Answer the Following Questions Using the Information Below:
Charlie Chairs

question 58

Multiple Choice

Answer the following questions using the information below:
Charlie Chairs Inc., manufactures plastic moldings for car seats. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through Department A and Department B. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production.
$\begin{array}{ll}\text { Datafor Department A for Februay } 2015 \text { are: }\\\text { Work in process, beginning inventory, } 40 \% \text { converted } & 200 \text { units } \\\text { Units started during February } & 800 \text { units } \\\text { Work in process, ending inventory } & 100 \text { units }\\\text { Costs for Department A for February } 2015 \text { are: }\\\text { Work in process, beginuing inventory: }\\\text { Direct materials } & \$ 150,000 \\\text { Conversion costs } & \$ 200,000 \\\text { Direct materials costs added during February } & \$ 600,000 \\\text { Conversion costs added during February } & \$ 425,000\end{array}$
-What is the unit cost per equivalent unit of beginning inventory in Department A?

• A) $750
• B) $1,750
• C) $2,800
• D) $3,250

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Definitions:

Inelastic

Describes a situation where the demand for a product or service is relatively unresponsive to changes in price, meaning that variations in price have little to no effect on the quantity demanded.

Whole Dollar Pricing

A pricing strategy where products are priced at round number amounts rather than using cents, designed to simplify pricing for consumers.

Price Maximization

A strategy aimed at setting the price of a product or service at the highest possible level at which the target segment of consumers is still willing to purchase it.

Elastic Demand

A situation where the demand for a product or service significantly changes in response to changes in its price.