Ch06_Guan CM_AISE TB
46 Pages

Ch06_Guan CM_AISE TB

Course: ACC 3302, Fall 2011

School: Houston Downtown

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Chapter 6Product 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....

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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. Register to View Answer 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 Register to View Answer 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 Register to View Answer 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 Register to View Answer PTS: 1 OBJ: 6-1 5. In process costing, costs are accounted for by a. year. b. batch. c. process. d. job. Register to View Answer 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 Register to View Answer PTS: 1 OBJ: 6-1 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. 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 Register to View Answer 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 Register to View Answer 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. Register to View Answer 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. Register to View Answer 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 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. Register to View AnswerSUPPORTING 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. Register to View Answer 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. Register to View Answer 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 Register to View Answer 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. Register to View Answer 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. Register to View Answer 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 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. 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 Register to View AnswerSUPPORTING 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 Register to View Answer 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. Register to View Answer 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 Register to View Answer 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 Register to View Answer 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. Register to View Answer PTS: 1 OBJ: 6-3 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. 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 Register to View Answer 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 Register to View Answer 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) Register to View Answer 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 Register to View Answer PTS: 1 OBJ: 6-3 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. 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 Register to View Answer 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 Register to View AnswerSUPPORTING 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 Register to View AnswerSUPPORTING CALCULATIONS: $20,000 + $20,000 = $40,000 PTS: 1 OBJ: 6-3 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. 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. Register to View Answer 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 Register to View AnswerSUPPORTING 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 Register to View AnswerSUPPORTING 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 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. 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. Register to View AnswerSUPPORTING 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 Register to View Answer 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 Register to View Answer 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. Register to View Answer 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. 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. 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 Register to View AnswerSUPPORTING 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 Register to View AnswerSUPPORTING 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 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. Register to View AnswerSUPPORTING 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 Register to View AnswerSUPPORTING 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. Register to View AnswerSUPPORTING 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 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. Register to View AnswerSUPPORTING 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 Register to View AnswerSUPPORTING 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 Register to View AnswerSUPPORTING 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 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. 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? Register to View AnswerSUPPORTING 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. Register to View AnswerSUPPORTING 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 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. 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. Register to View AnswerSUPPORTING 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. Register to View AnswerSUPPORTING 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. 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. Register to View AnswerSUPPORTING 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 Register to View AnswerSUPPORTING 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 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. 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. Register to View AnswerSUPPORTING 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 Register to View Answer 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 Register to View Answer 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 Register to View Answer 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 Register to View AnswerSUPPORTING 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 Register to View AnswerSUPPORTING 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 Register to View AnswerSUPPORTING CALCULATIONS: Transferred out (95,000 * 1) Ending WIP (15,000 * 0) PTS: 1 95,000 -095,000 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. 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 Register to View AnswerSUPPORTING 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 Register to View AnswerSUPPORTING 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. Register to View AnswerThis 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. 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. Register to View AnswerSUPPORTING 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. Register to View Answer 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. Register to View Answer 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. Register to View AnswerSUPPORTING 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. Register to View AnswerSUPPORTING 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. Register to View AnswerSUPPORTING 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. Register to View AnswerSUPPORTING 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 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. 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. Register to View Answer 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 Register to View AnswerSUPPORTING 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 Register to View Answer 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. 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. Register to View Answer 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 Register to View Answer 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. Register to View Answer 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 Register to View Answer 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. 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. Register to View AnswerSUPPORTING 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. Register to View AnswerSUPPORTING 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. Register to View AnswerSUPPORTING 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 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. 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. Register to View AnswerSUPPORTING 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. Register to View AnswerSUPPORTING 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. Register to View AnswerSUPPORTING 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. Register to View AnswerSUPPORTING CALCULATIONS: 22,000 + 2,000 - 2,000 = 22,000 PTS: 1 OBJ: 6-6 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 6-12 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 Register to View AnswerSUPPORTING 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 Register to View AnswerSUPPORTING 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 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 6-13 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. Register to View AnswerSUPPORTING 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. Register to View AnswerSUPPORTING 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. Register to View AnswerSUPPORTING CALCULATIONS: 105 + 15 = 120 - 30 = 90 OR 0 + 75 + 15 = 90 PTS: 1 OBJ: 6-6 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. 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. Register to View AnswerSUPPORTING 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. Register to View AnswerSUPPORTING 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. Register to View AnswerSUPPORTING 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. Register to View AnswerSUPPORTING CALCULATIONS: $6,000/120 = $50 PTS: 1 OBJ: 6-6 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. 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. Register to View AnswerSUPPORTING 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 Register to View Answer 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 Register to View Answer 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. Register to View Answer 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 Register to View AnswerSUPPORTING 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 Register to View AnswerSUPPORTING 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 Register to View AnswerSUPPORTING 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 Register to View AnswerSUPPORTING 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 Register to View AnswerSUPPORTING CALCULATIONS: Direct materials Conversion costs PTS: 1 $45,000 17,500 $62,500 OBJ: 6-7 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. 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 Register to View AnswerSUPPORTING 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 Register to View AnswerSUPPORTING 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 Register to View AnswerSUPPORTING 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 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. 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 Register to View Answer 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 Register to View Answer 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. Register to View Answer 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. Register to View Answer 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. Register to View Answer 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. Register to View AnswerSUPPORTING 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. 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. Register to View AnswerSUPPORTING 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. Register to View AnswerSUPPORTING 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. Register to View Answer 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- 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. 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? Register to View Answer1. 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: 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. 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. Register to View AnswerA 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? Register to View AnswerThe 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. 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. d. Conversion costs under the FIFO process cost method. Register to View Answerand 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. 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. Forming Register to View Answer2,500 - 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 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. 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 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 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. Register to View Answer 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. 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. Register to View Answer158,400 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. Register to View AnswerPhysical 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 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. 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 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. 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. Register to View Answer($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 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. 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) Register to View AnswerSpoilage = 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.
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