Information About Units Processed and Processing Costs Incurred During a Recent

question 40

Multiple Choice

Information about units processed and processing costs incurred during a recent month in the Refining Department of a manufacturing company follow: $\begin{array} {| l | r | r | } \hline & \text { Number of Units } & \begin{array} { r } \text { Conversion costs } \\\text { percentage complete }\end{array} \\\hline \begin{array} { l } \text { Beginning work in process } \\\text { inventory }\end{array} & 11,000 & 35 \% \\\hline \begin{array} { l } \text { Units started into } \\\text { production }\end{array} & 120,000 & \\\hline \begin{array} { l } \text { Units completed and } \\\text { transferred out }\end{array} & 114,000 & 30 \% \\\hline \begin{array} { l } \text { Ending work in process } \\\text { inventory }\end{array} & 17,000 & \\\hline\end{array}$
The beginning work-in-process inventory included $11,000 of conversion cost. During the month, the Refining Department incurred an additional $290,000 in conversion costs.

- Assuming that the company uses the FIFO method,what are the equivalent units of production for conversion costs for the refining Department for the month?

• A) 119,100 units.
• B) 111,950 units.
• C) 115,250 units.
• D) 114,000 units.

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Definitions:

Perfectly Inelastic

A market condition where the quantity demanded or supplied is unresponsive to price changes, depicted graphically as a vertical line.

Supply

The total amount of a product or service available for purchase at any given price level.

Inflation Rate

The percentage rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Nominal Rate

The interest rate unadjusted for inflation; the face value rate expressed as a percentage.