Which of the Following Formulas Is Used to Calculate the Cost

question 65

Multiple Choice

Which of the following formulas is used to calculate the cost per equivalent unit of production (EUP) for direct materials? The weighted-average method is used.

• A) Cost per EUP for direct materials = Total conversion costs / Equivalent units of production for direct materials
• B) Cost per EUP for direct materials = Total direct materials costs / Equivalent units of production for direct materials
• C) Cost per EUP for direct materials = Total transferred in costs / Equivalent units for transferred in
• D) Cost per EUP for direct materials = Total direct materials costs / Equivalent units of production for conversion costs

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Definitions:

Executory Costs

Executory costs are expenses associated with fulfilling the terms of a contract, typically not included in the initial acquisition cost of an asset.

Guaranteed Residual Value

The minimum future value of an asset as guaranteed by a third party or agreement upon the asset's lease end.

Initial Direct Costs

Initial Direct Costs are expenses directly associated with negotiating and arranging a lease that are not included in the net investment in the lease.

Sale-leaseback

A transaction where an asset is sold and immediately leased back from the new owner, allowing the seller to continue using the asset while freeing up capital.