The Following Data Were Taken from the Accounting Records of a Company

question 89

Multiple Choice

The following data were taken from the accounting records of a company that uses the FIFO method in its process costing system:
$\quad$ Beginning work in process inventory:
$\quad$ 20,000 units (materials 100% complete,conversion costs 60% complete)
$\quad$ Started in process during the period:
$\quad$ 80,000 units
$\quad$ Ending work in process inventory:
$\quad$ 30,000 units (materials 100% complete,conversion costs 70% complete)
The equivalent units are

• A)materials,90,000 units;conversion costs,89,000 units.
• B)materials,100,000 units;conversion costs,91,000 units.
• C)materials,60,000 units;conversion costs,53,000 units.
• D)materials,80,000 units;conversion costs,79,000 units.

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Definitions:

Variable Costs

Charges that shift in alignment with the volume of production or service tasks.

Operating Income

Earnings before interest and taxes (EBIT), a measure of a company's profit generated from its core operations excluding the effects of financing and taxes.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, due to fixed costs within a company's operating structure.

Variable Costs

Charges that shift in alignment with the volume of business activity.