Process Costing: Summary of Questions by Study Objectives and Bloom'S Taxonomy True-False Statements

CHAPTER 3
PROCESS COSTING
SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOMS TAXONOMY

Item SO BT Item SO BT Item SO BT Item SO BT Item SO BT
True-False Statements
sg
1. 1 K 9. 4 K 17. 6 K 25. 7 K 33. 3 C
a sg
2. 1 K 10. 4 K 18. 6 C 26. 8 K 34. 4 K
a sg
3. 1 C 11. 4 K 19. 6 K 27. 8 K 35. 5 K
a sg
4. 2 C 12. 5 C 20. 6 K 28. 8 K 36. 6 K
a sg,a
5. 2 K 13. 5 K 21. 6 C 29. 8 K 37. 8 K
a
6. 2 K 14. 5 K 22. 6 K 30. 8 K
sg
7. 2 K 15. 5 K 23. 7 K 31. 1 K
sg
8. 4 C 16. 5 AP 24. 7 K 32. 2 K
Multiple Choice Questions
a
38. 1 C 58. 5 AP 78. 6 AP 98. 6 AP 118. 8 AP
a
39. 1 C 59. 5 AP 79. 6 AP 99. 6 AP 119. 8 AP
a
40. 1 K 60. 5 AP 80. 6 AP 100. 6 AP 120. 8 AP
a
41. 1 K 61. 5 K 81. 6 AP 101. 6 C 121. 8 AP
a
42. 1 K 62. 5 AP 82. 6 AP 102. 6 AP 122. 8 AP
a
43. 2 C 63. 5 AP 83. 6 AP 103. 6 AP 123. 8 AP
a
44. 2 K 64. 5 AP 84. 6 AP 104. 6 AP 124. 8 AP
st
45. 2 C 65. 5 C 85. 6 AP 105. 6 AP 125. 1 K
sg
46. 2 K 66. 5 AP 86. 6 AP 106. 6 AP 126. 2 K
st
47. 2 K 67. 5 AP 87. 6 AP 107. 6 AP 127. 2 K
sg
48. 2 C 68. 5 AP 88. 6 AP 108. 6 AP 128. 5 K
sg
49. 2 K 69. 5 AP 89. 6 AP 109. 6 AP 129. 5 K
st
50. 4 C 70. 5 AP 90. 6 C 110. 6 AP 130. 5 K
sg
51. 4 C 71. 5 AP 91. 6 C 111. 6 AP 131. 6 AP
st
52. 4 C 72. 5 AP 92. 6 AP 112. 6 AP 132. 6 K
sg
53. 4 C 73. 5 AP 93. 6 K 113. 6 AP 133. 6 C
sg
54. 4 K 74. 5 AP 94. 6 AP 114. 7 K 134. 6 AP
st
55. 4 C 75. 5 AP 95. 6 AP 115. 7 K 135. 6 K
sg
56. 5 AP 76. 6 AP 96. 6 AP 116. 7 K 136. 7 K
a
57. 5 AP 77. 6 AP 97. 6 AP 117. 8 AP
Brief Exercises
137. 5 AP 140. 6 AP 143. 6 AP 146. 6 AP
a
138. 5 AP 141. 6 AP 144. 6 AP 147. 8 AP
a
139. 5 AP 142. 6 AP 145. 6 AP 148. 8 AP
sg
This question also appears in the Study Guide.
st
This question also appears in a self-test at the student companion website.
a
This topic is dealt with in an Appendix to the chapter.
3-2 Test Bank for ISV Managerial Accounting, Fourth Edition
SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOMS TAXONOMY

Exercises
149. 4 AP 154. 5 AP 159. 5,6 AP 164. 6 AP 169. 7 AP
a
150. 4 AP 155. 5 AP 160. 5,6 AP 165. 6 AP 170. 8 AP
a
151. 4 AP 156. 5,6 AP 161. 5,6 AP 166. 7 AP 171. 8 AP
152. 4 AP 157. 5,6 AN 162. 5,6 AP 167. 7 AP
153. 4 AP 158. 5,6 AP 163. 6 AP 168. 7 AP
Completion Statements
172. 1 K 174. 2 K 176. 5 K 178. 6 AP 180. 7 K
173. 2 K 175. 4 K 177. 6 K 179. 6 K
SUMMARY OF STUDY OBJECTIVES BY QUESTION TYPE

Item Type Item Type Item Type Item Type Item Type Item Type Item Type
Study Objective 1
1. TF 3. TF 38. MC 40. MC 42. MC 172. C
2. TF 31. TF 39. MC 41. MC 125. MC
Study Objective 2
4. TF 7. TF 44. MC 47. MC 126. MC 174. C
5. TF 32. TF 45. MC 48. MC 127. MC
6. TF 43. MC 46. MC 49. MC 173. C
Study Objective 3
33. TF
Study Objective 4
8. TF 11. TF 51. MC 54. MC 149. Ex 152. Ex
9. TF 34. TF 52. MC 55. MC 150. Ex 153. Ex
10. TF 50. MC 53. MC 128. MC 151. Ex 175. C
Study Objective 5
12. TF 56. MC 62. MC 68. MC 74. MC 139. BE 159. Ex
13. TF 57. MC 63. MC 69. MC 75. MC 154. Ex 160. Ex
14. TF 58. MC 64. MC 70. MC 129. MC 155. Ex 161. Ex
15. TF 59. MC 65. MC 71. MC 130. MC 156. Ex 162. Ex
16. TF 60. MC 66. MC 72. MC 137. BE 157. Ex 176. C
35. TF 61. MC 67. MC 73. MC 138. BE 158. Ex
Study Objective 6
17. TF 79. MC 89. MC 99. MC 109. MC 140. BE 159. Ex
18. TF 80. MC 90. MC 100. MC 110. MC 141. BE 160. Ex
19. TF 81. MC 91. MC 101. MC 111. MC 142. BE 161. Ex
20. TF 82. MC 92. MC 102. MC 112. MC 143. BE 162. Ex
21. TF 83. MC 93. MC 103. MC 113. MC 144. BE 163. Ex
22. TF 84. MC 94. MC 104. MC 131. MC 145. BE 164. Ex
36. TF 85. MC 95. MC 105. MC 132. MC 146. BE 165. Ex
76. MC 86. MC 96. MC 106. MC 133. MC 156. Ex 177. C
77. MC 87. MC 97. MC 107. MC 134. MC 157. Ex 178. C
78. MC 88. MC 98. MC 108. MC 135. MC 158. Ex 179. C
Process Costing 3-3
Study Objective 7
23. TF 25. TF 115. MC 136. MC 167. Ex 169. Ex
24. TF 114. MC 116. MC 166. Ex 168. Ex 180. C
a
Study Objective 8
26. TF 29. TF 117. MC 120. MC 123. MC 148. BE
27. TF 30. TF 118. MC 121. MC 124. MC 170. Ex
28. TF 37. TF 119. MC 122. MC 147. BE 171. Ex
Note: TF = True-False BE = Brief Exercise C = Completion
MC = Multiple Choice Ex = Exercise
The chapter also contains one set of eight Matching questions and four Short-Answer Essay
questions.
CHAPTER STUDY OBJECTIVES

