6Product Chapter and Service Costing: A Process Systems Approach
MULTIPLE CHOICE
1. The appropriate cost accounting system to use when inventory items are produced on an assembly line
is
a. job-order costing.
b. process costing.
c. weighted average.
d. perpetual method.
ANS: B
PTS: 1
OBJ: 6-1
2. What system would a manufacturer of unique special orders or batch processes most likely use to ac cumulate costs?
a. process costing
b. contract costing
c. variable costing
d. job-order costing
ANS: D
PTS: 1
OBJ: 6-1
3. _______________ is used when products are produced in a continuous production process.
a. Periodical method
b. Job-order costing
c. Process costing
d. Perpetual method
ANS: C
PTS: 1
OBJ: 6-1
4. Which of the following companies would be most likely to use a job-order costing system?
a. carpet manufacturer
b. oil refinery
c. furniture manufacturer
d. paper manufacturer
ANS: C
PTS: 1
OBJ: 6-1
5. In process costing, costs are accounted for by
a. year.
b. batch.
c. process.
d. job.
ANS: C
PTS: 1
OBJ: 6-1
6. _______________ accumulates production costs by process and uses a work-in-process account for
each process.
a. Process costing
b. Joint costing
c. Variable costing
d. Job-order costing
ANS: A
PTS: 1
OBJ: 6-1
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7. Which of the following characteristics pertains to job-order costing but NOT to process costing?
a. computing equivalent units
b. using predetermined overhead rates
c. preparing cost of production reports
d. preparing job-cost sheets
ANS: D
PTS: 1
OBJ: 6-1
8. The production report is:
a. a document used to requisition materials from inventory
b. the document to account for the transfer of costs to finished goods
c. the document that summarizes the manufacturing activity that takes place in a process de partment for a given period of time
d. the document that summarizes the manufacturing costs associated with a job in a job-cost ing system
ANS: C
PTS: 1
OBJ: 6-1
9. Which is NOT a difference between the job-order costing system and the process costing system?
a. They accumulate their costs to different cost objectives.
b. The number of work-in-process accounts is different.
c. One does not use the finished goods account.
d. All are differences.
ANS: C
PTS: 1
OBJ: 6-1
Figure 6-1
Allen Company has the following information for the Assembly Department for October 2010:
Materials purchased
Materials used
Direct labor
Actual manufacturing overhead
Cost of goods completed and transferred to the Finishing Dept.
$ 40,000
44,000
30,000
56,000
120,000
Overhead rate is 200 percent of direct labor costs.
Allen Company uses a process costing system for the Assembly Department.
10. Refer to Figure 6-1. The journal entry to record materials purchased would include a
a. debit to Materials Inventory for $40,000.
b. debit to Materials Inventory for $44,000.
c. credit to Accounts Payable for $44,000.
d. both b and c.
ANS: A
PTS: 1
OBJ: 6-1
11. Refer to Figure 6-1. What is the total amount of debits to Work in Process-Assembly Department for
October?
a. $120,000
b. $126,000
c. $134,000
d. cannot be determined
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copied, or distributed without the prior consent of the publisher.
ANS: C
SUPPORTING CALCULATIONS:
$44,000 + $30,000 + ($30,000 2) = $134,000
PTS: 1
OBJ: 6-1
12. Refer to Figure 6-1. The journal entry to record goods completed and transferred out of the Assembly
Department would include a
a. debit to Finished Goods Inventory for $120,000.
b. credit to Materials Inventory for $120,000.
c. debit to Work in Process-Assembly Department for $120,000.
d. debit to Work in Process-Finishing Department for $120,000.
ANS: D
PTS: 1
OBJ: 6-1
13. As production occurs, materials, direct labor, and applied manufacturing overhead are recorded in
a. materials.
b. finished goods.
c. work in process.
d. cost of goods sold.
ANS: C
PTS: 1
OBJ: 6-1
14. A production report provides information about:
a. the manufacturing costs associated with the units produced in a department
b. physical units processed in a department
c. units to account for and units accounted for
d. all of the above
ANS: D
PTS: 1
OBJ: 6-1
15. Which is NOT a feature of a process costing system?
a. Standardized products pass through standardized processes.
b. Each unit is treated uniquely in receiving a process.
c. Manufacturing costs are accumulated by a process for a given time period.
d. Unit costs are calculated for each department.
ANS: B
PTS: 1
OBJ: 6-1
16. Which is true about services?
a. Services can never be homogeneous and repetitively produced.
b. Some services may require that a sequence of uniform processes be performed.
c. Services cannot have work-in-process inventories.
d. All services require job-order costing.
ANS: B
PTS: 1
OBJ: 6-2
17. Bill Berry, CPA, prepares tax returns. The production costs and the number of tax returns prepared for
the month of August are as follows:
Direct materials
$ 100
CPA staff salaries
2,000
Overhead
900
Total
$3,000
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Number of tax returns 200
What is the unit cost per tax return?
a. $0.50
b. $10.00
c. $4.50
d. $15.00
ANS: D
SUPPORTING CALCULATIONS:
$3,000/200 = $15
PTS: 1
OBJ: 6-2
18. JIT firms are usually structured so they can use _______________ to determine product costs.
a. process costing
b. job-order costing
c. joint costing
d. variable costing
ANS: A
PTS: 1
OBJ: 6-2
19. JIT manufacturing emphasizes
a. continuous improvement.
b. elimination of waste.
c. reduction of work-in-process inventories.
d. all of the above.
ANS: D
PTS: 1
OBJ: 6-2
20. Activity-based costing might have a role in process costing settings under what conditions?
a. under no conditions
b. when there are products produced with homogeneous processes and little diversity
c. when multiple products are being produced.
d. when only one product is being produced
ANS: C
PTS: 1
OBJ: 6-2
21. The process costing principle in a service organization calculates the periods units cost by:
a. dividing the costs of the period by the number of activities
b. dividing the costs of the period by the output of the period
c. dividing the costs of the period by the equivalent units processed during the period
d. none of the above
ANS: B
PTS: 1
OBJ: 6-2
22. Equivalent units expresses all activity of the period in terms of
a. direct labor hours.
b. partially completed units.
c. fully completed units.
d. units of input.
ANS: C
PTS: 1
OBJ: 6-3
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23. _______________ represents the number of completed units that is equal, in terms of production in puts, to a given number of partially completed units.
a. Units completed
b. Equivalent units
c. Units started and completed
d. Total units in production
ANS: B
PTS: 1
OBJ: 6-3
24. An accounting firm had the following data concerning tax returns for January (output is measured in
the number of returns):
Units, beginning work in process
-0Units started
12,000
Units completed
7,000
Units, ending work in process (25% complete)
5,000
What are the equivalent units processed?
a. 8,250
b. 12,000
c. 7,000
d. 10,750
ANS: A
PTS: 1
OBJ: 6-3
25. There are five steps that must be followed in preparing a cost of production report. Which of the fol lowing is the correct sequence of steps?
a. Calculation of equivalent units, Computation of unit cost, Analysis of the flow of physical
units, Valuation of inventories (goods transferred out and ending work in process), Cost
reconciliations the administrative expense budget
b. Analysis of the flow of physical units, Calculation of equivalent units, Cost reconciliations
the pro-forma income statement, Computation of unit cost, Valuation of inventories
(goods transferred out and ending work in process)
c. Analysis of the flow of physical units, Calculation of equivalent units, Computation of unit
cost, Valuation of inventories (goods transferred out and ending work in process), Cost re conciliations
d. Calculation of equivalent units, Analysis of the flow of physical units, Computation of unit
cost, Cost reconciliations, Valuation of inventories (goods transferred out and ending work
in process)
ANS: C
PTS: 1
OBJ: 6-3
26. _______________ determine(s) whether the costs assigned to units transferred out and to units in end ing work in process are equal to the costs in beginning work in process, plus the manufacturing costs
incurred in the current period.
a. Equivalent unit of output
b. Cost reconciliation
c. Batch production process
d. Transferred-in costs
ANS: B
PTS: 1
OBJ: 6-3
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27. "Total costs to be accounted for" does NOT include which of the following costs?
a. direct materials requisitioned for the department
b. prior department costs transferred in
c. ending work-in-process balance
d. beginning work-in-process balance
ANS: C
PTS: 1
OBJ: 6-3
Figure 6-2
The following information is available for Dale, Inc.:
Direct Materials-Assembly Department
Direct Materials-Finishing Department
Direct Labor-Assembly Department
Direct Labor-Finishing Department
Applied Overhead-Assembly Department
Applied Overhead-Finishing Department
Actual Overhead-Assembly Department
Actual Overhead-Finishing Department
$10,000
15,000
11,000
20,000
11,000
20,000
12,500
17,500
28. Refer to Figure 6-2. What are the "total bottling costs to be accounted for" in the Assembly Depart ment?
a. $10,000
b. $21,000
c. $44,500
d. $32,000
ANS: D
SUPPORTING CALCULATIONS:
Direct materials
Direct labor
Applied overhead
Total
PTS: 1
$10,000
11,000
11,000
$32,000
OBJ: 6-3
29. Refer to Figure 6-2. What are the conversion costs in the Finishing Department?
a. $35,000
b. $40,000
c. $37,500
d. $57,500
ANS: B
SUPPORTING CALCULATIONS:
$20,000 + $20,000 = $40,000
PTS: 1
OBJ: 6-3
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30. When conversion costs are uniform,
a. materials, labor, and overhead are applied at different rates throughout the process.
b. materials, labor, and overhead are added throughout the process at the same rate.
c. labor and overhead are added at the same rate but different materials are added at a differ ent point.
d. materials and labor are added at the same rate but overhead is applied uniformly.
