Assume Material Is Added at the Beginning of a Process

question 74

Multiple Choice

Assume material is added at the beginning of a process, and the beginning WIP inventory is 30 per cent complete as to conversion costs. Using the FIFO method of costing, the total equivalent units for material for this process during this period is equal to

• A) units started this period in this process.
• B) units started this period in this process plus 70 per cent of beginning inventory.
• C) beginning inventory this period for the process.
• D) units started this period in this process plus the beginning inventory.

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Definitions:

Fair Value

The fund received from an asset sale or the cost for a liability shift in a smoothly facilitated transaction among participants of the market on the price determination date.

Capital Cost Allowance

A taxable expense in Canada that allows a business to deduct the cost of a capital asset over time.

Half-Year Rule

A tax rule in some jurisdictions that allows only half the usual depreciation expense deduction in the year that a capital asset is acquired.

Straight-Line

A method of calculating depreciation of an asset which assumes the asset depreciates equally over its useful life.