A Company Uses the Weighted Average Method for Inventory Costing

question 154

Multiple Choice

A company uses the weighted average method for inventory costing. During a period, a production department had 20,000 units in beginning goods in process inventory which were 40% complete; the department completed and transferred 165,000 units. At the end of the period, 22,000 units were in the ending goods in process inventory and are 75% complete. All of these are with respect to labor. The production department had labor costs in the beginning goods is process inventory of $99,000 and total labor costs added during the period are $726,825. Compute the equivalent cost per unit for labor.

• A) $4.40.
• B) $4.76.
• C) $4.19.
• D) $4.55.
• E) $4.61.

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Definitions:

Capital Budgeting

The process of planning significant investments in projects that have long-term implications such as the purchase of new equipment or the introduction of a new product.

Discounted Cash Flow

A valuation method used to estimate the value of an investment based on its expected future cash flows, adjusting for the time value of money.

Net Present Value

The difference between the present value of cash inflows and outflows over a period of time, used in capital budgeting to assess profitability.

Discount Rate

The discount rate is the interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows.