Ready Company Adds Direct Materials at the Beginning of the Process

question 49

Multiple Choice

Ready Company adds direct materials at the beginning of the process and adds conversion costs throughout the process.Data for the Finishing Department follows:

The cost per equivalent unit for conversion costs would be closest to

• A)$5.15.
• B)$4.31.
• C)$4.69.
• D)$5.47.

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Definitions:

Process Cost Systems

Accounting systems used to apply costs to similar products that are mass-produced in a continuous fashion.

Direct Labor

The wages of employees who are directly involved in the production of goods or services.

Overhead Costs

Expenses related to the general operation of a business that are not directly tied to the production of goods or services, such as utilities and administrative salaries.

Work in Process Account

An account used to record the costs associated with incomplete products, including labor, material, and overhead costs.