Paxton Corporation Uses the Weighted-Average Method in Its Process Costing

question 113

Multiple Choice

Paxton Corporation uses the weighted-average method in its process costing system. The Molding Department is the second department in its production process. The data below summarize the department's operations in January. The accounting records indicate that the conversion cost that had been assigned to beginning work in process inventory was $10,973 and a total of $268,107 in conversion costs were incurred in the department during January. The cost per equivalent unit for conversion costs for January in the Molding Department is closest to:

• A)$5.348
• B)$4.038
• C)$5.080
• D)$4.704

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Definitions:

Sticky Price Theory

An economic theory suggesting that prices of goods do not adjust immediately to changes in supply and demand, leading to disequilibrium in the market.

Sticky Wage Theory

The hypothesis that wages do not adjust quickly to changes in economic conditions, leading to unemployment and other inefficiencies.

Price Level

A measure of the average prices of goods and services in an economy at a given time, often monitored to understand inflation and the cost of living.

Natural Level

Refers to a state that an economic variable tends to trend towards in the long term, unaffected by short-term fluctuations.