Howell Company Uses the Average Cost Method of Process Costing

question 58

Multiple Choice

Howell Company uses the average cost method of process costing.Howell had 1,000 units in beginning work-in-process which were 75% complete.Costs associated with this inventory were $3,200.When calculating the cost per equivalent unit for the month of June,Howell's controller should:

• A)Not consider the $3,200 as those costs were incurred in a prior period.
• B)Calculate the cost to complete the 1,000 items in beginning work-in-process separately.
• C)Include the $3,200 with the current month's cost to arrive at total cost for production to date.
• D)Include the equivalent units to complete the beginning work-in-process inventory to arrive at the equivalent units for the period.

---

Definitions:

Net Loss

The amount by which total expenses exceed total revenues in a specific period, indicating a negative financial performance.

Owner's Equity

The residual interest in the assets of the entity after deducting liabilities, representing the ownership interest of the business owners.

Expenses

Costs incurred by a business in the process of earning revenue.

Owner's Equity

The residual interest in the assets of an entity after deducting liabilities, often seen as the net worth or book value of the company to the owners.