Answer the Following Questions Using the Information Below:
Vision Company

question 20

Multiple Choice

Answer the following questions using the information below:
Vision Company manufactures digital cameras. For May, there were no beginning inventories of direct materials and no beginning or ending work-in -process. Conversion costs is the only indirect manufacturing cost category currently used. Journal entries are recorded when materials are purchased and when units are sold.
$\begin{array}{lr}\text { Conversion costs - May } & \$ 100,625 \\\text { Direct materials purchased - May } & \$ 253,575 \\\text { Units produced - May } & 80,500 \text { units } \\\text { Units sold - May } & 77,500 \text { units } \\\text { Selling price } & \$ 20 \text { each }\end{array}$
-Which of the following journal entries would be recorded when units are sold for the month under backflush costing? ?

• A)\(\begin{array} { l }
• \text {Cost of Goods Sold }&\$341,000 \\
• \text { Inventory: Raw and In-Process}&\$341,000 \\
• \end{array}\)
• B)\(\begin{array} { l }
• \text {Cost of Goods Sold }&\$341,000 \\
• \text { Inventory Control }&\$244,125 \\
• \text {Conversion Costs Allocated }&\$96,875 \\
• \end{array}\)
• C)\(\begin{array} { l }
• \text {Inventory Inventory Control }&\$244,125 \\
• \text { Conversion Costs Allocated }&\$96,875 \\
• \text {Cost of Goods Sold }&\$341,000 \\
• \end{array}\)
• D)\(\begin{array} { l }
• \text { Cost of Goods Sold}&\$ 354,200\\
• \text {Inventory: Raw and In-Process }&\$253,575\\
• \text {Conversion Costs Allocated }&\$96,875 \\
• \end{array}\)

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Definitions:

Transitory Earnings

Earnings that are considered to be non-recurring or not indicative of the company's future earning potential.

Permanent Earnings

Profits generated by a company that are expected to continue in the future, excluding one-time events or transactions.

Implied Share Price

The calculated value of a company's share based on future earnings, cash flows, or market expectations.

Implied Share Price

The theoretical price of a company's stock derived from certain financial models, reflecting the market's expectations of its future cash flows or earnings.