Use the Following Data from a Company Using a Process

question 44

Multiple Choice

Use the following data from a company using a process costing system to answer the question below. Beginning Work in Process Inventory on June 1 :
2,000 units - 100 percent complete as to direct materials
80 percent complete as to conversion costs

Units Started During June:
12,800 units

Ending Work in Process Inventory on June 30:
2,400 units - 100 percent complete as to direct materials
40 percent complete as to conversion costs

The company uses average process costing method.
Units completed and transferred out of the department during the month totaled

• A) 12,800.
• B) 12,400.
• C) 14,800.
• D) 10,400.

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Definitions:

Safety Inventory

Additional stock that a company holds to prevent stockouts and ensure product availability, acting as a buffer against demand fluctuations.

Holding Cost

The expenses associated with keeping inventory in storage, including warehousing costs, insurance, depreciation, and potential obsolescence.

Standard Deviation

Standard deviation measures the amount of variation or dispersion of a set of values, indicating how much they deviate from the average.

Safety Inventories

Stocks of products or materials kept on hand to protect against uncertainties in supply or demand.