Which of the following statements is correct concerning the days’ sales in raw materials inventory?

1) Which of the following statements is correct concerning the Days’ sales in raw materials inventory? Multiple Choice

  • A measure of how long it takes raw materials to be used in production.
  • The ratio is not useful for a manufacturer.
  • Reveals how many times a company turns over its raw materials inventory in a period.
  • Most companies generally prefer a higher number of days’ sales in raw materials inventory.
  • Is calculated by taking the Raw materials used/Average raw materials inventory.
2) Using the information below for Sundar Company; determine the total manufacturing costs added during the current year:
Direct materials used $ 19,300
Direct labor used 24,800
Factory overhead 53,600
Beginning work in process 11,000
Ending work in process 11,600
Multiple Choice
  • $97,700.
  • $44,100.
  • $97,100.
  • $43,500.
  • $77,800.
3) At the beginning of the recent period, there were 1,200 units of product in a department, 35% completed. These units were finished and an additional 6,000 units were started and completed during the period. 1,200 units were still in process at the end of the period, 25% completed. Using the weighted average method, the equivalent units produced by the department were: Multiple Choice
  • 8,400 units.
  • 7,200 units.
  • 7,500 units.
  • 6,700 units.
  • 6,000 units.
4) Richards Corporation uses the FIFO method of process costing. The following information is available for October in its Fabricating Department:

Units:
Beginning Inventory: 81,000 units, 80% complete as to materials and 20% complete as to conversion.
Units started and completed: 251,000.
Units completed and transferred out: 332,000.
Ending Inventory: 30,500 units, 30% complete as to materials and 15% complete as to conversion.

Costs:
Costs in beginning Work in Process – Direct Materials: $37,200.
Costs in beginning Work in Process – Conversion: $79,700.
Costs incurred in October – Direct Materials: $646,800.
Costs incurred in October – Conversion: $919,300.

Calculate the equivalent units of conversion. Multiple Choice
  • 251,000
  • 320,375
  • 284,450
  • 367,075
  • 371,650
5) Richards Corporation uses the FIFO method of process costing. The following information is available for October in its Fabricating Department:

Units:
Beginning Inventory: 98,000 units, 80% complete as to materials and 20% complete as to conversion.
Units started and completed: 268,000.
Units completed and transferred out: 366,000.
Ending Inventory: 39,000 units, 30% complete as to materials and 15% complete as to conversion.

Costs:
Costs in beginning Work in Process – Direct Materials: $55,200.
Costs in beginning Work in Process – Conversion: $97,700.
Costs incurred in October – Direct Materials: $844,050.
Costs incurred in October – Conversion: $937,300.

Calculate the cost per equivalent unit of materials. Multiple Choice
  • $2.78
  • $2.51
  • $2.27
  • $2.82
  • $2.38
6) Following is a partial process cost summary for Mitchell Manufacturing’s Canning Department.
Equivalent Units of Production Direct Materials Conversion
Units Completed and transferred out 92,000 92,000
Units in Ending Work in Process:
Direct Materials (9,000 * 100%) 9,000
Conversion (9,000 * 60%) 5,400
Equivalent Units of Production 101,000 97,400
Cost per Equivalent Unit
Costs of beginning work in process $ 42,400 $ 62,300
Costs incurred this period 141,900 190,900
Total costs $ 184,300 $ 253,200
Cost per equivalent unit $ 1.82 per EUP $ 2.60 per EUP
The total conversion costs transferred out of the Canning Department equals: Multiple Choice
  • $253,240.
  • $253,200.
  • $190,900.
  • $184,300.
  • $239,200.

Answer

(1) Which of the following statements is correct concerning the Days’ sales in raw materials inventory? A measure of how long it takes raw materials to be used in production Because this parameter is used to determine that how many time raw material is takes to be used in production (2) Total manufacturing costs added during the current year:-        Direct Material + Direct Labor + Factory Overhead      = $19300 + $24800 + $53600 = $97700 (3)
Beginning WIP 1200
Units started & completed 6000
Ending WIP (1200 * 25%) 300
Equivalent Units 7500 units
Under weighted average method, there is need to take 100% of Beginning WIP for Equivalent Units (4)
Conversion
Beginning WIP (81000 * 80%) 64800
Units started & completed 251000
Ending WIP (30500 * 15%) 4575
Equivalent Units 320375 units
(5)
Material
Beginning WIP (98000 * 20%) 19600
Units started & completed 268000
Ending WIP (39000 * 30%) 11700
Equivalent Units 299300 units
Cost per equivalent unit of materials = Costs incurred in October on Direct Materials/Equivalent units      = $844050/299300 = $2.82 (6) Total conversion costs transferred out of the Canning Department:- Equivalent cost per unit for conversion cost * number of units transferred out of the Canning Department

= 92000 * $2.60 = $239200

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