ANS: C
PTS: 1
OBJ: 6-3
Figure 6-3
Ely Company had the following data for 2010:
Units in process at the beginning of the month
Units in process at the end of the month
Units started during the month
4,000
10,000
40,000
Materials are added at the beginning of the process. Beginning work in process was 40 percent com plete as to conversion. Ending work in process was 70 percent complete as to conversion.
31. Refer to Figure 6-3. What is the number of units completed and transferred out during the period?
a. 54,000 units
b. 34,000 units
c. 44,000 units
d. 40,000 units
ANS: B
SUPPORTING CALCULATIONS:
4,000 + 40,000 - 10,000 = 34,000
PTS: 1
OBJ: 6-3
32. Refer to Figure 6-3. How many equivalent units for materials would there be using the FIFO method?
a. 44,000 units
b. 30,000 units
c. 39,400 units
d. 40,000 units
ANS: D
SUPPORTING CALCULATIONS:
Beginning WIP (4,000 * 0)
Started and completed (30,000 * 1)
Ending WIP (10,000 * 1)
PTS: 1
-030,000
10,000
40,000
OBJ: 6-4
33. The following information pertains to Fry Corporation:
Work in process, December 1 (20% complete)
Started in December
Materials are added at the beginning of the process.
Units
3,000
24,000
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If 18,000 units were completed during the month, ending work in process at December 31 is
a. 9,000 units.
b. 6,000 units.
c. 3,000 units.
d. 15,000 units.
ANS: A
SUPPORTING CALCULATIONS:
Work in process, December 1
Units started
3,000
24,000
27,000
18,000
9,000
Less units completed
Ending work in process
PTS: 1
OBJ: 6-3
34. The FIFO costing method assumes:
a. beginning inventory costs should be treated as if they belong to the current period
b. that units in beginning work in process units are completed first, before any new units are
started
c. prior period costs are merged with the current period output and manufacturing costs
d. that current period manufacturing costs are added to the beginning work in process costs
ANS: B
PTS: 1
OBJ: 6-4
35. _______________ is a unit-costing method that excludes prior-period work and costs in computing
current-period unit work and costs.
a. FIFO costing method
b. Transferred-in cost
c. Weighted average method
d. Equivalent units
ANS: A
PTS: 1
OBJ: 6-4
36. Unit cost of materials for a department using the FIFO method of process costing is found by taking
the total cost of materials issued to the department during the year divided by
a. units in process.
b. units started and completed.
c. total units manufactured.
d. equivalent units manufactured.
ANS: D
PTS: 1
OBJ: 6-4
Figure 6-4
The following information is available:
Units in process at the beginning of the month
Units in process at the end of the month
Units started during the month
2,000
4,000
30,000
Materials are added at the beginning of the process.
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copied, or distributed without the prior consent of the publisher.
37. Refer to Figure 6-4. Beginning and ending units were 60 percent complete as to conversion costs.
What is the number of units started and completed?
a. 30,000 units
b. 26,000 units
c. 36,000 units
d. 28,000 units
ANS: B
SUPPORTING CALCULATIONS:
30,000 - 4,000 = 26,000
PTS: 1
OBJ: 6-4
38. Refer to Figure 6-4. Beginning and ending units were 60 percent converted. How many equivalent
units for materials would there be using the FIFO method?
a. 36,000 units
b. 34,000 units
c. 30,000 units
d. 29,200 units
ANS: C
SUPPORTING CALCULATIONS:
Beginning WIP (2,000 * 0)
Started and completed (26,000 * 1)
Ending WIP (4,000 * 1)
PTS: 1
-026,000
4,000
30,000
OBJ: 6-4
Figure 6-5
Gill Corporation adds raw materials to production at the beginning of the process in the Assembly De partment. Materials data for this department for March 2011 are as follows:
Work in process, March 1
Started during March
Work in process, March 31
Units
25,000
100,000
10,000
Costs
Materials
$ 68,750
300,000
Conversion
$167,650
903,350
Beginning inventory was 70 percent complete. Ending inventory was 40 percent complete.
39. Refer to Figure 6-5. How many equivalent units for materials would there be for Gill Corporation in
March using the FIFO method?
a. 100,000 units
b. 110,000 units
c. 125,000 units
d. 119,000 units
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copied, or distributed without the prior consent of the publisher.
ANS: A
SUPPORTING CALCULATIONS:
Beginning WIP (25,000 * 0)
Started and completed (90,000 * 1)
Ending WIP (10,000 * 1)
PTS: 1
-090,000
10,000
100,000
OBJ: 6-4
40. Refer to Figure 6-5. How many equivalent units for conversion costs would there be for Gill
Corporation in March using the FIFO method?
a. 100,000 units
b. 111,500 units
c. 125,000 units
d. 101,500 units
ANS: D
SUPPORTING CALCULATIONS:
Beginning WIP (25,000 * 0.30)
Started and completed (90,000 * 1)
Ending WIP (10,000 * 0.40)
PTS: 1
7,500
90,000
4,000
101,500
OBJ: 6-4
41. If beginning inventory contained 2,000 units of product that were judged to be 40 percent complete as
to labor, the equivalent units of production for labor during the current period under the FIFO method
for these 2,000 units are
a. 2,000 units.
b. 800 units.
c. 1,200 units.
d. 400 units.
ANS: C
SUPPORTING CALCULATIONS:
2,000 0.60 =
PTS: 1
OBJ: 6-4
Figure 6-6
Irvin Corporation's mixing department began January 2010 with 10,000 gallons of product (40 percent
completed) in process. During January, Irvin started 100,000 gallons of new product, of which 15,000
gallons remained in ending inventory (70 percent completed).
42. Refer to Figure 6-6. If materials were added at the beginning of the process, how many equivalent
units of production for conversion costs would there be for Irvin using the FIFO costing method?
a. 101,500 units
b. 110,000 units
c. 105,500 units
d. 116,500 units
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copied, or distributed without the prior consent of the publisher.
ANS: A
SUPPORTING CALCULATIONS:
Beginning WIP (10,000 * 0.60)
Started and completed (85,000 * 1)
Ending WIP (15,000 * 0.70)
PTS: 1
6,000
85,000
10,500
101,500
OBJ: 6-4
43. Refer to Figure 6-6. If materials were added when the units are 50 percent complete, how many equi valent units of production for materials would there be for Irvin Corporation using the FIFO costing
method?
a. 101,500 units
b. 105,500 units
c. 110,000 units
d. 85,000 units
ANS: C
SUPPORTING CALCULATIONS:
Beginning WIP (10,000 * 1)
Started and completed (85,000 * 1)
Ending WIP (15,000 * 1)
PTS: 1
10,000
85,000
15,000
110,000
OBJ: 6-4
44. The following information pertains to Jones Company:
Work-in-process inventory, March 1 (30% complete)
Units transferred in
Work-in-process inventory, March 31 (60% complete)
Units
20,000
50,000
16,000
Materials are added at the start of the process.
How many equivalent units for conversion costs would there be using the FIFO method?
a. 49,600 units
b. 70,000 units
c. 50,000 units
d. 57,600 units
ANS: D
SUPPORTING CALCULATIONS:
Beginning WIP (20,000 * 0.70)
Started and completed (34,000 * 1)
Ending WIP (16,000 * 0.60)
PTS: 1
14,000
34,000
9,600
57,600
OBJ: 6-4
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45. Lee Company began making lipstick in October 2009 using a single-step process. Lee incurred
$42,000 for materials and $48,640 for conversion during the month. There were 21,000 cases of lip stick started in October and 3,000 cases unfinished (40 percent complete) at the end of the period. All
materials were added at the beginning of the production process.
a. $4.53
b. $2.00
c. $2.03
d. none of these
What is the unit cost for materials for Lee using the FIFO method?
ANS: B
SUPPORTING CALCULATIONS:
$42,000/21,000 = $2
PTS: 1
OBJ: 6-4
Figure 6-7
Champ Inc. manufactures a product that passes through two processes: mixing and molding. All manu facturing costs are added uniformly in the Mixing Department. Information for the Mixing Department
for October follows:
Work in process, October 1:
Units (35% complete)
7,500
Direct materials
$36,000
Direct labor
$45,000
Overhead
$15,000
During October, 26,750 units were completed and transferred to the Molding Department. The follow ing costs were incurred by the Mixing Department during October:
Direct materials
$133,050
Direct labor
180,000
Overhead (applied)
45,000
46. Refer to Figure 6-7. There were 2,500 units that were 80 percent complete remaining in Mixing at Oc tober 31. The amount of total costs to account for is
a. $454,050.
b. $396,000.
c. $360,000.
d. none of the above.
