Macey Company Uses a Weighted-Average Process Costing System

question 46

Multiple Choice

Macey Company uses a weighted-average process costing system. Beginning inventory consists of 6,000 units, 40% complete. Units started are 14,000, completed are 10,000, and ending inventories are 9,000 units, 70% complete. Normal spoilage is 5% of the units inspected. Direct material is added at the 75% point and spoilage inspection occurs at the 80% point. The cost per equivalent unit for materials was $1.00 and $3.00 for conversion costs.
The loss from abnormal spoilage was:

• A) $1,530
• B) $1,800
• C) $1,440
• D) $1,080

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Definitions:

Debt-Equity Ratio

This financial measure indicates how a company's assets are financed through a mix of shareholders' equity and debt.

Residual Dividend Policy

A strategy where dividends are based on earnings minus funds retained to finance the firm's optimal capital budget.

After-Tax Earnings

The amount of net income a company retains after paying all taxes, representing the true profitability of the company.

Market Value

The cost at which an asset or service can be sold or bought right now in the marketplace.