1. Understand who uses process cost systems. Companies that mass-produce similar
products in a continuous fashion use process cost systems. Once production begins, it
continues until the finished product emerges. Each unit of finished product is
indistinguishable from every other unit.
2. Explain the similarities and differences between job order cost and process cost
systems. Job order cost systems are similar to process cost systems in three ways: (1)
Both systems track the same cost elementsdirect materials, direct labor, and
manufacturing overhead. (2) Both accumulate costs in the same accountsRaw Materials
Inventory, Factory Labor, and Manufacturing Overhead. (3) Both assign accumulated costs
to the same accountsWork in Process, Finished Goods Inventory, and Cost of Goods
Sold. However, the method of assigning costs differs significantly.
There are four main differences between the two cost systems: (1) A process cost system
uses separate accounts for each department or manufacturing process, rather than only
one work in process account used in a job order cost system. (2) A process cost system
summarizes costs in a production cost report for each department. A job cost system
charges costs to individual jobs and summarizes them in a job cost sheet. (3) Costs are
totaled at the end of a time period in a process cost system, but at the completion of a job in
a job cost system. (4) A process cost system calculates unit cost as: Total manufacturing
costs for the period Units produced during the period. A job cost system calculates unit
cost as: Total cost per job Units produced.
3. Explain the flow of costs in a process cost system. A process cost system assigns
manufacturing costs for raw materials, labor, and overhead to work in process accounts for
various departments or manufacturing processes. It transfers the costs of partially
completed units from one department to another as those units move through the
manufacturing process. The system transfers the costs of completed work to Finished
Goods Inventory. Finally, when inventory is sold, the system transfers the costs to Cost of
Goods Sold.
4. Make the journal entries to assign manufacturing costs in a process cost system.
Entries to assign the costs of raw materials, labor, and overhead consist of a credit to Raw
Materials Inventory, Factory Labor, and Manufacturing Overhead, and a debit to Work in
Process for each department. Entries to record the cost of goods transferred to another
department are a credit to Work in Process for the department whose work is finished and a
debit to the department to which the goods are transferred. The entry to record units
completed and transferred to the warehouse is a credit for the department whose work is
finished and a debit to Finished Goods Inventory. The entry to record the sale of goods is a
credit to Finished Goods Inventory and a debit to Cost of Goods Sold.
5. Compute equivalent units. Equivalent units of production measure work done during a
period, expressed in fully completed units. Companies use this measure to determine the
cost per unit of completed product. Equivalent units are the sum of the units completed and
transferred out plus equivalent units of ending work in process.
6. Explain the four steps necessary to prepare a production cost report. The four steps to
complete a production cost report are: (1) Compute the physical unit flowthat is, the total
units to be accounted for. (2) Compute the equivalent units of production. (3) Compute the
unit production costs, expressed in terms of equivalent units of production. (4) Prepare a
cost reconciliation schedule, which shows that the total costs accounted for equal the total
costs to be accounted for.
7. Prepare a production cost report. The production cost report contains both quantity and
cost data for a production department. There are four sections in the report: (1) number of
physical units, (2) equivalent units determination, (3) unit costs, and (4) cost reconciliation
schedule.
a
8. Compute equivalent units using the FIFO method. Equivalent units under the FIFO
method are the sum of the work performed to: (1) Finish the units of beginning work in
process inventory, if any. (2) Complete the units started into production during the period. (3)
Start, but only partially complete, the units in ending work in process inventory.
Process Costing 3-5
TRUE-FALSE STATEMENTS
1. Process cost accounting focuses on the process involved in mass-producing products that
are very similar in nature.
2. Process cost systems are used to apply costs to a specific job, such as the manufacturing
of a specialized machine.
3. A company that produces motion pictures would likely use a process cost system.
4. In a process cost system, costs are tracked through a series of connected manufacturing
processes or departments, rather than by individual jobs.
5. In a process cost system, total costs are determined at the end of a month or year.
6. Separate work in process accounts are maintained for each production department or
manufacturing process in a process cost system.
7. In a process cost system, materials, labor and overhead are only added in the first
production department.
8. The assignment of the three manufacturing cost elements to Work in Process in a process
cost system is the same as in a job order cost system.
9. Fewer materials requisitions are generally required in a process cost system than in a job
order cost system.
10. In a process cost system, all labor costs incurred within a producing department are a cost
of processing the raw materials.
11. A primary driver of overhead costs in continuous manufacturing operations is machine

time used.
12. Equivalent units of production are used to determine the cost per unit of completed
products.
13. Equivalent units of production measure the work done during a period, expressed in fully
completed units.
14. Equivalent units of production is the sum of units completed and transferred out plus
equivalent units of beginning work in process.
15. The weighted-average method of computing equivalent units is the most widely used
method in practice.
16. There are no units in process at the beginning of the period, 1,000 units in process at the
end of the period that are 40% complete, and 10,000 units transferred out during the
period. Based on this information, there were 9,600 equivalent units of production during
the period.
17. The first step performed in preparing a production cost report is computing the equivalent
units of production.
18. Equivalent units of production must be calculated before the unit production costs can be
computed.
19. The physical units in a department are another name for the equivalent units of
production.
20. Unit material cost is computed by taking total material costs charged to the department for
the period and dividing by the physical units in the process during the period.
21. When equivalent units of production are different for materials and conversion costs, unit
costs are computed for materials, conversion, and total manufacturing.
22. The total manufacturing cost per unit is used in costing the units completed and
transferred during the period.
23. A production cost report is an internal document for management that shows production
quantity and cost data for a particular job.
24. Production cost reports provide a basis for evaluating the productivity of a department.
25. Companies often use a combination of a process cost and a job order cost system, called
operations costing.
a
26. The FIFO method is easier to understand and use than the weighted-average method.
a
27. The FIFO method is conceptually superior to the weighted-average method.
a
28. When comparing the FIFO with the weighted-average method, the FIFO method provides
current cost information.
a
29. There are no units in ending work in process at the end of the period under the FIFO
method.
a
30. Companies using the weighted-average method do not complete units left over from the
previous accounting periods. They start new units.
Additional True-False Questions
31. In continuous process manufacturing, generally once the production begins, it continues
until the finished product emerges.
32. One similarity of process cost accounting with job order cost accounting is that both
determine total manufacturing costs after each job.
33. The flow of costs in a process costing system requires that materials be added in one
department, labor added in another department and manufacturing overhead in a third
department.
34. When finished goods are sold, the entry to record the cost of goods sold is a debit to
Finished Goods Inventory and a credit to Cost of Goods Sold.
Process Costing 3-7
35. When there is no beginning work in process and materials are entered at the beginning of
the process, equivalent units of materials are the same as the units started into
production.
36. In order to compute the physical unit flow, a company must first compute unit production
costs.
a
37. Under the FIFO method, it is assumed that the beginning work in process is completed
before new work is started.
Answers to True-False Statements

Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans.
a
1. T 7. F 13. T 19. F 25. T 31. T 37. T
a
2. F 8. F 14. F 20. F 26. F 32. F
a
3. F 9. T 15. T 21. T 27. T 33. F
a
4. T 10. T 16. F 22. T 28. T 34. F
a
5. T 11. T 17. F 23. F 29. F 35. T
a
6. T 12. T 18. T 24. T 30. F 36. F
MULTIPLE CHOICE QUESTIONS

