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

question 91

Multiple Choice

Use the information below to answer the following question(s) .Hollywood North Magic, a cosmetic manufacturer, began operations in January.During the first month of operations, $60,000 was incurred for direct materials and $80,000 was incurred for conversion costs.During January, 30,000 litres of cosmetics were started and 6,000 litres were unfinished at the end of the month.Ending work-in-process was 45% completed.All inputs are added evenly throughout the production process.
-Calculate the equivalent units for conversion costs in January using the FIFO method.

• A)24,000 litres
• B)26,700 litres
• C)30,000 litres
• D)36,000 litres
• E)39,000 litres

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Definitions:

Capital Asset

A Capital Asset is a significant piece of property such as investments, real estate, and personal items that is not easily sold in the regular course of a business's operations.

Section 1231

A tax term relating to the classification of property that includes depreciable property and real property (e.g., buildings and equipment) used in a trade or business and held for more than one year. gains from the sale of Section 1231 property can be taxed at more favorable capital gains rates rather than ordinary income rates.

Ordinary Loss

A loss resulting from regular business operations that is fully deductible against ordinary income on a taxpayer's tax return.

Sole Proprietor

An individual who owns and operates a business alone, bearing sole responsibility for its operations and liabilities.