A Company Uses a Process Cost Accounting System

question 33

Multiple Choice

A company uses a process cost accounting system. Its Assembly Department's beginning inventory consisted of 50,000 units, 3/4 complete with respect to direct labor and overhead. The department started and finished 127,500 units this period. The ending inventory consists of 40,000 units that are 1/4 complete with respect to direct labor and overhead. All direct materials are added at the beginning of the process. The department incurred direct labor costs of $24,000 and overhead costs of $32,000 for the period. Assuming the weighted average method, the direct labor cost per equivalent unit (rounded to the nearest cent) is:

• A) $0.14.
• B) $0.16.
• C) $0.17.
• D) $0.30.
• E) $0.37.

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Definitions:

Convertible

A security, often bonds or preferred shares, that can be converted into a specified number of another form, commonly shares of the issuing company's common stock.

Discount On Bonds Payable

The difference by which a bond's selling price is less than its face value, which effectively increases the interest yield for investors.

Additional Paid-In Capital

An amount paid by investors for shares that exceeds the par value of the shares; it reflects the excess amount investors are willing to pay above the nominal value.

Market Value Method

An accounting method that assesses assets and liabilities based on their current market prices rather than historical cost.