South River Chemicals Pty Ltd Manufactures a Product Called Zybek

question 23

Multiple Choice

South River Chemicals Pty Ltd manufactures a product called Zybek. Direct materials are added at the beginning of the process and conversion activity occurs uniformly throughout the process. The following data pertain to the month of May.
What are the unit costs for the period (rounded to two decimal places) assuming FIFO costing?

• A) DM $7.25; CC $15.62
• B) DM $5.90; CC $13.55
• C) DM $5.90; CC $15.62
• D) None of the given answers

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Definitions:

Differential Analysis

The process of comparing the costs and benefits of alternative decisions or investments to determine the best option.

Book Value

The value of an asset according to its balance sheet account balance, taking into account the cost of the asset minus any depreciation, amortization, or impairment costs.

Annual Costs

The total amount of expenditures associated with the ongoing operations of a business or project over the course of a year.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision; represents the benefits that could have been received by choosing the alternative.