ANS: A
SUPPORTING CALCULATIONS:
Costs to account for:
Beginning work in process
Incurred during period
Total costs to account for
PTS: 1
Materials
$ 36,000
133,050
$169,050
Conversion
$ 60,000
225,000
$285,000
Total
$ 96,000
358,050
$454,050
OBJ: 6-4
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47. Refer to Figure 6-7. There were 3,750 units that were 80 percent complete remaining in Mixing at Oc tober 31. Total cost per equivalent unit of production using the FIFO method is
a. $12.16.
b. $13.20.
c. $9.76.
d. none of the above.
ANS: B
SUPPORTING CALCULATIONS:
Equivalent units
= (7,500 * 0.65) + (26,750 - 7,500) + (3,750 * 0.80)
= 27,125 units
Costs to account for:
Current costs to account for
Cost per equivalent unit ($358,050/27,125)
PTS: 1
Materials
$133,050
$ 13.20
Conversion
$225,000
Total
$358,050
OBJ: 6-4
48. Refer to Figure 6-7. The cost of October's ending work in process for the Mixing Department using the
FIFO method is
a. $26,250.
b. $50,400.
c. $63,000.
d. none of the above.
ANS: D
SUPPORTING CALCULATIONS:
3,750 0.80 $13.20* =
* cost per equivalent units of 13.20 are calculated by dividing total costs by equivalent units as fol lows:
Equivalent units
= (7,500 * 0.65) + (26,750 - 7,500) + (3,750 * 0.80)
= 27,125 units
Costs to account for:
Current costs to account for
Cost per equivalent unit ($358,050/27,125)
PTS: 1
Materials
$133,050
$ 13.20
Conversion
$225,000
Total
$358,050
OBJ: 6-4
49. Refer to Figure 6-7. There were 3,750 units that were 80 percent complete remaining in Mixing at Oc tober 31. The cost of goods transferred to the Molding Department during October using the FIFO
method is
a. $414,450.
b. $391,575.
c. $323,400.
d. none of the above.
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copied, or distributed without the prior consent of the publisher.
ANS: A
SUPPORTING CALCULATIONS:
Beginning work in process:
Beginning balance ($36,000 + $45,000 + $15,000)
Add: (7,500 * 0.65 * $13.20*)
Started and completed (19,250 * $13.20*)
Total
=
=
=
=
$ 96,000
64,350
254,100
$414,450
* cost per equivalent units of 13.20 are calculated by dividing total costs by equivalent units as fol lows:
Equivalent units
= (7,500 * 0.65) + (26,750 - 7,500) + (3,750 * 0.80)
= 27,125 units
Costs to account for:
Current costs to account for
Cost per equivalent unit ($358,050/27,125)
PTS: 1
Materials
$133,050
$ 13.20
Conversion
$225,000
Total
$358,050
OBJ: 6-4
50. Beginning inventory consisted of 1,000 units with costs of $21,000. All materials and 60 percent of
labor and overhead were added in the prior period. In addition, another 8,000 units were started and
completed. Unit costs are materials, $6.00; labor, $15.00; overhead, $9.00. What is the total cost of
goods transferred out using FIFO?
a. $240,000
b. $270,000
c. $262,200
d. $270,600
ANS: D
SUPPORTING CALCULATIONS:
Beginning work in process:
Beginning balance
Labor (400 * $15)
Overhead (400 * $9)
Started and completed (8,000 * $30)
Total
PTS: 1
$ 21,000
6,000
3,600
$ 30,600
240,000
$270,600
OBJ: 6-4
51. Kent Company adds materials to production at the beginning of the process in the Production Depart ment. It uses a single-step process. Data on material for this department for October 2011 are as fol lows:
Production data (units):
In process, beginning of October
Started during October
Completed and transferred out during October
10,000
60,000
55,000
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copied, or distributed without the prior consent of the publisher.
Manufacturing cost:
Work in process, beginning
Materials used in October
$39,000
$186,000
The company uses the FIFO inventory method.
The materials cost in Work in Process on October 31 is
a. $46,500.
b. $37,500.
c. $31,000.
d. $39,000.
ANS: A
SUPPORTING CALCULATIONS:
$186,000/60,000 = $3.10
15,000 $3.10 =
PTS: 1
OBJ: 6-4
52. When calculating the valuation of inventories under the FIFO costing method, there are three categor ies of current-period output:
a. equivalent units in ending work in process, units started and completed, and equivalent
units of work necessary to finish units in beginning work in process
b. units in beginning work in process inventory, units started and completed, units in ending
work in process
c. equivalent units started, equivalent units completed, and equivalent units in ending work
in process
d. none of the above
ANS: A
PTS: 1
OBJ: 6-4
53. _______________ is a unit-costing method that merges prior-period work and costs with current-peri od work and costs.
a. FIFO costing method
b. Transferred-in cost
c. Weighted average method
d. Operating costing
ANS: C
PTS: 1
OBJ: 6-5
54. Which of the following statements is NOT true regarding the weighted-average costing method?
a. Weighted-average method can be used when costs of production remain very stable from
one period to the next
b. Units in beginning inventory are counted as part of current periods equivalent units of
production
c. Beginning work in process units are treated as completed before current period units are
started
d. Prior-period costs are merged with current-period costs
ANS: C
PTS: 1
OBJ: 6-5
This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold,
copied, or distributed without the prior consent of the publisher.
55. Beginning inventory consisted of 10,000 units (20 percent converted) and ending inventory consisted
of 20,000 units (40 percent converted). In addition, 60,000 units were started during the period. How
many equivalent units for conversion costs were produced using the weighted average method?
a. 50,000 units
b. 56,000 units
c. 70,000 units
d. 58,000 units
ANS: D
SUPPORTING CALCULATIONS:
Transferred out (50,000 * 1)
Ending WIP (20,000 * 0.40)
PTS: 1
50,000
8,000
58,000
OBJ: 6-5
Figure 6-8
Irvin Corporation's Mixing Department began January 2010 with 10,000 gallons of product (40 per cent completed) in process. During January, Irvin started 100,000 gallons of new product, of which
15,000 gallons remained in ending inventory (70 percent completed).
56. Refer to Figure 6-8. If materials were added at the beginning of the process, how many equivalent
units of production for conversion costs would there be for Irvin using the weighted average costing
method?
a. 120,500 units
b. 110,000 units
c. 105,500 units
d. 99,500 units
ANS: C
SUPPORTING CALCULATIONS:
Transferred out (95,000 * 1)
Ending WIP (15,000 * 0.70)
PTS: 1
95,000
10,500
105,500
OBJ: 6-5
57. Refer to Figure 6-8. If materials were added when the units were 80 percent complete, how many equi valent units of production for materials would there be for Irvin using the weighted average costing
method?
a. 110,000 units
b. 95,000 units
c. 107,000 units
d. 105,500 units
ANS: B
SUPPORTING CALCULATIONS:
Transferred out (95,000 * 1)
Ending WIP (15,000 * 0)
PTS: 1
95,000
-095,000
OBJ: 6-5
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copied, or distributed without the prior consent of the publisher.
58. The following information is available:
Units in process, November 1 (60% converted)
Units in process, November 30 (60% converted)
Units started during the month
2,000 units
4,000 units
30,000 units
Materials are added at the beginning of the process.
How many equivalent units for conversion would there in November be using the weighted average
method?
a. 36,000 units
b. 30,400 units
c. 32,000 units
d. 33,200 units
ANS: B
SUPPORTING CALCULATIONS:
Transferred out (28,000 * 1)
Ending WIP (4,000 * 0.60)
PTS: 1
28,000
2,400
30,400
OBJ: 6-5
59. The following information pertains to Mack Company:
Work-in-process inventory, December 1 (30% complete)
Units transferred in
Work-in-process inventory, December 31 (60% complete)
20,000 units
50,000 units
16,000 units
Materials are added at the start of the process.
How many equivalent units for materials would there be using the weighted average method?
a. 86,000 units
b. 70,000 units
c. 50,000 units
d. 57,600 units
ANS: B
SUPPORTING CALCULATIONS:
Transferred out (54,000 * 1)
Ending WIP (16,000 * 1)
PTS: 1
54,000
16,000
70,000
OBJ: 6-5
60. Beginning inventory for the month contained 3,000 units that were 35 percent complete with respect to
materials. 45,000 units were completed and transferred out during the month. 4,500 units were in end ing inventory, 10 percent complete with respect to materials. The weighted average equivalent units of
production for materials for the month would be
a. 45,000 units.
b. 47,250 units.
c. 46,800 units.
d. 45,450 units.
ANS: D
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copied, or distributed without the prior consent of the publisher.
