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:

Tax Liability

The total amount of tax owed to the government by an individual, organization, or corporation.

Cash Dividend

A distribution of a company's earnings to its shareholders in the form of cash.

Residual Dividend Approach

A policy whereby dividends are based on earnings minus funds retained to finance the optimal capital budget.

Predictable Dividend Payout

Regular, forecastable payments made by a company to its shareholders, usually as a part of the firm's profit sharing mechanism.