38. A process cost accounting system is most appropriate when
a. a variety of different products are produced, each one requiring different types of
materials, labor, and overhead.
b. the focus of attention is on a particular job or order.
c. similar products are mass-produced.
d. individual products are custom made to the specification of customers.
39. A characteristic of products that are mass-produced in a continuous fashion is that

a. the products are identical or very similar in nature.
b. they are grouped in batches.
c. they are produced at the time an order is received.
d. their costs are accumulated on job cost sheets.
40. A process cost system would be used for all of the following products except
a. chemicals.
b. computer chips.
c. motion pictures.
d. soft drinks.
41. In a process cost system,

a. a Work in Process account is maintained for each product.
b. a materials requisition must identify the job on which the materials will be used.
c. a Work in Process account is maintained for each process.
d. one Work in Process account is maintained for all the processes, similar to a job order
cost system.
42. Differences between a job order cost system and a process cost system include all of the
following except the
a. documents used to track costs.
b. point at which costs are totaled.
c. unit cost computations.
d. flow of costs.
43. Which of these best reflects a distinguishing factor between a job order cost system and a
process cost system?
a. The detail at which costs are calculated
b. The time period each covers
c. The number of work in process accounts
d. The manufacturing cost elements included
44. Which of the following is a true statement about process cost systems?
a. In process cost systems, costs are accumulated but not assigned.
b. A process cost system has one work in process account for each process.
c. In process cost systems, costs are summarized on job cost sheets.
d. Unit costs are not computed in process cost systems.
45. Which of the following is correct regarding cost systems?

Job Order Process
a. Work in process account several one for each process
b. Work in process account one one
c. Work in process account one one for each process
d. Work in process account several one
46. In a process cost system, unit costs are determined using a

a. numerator of costs of each job.
b. denominator of units produced during the period.
c. denominator of units produced for the job.
d. denominator of units produced for the day.
47. In process cost accounting, manufacturing costs are summarized on a

a. job order cost sheet.
b. process order cost sheet.
c. production cost report.
d. manufacturing cost sheet.
48. Which of the following manufacturing cost elements occurs in a process cost system?
a. Direct materials
b. Direct labor
c. Manufacturing overhead
d. All of these
49. In a process cost system, product costs are summarized

a. on job cost sheets.
b. on production cost reports.
c. after each unit is produced.
d. when the products are sold.
Process Costing 3-9
50. When manufacturing overhead costs are assigned to production in a process cost system,
they are debited to
a. the Finished Goods Inventory account.
b. Cost of Goods Sold.
c. a Manufacturing Overhead account.
d. the Work in Process account.
51. A product requires processing in two departments, Department A and then Department B,
before it is completed. Costs transferred out of Department A will be transferred to
a. Finished Goods Inventory.
b. Cost of Goods Sold.
c. Work in ProcessDepartment B.
d. Manufacturing Overhead.
52. Which of the following would not appear as a debit in the Work in Process account of a
second department in a two stage production process?
a. Materials used
b. Overhead applied
c. Labor assigned
d. Cost of products transferred out
53. Materials requisitions are

a. not used in process costing.
b. generally used more frequently in process costing than job order costing.
c. generally used less frequently in process costing than job order costing.
d. used more frequently by latter stage production departments.
54. A primary driver of overhead costs in continuous manufacturing operations is

a. direct labor dollars.
b. direct labor hours.
c. machine hours.
d. machine maintenance dollars.
55. Price Manufacturing assigns overhead based on machine hours. Department A logs 1,200
machine hours and Department B shows 2,000 machine hours for the period. If the
overhead rate is $5 per machine hour, the entry to assign overhead will show a
a. debit to Manufacturing Overhead for $16,000.
b. credit to Work in ProcessDepartment B for $10,000.
c. debit to Work in Process for $10,000.
d. credit to Manufacturing Overhead for $16,000.
56. Barnes and Miller Manufacturing is trying to determine the equivalent units for conversion
costs with 3,000 units of ending work in process at 80% completion and 14,000 physical
units. There are no beginning units in the department. Conversion costs occur evenly
throughout the entire production period. What are the equivalent units for conversion costs
for the current period?
a. 17,000
b. 16,800
c. 2,400
d. 13,400
3 - 10 Test Bank for ISV Managerial Accounting, Fourth Edition
57. 7,000 units in a process that are 70% complete are referred to as
a. 7,000 equivalent units of production.
b. 2,100 equivalent units of production.
c. 4,900 equivalent units of production.
d. 2,100 unequivalent units of production.
58. A process with no beginning work in process, completed and transferred out 45,000 units
during a period and had 30,000 units in the ending work in process inventory that were
30% complete. The equivalent units of production for the period were
a. 45,000 equivalent units.
b. 75,000 equivalent units.
c. 54,000 equivalent units.
d. 22,500 equivalent units.
Use the following information for questions 5960.
A department adds raw materials to a process at the beginning of the process and incurs
conversion costs uniformly throughout the process. For the month of January, there were no units
in the beginning work in process inventory; 80,000 units were started into production in January;
and there were 20,000 units that were 40% complete in the ending work in process inventory at
the end of January.
59. What were the equivalent units of production for materials for the month of January?
a. 88,000 equivalent units
b. 72,000 equivalent units
c. 60,000 equivalent units
d. 80,000 equivalent units
60. What were the equivalent units of production for conversion costs for the month of
January?
61. Equivalent units are calculated by

a. multiplying the percentage of work done by the equivalent units of output.
b. dividing physical units by the percentage of work done.
c. multiplying the percentage of work done by the physical units.
d. dividing equivalent units by the percentage of work done.
62. Minor Company had the following department data:

Physical Units
Work in process, July 1 16,000
Completed and transferred out 72,000
Materials are added at the beginning of the process. What is the total number of
equivalent units for materials in July?
a. 72,000
b. 80,000
c. 112,000
d. 96,000
Process Costing 3 - 11
63. Corsi Company had the following department data:

Physical Units
Work in process, beginning -0-
Work in process, ending 7,000
equivalent units for materials during the period?
a. 70,000
b. 7,000
c. 77,000
d. 63,000
64. Gantner Company had the following department information about physical units and
percentage of completion:
Physical Units
Work in process, May 1 (60%) 36,000
If materials are added at the beginning of the production process, what is the total number
of equivalent units for materials during May?
a. 126,000
b. 120,000
c. 116,400
d. 102,000
65. It is necessary to calculate equivalent units of production in a department because

a. a physical count of units is impossible.
b. some units worked on in the department are not fully complete.
c. the physical units in the department are always 100% complete.
d. at times a department may use a job order cost system and then switch to a process
cost system.