SUPPORTING CALCULATIONS:
Units complete
Ending work in process (4,500 * 10%)
Equivalent units of production
PTS: 1
45,000
450
45,450
OBJ: 6-5
61. The following information pertains to North Company:
Units
8,000
40,000
12,000
Work in process, January 1 (20% complete)
Started in January
Work in process, January 31
Materials are added at the beginning of the process.
If equivalent units of production for conversion using the weighted average method was 39,000, end ing work in process at January 31 must have been
a. 15.0% complete.
b. 30.0% complete.
c. 25.0% complete.
d. 97.5% complete.
ANS: C
SUPPORTING CALCULATIONS:
Equivalent units of production
Units completed (8,000 + 40,000 - 12,000)
Equivalent units of production from ending WIP
39,000
36,000
3,000
Ending WIP must be (3,000/12,000), or 25.0% complete.
PTS: 1
OBJ: 6-5
62. The costs included in the cost per equivalent unit using the weighted average method are
a. current costs.
b. beginning work in process.
c. ending work in process.
d. both a and b.
ANS: D
PTS: 1
OBJ: 6-5
63. The material cost per equivalent unit using the weighted average method is calculated as
a. total material costs to account for/equivalent units for materials.
b. material costs added during the period/equivalent units for materials.
c. total material costs to account for/number of partially completed units for materials.
d. material costs added during the period/number of partially completed units for materials.
ANS: A
PTS: 1
OBJ: 6-5
This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold,
copied, or distributed without the prior consent of the publisher.
Figure 6-9
The following information is available for Department A for the month of January:
Units
Work in process, January 1 (70% complete)
10,000
Direct materials
Direct labor
Manufacturing overhead
Total work in process, January 1
Started in production during January
40,000
Costs added:
Direct materials
Direct labor
Manufacturing overhead
Total costs added during January
Work in process, January 31 (80% complete)
4,000
Cost
$ 36,000
18,000
24,000
$ 78,000
$108,000
48,000
60,600
$216,600
Materials are added at the beginning of the process. Round unit costs to two decimal places.
64. Refer to Figure 6-9. The cost per equivalent unit of production for materials using the weighted aver age method is
a. $3.60.
b. $3.12.
c. $2.88.
d. $2.70.
ANS: C
SUPPORTING CALCULATIONS:
Units completed (10,000 + 40,000 - 4,000)
Ending work in process
Equivalent units of production
Materials
46,000
4,000
50,000
Costs to account for:
Beginning work in process
Incurred during period
Total costs to account for
Materials
$ 36,000
108,000
$144,000
Cost per equivalent unit ($144,000/50,000)
PTS: 1
$2.88
OBJ: 6-5
65. Refer to Figure 6-9. The cost per equivalent unit of production for conversion using the weighted aver age method is
a. $3.54.
b. $3.06.
c. $2.55.
d. $2.19.
This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold,
copied, or distributed without the prior consent of the publisher.
ANS: B
SUPPORTING CALCULATIONS:
Units completed (10,000 + 40,000 - 4,000)
Ending work in process
Equivalent units of production
Conversion
46,000
3,200
49,200
Beginning work in process (18,000 + 24,000)
Incurred during period (48,000 + 60,600)
Total costs to account for
Conversion
$ 42,000
108,600
$150,600
Cost per equivalent unit ($150,600/49,200)
PTS: 1
$3.06
OBJ: 6-5
66. Refer to Figure 6-9. The cost of goods transferred out using the weighted average method is
a. $273,600.
b. $241,500.
c. $273,240.
d. none of the above.
ANS: C
SUPPORTING CALCULATIONS:
Units transferred out = ($2.88* + $3.06**) 46,000 =
*Materials cost per equivalent unit ($144,000/50,000)
**Conversion cost per equivalent unit ($150,600/49,200)
PTS: 1
$2.88
$3.06
OBJ: 6-5
67. Refer to Figure 6-9. The cost of ending work in process using the weighted average method is
a. $23,760.
b. $21,312.
c. $16,992.
d. none of the above.
ANS: B
SUPPORTING CALCULATIONS:
Ending work in process:
Materials ($2.88* 4,000)
Conversion ($3.06** 3,200)
*Materials cost per equivalent unit ($144,000/50,000)
**Conversion cost per equivalent unit ($150,600/49,200)
PTS: 1
$11,520
9,792
$21,312
$2.88
$3.06
OBJ: 6-5
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copied, or distributed without the prior consent of the publisher.
68. Which is NOT a disadvantage of the weighted average costing assumption in process costing?
a. There is a possibility of errors when input costs are changing significantly from one period
to the next.
b. The cumulative effect of an error might produce a significant distortion in the cost of the
final product.
c. The performance of the current period is combined with the performance of the current
period making it difficult to compare costs between periods.
d. Unit costs are simpler to calculate.
ANS: D
PTS: 1
OBJ: 6-5
69. Franklin Company manufactures a product that passes through two processes: Mixing and Molding.
All manufacturing costs are added uniformly in the Mixing Department. Information for the Mixing
Department for October follows:
Work in process, October 1:
Units (35% complete)
Direct materials
Direct labor
Overhead
7,500
$36,000
$45,000
$15,000
During October, 37,500 units were completed and transferred to the Molding Department. The follow ing costs were incurred by the Mixing Department during October:
Direct materials
Direct labor
Overhead
$135,000
180,000
45,000
There were 3,750 units that were 80 percent complete remaining in mixing at October 30. The equival ent units of production using the weighted average method is
a. 43,125 units
b. 30,000 units
c. 40,500 units
d. 34,500 units
ANS: C
SUPPORTING CALCULATIONS:
Units completed
Ending work in process (3,750 * 80%)
Equivalent units of production
PTS: 1
37,500
3,000
40,500
OBJ: 6-5
70. Which of the five steps necessary to prepare a cost of production report is the same under both FIFO
costing method and the Weighted-Average costing method?
a. calculation of equivalent units
b. analysis of the flow of physical units
c. cost reconciliation
d. computation of unit cost
ANS: B
PTS: 1
OBJ: 6-5
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copied, or distributed without the prior consent of the publisher.
71. Transferred-in costs are accounted for in the same manner as
a. materials added at the beginning of the process.
b. materials added at the end of the process.
c. conversion costs.
d. labor costs.
ANS: A
PTS: 1
OBJ: 6-6
72. _______________ is the cost assigned to goods from a prior process.
a. FIFO costing method
b. Transferred-in cost
c. Weighted average method
d. Operating costing
ANS: B
PTS: 1
OBJ: 6-6
73. Materials are added to a second production department and will NOT increase the number of units pro duced in this department. Adding materials to the second department will
a. decrease total ending work in process.
b. change the amount of factory overhead included in the ending work in process.
c. increase total unit cost.
d. not change the dollar amount transferred out of the department.
ANS: C
PTS: 1
OBJ: 6-6
74. Which of the following points is NOT necessary to be considered when dealing with transferred in
costs?
a. Units started in subsequent department correspond to the units transferred out from prior
department
b. The cost of this departments materials is the cost of goods transferred out computed in the
prior department
c. The units of the transferring department may not be measured differently than the unit of
the receiving department
d. the units of the transferring department may be measure differently than the units of the re ceiving department
ANS: C
PTS: 1
OBJ: 6-6
Figure 6-10
Peck Corporation produces a product that passes through two processes. During October, the first de partment transferred 20,000 units to the second department. The cost of the units transferred was
$30,000. Materials are added uniformly in the second process. The following information is provided
about the second department's operations during October:
Units, beginning work in process
Units, ending work in process
4,000
5,500
75. to Refer Figure 6-10. The number of units started in the second department during October is
a. 20,000 units.
b. 14,500 units.
c. 16,000 units.
d. 24,000 units.
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copied, or distributed without the prior consent of the publisher.
ANS: A
SUPPORTING CALCULATIONS:
Units started equal the number of units transferred in = 20,000.
PTS: 1
OBJ: 6-6
76. Refer to Figure 6-10. The number of units completed in the second department during October is
a. 24,000 units.
b. 18,500 units.
c. 9,500 units.
d. 27,500 units.
ANS: B
SUPPORTING CALCULATIONS:
Beginning work in process
Transferred in
Less: Ending work in process
PTS: 1
4,000
20,000
24,000
5,500
18,500
OBJ: 6-6
77. Refer to Figure 6-10. The number of units started and completed in the second department during Oc tober is
a. 14,500 units.
b. 18,500 units.
c. 9,500 units.
d. 27,500 units.
ANS: A
SUPPORTING CALCULATIONS:
Units completed
Less: Beginning work in process
Units started and completed
PTS: 1
18,500
4,000
14,500
OBJ: 6-6
Figure 6-11
Quinn Corporation produces a product that passes through two processes. During October, the first de partment transferred 20,000 units to the second department. The cost of the units transferred was
$60,000. Materials are added uniformly in the second process. The following information is provided
about the second department's operations during October:
Units, beginning work in process (1/3 complete)
Units, ending work in process (1/2 complete)
6,000
4,000
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copied, or distributed without the prior consent of the publisher.
