Lorraine, Estelle, and Frances Own a Business Jointly and Share

question 190

Essay

Lorraine, Estelle, and Frances own a business jointly and share profits and losses in the same proportion as their investments. How much of a profit of $14 500 will each receive if their investments are $14 000, $16 000, and $15 000 respectively?

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Definitions:

Conversion Costs

Costs incurred during the transformation of raw materials into finished products, comprising of direct labor and manufacturing overhead.

Weighted-Average Method

A cost accounting method that calculates the cost per unit of inventory by considering both the cost of existing inventory and the cost of new inventory acquired, weighted by their respective quantities.

Process Costing System

is used in manufacturing where production is continuous, and costs are assigned to processes or departments, then averaged over units produced.

Work in Process

Inventory that includes goods that are in the process of being manufactured but are not yet complete.