Use the Information Below to Answer the Following Question(s)

question 47

Multiple Choice

Use the information below to answer the following question(s) .Craft Concept manufactures small tables in its Processing Department.Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit.Conversion costs are incurred evenly throughout the production cycle.Before inspection, some units are spoiled due to non-detectable materials defects.Inspection occurs at the end of the process.Spoiled units generally constitute 5 percent of the good units.Data for December are as follows:

-Under the FIFO method, all spoilage costs are assumed to be

• A)related to the units in beginning inventory, plus the units completed during the period.
• B)related to the units completed during the period.
• C)related to the units in ending inventory.
• D)related to the units in both beginning and ending inventory plus the units completed during the period.
• E)related to the units completed in both beginning and ending inventory.

---

Definitions:

Budgeted Cash Balance

The projected cash balance a company expects to have at the end of a period, based on forecasted inflows and outflows.

Cash Receipts

The collection of money, including cash, checks, and credit card payments, received by a business.

Cash Disbursements

Cash disbursements refer to the outflow of cash for expenses, including payments to suppliers, wages, and other operational costs.

Variable Overhead Rate

The rate at which variable overhead costs are allocated to products, based on an activity such as labor hours or machine hours.