78. Refer to Figure 6-11. The equivalent units for those transferred in from the prior department using
weighted average is
a. 26,000 units.
b. 20,000 units.
c. 14,000 units.
d. 16,000 units.
ANS: A
SUPPORTING CALCULATIONS:
22,000 + 4,000 = 26,000
PTS: 1
OBJ: 6-6
79. Refer to Figure 6-11. The equivalent units for conversion using weighted average is
a. 10,000 units.
b. 16,000 units.
c. 26,000 units.
d. 24,000 units.
ANS: D
SUPPORTING CALCULATIONS:
22,000 + 2,000 = 24,000
PTS: 1
OBJ: 6-6
80. Refer to Figure 6-11. The equivalent units for those transferred in from the prior department using
FIFO would be
a. 10,000 units.
b. 20,000 units.
c. 26,000 units.
d. 22,000 units.
ANS: B
SUPPORTING CALCULATIONS:
0 + 16,000 + 4,000 = 20,000
PTS: 1
OBJ: 6-6
81. Refer to Figure 6-11. The equivalent units for conversion using FIFO would be
a. 10,000 units.
b. 12,000 units.
c. 26,000 units.
d. 22,000 units.
ANS: D
SUPPORTING CALCULATIONS:
22,000 + 2,000 - 2,000 = 22,000
PTS: 1
OBJ: 6-6
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copied, or distributed without the prior consent of the publisher.
Figure 6-12
Square Deal Company makes carpenter's squares and uses a process costing system. There is no spoil age. Manufacturing goes through three departments: Forming, Finishing, and Packing. Unit data for
these departments are given below:
Forming
Finishing
Packing
Beginning inventory units
(80% complete)
1,000
2,000
3,000
Units started
8,000
??
Ending inventory units
(20% complete)
3,000
4,000 1,000
The Finishing Department adds materials at the point where processing is 50 percent complete.
82. Refer to Figure 6-12. The equivalent units for materials in the Finishing Department is
Weighted Average
FIFO
a.
b.
c.
d.
4,000
2,000
4,800
6,000
8,000
3,200
3,000
8,000
ANS: A
SUPPORTING CALCULATIONS:
Started in finishing:
Transferred out:
Weighted average:
1,000 + 8,000 - 3,000 = 6,000
2,000 + 6,000 - 4,000 = 4,000
4,000 + 0 = 4,000
Started and completed:
4,000 - 2,000 = 2,000
No materials needed to finish beginning inventory and no materials in ending inventory.
FIFO:
0 + 2,000 + 0 = 2,000
PTS: 1
OBJ: 6-6
83. Refer to Figure 6-12. The equivalent units for transferred-in the Finishing Department is
Weighted Average
FIFO
a.
b.
c.
d.
4,000
2,000
4,800
6,000
8,000
3,200
3,000
6,000
ANS: D
SUPPORTING CALCULATIONS:
Started:
Transferred out:
1,000 + 8,000 - 3,000 = 6,000
2,000 + 6,000 - 4,000 = 4,000
Weighted average:
FIFO:
4,000 + 4,000 = 8,000
0 + 2,000 + 4,000 = 6,000
PTS: 1
OBJ: 6-6
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copied, or distributed without the prior consent of the publisher.
Figure 6-13
Takon manufactures specialized plastic boxes in two processes: Molding and Packaging. In the Pack aging Department, materials are added at the end of the process. The following data are given:
Costs
Units
Trans.-in
Materials
Conv.
Work in process, October 1
30
$1,590
$-0$513
Transferred in during October
?
Completed during October
105
Work in process, October 31
15
Costs added during October
$4,410
$1,050
$1,767
The conversion process on the beginning inventory is 70 percent completed and the ending inventory
is 60 percent completed.
84. Refer to Figure 6-13. Takon's equivalent units for conversion using FIFO would be
a. 9.
b. 93.
c. 105.
d. 114.
ANS: B
SUPPORTING CALCULATIONS:
105 + 9 = 114 - 21 = 93 OR 9 + 75 + 9 = 93
PTS: 1
OBJ: 6-6
85. Refer to Figure 6-13. Takon's equivalent units for materials using weighted average would be
a. 15.
b. 90.
c. 105.
d. 120.
ANS: C
SUPPORTING CALCULATIONS:
105 + 0 = 105
PTS: 1
OBJ: 6-6
86. Refer to Figure 6-13. Takon's equivalent units for transferred-in units using FIFO would be
a. 15.
b. 90.
c. 105.
d. 120.
ANS: B
SUPPORTING CALCULATIONS:
105 + 15 = 120 - 30 = 90 OR 0 + 75 + 15 = 90
PTS: 1
OBJ: 6-6
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copied, or distributed without the prior consent of the publisher.
87. Refer to Figure 6-13. Takon's equivalent units for transferred-in units using weighted average would
be
a. 15.
b. 90.
c. 105.
d. 120.
ANS: D
SUPPORTING CALCULATIONS:
105 + 15 = 120
PTS: 1
OBJ: 6-6
88. Refer to Figure 6-13. Rounded to two decimal places, Takon's conversion cost per unit using FIFO
would be
a. $15.50.
b. $19.00.
c. $20.00.
d. $24.52.
ANS: B
SUPPORTING CALCULATIONS:
$1,767/93 = $19
PTS: 1
OBJ: 6-6
89. Refer to Figure 6-13. Rounded to two decimal places, Takon's cost per equivalent unit for conversion
using weighted average would be
a. $15.50.
b. $19.00.
c. $20.00.
d. $24.52.
ANS: C
SUPPORTING CALCULATIONS:
$2,280/114 = $20
PTS: 1
OBJ: 6-6
90. Refer to Figure 6-13. Rounded to two decimal places, Takon's cost per equivalent units for transferredin costs using weighted average would be
a. $49.00.
b. $50.00.
c. $57.14.
d. $66.67.
ANS: B
SUPPORTING CALCULATIONS:
$6,000/120 = $50
PTS: 1
OBJ: 6-6
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copied, or distributed without the prior consent of the publisher.
91. Refer to Figure 6-13. Rounded to two decimal places, Takon's costs transferred out using weighted av erage would be
a. $6,000.
b. $8,190.
c. $8,400.
d. $9,330.
ANS: C
SUPPORTING CALCULATIONS:
($6,000/120) + ($1,050/105) + ($2,280/114) = $80
$80 105 =
PTS: 1
OBJ: 6-6
92. _______________ is a process that produces batches of different products which are identical in many
ways but differ in others.
a. Operating costing
b. Cost reconciliation
c. Batch production process
d. Equivalent unit of output
ANS: C
PTS: 1
OBJ: 6-7
93. _______________ is a costing system that uses job-order costing to assign material costs and process
costing to assign conversion costs.
a. Operation costing
b. Cost reconciliation
c. Batch production process
d. Equivalent unit of output
ANS: A
PTS: 1
OBJ: 6-7
94. When job-order costing is used to assign material costs and process costing is used to assign conver sion costs, it is called
a. matrix costing.
b. blend costing.
c. operation costing.
d. variable costing.
ANS: C
PTS: 1
OBJ: 6-7
Figure 6-14
CUPORAMA Corp. manufactures cups. The company's manufacturing operations and costs applied to
products for April were:
Molding
Heat-treat
Finishing
Direct labor
$25,000
$12,500
$ 7,500
Factory overhead
30,000
17,500 12,600
Total
$55,000
$30,000 $20,100
This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold,
copied, or distributed without the prior consent of the publisher.
Three types of cups were produced in April. The quantities and direct materials costs were:
Type
Quantity
Direct Materials
Casts
5,000
$15,000
Cups
7,000
22,470
Mugs
8,000
32,500
Casts are produced in the Molding Department. Cups pass through the Molding and Finishing Depart ments. Mugs pass through all three departments. An operations costing system is used.
95. Refer to Figure 6-14. What is CUPORAMA's conversion cost per unit for the heat-treat operation,
rounded to two decimal places?
a. $1.50
b. $2.00
c. $2.50
d. $3.75
ANS: D
SUPPORTING CALCULATIONS:
$30,000/8,000 = $3.75
PTS: 1
OBJ: 6-7
96. Refer to Figure 6-14. What is CUPORAMA's total cost for Casts in April?
a. $13,750
b. $26,275
c. $28,750
d. $70,000
ANS: C
SUPPORTING CALCULATIONS:
55,000/(5,000 + 7,000 + 8,000) = 2.75
15,000 + (5,000 2.75) =
PTS: 1
OBJ: 6-7
97. Refer to Figure 6-14. What is CUPORAMA's total cost per unit for Cups in April?
a. $4.09
b. $7.30
c. $7.84
d. $11.05
ANS: B
SUPPORTING CALCULATIONS:
55,000/(5,000 + 7,000 + 8,000) = 2.75
20,100/(7,000 + 8,000) = 1.34
$22,470 + (7,000 2.75) + (7,000 1.34) = $51,100/7,000 =
PTS: 1
OBJ: 6-7
Figure 6-15
Ring Company produces two types of product: Small and Large. Two work orders for two batches of
the products are shown below, along with some additional cost information:
This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold,
copied, or distributed without the prior consent of the publisher.
