Answer the Following Questions Using the Information Below:
Verer Custom

question 18

Multiple Choice

Answer the following questions using the information below:
Verer Custom Carpentry manufactures chairs in its Processing Department. Direct materials are included at the inception of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Inspection takes place as units are placed into production. After inspection, some units are spoiled due to nondetectible material defects. Spoiled units generally constitute 4% of the good units. Data provided for March 20X5 are as follows:
$\begin{array}{ll}(\text { WIP, beginuing inventory } 3 / 1 / 20 \times 5&32,000 \text { units }\\\text { Direct materials ( } 100 \% \text { complete) }\\\text { Conversion costs ( } 85 \% \text { complete) }\\\\\text { Started during March } & 70,000 \text { units } \\\text { Completed and transferred out } & 80,000 \text { units } \\\\\text { WIP, ending inwentory } 3 / 31 / 20 \times 5 & 18,000 \text { units }\\\text { Direct materials ( } 100 \% \text { complete) }\\\text { Conversion costs ( } 80 \% \text { complete) }\\\\\text { Costs: }\\\text { WIP, beginning inventory: }\\\hline \text { Direct materials } & \$ 70,000 \\\quad \text { Conversion costs } & 40,000 \\\text { Direct materials added } & 105,000 \\\text { Conversion costs added } & 128,160\end{array}$
-What costs are allocated to the ending work-in-process inventory for direct materials and conversion costs,respectively,using the FIFO method of process costing?

• A) $28,250; $24,850
• B) $27,000; $25,920
• C) $40,000; $25,590
• D) $27,500; $23,600

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Definitions:

Batch-level Activity

Activities and associated costs that are incurred for every batch produced, regardless of the size of the batch, such as setup costs and inspections.

Unit-level Activity

Operations or activities performed on individual units or items within a production process.

Activity-based Costing

Activity-based costing (ABC) is an accounting methodology that assigns costs to products and services based on the resources they consume.

Costs Of Quality

The total costs associated with preventing, detecting, and correcting defective work, divided into prevention costs, appraisal costs, and failure costs.