Information About Units Processed and Processing Costs Incurred During a Recent

question 59

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 weighted-average cost method,what are the equivalent units of production for conversion costs for the Refining Department for the month?

• A) 119,100 units.
• B) 120,000 units.
• C) 114,000 units.
• D) 131,000 units.

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Definitions:

Net Operating Cash Flows

The cash generated from the normal operations of a business, excluding capital expenditures and investment income.

Production Equipment

Machinery and tools that are used in the process of manufacturing goods.

Discount Rate

The interest rate used to discount future cash flows to their present value, assessing the attractiveness of an investment.

Salvage Value

is the estimated resale value of an asset at the end of its useful life, important for depreciation calculations.