Answer the Following Questions Using the Information Below:
Emerging Dock $20 X 5$

question 75

Multiple Choice

Answer the following questions using the information below:
Emerging Dock Company manufactures boat docks on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production.
Data for the Assembly Depatment for May $20 X 5$ are:
Work in process, beginuning inventory: $\quad\quad\quad70 \text { units }$
Direct materials (100\% complete)
Conversion costs ( $25 \%$ complete)

$\text { Units started during May }$$\quad\quad\quad40 \text { units }$

Work in process, ending inventory: $\quad\quad\quad40 \text { units }$
Direct materials ( $100 \%$ complete)
Conversion costs ( $50 \%$ complete)

Costs for May:
Standard costs for Assembly:
Direct materials $\quad\quad\quad\quad\quad\quad\quad\$ 8,000 \text { per unit }$
Conversion costs $\quad\quad\quad\quad\quad\quad\quad\$ 32,000 \text { per unit }$

Work in process, beginning inventory: $\quad\quad\quad \$280,000$
Direct materials Conversion costs $\quad\quad\quad\quad \$520,000$
-Which of the following journal entries records the Assembly Department's conversion costs at actual costs for the month,assuming conversion costs are 20% higher than expected?

• A) \(\begin{array} { l }
• \text {Assembly Department Conversion Cost Control } &3,360,000\\ \text {Various accounts } &3,360,000\\
• \end{array}\)
• B) \(\begin{array} { l }
• \text {Materials Inventory } &3,360,000\\ \text {Assembly Department Conversion Cost Control } &3,360,000\\
• \end{array}\)
• C) \(\begin{array} { l }
• \text {Assembly Department Conversion Cost Control } &2,800,000\\ \text { Materials Inventory} &2,800,000\\
• \end{array}\)
• D) \(\begin{array} { l }
• \text {Materials Inventory }& 3,360,000\\ \text { Work in Process - Assembly}&3,360,000 \\
• \end{array}\)

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Definitions:

Implicit Rate

The interest rate implied in the terms of a lease or financial arrangement, often used in leasing transactions to calculate lease payments.

Economic Life

The period over which an asset is expected to be economically useful to the owner.

Warranty

A guarantee provided by a seller that a product will meet certain performance standards or an offer to repair or replace defective goods within a certain time frame.

Implicit Rate Of Return

An interest rate that equates the present value of expected future cash flows of an investment to its initial cost.