(Appendix 4A) Ozdemir Corporation Uses the FIFO Method in Its

question 33

Multiple Choice

(Appendix 4A) Ozdemir Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below:
Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.
-The cost of a completed unit transferred out of the department is closest to:

• A) $62.36
• B) $76.27
• C) $66.10
• D) $58.23

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Definitions:

Absorption Costing

A method of costing that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs, excluding fixed overhead from inventory valuation.

Fixed Overhead

Recurring operating expenses that remain relatively constant regardless of the level of production or business activity.

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.