Morvan Corporation Uses the FIFO Method in Its Process Costing

question 63

Multiple Choice

Morvan Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed.
-The cost of a completed unit transferred out of the department is closest to:

• A)$74.51
• B)$68.27
• C)$74.02
• D)$70.29

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Definitions:

Perpetual Inventory System

An accounting method that continuously updates inventory records for every purchase and sale.

Credit Memo

A document issued by a seller to a buyer, reducing the amount that the buyer owes due to a return or refund.

Credit for Returns

A reduction in sales revenue that occurs when customers return previously purchased products.

Discount Period

The timeframe during which a discount is available or the period between the receipt of a bill and its payment due date when a discount may be taken.