In the month of June, a department had 10,000 units in beginning work in process that were 70%
complete. During June, 40,000 units were transferred into production from another department. At
the end of June there were 5,000 units in ending work in process that were 40% complete.
Materials are added at the beginning of the process, while conversion costs are incurred
uniformly throughout the process.
66. How many units were transferred out of the process in June?
a. 40,000 units
b. 35,000 units
c. 45,000 units
d. 50,000 units
67. The equivalent units of production for materials for June were
68. The equivalent units of production for conversion costs for June were
69. A process with no beginning work in process, completed and transferred out 10,000 units
during a period and had 5,000 units in the ending work in process that were 50%
complete. How much is equivalent units of production for the period for conversion costs?
70. A process with 800 units of beginning work in process, completed and transferred out
10,000 units during a period. There were 5,000 units in the ending work in process that
were 50% complete as to conversion costs. Materials are added 80% at the beginning of
the process and 20% when the units are 90% complete. How much is equivalent units of
production for the period for material costs?
71. Hanker Company had the following department data on physical units:
Work in process, beginning 1,000
Work in process, ending 800
equivalent units for materials during the period?
a. 4,200
b. 800
c. 4,800
d. 3,000
72. Super-Tech Industries had the following department information about physical units and
Physical Units
Work in process, June 1 (75%) 2,000
Work in process, June 30 (50%) 3,000
If materials are added at the beginning of the production process, what is the total number
of equivalent units for materials during June?
a. 3,750
b. 7,500
c. 8,000
d. 6,000
73. Gloria Company had no beginning work in process. During the period, 5,000 units were
completed, and there were 500 units of ending work in process. How many units were
started into production?
a. 5,500
b. 5,000
c. 4,500
d. 500
74. Cohen Manufacturing is trying to determine the equivalent units for conversion costs with
2,000 units of ending work in process at 80% completion and 14,000 physical units that
are 100% completed. There are no beginning units in the department. Materials are added
at the beginning of the process, and conversion costs occur evenly throughout the entire
production period. What is the equivalent units for conversion costs for the current period?
a. 16,000
b. 15,600
c. 1,600
d. 13,600
75. If beginning work in process is 2,000 units, ending work in process is 1,000 units, and the
units accounted for equals 5,000 units, what must units started into production be?
a. 7,000
b. 6,000
c. 3,000
d. 4,000
76. Cinder Company had the following department information for the month:
Total materials costs $ 80,000
Equivalent units of materials 10,000
Total conversion costs $120,000
Equivalent units of conversion costs 20,000
How much is the total manufacturing cost per unit?
a. $14.00
b. $6.67
c. $6.00
d. $8.00
Materials costs of $200,000 and conversion costs of $214,200 were charged to a processing
department in the month of September. Materials are added at the beginning of the process,
while conversion costs are incurred uniformly throughout the process. There were no units in
beginning work in process, 100,000 units were started into production in September, and there
were 8,000 units in ending work in process that were 40% complete at the end of September.
77. What was the total amount of manufacturing costs assigned to those units that were
completed and transferred out of the process in September?
a. $184,000
b. $391,000
c. $414,200
d. $425,200
78. What was the total amount of manufacturing costs assigned to the 8,000 units in the
ending work in process?
a. $16,000
b. $7,200
c. $13,600
d. $23,200
79. Charley Companys Assembly Department has materials cost at $3 per unit and
conversion cost at $6 per unit. There are 9,000 units in ending work in process, all of
which are 70% complete as to conversion costs. How much are total costs to be assigned
to inventory?
a. $37,800
b. $64,800
c. $56,700
d. $81,000
80. Byrd Manufacturing decided to analyze certain costs for June of the current year. Units
started into production equaled 14,000 and ending work in process equaled 2,000 units.
With no beginning work in process inventory, how much is the conversion cost per unit if
ending work in process was 25% complete and total conversion costs equaled $50,000?
a. $3.13
b. $12.50
c. $4.00
d. $2.00
81. Reed Manufacturing has recently tried to improve its analysis for its manufacturing
process. Units started into production equaled 6,000 and ending work in process equaled
400 units. Reed had no beginning work in process inventory. Conversion costs are applied
equally throughout production, and materials are applied at the beginning of the process.
How much is the materials cost per unit if ending work in process was 25% complete and
total materials costs equaled $60,000?
a. $10.00
b. $10.53
c. $37.50
d. $9.38
82. Conversion cost per unit equals $6.00. Total materials costs are $40,000. Equivalent units
are 20,000. How much is the total manufacturing cost per unit?
a. $8.00
b. $6.00
c. $10.00
d. $2.00
83. Physical units are 40,000. Total conversion costs are $197,500. There are 1,000 units in
ending inventory which are 50% complete as to conversion costs. How much are
conversion costs per unit?
a. $5.00
b. $4.93
c. $9.88
d. $4.82
84. Madison Industries has equivalent units of 2,000 for materials and for conversion costs.
Total manufacturing costs are $200,000. Total materials costs are $150,000. How much is
the conversion cost per unit?
a. $10.00
b. $25.00
c. $100.00
d. $20.00
85. Equivalent units for materials total 15,000. There were 12,000 units completed and
transferred out. Equivalent units for conversion costs equals 13,500. How much are the
physical units for conversion costs if ending work in process is 50% complete?
a. 14,000
b. 15,000
c. 4,000
d. 12,000
86. If equivalent units are 6,000 for conversion costs and units transferred out equals 4,000,
what stage of completion should the ending work in process be for the 8,000 units
remaining?
a. 75%
b. 25%
c. 10%
d. 20%

In the month of April, a department had 500 units in the beginning work in process inventory that
were 60% complete. These units had $20,000 of materials costs and $15,000 of conversion
costs. Materials are added at the beginning of the process and conversion costs are added
uniformly throughout the process. During April, 10,000 units were completed and transferred to
the finished goods inventory and there were 2,000 units that were 25% complete in the ending
work in process inventory on April 30. During April, manufacturing costs charged to the
department were: Materials $460,000; Conversion costs $510,000.
87. The cost assigned to the units transferred to finished goods during April was
a. $900,000.
b. $905,000.
c. $940,000.
d. $895,000.
88. The cost assigned to the units in the ending work in process inventory on April 30 was
a. $180,000.
b. $105,000.
c. $80,000.
d. $145,000.
89. Zibba Company enters materials at the beginning of the process. In January, there was no
beginning work in process, but there were 100 units in the ending work in process
inventory. The number of units completed equals the number of
a. units started.
b. units started less 100.
c. units started plus 100.
d. equivalent units.
90. If there are no units in process at the beginning of the period, then
a. the company must be using a job order cost system.
b. only one computation of equivalent units of production will be necessary.
c. the units started into production will equal the number of units transferred out.
d. the units to be accounted for will equal the units transferred out and the units in
process at the end of the period.
91. Which of the following is not a necessary step in preparing a production cost report?
a. Compute the equivalent units of production
b. Compute the physical unit flow
c. Prepare the job order cost sheet
d. Prepare a cost reconciliation schedule
92. Honrad Company's Assembly Department has materials cost at $4 per unit and
conversion cost at $8 per unit. There are 9,000 units in ending work in process, all of
which are 70% complete as to conversion costs. How much are total costs to be assigned
to inventory?
a. $50,400
b. $86,400
c. $75,600
d. $108,000
93. In a process cost system, units to be accounted for in a department are equal to the
a. number of units started or transferred into the department.
b. number of units transferred out of the department.
c. units in the beginning inventory plus the units started or transferred into the department.
d. ending inventory plus the units started or transferred into the department.
94. The total units accounted for equals units in

a. beginning work in process units transferred out.
b. beginning work in process + ending work in process.
c. ending work in process + units transferred out.
d. ending work in process units started into production.

