Roger Company Uses the FIFO Method in Its Process Costing

question 46

Multiple Choice

Roger Company uses the FIFO method in its process costing system.The following data are taken from the accounting records of a particular department for June: $\begin{array}{llcc} \text { Beginning work in process inventory: } &\\ \text { Cost......................................................} &\$17,500\\ \text { Units.....................................................} &20,000& \text { units}\\ \text { Percentage completion: } &\\ \text { Materials.............................................. } &100\%\\ \text { Conversion.......................................... } &60\%\\ \text { Units completed and transferred out.... } &75,000& \text { units}\\ \text { Cost per equivalent unit: } &\\ \text { Material.............................................. } &\$1.75\\ \text { Conversion......................................... } &\$0.50\\\end{array}$ The cost of the 75,000 units transferred out of the department during June is:

• A)$151,250
• B)$145,250
• C)$131,500
• D)$168,750

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Definitions:

Cash Conversion Cycle

The cash conversion cycle measures the time it takes for a company to convert resource inputs into cash flows, indicating the efficiency of managing inventory and receivables.

Receivable into Cash

The process or activity of converting money that is owed to a company by its customers into actual cash, usually through collection efforts.

Excess Cash

Funds that exceed the normal operating needs of a company, which might be used for investments, acquisitions, or improving financial ratios.

Marketable Securities

Financial instruments that can easily be converted to cash due to their high demand and short maturity period.