Selah Manufacturing Makes a Quality-Improvement Device for the Aeronautical Industry

question 87

Multiple Choice

Selah Manufacturing makes a quality-improvement device for the aeronautical industry. The company uses a process costing system and has only a single processing department. The following information pertains to operations for the month of May:
$\begin{array} { | l | r | } \hline & \text { Number of Units } \\\hline \text { Beginning work in process inventory } & 16,000 \\\hline \text { Units started into production during May } & 100,000 \\\hline \text { Units completed during May } & 92,000 \\\hline \text { Ending work in process inventory } & 24,000 \\\hline\end{array}$ The beginning work-in-process inventory was 60% complete with respect to materials and 20% complete with respect to conversion costs. The ending work-in-process inventory was 90% complete with respect to materials and 40% complete with respect to conversion costs. The costs were as follows:
$\begin{array} { |l | r | r | r | } \hline & \text { Materials } & \text { Conversion } & \text { Total } \\\hline \begin{array} { l } \text { Beginning work-in- } \\\text { process inventory }\end{array} & \$ 54,560 & \$ 35,560 & \$ 90,120 \\\hline \begin{array} { l } \text { Costs incurred } \\\text { during May }\end{array} & \$ 468,000 & \$ 574,040 & \$ 1,042,040 \\\hline \text { Total } & \$ 522,560 & \$ 609,600 & \$ 1,132,160 \\\hline\end{array}$
- Suppose there was no separate breakdown of the total cost of the beginning work-in-process inventory of $90,120 into materials ($54,560) and conversion ($35,560) .Which method of accounting would not have been possible to use?

• A) Process costing, using weighted-average.
• B) Process costing, using FIFO.
• C) Process costing using either weighted-average or FIFO.
• D) Operations costing.

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Definitions:

Management Technique

A method or approach used by managers to improve efficiency, solve problems, and achieve organizational goals.

Contingency

Contingency refers to a future event or circumstance that is possible but cannot be predicted with certainty, often implying the need for plans to address potential changes.

Scientific Management

A theory of management that analyzes and synthesizes workflows to improve economic efficiency, especially labor productivity.

Open Systems

Organizations or entities that interact dynamically with their environment, adapting and exchanging resources and information.