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.

Answer 1

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