Figure 6-7 Ely Company Had the Following Data for 2011

question 4

Multiple Choice

Figure 6-7 Ely Company had the following data for 2011:
Materials are added at the beginning of the process.Beginning work in process was 40 percent complete as to conversion.Ending work in process was 70 percent complete as to conversion.
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Refer to Figure 6-7.How many equivalent units for materials would there be using the FIFO method?

• A) 44,000 units
• B) 30,000 units
• C) 39,400 units
• D) 40,000 units

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Definitions:

Treasury Stock Method

An accounting method used to calculate the number of shares outstanding when considering stock options and warrants, assuming these are exercised and the treasury stock is sold.

Convertible Bond

A type of bond that can be converted into a predetermined amount of the issuing company's equity at certain times during its life, usually at the discretion of the bondholder.

Stock Options

Financial derivatives that give the holder the right, but not the obligation, to buy or sell a stock at a predetermined price within a specific timeframe.

Warrants

Warrants are financial instruments that give the holder the right, but not the obligation, to buy a company's stock at a predetermined price before a specified expiration date.