(Appendix 4A) Sumptuous Beer Corporation Manufactures Beer in Two Departments

question 71

Multiple Choice

(Appendix 4A) Sumptuous Beer Corporation manufactures beer in two departments, Fermenting and Bottling. In the Fermenting Department, ingredients are placed in a large vat and fermented for three days. The beer is then transferred over to Bottling where it is further purified and bottled. Sumptuous uses a FIFO process cost system to collect costs in both departments.
On May 1, the Fermenting Department had 32,000 gallons (units) in process. These gallons were 100% complete with respect to materials (ingredients) and 80% complete with respect to conversion cost. During May, Fermenting started an additional 460,000 gallons into production. On May 31, Fermenting had 18,000 gallons in work in process. These gallons were 100% complete with respect to materials and 60% complete with respect to conversion cost.
-What are the Fermenting Department's equivalent units (gallons) of production related to materials for May?

• A) 442,000
• B) 460,000
• C) 474,000
• D) 492,000

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Definitions:

Positive Cost

Expenses that result in a benefit or return in the future, considered an investment rather than a loss.

Carry

The profit or loss from holding a position in a financial instrument over a period, considering factors like interest rates or dividends.

Cumulative Return

The aggregate amount that an investment has gained or lost over time, regardless of the period of time involved.

Initial Margin

The upfront payment required when purchasing securities on margin, serving as a deposit to cover credit risk for the broker.