During July, the Equivalent Full Units of Direct Materials Added

question 101

Multiple Choice

During July, the equivalent full units of direct materials added to the product worked on by Department A amounted to a total of 90,000 applied as follows: beginning inventory, 20,000 units; units started and completed in July, 60,000 units; and ending inventory, 10,000 units. Assuming that the cost of direct materials requisitioned by the department in July was $135,000; the amount of the materials cost to be assigned to the ending inventory would be:

• A) $16,875.
• B) $54,000.
• C) $15,000.
• D) $18,000.

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Definitions:

Carrying Costs

Expenses incurred for holding inventory, including storage, insurance, taxes, and opportunity costs, among others.

Accounts Receivable Approach

A method to estimate the financing or adjustments needed in the accounts receivable area of a company's balance sheet.

Cost Of Switching

Cost of switching refers to the expenses a customer incurs as a result of changing from one product, supplier, or system to another.

Credit Policy

Guidelines a company follows to determine credit terms for customers, such as payment period and discounts for early payment.