9). Truong Company\'s Assembly Department has materials cost at-$3 per unit and
ID: 2396742 • Letter: 9
Question
9). Truong Company's Assembly Department has materials cost at-$3 per unit and conversion cost at-$6 per unit. There are 15,000-units in ending inventory, all of which are 70% complete as to conversion costs. How much are total costs to be assigned to ending inventory (EI) ?
A) $63,000.
B) $108,000.
C) $94,500.
D) $135,000.
10). The Anfa Company's Assembly Department has materials cost at $4 per unit and conversion cost at $8 per unit. There are 15,000 units in ending (EI) inventory, all of which are 70% complete as to conversion costs. How much are total costs to be assigned to ending inventory (EI) ?
A) $84,400.
B) $144,000.
C) $126,600.
D) $180,000.
11). At the high level of activity in November, 7,000 machine hours were run and power costs were $18,000. In April, a month of low activity, 2,000 machine hours were run and power costs amounted to $9,000. Using the high-low method, the estimated fixed cost (F /C) element of power costs is
A) $18,000.
B) $9,000.
C) $5,400.
D) $12,600.
Explanation / Answer
9) B) $ 108,000 Working: a.Calcuation of Equivalent units of Ending Inventory Physical Units % of Completion Equivalent units of production-Materials % of Completion Equivalent units of production-Conversion Ending Inventory 15,000 100% 15,000 70% 10,500 b. Cosst to be assigned to ending inventory Equivalent Units Costs per Equivalent Units Total Costs Costs of Ending Inventory: Materials 15,000 $ 3 $ 45,000 Conversion 10,500 $ 6 $ 63,000 Total $ 1,08,000 10) B) $ 144,000 Working: a.Calcuation of Equivalent units of Ending Inventory Physical Units % of Completion Equivalent units of production-Materials % of Completion Equivalent units of production-Conversion Ending Inventory 15,000 100% 15,000 70% 10,500 b. Cosst to be assigned to ending inventory Equivalent Units Costs per Equivalent Units Total Costs Costs of Ending Inventory: Materials 15,000 $ 4 $ 60,000 Conversion 10,500 $ 8 $ 84,000 Total $ 1,44,000 11) C) $ 5,400 Working: As per high-low method, variable cost per unit = Total costs at highets level of activity-Total cost at lowest level of activity/(Total higets activity-Total owest activity) = (18000-9000)/(7000-2000) = $ 1.80 Now, At highest level of activity of 7,000 machine hours, Total Costs $ 18,000 Less Total Variable cost 7,000 x $ 1.80 = $ 12,600 Total Fixed Costs $ 5,400 At lowest level of activity, Total Costs $ 9,000 Less Total Variable cost 2,000 x $ 1.80 = $ 3,600 Total Fixed Costs $ 5,400 Thus, Fixed Cost Cost component is $ 5,400
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