Department 1 of a two department production process shows:
Units
Beginning Work in Process 10,000
Ending Work in Process 50,000
Total units to be accounted for 120,000
95. How many units were started into production in Department 1?

a. 50,000
b. 70,000
c. 120,000
d. 110,000
96. How many units were transferred out to Department 2?

a. 50,000
b. 70,000
c. 120,000
d. 110,000
97. The Assembly Department shows the following information:

Units
Units Transferred Out 90,000
How many total units are to be accounted for by the Assembly Department?
a. 140,000
b. 50,000
c. 70,000
d. 120,000
98. The last department in a production process shows the following information at the end of
the period:
Units
Started into Production 105,000
How many units have been transferred out to finished goods during the period?
a. 105,000
b. 120,000
c. 135,000
d. 90,000
99. A process began the month with 3,000 units in the beginning work in process inventory
and ended the month with 2,000 units in the ending work in process. If 9,000 units were
completed and transferred out of the process during the month, how many units were
started into production during the month?
a. 8,000
b. 10,000
c. 9,000
d. 7,000
100. If 75,000 units are started into production and 30,000 units are in process at the end of the
period, how many units were completed and transferred out?
a. 75,000
b. 30,000
c. 45,000
d. 105,000
101. Total units to be accounted for less units in beginning work in process equals
a. total units accounted for.
b. units transferred out.
c. units started into production.
d. equivalent units.
102. If 80,000 units are transferred out of a department and there are 16,000 units still in
process at the end of a period, the number of units that were started into production
during the period is
a. 96,000.
b. 80,000.
c. 64,000.
d. 16,000.
103. A department adds materials at the beginning of the process and incurs conversion costs
uniformly throughout the process. For the month of July, there was no beginning work in
process; 20,000 units were completed and transferred out; and there were 10,000 units in
the ending work in process that were 40% complete. During July, $72,000 materials costs
and $63,000 conversion costs were charged to the department.
The unit production costs for materials and conversion costs for July was
Materials Conversion Costs
a. $2.40 $2.10
b. $2.40 $2.63
c. $3.00 $2.10
d. $3.60 $3.15
104. Conversion cost per unit equals $6.00. Total materials costs equal $60,000. Equivalent
units for materials are 20,000. How much is the total manufacturing cost per unit?
a. $9.00
b. $6.00
c. $12.00
d. $3.00
105. The following department data are available:

Total materials costs $120,000
What is the total manufacturing cost per unit?
a. $2.00
b. $2.33
c. $4.33
d. $2.11
106. Byers Company had the following department information for the month:
What is the total manufacturing cost per unit?
a. $5.34
b. $5.00
c. $6.00
d. $11.00
107. Physical units are 80,000. Total conversion costs are $197,500. There are 2,000 units in
ending inventory which are 50% complete as to conversion costs. How much is the
conversion cost per unit?
a. $2.50
b. $2.47
c. $2.44
d. $2.41
108. A department had the following information for the month:

Conversion cost per unit $3.00
Total manufacturing cost per unit $5.00
What are the equivalent units of production for materials?
a. 60,000
b. 40,000
c. 24,000
d. Cannot be determined
109. Maisley Manufacturing decided to analyze certain costs for June of the current year. Units
started into production equaled 28,000 and ending work in process equaled 4,000. With
no beginning work in process inventory, how much is the conversion cost per unit if ending
work in process was 25% complete and total conversion costs equaled $50,000?
a. $1.57
b. $6.25
c. $2.00
d. $1.00
Materials costs of $400,000 and conversion costs of $510,000 were charged to a processing
department in the month of September. Materials are added at the beginning of the process,
while conversion costs are incurred uniformly throughout the process. There were no units in
beginning work in process, 20,000 units were started into production in September, and there
were 5,000 units in ending work in process that were 40% complete at the end of September.
110. What was the total amount of manufacturing costs assigned to those units that were
completed and transferred out of the process in September?
a. $750,000
b. $1,000,000
c. $803,250
d. $682,500
111. What was the total amount of manufacturing costs assigned to the 5,000 units in the
ending work in process?
a. $227,500
b. $250,000
c. $160,000
d. $100,000
112. Snead Manufacturing has recently tried to improve its analysis for its manufacturing
process. Units started into production equaled 9,000 and ending work in process equaled
600 units. Snead had no beginning work in process inventory. Conversion costs are
applied equally throughout production, and materials are applied at the beginning of the
process. How much is the materials cost per unit if ending work in process was 25%
complete and total materials costs equaled $60,000?
a. $6.67
b. $7.02
c. $25.00
d. $6.25
113. Madison Industries has equivalent units of 4,000 for materials and for conversion costs.
Total manufacturing costs are $200,000. Total materials costs are $150,000. How much is
the conversion cost per unit?
a. $37.50
b. $12.50
c. $50.00
d. $10.00
114. In a process cost system, a production cost report is prepared

a. only for the first processing department.
b. for all departments in the aggregate.
c. for each processing department.
d. only for the last processing department.
115. A production cost report

a. is prepared for each product.
b. is prepared from a job cost sheet.
c. will show quantity and cost data for a production department.
d. will not identify a specific department if more than one department is involved in the
production process.
116. In the production cost report, the total

a. physical units accounted for equals the costs accounted for.
b. physical units accounted for equals the units to be accounted for.
c. costs charged equals the units to be accounted for.
d. costs accounted for equals the costs of the units started into production.
a
117. The Cutting Departments output during the period consists of 12,000 units completed and
transferred out, and 3,000 units in ending work in process that were 25% complete as to
materials and conversion costs. Beginning inventory was 1,500 units that were 25%
complete as to materials and conversion costs. Under the FIFO method, what are the
equivalent units of production for materials?
a. 13,725
b. 12,375
c. 14,475
d. 13,500
a
118. The Wrapping Departments output during the period consists of 10,000 units completed
and transferred out, and 600 units in ending work in process that were 75% complete as
to materials and conversion costs. Beginning inventory was 800 units that were 30%
complete as to materials and conversion costs. Under the FIFO method, what are the
equivalent units of production for materials?
a. 10,690
b. 11,010
c. 10,450
d. 10,210
Use the following information to answer questions 119120.

Chicotti Company has 3,000 units in beginning work in process, 30% complete as to conversion
costs, 25,000 units transferred out to finished goods, and 1,000 units in ending work in process
20% complete as to conversion costs. The beginning and ending inventory is fully complete as to
materials costs.
a
119. How much are equivalent units for conversion costs if the FIFO method is used?
a. 25,200
b. 27,300
c. 23,000
d. 24,300
a
120. How much are equivalent units for materials if the FIFO method is used?
a. 25,200
b. 26,000
c. 23,000
d. 29,000
a
121. Schiller Company has unit costs of $5 for materials and $15 for conversion costs. There
are 4,200 units in ending work in process which are 25% complete as to conversion costs,
and fully complete as to materials cost. How much is the total cost assignable to the
ending work in process inventory if the FIFO method is used?
a. 36,750
b. 84,000
c. 21,000
d. 15,750
a
122. Solis Company uses the FIFO method to compute equivalent units. It has 2,000 units in
beginning work in process, 20% complete as to conversion costs and 50% complete as to
materials costs, 25,000 units started, and 3,000 units in ending work in process, 30%
complete as to conversion costs, and 80% complete as to materials cost. How much are
the equivalent units for materials under the FIFO method?
a. 25,400
b. 25,000
c. 26,400
d. 27,000
a
123. Special Company had the following department information about physical units and
Physical Units
Materials are added at the beginning of the production process. Conversion costs are
added equally throughout production. What is the total number of equivalent units during
May for conversion costs if the FIFO method is used?
a. 52,400
b. 32,000
c. 23,360
d. 43,760
a
124. Hanker Company had the following department data on physical units:
Work in process, beginning 1,000
Work in process, ending 800
equivalent units for materials if the FIFO method is used?
a. 4,200
b. 3,800
c. 4,800
d. 3,000
Additional Multiple Choice Questions
125. A process cost system would be used by all of the following except a(n)
a. chemical company.
b. advertising company.
c. oil company.
d. computer chip company.
126. Which of the following is considered a difference between a job order cost and a process
cost system?
a. The manufacturing cost elements
b. Documents used to track costs
c. The accumulation of the costs of materials, labor, and overhead
d. The flow of costs
127. The basic similarities between job order cost and process cost systems include all of the
following except the
a. manufacturing cost elements.
b. flow of costs.
c. point at which costs are totaled.
d. accumulation of the costs of materials, labor, and overhead.
128 Equivalent units of production are a measure of

