Karmen Company Uses the FIFO Method in Its Process Costing

question 100

Multiple Choice

Karmen Company uses the FIFO method in its process costing system.Operating data for the Enamelling Department for the month of May appear below:
$$\begin{array} { | l | r | r | } \hline & \text { Units } & \text { Percentage complete } \\\hline \text { Beginning work in process } & 2,400 & 40 \% \\ \text { inventory } & & \\\hline \text { Transferred in from the } & 87,000 & \\\text { prior department during } & & \\\text { May } & & \\\hline \begin{array} { l } \text { Ending work in process } \\\text { inventory }\end{array} &8,600 &60\% \\\hline\end{array}$$
What were the equivalent units of production for conversion costs in the Enamelling Department for May?

• A) 85,000 units.
• B) 85,960 units.
• C) 93,200 units.
• D) 80,800 units.

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Definitions:

Depreciation Expense

Depreciation Expense represents the allocation of the cost of tangible assets over their useful lives recognizing a decrease in value due to wear and tear, deterioration, or obsolescence.

Direct Financing Lease

A type of lease where the lessor effectively transfers all the risks and rewards incidental to ownership to the lessee without transferring legal ownership.

Sales-Type Lease

A lease agreement where the lessor recognizes immediate profit similar to a sale, often used in the context of finance leases in accounting.