Problemsets 4 & 5
1. Consider the first-price private-value auction where there are n bidders, each with a value drawn from a uniform distribution on [0, ]. If everyone but player i follows a symmetric bidding strategy (i ), the expected utility of a bid
Under which of the following conditions will the FIFO method produce the same cost of goods
manufactured as the weighted-average method?
There is no ending inventory.
There is no beginning inventory.
The beginning and ending inventories ar
Due Friday October 7th before 5pm
1. Three friends are voting on a holiday destination. Each player chooses a destination to vote for, and the winner is the destination with the most votes. If all three are tied, then one destination is rando
Homework # 2
Write your answers to the following questions on separate sheets of paper. Your answers are due
in class on Tuesday, February 7. Late homeworks are not accepted.
1. Consider the two-round home bargaining game discus
Which of the following statements regarding first-in, first-out (FIFO) process costing is/are true?
(A) First-in, first-out (FIFO) process costing transfers out the costs in beginning inventory before
transferring out the costs associated with units s
Of the following process costing steps, which must be done last?
Compute the equivalent units of production.
Compute the costs per equivalent unit of production.
Measure the physical flow of resources.
Identify the product costs to account
Homework # 1
Write your answers to the following questions on separate sheets of paper. Your answers are due in class on Tuesday, January 24. Late homeworks are not accepted. 1. A prisoner is trying to escape from prison. He can
If the beginning Work-in-Process inventory is zero, first-in, first-out (FIFO) and weighted-average
process costing will assign the same amount to the units transferred out.
It is the beginning WIP costs that create differences between weighted a
In the weighted-average approach, the number of physical units transferred out cannot be greater than
the equivalent number of units produced during the period.
EUP = transferred out + % completed ending inventory. The number transferred can equal
In the computation of the manufacturing cost per equivalent unit, the weighted average method of
process costing considers
current costs only.
current costs plus cost of beginning Work-in-Process Inventory.
current costs plus cost of endin
Department B had a beginning inventory of 400 units, 1/4 completed; an ending inventory of 300 units,
2/3 completed, and received 900 units during the period from Department A. What was the equivalent
unit production of Department B, assuming weighted
The Blue Corporation started and completed 4,800 units during February. Blue started the month with
700 units in process (40% complete) and ended the month with 400 units in process (40% complete).
How many units were transferred to the Finished Goods
Department A had no Work-in-Process at the beginning of the period, 1,000 units were completed
during the period, 200 units were 50% completed at the end of the period, and the following
manufacturing costs were debited to the departmental Work-in-Pro
Sussex Corporation's production cycle starts in the Mixing Department. The following information is
available for April:
Materials are added at the beginning of the process in the Mixing Department. What are the equivalent
units of production for the
Unit cost of labor and overhead is
$37,400/17,000 = $2.20
Lanen - Chapter 08 #61
Learning Objective: 3
Topic Area: Compute the Costs per
What are the equivalent units of production for the conversion costs during the period?
5,000(.70) + 13,000 + 2,000(.30) = 17,100
Equivalent units of production for material are
16,000 + 4,000 = 20,000
Lanen - Chapter 08 #58
Learning Objective: 2
Topic Area: Com
The Viva Company had 20,000 units in process on December 31, 2008 which was 80% complete as to
materials but only 40% complete as to conversion costs. The company's records show 40,000 units were
transferred to the Finished Goods Inventory during Janu
Beattie Company completed and transferred out 2,300 units in May 2008. There were 200 units in
the Work-in-Process Inventory on May 31, 2008, 30% complete as to conversion costs and 100%
complete as to materials. The month's charges for conversion cos
The Wisco Company has a process cost system. All materials are placed in process when the process is
first begun. At the beginning of September, there were no units of product in process. During September
50,000 units were started; 5,000 of these were
The ALG Manufacturing Company has gathered the following information for the month of September:
6,000 units in the beginning Work-in-Process Inventory (75% complete as to materials, 1/3 complete
with respect to the conversion costs)
60,000 units we
How many units were transferred-out during the period?
5,000 + 15,000 - 2,000 = 18,000
Lanen - Chapter 08 #64
Learning Objective: 5
Determine the equivalent units of production for conversion costs.
1,200(.75) + 5,000 + 1,000(.50) = 6,400
Lanen - Chapter 08 #69
The unit cost of Product X started and completed in the current period is
($3,600/6,000) + $2.00 = $2.60
Lanen - Chapter 08 #72
In a process costing system, the application of factory overhead usually would be recorded as an
increase in: (CPA adapted)
Finished goods inventory control
Factory overhead control
Cost of goods sold
Work-in-process inventory control
The following information pertains to Lap Co.'s Palo Division for the month of April:
All materials are added at the beginning of the process. Using the weighted-average method, the cost
per equivalent unit of materials is: (CPA adapted)
What are the total costs in the ending Work-in-Process Inventory assuming Kimbeth uses first-in, firstout (FIFO) process costing?
[21,600 ($4.50)] + [9,600 ($5.83)] = $153,168
In process 2, material G is added when a batch is 60% complete. Ending work-in-process units, which
are 50% complete, would be included in the computation of equivalent units for: (CPA adapted)
The addition point for the material h
Kimbeth Manufacturing uses process costing to control costs in the manufacture of Dust Sensors for the
mining industry. The following information pertains to operations for November. (CMA Exam adapted)
The beginning inventory was 60% complete as to materi
An Application of Sequential Move
The Bargaining Problem
• The “Bargaining Problem” arises in economic situations
where there are gains from trade, for example, when a
where there are gains from trade, for example, when