Assuming That the Cost of Direct Materials Used by Department

question 30

Multiple Choice

Assuming that the cost of direct materials used by Department Q in May was $440,000, the materials cost assigned to unfinished units at May 31 would be:

• A) $55,000.
• B) $26,400.
• C) $70,400.
• D) Impossible to determine unless we know the percentage of completion for ending inventory units.

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Definitions:

Manufacturing Cost

The total expense incurred in the production of goods, including raw materials, labor, and overhead.

Predetermined Overhead Rates

Estimated overhead rates used to assign manufacturing overhead costs to products based on a pre-defined basis such as machine hours or labor hours.

Machine-Hours

A measure of the amount of time a machine is operated, used as a basis for allocating overhead costs in manufacturing.

Forming

The process of shaping material into a desired geometry, often through methods like forging, molding, or casting.