a. units completed and transferred out.
b. units transferred out.
c. units in ending work in process.
d. the work done in a period expressed in fully completed units.
129. Total physical units to be accounted for are equal to the units
a. started (or transferred) into production.
b. started (or transferred) into production plus the units in beginning work in process.
c. started (or transferred) into production less the units in beginning work in process.
d. completed and transferred out.
130. In computing equivalent units, ___________ is not part of the equivalent units of
production formula.
a. units transferred out
b. beginning work in process
c. ending work in process
d. None of these is correct.
131. In Saint-Simon, Inc., the Assembly Department started 12,000 units and completed
14,000 units. If beginning work in process was 6,000 units, how many units are in ending
work in process?
a. 0
b. 2,000
c. 4,000
d. 8,000
132. The total units to be accounted for is computed by adding

a. beginning units in process to units transferred out.
b. ending units in process to units started into production.
c. beginning units in process to units started into production.
d. ending units in process to total units accounted for.
133. In the Camria Company, materials are entered at the beginning of the process. If there is
no beginning work in process, but there is an ending work in process inventory, the
number of equivalent units as to materials costs will be
a. the same as the units started.
b. the same as the units completed.
c. less than the units started.
d. less than the units completed.
134. For the Assembly Department, unit materials cost is $8 and unit conversion cost is $12. If
there are 6,000 units in ending work in process 75% complete as to conversion costs, the
costs to be assigned to the inventory are
a. $120,000.
b. $102,000.
c. $90,000.
d. $108,000.
135. The total costs accounted for in a production cost report equal the
a. cost of units completed and transferred out only.
b. cost of units started into production.
c. cost of units completed and transferred out plus the cost of ending work in process.
d. cost of beginning work in process plus the cost of units completed and transferred out.
136. In a production cost report, which one of the following sections is not shown under Costs?
a. Unit costs
b. Costs to be accounted for
c. Costs during the period
d. Units accounted for
Answers to Multiple Choice Questions

Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans.
38. c 53. c 68. b 83. a 98. d 113. b 128. d
39. a 54. c 69. a 84. b 99. a 114. c 129. b
40. c 55. d 70. d 85. b 100. c 115. c 130. b
41. c 56. d 71. c 86. b 101. c 116. b 131. c
a
42. d 57. c 72. b 87. a 102. a 117. b 132. c
a
43. c 58. c 73. a 88. b 103. b 118. d 133. a
a
44. b 59. d 74. b 89. b 104. a 119. d 134. b
a
45. c 60. c 75. c 90. d 105. c 120. c 135. c
a
46. b 61. c 76. a 91. c 106. d 121. a 136. d
a
47. c 62. d 77. b 92. b 107. a 122. a
a
48. d 63. c 78. d 93. c 108. a 123. c
a
49. b 64. b 79. b 94. c 109. c 124. b
50. d 65. b 80. c 95. d 110. a 125. b
51. c 66. c 81. a 96. b 111. c 126. b
52. d 67. b 82. a 97. a 112. a 127. c
BRIEF EXERCISES
BE 137
Tip Top Painting Company has the following production data for January:
Beginning work in process, 0 units
Units transferred out, 35,000
Units in ending work in process, 4,000, which are 30% complete for conversion costs
Materials are added only at the beginning of the process.
Instructions
Compute equivalent units of production for both materials and conversion costs.
Solution 137 (4 min.)

Equivalent Units
QUANTITIES Physical Units Materials Conversion Costs
Units to be accounted for

Work in process, January 1 0
Started into production 39,000
Total units 39,000
Units accounted for

Transferred out 35,000 35,000 35,000
Work in process, January 31 4,000 4,000 1,200 (4,000 30%)
Total units 39,000 39,000 36,200
BE 138
Tip Top Painting Company has the following production data for March:
Beginning work in process, 2,000 units
Instructions
Compute equivalent units of production for both materials and conversion costs.

Equivalent Units
Work in process, March 1 2,000
Total units 48,000
Units accounted for
Transferred out 42,000 42,000 42,000
Work in process, March 31 6,000 6,000 4,800 (6,000 80%)
Total units 48,000 48,000 46,800
BE 139
The Kirkland Department of Delta Manufacturing began the month of December with beginning
work in process of 4,000 units that are 100% complete as to materials and 30% complete as to
conversion costs. Units transferred out are 10,000 units. Ending work in process contains 1,000
units that are 100% complete as to materials and 60% complete as to conversion costs.
Instructions
Compute the equivalent units of production for materials and conversion costs for the month of
December.

Equivalent Units
Work in process, December 1 4,000
Total units 11,000
Units accounted for
Transferred out 10,000 10,000 10,000
Work in process, December 31 1,000 1,000 600 (1,000 60%)
Total units 11,000 11,000 10,600
BE 140
White Supplies total material costs are $50,000 and total conversion costs are $65,000.
Equivalent units of production for materials are 10,000, and 3,250 for conversion costs.
Instructions
Compute the unit costs for materials, conversion costs, and total manufacturing costs for the
month.

COSTS
Unit costs Materials Conversion Costs Total
Costs incurred $50,000 $65,000 $115,000
Equivalent units 10,000 3,250
Unit costs $ 5.00 $ 20.00 $25.00
BE 141
Apoly Manufacturing Company has the following production data for January.
Ending Work in Process
Beginning Units Started into % Complete as to
Work in Process Production Units Conversion Cost
-0- 6,500 700 30%
Instructions
Compute the physical units for January.

Beginning work in process -0-
Transferred out 5,800

Ending work in process 700
Total units accounted for 6,500
BE 142
Sandusky Widget Company has the following production data for March.
Beginning Units % Complete as to
Month Work in Process Transferred Out Units Conversion Cost
March 1,200 5,100 800 20%
BE 142 (cont.)
Instructions
Compute the physical units for March.

Beginning work in process 1,200

BE 143
Sequal Company has the following production data for June: units transferred out 46,000, and
ending work in process 4,000 units that are 100% complete for materials and 30% complete for
conversion costs. Unit materials cost is $5 and unit conversion cost is $11.
Instructions
Determine the costs to be assigned to the units transferred out and the units in ending work in
process.

