The Following Information Was Obtained from the Records of the First

question 66

Multiple Choice

The following information was obtained from the records of the first processing department of Keith Manufacturing Company for the month of February. The company uses the FIFO method in its process costing system.
$\begin{array}{|l|r|r|}\hline & \text { Number of Units } & \begin{array}{r}\text { Labour and overhead } \\\text { percentage complete }\end{array} \\\hline \begin{array}{l}\text { Work in process inventory, } \\\text { February 1 }\end{array} & 15,000 & 30 \% \\\hline \begin{array}{l}\text { Started in assembly during } \\\text { the month }\end{array} & 60,000 & \\\hline \begin{array}{l}\text { Work in process inventory, } \\\text { February 28 }\end{array} & 20,000 & 20 \% \\\hline\end{array}$

All materials are added at the beginning of the manufacturing process.

- What are the equivalent units of production for labour and overhead for the month?

• A) 54,500 units.
• B) 59,000 units.
• C) 95,000 units.
• D) 60,000 units.

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Definitions:

Average Costs

Average costs refer to the total cost of production divided by the number of units produced, indicating the cost of producing each unit.

Marginal Costs

The cost added by producing one additional unit of a product or service.

Diseconomies of Scale

The phenomenon where production costs per unit increase as the scale of operation expands.

Inputs

Resources used in the production process, including labor, capital, materials, and energy, to create output or goods and services.