The Taylor Company Uses a Process Costing System Assume That You Have Calculated a Direct Materials Cost Per

question 73

Multiple Choice

The Taylor Company uses a process costing system.Assume that direct materials are added at the beginning of the period and that direct labor and overhead are added continuously throughout the process.The company uses the FIFO costing method.The following data are available for one of its accounting periods: $\begin{array} { l l } &\text { Units }\\\text { Beginning work in process }&\text { 26,000 (70 percent complete for conversion }\\& \text { costs) } \\ \text { Units started } & 180,000 \\ \text { Units transferred out } & 191,000 \\ \text { Ending work in process } & 15,000 \text { (60 percent complete far conversion } \\ & \text { costs) } \end{array}$ Assume that you have calculated a direct materials cost per unit of $4 and a conversion cost per unit of $7.Under this assumption,the ending balance for Work in Process Inventory would be

• A) $82,000.
• B) $165,000.
• C) $99,000.
• D) $123,000.

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Definitions:

Fixed Costs

Costs that remain constant regardless of how much is produced or sold, including expenses like rent, salaries, and insurance.

Net Income

The amount of profit that remains after all operating expenses, taxes, and costs have been subtracted from total revenue, essentially the bottom line.

Break-Even Point

The point at which total costs and total revenue are equal, resulting in neither profit nor loss.

Fixed Costs

Expenses that do not change with the volume of production or sales, such as rent, salaries, and insurance.