Work in process, June 30
Materials (4,000 $5) $20,000
Conversion costs (4,000 30% $11) 13,200
Total cost of work in process $33,200
Units transferred out (46,000 $16) $736,000
BE 144
Tomlinson Company has the following production data for May:
Beginning work in process, 0 units
Units started, 62,000
Ending work in process, 7,000 units that are 100% complete for materials and 60% complete
for conversion costs
Unit materials cost, $7
Unit conversion cost, $10
Instructions
process.

Work in process, May 31
Materials (7,000 $7) $49,000
Conversion costs (7,000 60% $10) 42,000
Total cost of work in process $91,000
Units transferred out (55,000 $17) $935,000
BE 145
Dirt Cleaners, Inc. has the following production data for January:
Transferred out 50,000 units
Ending work in process 6,000 units
The units in ending work in process are 100% complete for materials and 60% complete for
conversion costs. There is no beginning work in process. Materials cost is $10 per unit and
conversion costs are $11 per unit.
Instructions
process.

Cost Reconciliation Schedule
Costs accounted for
Transferred out (50,000 $21) $1,050,000
Materials (6,000 $10) $ 60,000
Conversion costs (3,600* $11) 39,600 99,600
Total costs $1,149,600
*(6,000 x 60%)
BE 146
Production costs chargeable to the Sanding Department in July for Joyful Art are $12,500 for
materials, $26,000 for labor, and $10,000 for manufacturing overhead. Equivalent units of
production are 25,000 for materials and 18,000 for conversion costs.
Instructions
Compute the unit costs for materials and conversion costs.

COSTS
Costs in July $12,500 $36,000 $48,500
Unit costs $0.50 $2.00 $2.50
a
BE 147
Tip Top Painting Company has the following production data for March:
Beginning work in process, 2,000 units, which are 30% complete for conversion costs
Instructions
Compute equivalent units of production for both materials and conversion costs using the FIFO
method.

Equivalent Units
Total Units 48,000
Units accounted for

Work in process, March 1 2,000 0 1,400 (2,000 70%)
Transferred out 40,000 40,000 40,000
Total units 48,000 46,000 46,200
a
BE 148
The Kirkland Department of Delta Manufacturing began the month of December with beginning
work in process of 4,000 units that are 100% complete as to materials and 20% complete as to
conversion costs. Units transferred out are 10,000 units. Ending work in process contains 1,000
units that are 100% complete as to materials and 60% complete as to conversion costs.
Instructions
Compute equivalent units of production for both materials and conversion costs for the month of
December using the FIFO method.
a
Equivalent Units
Total Units 11,000
Units accounted for

Work in process, December 1 4,000 0 3,200 (4,000 80%)
Transferred out 6,000 6,000 6,000
Work in process, December 31 1,000 1,000 600 (1,000 60%)
Total units 11,000 7,000 9,800
EXERCISES
Ex. 149
Baez Manufacturing Company produces a product in two departments: (1) Mixing and (2)
Finishing. The company uses a process cost accounting system.
(a) Purchased raw materials for $50,000 on account.
(b) Raw materials requisitioned for production were:

Direct materials
Mixing department $20,000
Finishing department 14,000
(c) Incurred labor costs of $80,000.
(d) Factory labor used:

Mixing department $48,000
Finishing department 32,000
(e) Manufacturing overhead is applied to the product based on machine hours used in each
department:
Mixing department600 machine hours at $45 per machine hour.
Finishing department500 machine hours at $30 per machine hour.
(f) Units costing $66,000 were completed in the Mixing Department and were transferred to the
Finishing Department.
(g) Units costing $60,000 were completed in the Finishing Department and were transferred to
finished goods.
(h) Finished goods costing $30,000 were sold on account for $45,000.
Instructions
Prepare the journal entries to record the preceding transactions for Baez Manufacturing
Company.

(a) Raw Materials Inventory............................................................... 50,000
Accounts Payable................................................................ 50,000
(Purchase of raw materials on account)
(b) Work in ProcessMixing.............................................................. 20,000

Work in ProcessFinishing.......................................................... 14,000
Raw Materials Inventory...................................................... 34,000
(To record materials used in production)
(c) Factory Labor............................................................................... 80,000

Wages Payable.................................................................... 80,000
(To record payroll liability)
(d) Work in ProcessMixing.............................................................. 48,000

Work in ProcessFinishing.......................................................... 32,000
Factory Labor....................................................................... 80,000
(To assign factory labor to production)
(e) Work in ProcessMixing (600 $45).......................................... 27,000

Work in ProcessFinishing (500 $30)...................................... 15,000
Manufacturing Overhead..................................................... 42,000
(To assign overhead to processes)
(f) Work in ProcessFinishing.......................................................... 66,000

Work in ProcessMixing..................................................... 66,000
(To record transfer of units to the Finishing Department)
(g) Finished Goods Inventory............................................................. 60,000

Work in ProcessFinishing................................................. 60,000
(To record transfer of units to finished goods)
(h) Accounts Receivable.................................................................... 45,000

Sales.................................................................................... 45,000
(To record sale of finished goods on account)
Cost of Goods Sold...................................................................... 30,000

Finished Goods Inventory.................................................... 30,000
(To record cost of goods sold)
Ex. 150
Sanders Company has two production departments: Fabricating and Finishing. Beginning
inventories are: Work in ProcessFabricating, $6,030; Work in ProcessFinishing, $4,100; and
Finished Goods, $5,600. During the month the following transactions occurred:
1. Purchased $45,000 of raw materials on account.
2. Incurred $65,000 of factory labor. Wages are unpaid.
3. Incurred $50,000 of manufacturing overhead; $44,000 was paid and the remainder is unpaid.
4. Requisitioned materials for Fabricating, $10,000 and Finishing, $8,000.
Ex. 150 (cont.)
5. Used factory labor for Finishing, $52,000 and Fabricating, $13,000.

6. Applied $45,000 of overhead based on machine hours used in each department. The
Finishing Department used twice as many machine hours as did Fabricating.
Instructions
Journalize the transactions for the month.

1. Raw Materials Inventory.................................................................. 45,000
Accounts Payable................................................................... 45,000
2. Factory Labor.................................................................................. 65,000

Wages Payable....................................................................... 65,000
3. Manufacturing Overhead................................................................. 50,000

Accounts Payable................................................................... 6,000
Cash....................................................................................... 44,000
4. Work in ProcessFabricating......................................................... 10,000

Work in ProcessFinishing............................................................. 8,000
Raw Materials Inventory......................................................... 18,000

Factory Labor......................................................................... 65,000

Manufacturing Overhead........................................................ 45,000
Ex. 151
The Pasta Factory manufactures spaghetti sauce through two production departments: Cooking
and Packaging. For the month of February, the work in process accounts show the following
debits:
Cooking Packaging
Beginning work in process $ -0- $ 6,000
Materials 40,000 21,000
Labor 21,000 9,000
Overhead 25,000 14,000
Costs transferred in 50,000
Instructions
Journalize the February transactions that involved the work in process accounts.

