3310solmod14

3310solmod14 - Module 14 Answers 7-5. Prior department...

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Module 14 Answers 7-5. Prior department costs behave the same as direct materials, which are typically added at the start of production. They are treated separately because they represent the accumulation of costs from previous departments rather than the receipt of materials from the stores area. It is helpful to separate prior department costs from other costs because the manager of the department receiving the transferred units has no control over the costs incurred in prior departments. Thus, the prior department costs are not useful for evaluating the performance of the manager of the department receiving the units. 7-10. The correct answer is (b). The difference between the weighted-average and FIFO methods of process costing is how they handle beginning WIP. When there is no beginning WIP there is no difference between the two costing methods. Answer (a) is incorrect because both methods assume units are homogeneous. Answer (c) is incorrect because amounts in beginning inventory will differ between FIFO and weighted-average. If there are no ending inventories, then the cost of goods manufactured is the sum of the current costs, which will be the same under both methods, and the costs in beginning work in process, which can differ. Answer (d) is incorrect because the cost per equivalent unit can differ and so the costs assigned to the equivalent units in ending inventory can differ.
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7-27. (35 min.) Compute Costs per Equivalent Unit—Weighted-Average Method: Pacific Ink Physical Units Equivalent Units Materials Eq. units Conversion Costs Eq. units
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This note was uploaded on 11/13/2008 for the course ACCT 305 taught by Professor Franz during the Spring '07 term at S.F. State.

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3310solmod14 - Module 14 Answers 7-5. Prior department...

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