Direct materials (actual costs)
Applied conversion costs:
Mixing
Cooking
Bottling
Small
Work Order 10
$45,000
?
$12,000
$10,000
Large
Work Order 11
$75,000
?
$12,000
$15,000
Batch size (bottles)
5,000
5,000
In the Mixing Department, conversion costs are applied on the basis of direct labor hours. Budgeted
conversion costs for the department for the year were $50,000 for labor and $125,000 for overhead.
Budgeted direct labor hours were 2,500. It takes three minutes to mix the ingredients needed for each
bottle.
Small (Work Order 10) and Large (Work Order 11) flow through the Mixing Department first, then
through the Cooking and Bottling departments.
98. Refer to Figure 6-15. What are Ring Company's conversion costs applied to Small (Work Order 10)
from the Mixing Department for each batch?
a. $17,500
b. $35
c. $175,000
d. $35,000
ANS: A
SUPPORTING CALCULATIONS:
Conversion cost rate (Mixing) = ($125,000 + $50,000)/2,500 = $70 per DLH
Applied conversion costs = $70 5,000 3/60 =
PTS: 1
OBJ: 6-7
99. Refer to Figure 6-15. What is Ring Company's amount transferred from the Mixing Department to the
Bottling Department for Work Order 10?
a. $45,000
b. $84,500
c. $39,500
d. $62,500
ANS: D
SUPPORTING CALCULATIONS:
Direct materials
Conversion costs
PTS: 1
$45,000
17,500
$62,500
OBJ: 6-7
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copied, or distributed without the prior consent of the publisher.
100. Refer to Figure 6-15. What is Ring Company's amount transferred from the Bottling Department to
Finished Goods for Work Order 10?
a. $45,000
b. $84,500
c. $39,500
d. $67,000
ANS: B
SUPPORTING CALCULATIONS:
Direct materials
Applied conversion costs:
Mixing
Cooking
Bottling
Total
PTS: 1
$45,000
17,500
12,000
10,000
$84,500
OBJ: 6-7
101. Refer to Figure 6-15. What is Ring Company's unit cost of Small?
a. $3.50
b. $16.90
c. $23.90
d. $70.00
ANS: B
SUPPORTING CALCULATIONS:
Direct materials
Applied conversion costs:
Mixing
Cooking
Bottling
Total
$84,500/5,000 = $16.90
PTS: 1
$45,000
17,500
12,000
10,000
$84,500
OBJ: 6-7
102. Refer to Figure 6-15. What is Ring Company's unit cost of Large?
a. $3.50
b. $16.90
c. $23.90
d. $20.40
ANS: C
SUPPORTING CALCULATIONS:
Direct materials
Applied conversion costs:
Mixing
Cooking
Bottling
Total
$119,500/5,000 = $23.90
PTS: 1
$ 75,000
17,500
12,000
15,000
$119,500
OBJ: 6-7
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copied, or distributed without the prior consent of the publisher.
103. Refer to Figure 6-15. What is Ring Company's journal entry to record materials used in the Mixing
Department for Work Order 10?
a. Materials
45,000
Work in Process-Mixing
45,000
b. Work in Process-Mixing
17,500
Conversion Costs Control
17,500
c. Conversion Costs Control
17,500
Work in Process-Mixing
17,500
d. Work in Process-Mixing
45,000
Materials
45,000
ANS: D
PTS: 1
OBJ: 6-7
104. Refer to Figure 6-15. What is Ring Company's journal entry to apply conversion costs in the Mixing
Department for Work Order 10?
a. Materials
45,000
Work in Process-Mixing
45,000
b. Work in Process-Mixing
17,500
Conversion Costs Control
17,500
c. Conversion Costs Control
17,500
Work in Process-Mixing
17,500
d. Work in Process-Mixing
45,000
Materials
45,000
ANS: B
PTS: 1
OBJ: 6-7
105. Which of the following would NOT be true when there is spoilage?
a. Equivalent units must be calculated for spoiled units.
b. Normal and abnormal spoilage are distinguished.
c. The units to account for are greater than the total units accounted for indicating spoilage.
d. The total units accounted for are greater than the total units to account for indicating spoil age.
ANS: D
PTS: 1
OBJ: 6-8
106. Spoilage in a process costing process means
a. fewer units leave the process than enter it.
b. fewer units enter a process than leave it.
c. a process is no longer viable.
d. products are receiving too much attention.
ANS: A
PTS: 1
OBJ: 6-8
Figure 6-16
The following information is available for Department A for the month of January:
Units
Cost
Work in process, January 1 (70% complete)
10,000
Direct materials
$ 36,000
Direct labor
18,000
Manufacturing overhead
24,000
Total work in process, January 1
$ 78,000
Started in production during January
40,000
This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold,
copied, or distributed without the prior consent of the publisher.
Costs added:
Direct materials
Direct labor
Manufacturing overhead
Total costs added during January
Work in process, January 31 (80% complete)
Units completed and transferred out
$108,000
48,000
61,040
$217,040
4,000
42,000
Materials are added at the beginning of the process. Inspection takes place at the 50 percent point in
the conversion process to determine spoiled units. Round unit costs to two decimal places. The com pany uses the weighted average cost flow assumption.
107. Refer to Figure 6-16. Department A's equivalent units of production for materials using the weighted
average method is
a. 44,800.
b. 47,200.
c. 50,000.
d. 54,000.
ANS: C
PTS: 1
OBJ: 6-8
108. Refer to Figure 6-16. Department A's cost per unit for materials using the weighted average method is
a. $2.16.
b. $2.88.
c. $3.43.
d. $3.60.
ANS: B
SUPPORTING CALCULATIONS:
Units completed
Ending work in process
Spoilage
Equivalent units of production
Conversion
42,000
4,000
4,000
50,000
Conversion
Costs to account for:
Beginning work in process
Incurred during period
Total costs to account for
Cost per equivalent unit ($144,000/50,000)
PTS: 1
$ 36,000
108,000
$144,000
$2.88
OBJ: 6-8
109. Refer to Figure 6-16. Department A's conversion cost per unit using the weighted average method is
a. $2.18.
b. $2.22.
c. $2.31.
d. $3.20.
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copied, or distributed without the prior consent of the publisher.
ANS: D
SUPPORTING CALCULATIONS:
Conversion
42,000
3,200
2,000
47,200
Units completed
Ending work in process
Spoilage (4,000 0.50)
Equivalent units of production
Conversion
Costs to account for:
Beginning work in process
Incurred during period
Total costs to account for
$ 42,000
109,040
$151,040
Cost per equivalent unit ($151,040/47,200)
PTS: 1
$3.20
OBJ: 6-8
110. Refer to Figure 6-16. Department A's equivalent units of production for conversion using the weighted
average method is
a. 44,800.
b. 47,200.
c. 50,000.
d. 54,000.
ANS: B
SUPPORTING CALCULATIONS:
42,000 + (4,000 0.80) + (4,000 0.50) = 47,200
PTS: 1
OBJ: 6-8
111. Abnormal spoilage is treated differently from normal spoilage in what way?
a. Normal spoilage is absorbed as part of the product cost but abnormal spoilage costs are
treated separately.
b. Equivalent units are calculated for normal spoilage but not for abnormal spoilage.
c. Equivalent units are calculated for abnormal spoilage but not for normal spoilage.
d. Abnormal spoilage is not assigned costs but normal spoilage is.
ANS: A
PTS: 1
OBJ: 6-8
PROBLEM
1. Begzy Company produces calculators on an assembly line in a single-step process. The following data
pertains to November 2009:
Current manufacturing costs:
Materials purchased
$150,000
Materials issued to production
120,000
Direct labor
40,000
Factory overhead
30,000
Finished goods for period
Beginning work in process
Ending work in process:
180,000
-0-
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copied, or distributed without the prior consent of the publisher.
Materials
Direct labor
Factory overhead
Required:
a.
3,000
?
?
Prepare traditional journal entries for the following events in November:
1. Purchase of materials on account
2. Requisition of materials into production
3. Usage of direct labor
4. Application of overhead
5. Completion of finished goods
b.
What is the amount of direct labor in ending work in process?
ANS:
a. 1.
2.
3.
4.
5.
b.
Materials
Accounts Payable
150,000
Work in Process
Materials Inventory
120,000
150,000
120,000
Work-in-Process Inventory
Wages Payable
40,000
Work in Process
Factory Overhead
30,000
Finished Goods
Work in Process
180,000
Ending WIP
40,000
30,000
180,000
= $0 + $120,000 + $40,000 + $30,000 - $180,000
= $10,000
OH rate = ($30,000/$40,000) = 75% of DLC
Let X = Direct labor cost
$3,000 + X + 0.75X = 10,000
1.75X = $7,000
X=
$4,000
PTS: 1
OBJ: 6-1
2. A local post office sorts letters by zip code. During the month of July, 200,000 letters were sorted. The
cost of sorting includes the following:
Direct labor
Overhead
Total
$12,000
8,000
$20,000
Required:
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copied, or distributed without the prior consent of the publisher.
a.
b.
c.
