James Automotive Group Is a Maker of Engines for High

question 70

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 unit conversion costs?

• A)$46.70.
• B)$363.64.
• C)$450.00.
• D)$536.36. ($180,500 + $760,000)/2,090 = $450

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Definitions:

Gross Profit

The difference between sales and the cost of goods sold, essentially measuring the efficiency of a company in managing its labor and supplies in production.

Intra-entity

Pertains to transactions or activities occurring within the same legal entity.

Equity Method

An accounting technique used by a company to record its investment in another company based on the profit or loss and changes in the investee’s equity.

Significant Influence

A level of control exerted by an investor over an investee, characterized by the power to participate in financial and operating policy decisions without having full control or majority ownership.