180,000. (300 x.3)x $450 = $40,500

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Definitions:

Entry Barriers

Factors that prevent or hinder companies from entering a particular market, including high start-up costs, stringent regulations, and established competitors.

Competitive Forces

Elements in the external environment that influence the competitiveness of a company, including rivalry among existing competitors, threat of new entrants, threat of substitute products, bargaining power of buyers, and bargaining power of suppliers.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, indicating the profitability of an enterprise beyond basic financial profit.

Monopoly

A market structure characterized by a single supplier controlling all the supply of a particular good or service.