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1) Refer to the following information about the Painting Department in the Richardson
Factory for the month of June. Richardson Factory uses the FIFO method of inventory
costing.
Compute the equivalent cost per unit for direct materials, direct labor and overhead for
June.
2) A company produces two products, X and Y, from a single raw material called ZZ.
ZZ is purchased in 55-gallon drums, and the contents of one drum are sufficient to
produce 30 gallons of X and 15 gallons of Y. X sells for $10.00 per gallon and Y sells
for $30.00 per gallon. During the current period, the company used 400 drums of ZZ to
produce X and Y. The cost of ZZ was $90 per drum.
Required:
(1) If the cost of ZZ is allocated to the X and Y products on the basis of the number of
gallons produced, how much of the total cost of the 400 drums should be charged to
each product?
(2) If the cost of ZZ is allocated to the X and Y products in proportion to their market
values, how much of the total cost of the 400 drums should be charged to each product?
(3) Which basis of allocating the cost is most likely to be used by the company?
Check one and briefly explain.
_________ The relative number of gallons of each product produced.
_________ The relative market values of each product at the point of separation.
3) Investments in equity securities where the investor has a controlling influence are
accounted for using the _______________________________.
4) Expenditures incurred in the process of converting raw materials to finished goods,
that include direct labor and factory overhead are known as ______________________.
5) _____________________ is an estimate of an asset's value at the end of its benefit
period.