Explain why process costing is appropriate for this operation.
Calculate the cost per letter for this operation.
There are no direct materials used for the sorting operation. Is the absence of direct materials
typical of services? If not, provide examples of services that use direct materials.
ANS:
a. A process costing approach can be used for the sorting operation because it is a repetitive, ho mogeneous service.
b. Cost per letter is $0.10. ($20,000/200,000)
c. Although many services may not use direct materials, it would be difficult to argue that it is
typical. For example, dentists, doctors, and funeral directors all use direct materials in provid ing services. In some cases, the cost of materials can be significant.
PTS: 1
OBJ: 6-2
3.
a.
b.
c.
Identify the five steps of preparing a cost of production report
Given the following information, calculate the unit cost of a gallon of paint
Units, beginning work in process
-0Units started
10,000
Units completed
8,000
Units, ending work in process
2,000
(20% complete)
Total Production Costs
$126,000
Why can process costing be used to compute the cost of a gallon of paint?
ANS:
a. The five steps are:
b Equivalent units = 8,000 = (.20 * 2,000) = 8,400
.
$126,000 / 8,400 = $15 per gallon
c. Paint is a homogenous product and mass produced
PTS: 1
OBJ: 6-3
4. Vance Manufacturing Company began June 2010 with 10,000 units of inventory in process, 20 percent
completed. During the period, 50,000 units were completed and transferred to the finished goods ware house. Ending inventory consisted of 5,000 units, 70 percent completed. Materials were added at the
beginning of the process.
Required:
Calculate the equivalent units for:
a.
b.
c.
Materials costs under the weighted average process cost method.
Conversion costs under the weighted average process cost method.
Materials costs under the FIFO process cost method.
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d. Conversion costs under the FIFO process cost method.
ANS:
a. and b.
Materials
Units completed
Add: Equiv. units in end. inv.
Equivalent units
Conversion
50,000
50,000
5,000 3,500
(a) 55,000 (b) 53,500
c. and d.
Equivalent units in process
Less: Equiv. units in beg. inv.
Equivalent units
PTS: 1
55,000 53,500
10,000 2,000
(c) 45,000 (d) 51,500
OBJ: 6-4 | 6-5
5. Toyco manufactures a wooden toy product in a two-stage production process. Wood material is
brought into the Forming Department where it is shaped. Shaped products are then moved to the Fin ishing Department where metal is added. The following data is given for the Forming Department for
April:
Units for April:
Work in process, beginning inventory April 1
Direct materials (100% complete)
Conversion (40% complete)
Units started in April:
Work in process, ending inventory April 30
Direct materials (100% complete)
Conversion (25%)
Costs for April:
Work in process, beginning inventory
Direct materials
Conversion
Costs added during April:
Direct materials
Conversion
300 units
2,200 units
500 units
$7,100
$4,525
$70,400
$40,100
Round to two decimal places.
Required:
a. How many units were transferred to Finishing?
b. How many units were started and completed during April?
c. How many equivalent units of conversion does it take to complete the beginning inventory in
the current period?
d. What is the FIFO cost assigned to the ending inventory?
e. What is the FIFO cost assigned to the units transferred out?
f. Show the T-account for the forming process.
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Forming
ANS:
a. 2,500 - 500 = 2,000
b.
Units started and completed = Units transferred out - Beginning inventory
Transferred out = 300 + 2200 - 500 = 2,000 (from part a)
Started and completed = 2000 - 300 = 1,700
c.
300 - 120 = 180 (60%)
d.
(500 32*) + (125 20*) = 18,500
* calculation of cost per unit
Equivalent units in process:
Units completed
Add: Eq. units in end. inv.
Equivalent units in process
Less: Eq. units in beg. inv.
Equivalent units manufactured
Conversion
2,000
125
2,125
120
2,005
Total costs to be accounted for:
Beginning WIP
Current costs
Total costs in process
Costs per equivalent unit
e.
2,000
500
2,500
300
2,200
Materials
Conversion
$70,400
$40,100
$32.00
$20.00
Total
$ 11,625
110,500
$122,125
$ 52.00
11,625 + (180 20) + (1,700 52) = $103,625
f.
Forming
DM 70,400
Conv 40,100
End 18,500
PTS: 1
OBJ: 6-4 | 6-5
6. Urban Company manufactures a product through a continuous single-step process. All materials are
added at the beginning of processing. Production and cost data for the company for February 2009 are
as follows:
Production data:
In process, beginning of m onth (20% converted)
Started during February
Com pleted and transferred to finished goods
In process, end of m o (60% converted)
nth
Manufacturing costs:
Work in process, beginning
Materials
Direct labor cost
Factory overhead cost
1,000 units
5,000 units
4,500 units
1,500 units
$14,730
$45,000
$102,960
$51,480
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copied, or distributed without the prior consent of the publisher.
Required:
Prepare a cost of production report for February 2009. Use FIFO process costing.
ANS:
Summary of units in process:
Beginning
Units started
In process
Completed
Ending
1,000
5,000
6,000
(4,500)
1,500
Equivalent units in process:
Units completed
Add: Eq. units in end. inv.
Equivalent units in process
Less: Eq. units in beg. inv.
Equivalent units manufactured
Total costs to be accounted for:
Beginning WIP
Current costs
Total costs in process
Costs per equivalent unit
Materials
4,500
1,500
6,000
1,000
5,000
Materials
$45,000
$9.00
Conversion
Total
$ 14,730
$154,440 199,440
$214,170
$ 29.70 $38.70
Accounting for total costs:
Transferred out:
Beginning WIP:
Beginning balance
$ 14,730
23,760
$ 38,490
135,450
$173,940
Add: Conversion (800 * 29.70)
Started and finished (3,500 * 38.70)
Total transferred out
Ending WIP:
Materials (1,500 * $9.00)
Conversion (900 * $29.70)
$ 13,500
26,730
Ending WIP
Total cost accounted for
PTS: 1
Conversion
4,500
900
5,400
200
5,200
40,230
$214,170
OBJ: 5-4
7. Xi Corporation produces a product that passes through two departments. For July, the following equi valent unit schedule was prepared for the first department:
Units completed
Units, EWIP fraction complete:
15,000 * 100%
15,000 * 40%
Equivalent units of output
Materials
180,000
15,000
______
195,000
Conversion
180,000
6,000
186,000
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copied, or distributed without the prior consent of the publisher.
Costs assigned to beginning work in process:
Materials:
Conversion:
$51,000
$24,750
Manufacturing costs incurred during the month:
Materials:
Conversion:
$56,250
$45,000
Required:
a. Compute the unit cost for July using the weighted average method.
b. Determine the cost of goods transferred out.
c. Determine the cost of ending work in process.
ANS:
a.
Cost per equivalent unit:
Materials = ($51,000 + $56,250)/195, 000 = $0.55
C onversion = ($24,750 + $45,000)/186,000 = $0. 375
Total unit cost = $0.925 per equivalent unit
b.
Cost of goods transferred out = $0.925 180,000 =
c.
Cost of ending work in process
= (15,000 $0.55) + (6,000 $0.375)
= $8,250 + $2,250 = $10,500
PTS: 1
OBJ: 6-5
8. York, Inc., manufactures a product that passes through two processes: Mixing and Packaging. All
manufacturing costs are added uniformly in the Mixing Department. Information for the Mixing De partment for December follows:
Work in process, December 1:
Units (30% complete)
Direct materials
Direct labor
Overhead
7,500
$2,000
$1,500
$1,188
During December, 150,000 units were completed and transferred to Packaging. The following costs
were incurred by the Mixing Department during December:
Direct materials
Direct labor
Overhead
$25,000
15,000
6,000
There were 12,000 units that were 70 percent complete remaining in the Mixing Department at
December 30. Use the weighted average method and round unit costs to two decimal places.
Required:
a. Determine the equivalent units of production for December.
b. Determine the total costs to account for in December.
c. Determine the total cost per equivalent unit of production.
d. Calculate the cost of goods transferred to the Packaging Department.
e. Calculate the cost of December's ending work in process for the Mixing Department.
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copied, or distributed without the prior consent of the publisher.
ANS:
a. 158,400
Units accounted for:
Units completed
Units in EWIP (70% complete)
Total units accounted for
b.
Physical Flow
150,000
12,000
162,000
$50,688
Costs to account for:
Beginning work in process
Costs added
Total costs to account for
c.
d.
e.
Equiv. Units
150,000
8,400
158,400
$0.32
$48,000
$2,688
PTS: 1
Manufacturing Costs
$ 4,688
46,000
$50,688
($50,688/158,400)
(150,000 * $0.32)
(8,400 * $0.32)
OBJ: 6-5
9. Wall Company manufactures a product that passes through two processes. The following information
is available for the first department for April:
All materials are added at the beginning of the process.
