Smith Co Started 40 000 Units into Production During the Current

question 26

Multiple Choice

Smith Co started 40 000 units into production during the current period and completed 28 000. The other 12 000 units were 30% complete as to conversion costs at the end of the period. Total costs were $60 000 for material and $36 000 for conversion costs.
Material is added at the beginning of the production process. Unit raw material and conversion costs for the period were:
Raw materials cost Conversion cost

• A) $5.00 $10.00
• B) $1.50 $10.00
• C) $5.00 $ .90
• D) $1.50 $ 1.14

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Definitions:

Inventory Turnover

Inventory turnover is a ratio showing how many times a company's inventory is sold and replaced over a particular period, indicating the efficiency of inventory management.

Accounts Payable

Accounts payable is an accounting term for the outstanding bills or debts a company owes to suppliers or vendors for goods or services received.

Operating Cycle

The operating cycle is the amount of time it takes for a company to purchase inventory, sell it to customers, and collect the cash from these sales, reflecting the efficiency of a company's operations.

Accounts Receivable Period

The average number of days that a company takes to collect payments from its credit sales.