Answer the Following Questions Using the Information Below

question 98

Multiple Choice

Answer the following questions using the information below:
The following table presents the flow of production in units.Assume that there are 5,000 total spoiled units at each stage of completion and that the normal spoilage rate is 3% of good units passing the inspection point.
-What is the number of normal spoiled units recognized at the 100% stage of completion?

• A)1,740
• B)1,650
• C)1,500
• D)1,950
• E)1,800

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Definitions:

Equity Method

An accounting technique used to record equity investments to reflect the investor's share of the investee's earnings or losses.

Acquisition Differential

The difference between the purchase price of a company and the fair market value of its identifiable net assets at the time of acquisition.

Unrealized Intercompany Profits

Profits that result from transactions between companies within the same group, which are not realized until sold to an external party.

Direct Control

The ability to influence the management and policies of another entity through direct ownership or voting rights.