Beginning work in process consisted of 7,000 units that were 90 percent complete with respect
to conversion.
Ending work in process consisted of 3,000 units that were 40 percent complete with respect to
conversion.
There were 35,000 units started in process during the month.
:
a.
b.
Prepare a physical flow schedule.
Compute equivalent units using the weighted average method.
ANS:
a. Physical flow schedule:
Units to account for:
Units, beginning work in process
Units started
Total units to account for
Units accounted for:
Units completed and transferred out:
Started and completed
From beginning work in process
Units, ending work in process
Total units accounted for
7,000
35,000
42,000
32,000
7,000
39,000
3,000
42,000
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copied, or distributed without the prior consent of the publisher.
b.
Equivalent units:
Units completed
Units EWIP fraction complete:
Materials (3,000 * 100%)
Conversion (3,000 * 40%)
Equivalent units of output
PTS: 1
Materials
39,000
Conversion
39,000
3,000
42,000
1,200
40,200
OBJ: 6-5
10. Zoo Company manufactures a product that passes through two departments, Assembly and Finishing.
In the Finishing Department, materials are added at the end of the process. Conversion costs are in curred uniformly throughout the process. During the month of December, the Finishing Department re ceived 60,000 units from the Assembly Department. The transferred-in cost of the 60,000 units was
$69,900.
Costs added by Finishing during December included the following:
Direct materials
Direct labor
Overhead
$35,200
56,000
25,600
On December 1, the Finishing Department had 10,000 units in inventory that were 30 percent com plete with respect to conversion costs. On December 30, 12,000 units were in inventory, one-third
complete with respect to conversion costs. The costs associated with the 10,000 units in beginning in ventory were as follows:
Transferred in
Direct labor
Overhead
$11,650
8,750
4,000
Required:
Prepare a cost of production report using the weighted average method.
ANS:
Zoo Company
Finishing Department
For the Month of December
Unit Information
Units to account for:
Units, BWIP
Units started
Units to account for
10,000
60,000
70,000
Units accounted for:
Units completed
Units, EWIP
Units accounted for
Phys. flow
58,000
12,000
70,000
Equivalent Units
Trans. in
Materials
Conversion
58,000
58,000
58,000
12,000
- 4,000
70,000
58,000 62,000
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copied, or distributed without the prior consent of the publisher.
Cost Information
Costs to account for:
BWIP
Costs added in dept.
Costs to acct for
Trans.-in
$11,650
69,900
$81,550
Cost per equiv. unit
$1.165
$
Materials
35,200
$35,200
Conversion
Total
$12,750
$ 24,400
81,600
186,700
$94,350 $211,100
$0.607
$1.522 $3.294
Costs accounted for:
Trans. out
Goods transferred out:
(58,000 * $3.294)
Ending work in process:
Trans. in (12,000 * $1.165)
Conversion (4,000 * $1.522)
Total costs accounted for
EWIP
$191,052
-
-
Total
$ 191,052
$13,980 13,980
6,088
6,088
$20,068 $211,120*
$191,052
*Difference due to rounding.
PTS: 1
OBJ: 6-6
11. Cap Corporation produces two types of product: Regular and Super. Two work orders for two batches
of the products are shown below, along with some additional cost information:
Regular
Super
Work Order 5 Work Order 6
Direct materials (actual costs)
$180,000
$300,000
Applied conversion costs:
Mixing
?
?
Cooking
$48,000
$48,000
Bottling
$40,000
$30,000
Batch size (bottles)
5,000
5,000
In the Mixing Department, conversion costs are applied on the basis of direct labor hours. Budgeted
conversion costs for the department for the year were $200,000 for labor and $600,000 for overhead.
Budgeted direct labor hours were 5,000. It takes 6 minutes to mix the ingredients needed for each
bottle.
Regular and Super flow through the Mixing Department, followed by the Cooking and Bottling depart ments.
Required:
a. What are the conversion costs applied to Regular and Super from the Mixing Department for
each batch?
b. Calculate the cost per bottle for Regular and Super.
c. Prepare the journal entries that record the costs of a batch of 5,000 bottles of Regular.
ANS:
a. ($200,000 + $600,000)/5,000 = $160 per DLH
Regular = $160 * 5,000 * 6/60 = $80,000
Super = $160 * 5,000 * 6/60 = $80,000
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copied, or distributed without the prior consent of the publisher.
Regular
b.
Super
$180,000
$300,000
80,000 80,000
48,000 48,000
40,000
30,000
$348,000 $458,000
Direct materials
Mixing
Cooking
Bottling
Cost per bottle
c.
$69.60 $91.60
Work in Process-Mixing
Materials
180,000
180,000
Work in Process-Mixing
Conversion Costs-Control
80,000
80,000
Work in Process-Cooking
Work in Process-Mixing
(180,000 + 80,000 = 260,000 costs transferred to cooking)
Work in Process-Cooking
Conversion Costs-Control
260,000
260,000
48,000
48,000
Work in Process-Bottling
308,000
Work in Process-Cooking
308,000
(180,000 + 80,000 + 48,000 = 308,000 costs transferred to bottling)
Work in Process-Bottling
Conversion Costs-Control
40,000
40,000
Finished Goods
348,000
Work in Process-Bottling
348,000
(180,000 + 80,000 + 48,000 + 40,000 = 348,000 costs transferred to finished
goods)
PTS: 1
OBJ: 6-7
12. The Curing Department of Harmon Company reported the following information for the month of
November:
Conversion
Units
Percentage Completed
Units started
28,000
Completed and transferred
27,000
Work in process, 11/1
10,000
80%
Work in process, 11/30
8,000
30%
Materials
Costs for November:
Work in process, 11/1
Added during the month
Labor and
Overhead
Transferred-In
$ 51,720
$145,880
$ 65,048
$194,224
$ 80,624
$234,320
This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold,
copied, or distributed without the prior consent of the publisher.
All materials are added at the beginning of the process. Inspection occurs 60 percent of the way
through the process. Normal spoilage is 10 percent of the good units completed. (Round to two decim al places.)
Required:
a.
b.
c.
d.
e.
f.
g.
What are the weighted average equivalent units for materials, transferred-in and conversion?
What are the FIFO equivalent units for materials, transferred-in, and conversion?
What is the weighted average cost per unit for conversion?
What is the weighted average cost per unit for materials?
What is the cost assigned to ending work in process using weighted average?
What is the cost assigned to transferred out using weighted average?
Show the entries to the following T-account:
Work in Process-Curing
(Weighted Average)
ANS:
a. Spoilage = 10,000 + 28,000 - 27,000 - 8,000 = 3,000
Normal spoilage = 27,000 * 0.10 = 2,700;
Abnormal spoilage = 3,000 - 2,700 = 300
Transferred out
Ending inventory
Normal spoilage
Abnormal spoilage
Total
27,000
8,000
2,700
300
38,000
T-I
27,000
8,000
2,700
300
38,000
Materials
27,000
8,000
2,700
300
38,000
Conversion
27,000
2,400 (8,000 * 0.30)
1,620 (2,700 * 0.60)
180 (300 * 0.60)
31,200
27,000
8,000
2,700
300
38,000
10,000
28,000
T-I
27,000
8,000
2,700
300
38,000
10,000
28,000
Materials
27,000
8,000
2,700
300
38,000
10,000
28,000
Conversion
27,000
2,400 (8,000 * 0.30)
1,620 (2,700 * 0.60)
180 (300 * 0.60)
31,200
8,000 (10,000 * 0.80)
23,200
b.
Transferred out
Ending inventory
Normal spoilage
Abnormal spoilage
Total
Beginning inventory
Current units
c.
Conversion = $65,048 + $194,224 = $259,272/31,200 = $8.31
d.
Materials = $51,720 + $145,880 = $197,600/38,000 = $5.20
e.
EI:
Transferred in
Materials
Conversion
Total
(8,000 * $8.288*)
$ 66,304
(8,000 * $5.20) 41,600
(2,400 * $8.31)
19,944
$127,848
*Transferred in = $80,624 + $234,320 = $314,944/38,000 = $8.288
This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold,
copied, or distributed without the prior consent of the publisher.
f.
Transferred out
Normal spoilage
(27,000 * $21.798)
(2,700 * $8.288)
(2,700 * $5.20)
(1,620 * $8.31)
Total
g.
B
TI
M
C
E
$588,546.00
22,377.60
14,040.00
13,462.20
$638,425.80
Work in Process-Curing
197,392
638,425.80
234,320
5,542.20*
145,880
(Weighted Average)
194,224
127,848
Abnormal spoilage = Recorded separately
(300 * 8.288)
$2,486.40
(300 * 5.20)
$1,560.00
(180 * 8.31)
$1,495.80
Total
$5,542.20
PTS: 1
OBJ: 6-8
This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold,
copied, or distributed without the prior consent of the publisher.