Answer the Following Questions Using the Information Below

question 74

Multiple Choice

Answer the following questions using the information below:
Argon Corp. had capacity to produce 15,000 units of L3 using 30,000 kg of direct materials. Argon produced 14,750 units of L3 by processing 27,500 kg of direct materials. Conversion cost per unit is $7.50. Argon can add or reduce manufacturing capacity in increments of 2,500 kgs.
-What is the cost of unused capacity for conversion costs of Argon?

• A) $3,750
• B) $7,500
• C) $9,375
• D) $1,875

---

Definitions:

Sole Proprietorship

A business structure where an individual owns and operates the business entirely, bearing unlimited liability for its debts and obligations.

Stockholders' Equity

The owners' claim after subtracting total liabilities from total assets, representing the net value of a company to its shareholders.

Net Income

The residual financial gain of a company after deducting every cost, tax, and expense from the total earnings.

Note Payable

A written agreement where one party promises to pay another party a certain amount of money at a future date or on demand.