ch.6
Which of the following statements best describes the difference between the Weighted Average and FIFO methods in process costing?
A. Weighted Average considers only current-period costs, while FIFO includes both beginning inventory and current costs.
B. FIFO combines beginning inventory costs with current-period costs to find this period’s unit cost.
C. Weighted Average combines beginning inventory and current-period costs, while FIFO includes only current-period work and costs.
C. Weighted Average combines beginning inventory and current-period costs, while FIFO includes only current-period work and costs.
Fill in the Blank:
Change in Profits (Operating Income) = ___ × Change in Sales
Contribution Margin Ratio × Change in Sales
At the beginning of the month, there were 4,500 units in work in process, 50% complete. During the month, 25,000 units were started, and 23,800 units were completed and transferred out.
What is the number of units in ending work in process?
A) 5,700 units
B) 6,200 units
C) 4,900 units
D) 5,150 units
Ending WIP=(4,500+25,000)−23,800 =5,700 units
You’re organizing a local charity concert.
Tickets will be sold for $25 each.
The variable cost per ticket (venue fee, security, and refreshments) is $10.
Your total fixed costs (performer fees, equipment rental, and marketing) are $4,500.
Calculate the break-even number of tickets that must be sold to cover all costs.
300 Tickets to Break-Even
During the current period, a Coffee Co. began roasting 15,000 pounds of coffee beans. By the end of the month, 6,000 pounds were fully packaged and completed, while 9,000 pounds remained in process and were 40% roasted. There was no beginning work in process.
They incurred total production costs of $27,000 during the month. What was the cost per equivalent pound for the period?
$27000/ 9600 equivalent units = $2.81
ABC Company projects the following operating income for the next year based on sales of 5,000 units:
Total Sales: $150,000
Total Variable Costs: $90,000
Total Fixed Costs: $30,000
Find the number of units that must be sold to achieve an operating income of $6,000.
36000/12 = 3000 Units