South River Chemicals Pty Ltd Manufactures a Product Called Zybek

question 30

Multiple Choice

South River Chemicals Pty Ltd manufactures a product called Zybek. Direct materials are added at the end of the process and conversion activity occurs uniformly throughout the process. The following data pertain to the month of May.
Using the weighted average method of process costing, calculate the equivalent units of direct materials and conversion costs for the month of May.

• A) DM 75 000; CC 69 400
• B) DM 75 000; CC 60 400
• C) DM 60 000; CC 60 400
• D) DM 68 000; CC 69 400

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Definitions:

LIFO

An accounting method for valuing inventory that assumes the last items produced or purchased are the first ones sold.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated as the beginning inventory plus purchases minus cost of goods sold.

Overstated

A term used to describe financial statements that report a value or condition as being higher than it actually is.

Understated

Refers to figures or amounts that have been reported lower than they actually are, often affecting financial statements and analysis.