Archetype Fabrication Makes Pre-Stressed Concrete Forms for the Building Industry

question 31

Multiple Choice

Archetype Fabrication makes pre-stressed concrete forms for the building industry. They use just-in-time production and accounting methodology. At the beginning of January, selected account balances are shown in the T-accounts below. During January, the following 5 transactions take place:
1) Purchase $40,000 of materials on account.
2) Pay out $25,000 of direct labor costs.
3) Incur $9,000 of manufacturing overhead costs.
4) Complete 12 units. Each unit includes $1,500 of materials, $300 of direct labor, and $150 of manufacturing overhead costs.
5) Sell 10 of the 12 completed units at a price of $2,200.
-
Use the T-accounts shown above to record the transactions, and then answer the following question:
After transaction number 4, what was the balance in the Finished goods inventory account?

• A) $28,600
• B) $18,600
• C) $23,400
• D) $26,900

---

Definitions:

Setup Costs

The expenses incurred to prepare equipment or processes for manufacturing or production runs.

Payoffs

The outcomes or rewards received as a result of a decision or action, often evaluated in decision-making processes to anticipate different scenarios' benefits or drawbacks.

Clearance Priced

Reduced pricing strategies applied to products or inventory intended to be sold quickly, often to make room for new stock or to eliminate excess.

Demand Patterns

The trends or tendencies in consumer demand over time, which can vary due to seasonality, market changes, or other factors.