Work in ProcessCooking................................................................... 40,000
Work in ProcessPackaging................................................................ 21,000
Raw Materials Inventory............................................................... 61,000
Factory Labor............................................................................... 30,000
Manufacturing Overhead.............................................................. 39,000
Work in ProcessCooking........................................................... 50,000
Ex. 152
Benson Industries uses a process cost system. Products are processed first by Department A,
second by Department B, and then they are transferred to the finished goods warehouse. Shown
below is the cost information for Department B during the month of October:
Costs of units transferred in $120,000

Manufacturing costs added in Department B:
Direct materials $40,000
Direct labor 11,000
Manufacturing overhead 19,000 70,000
Total costs charged to Department B in October $190,000
The cost of work in process in Department B at October 1 is $25,000, and the cost of work in
process at October 31 has been determined to be $30,000.
Instructions
Prepare journal entries to record for the month of October:
(a) The transfer of production from Department A to B.
(b) The manufacturing costs incurred by Department B.
(c) The transfer of completed units from Department B to the finished goods warehouse.

(a) Work in ProcessDept. B............................................................. 120,000
Work in ProcessDept. A...................................................... 120,000
(b) Work in ProcessDept. B............................................................. 70,000

Factory Labor......................................................................... 11,000
Raw Materials Inventory......................................................... 40,000
Manufacturing Overhead........................................................ 19,000
(c) Finished Goods Inventory ($25,000 + $190,000 $30,000).......... 185,000

Work in ProcessDept. B...................................................... 185,000
Ex. 153
Hardy Company manufactures a single product by a continuous process, involving two production
departments. The records indicate that $120,000 of direct materials were issued to and $200,000
of direct labor was incurred by Department 1 in the manufacture of the product. The factory
overhead rate is $15 per machine hour; machine hours were 6,000 in Department 1. Work in
process in the department at the beginning of the period totaled $35,000; and work in process at
the end of the period was $25,000.
Instructions
Prepare entries to record
(a) The flow of costs into Department 1 for
(1) direct materials
(2) direct labor
(3) overhead
(b) The transfer of production costs to Department 2.

(a) (1) Work in ProcessDept. 1.................................................... 120,000
Raw Materials Inventory.............................................. 120,000
(2) Work in ProcessDept. 1.................................................... 200,000

Factory Labor.............................................................. 200,000
(3) Work in ProcessDept. 1.................................................... 90,000

Manufacturing Overhead (6,000 $15)...................... 90,000
(b) Work in ProcessDept. 2............................................................ 420,000*

Work in ProcessDept. 1.................................................... 420,000
*$35,000 + $120,000 + $200,000 + $90,000 $25,000 = $420,000
Ex. 154
Muffy Painting Company has the following production data for March.

Beginning Units % Complete as to
Month Work in Process Transferred Out Units Conversion Cost
March 2,000 42,000 8,000 80%
Instructions
Compute equivalent units of production for March for both materials and conversion costs.
Materials are entered at the beginning of the process.

Equivalent Units
Quantities Physical Units Materials Conversion Costs
Total units 50,000
Units accounted for
Transferred out 42,000 42,000 42,000
Total units 50,000 50,000 48,400
Ex. 155
The Nitrogen Fixation Department of Tomco Manufacturing began the month of December with
beginning work in process of 4,000 units that are 100% complete as to materials and 30%
complete as to conversion costs. Units transferred out are 10,000 units. Ending work in process
contains 3,000 units that are 100% complete as to materials and 60% complete as to conversion
costs.
Instructions
Compute the equivalent units of production for materials and conversion costs for the month of
December.

Equivalent Units
Quantities Physical Units Materials Conversion Costs
Total units 13,000
Units accounted for
Transferred out 10,000 10,000 10,000
Work in process, December 31 3,000 3,000 1,800 (3,000 60%)
Total units 13,000 13,000 11,800
Ex. 156
At Crenshaw Company, materials are entered at the beginning of each process. Work in process
inventories, with the percentage of work done on conversion, and production data for its Painting
Department in selected months are as follows:
Beginning Work In Process Ending Work In Process
Percentage Units Completed Percentage
Month Units Completed and Transferred Out Units Completed
July -0- 10,000 500 90%
Sept. 2,500 20% 9,000 4,000 70%
Ex. 156 (cont.)

Instructions
(a) Compute the physical units for July.
(b) Compute the equivalent units of production for materials and conversion costs for
September.

(a) COMPUTATION OF PHYSICAL UNITS
July
Beginning work in process -0-
(b) COMPUTATION OF EQUIVALENT UNITS

Equivalent Units
Units accounted for Physical Units Materials Conversion Costs
Work in process, Sept. 30 4,000 4,000 2,800 (4,000 .70)
Total equivalent units 13,000 13,000 11,800
Ex. 157
Watts Company adds materials at the beginning of the process and conversion costs are incurred
uniformly throughout the process.
Instructions
Complete the following calculation of equivalent units for materials and conversion costs.
Equivalent Units
Physical Units Materials Conversion Costs
Ending work in process
Materials
Conversion costs, 75% complete 18,000
Total units

Equivalent Units
Completed and transferred out 40,000 40,000 40,000
Materials 24,000* 24,000*
Conversion costs75% complete 18,000
Total units 64,000 58,000
*18,000 .75
Ex. 158
The general ledger of Oates Company has the following work in process account.
WORK IN PROCESSFINISHING
6/1 Balance 8,000 6/30 Transferred out ?
6/30 Materials 1,800
6/30 Labor 2,400
6/30 Overhead 3,350
6/30 Balance ?
Production records show that there were 2,000 units in beginning inventory, 50% complete; 5,000
units started, and 4,500 units transferred out. The beginning work in process had conversion
costs of $3,700. The units in ending inventory were 60% complete. Materials are added at the
beginning of the process.
Instructions
Answer the following questions.
(a) How many units are in process at June 30?
(b) What is the unit conversion cost for June?
(c) What is the conversion cost in the June 30 inventory?

(a) Work in process, June 1 2,000
Units to be accounted for 7,000
Less: Transferred out 4,500
Work in process, June 30 2,500
(b) Conversion costs Physical Units Equivalent Units

Transferred out 4,500 4,500
Work in process, June 30 2,500 1,500 (2,500 .60)
Total 7,000 6,000
Unit conversion cost = $1.58 ($3,700 + $5,750) 6,000 = $1.58
(c) Conversion cost in June 30 inventory: 1,500 $1.58 = $2,370

Ex. 159
The Assembly Department uses a process cost accounting system and a weighted-average cost
flow assumption. The department adds materials at the beginning of the process and incurs
conversion costs uniformly throughout the process. During July, $190,000 of materials costs and
$133,000 in conversion costs were charged to the department. The beginning work in process
inventory was $108,000 on July 1, comprised of $80,000 of materials costs and $28,000 of
conversion costs.
Other data for the month of July are as follows:

Beginning work in process inventory, 7/1 25,000 units (40% complete)
Units completed and transferred out 90,000 units
Ending work in process inventory, 7/31 10,000 units (20% complete)
Instructions
Answer the following questions and show computations to support your answers.
1. How many physical units have to be accounted for in July?
2. What are the equivalent units of production for materials and for conversion costs for the
month of July?
3. What is the total cost assigned to the 90,000 units that were transferred out of the process in
July?
4. What is the total cost of the July 31 inventory?

1. Units transferred out 90,000
Units accounted for 100,000
2. Equivalent units of production:

Equivalent Units
Transferred out 90,000 90,000 90,000
Work in process, July 31 10,000 10,000 2,000*
Total 100,000 100,000 92,000
*(10,000 .20)
3. Materials cost per unit = $2.70 ($270,000* 100,000 units)

Conversion cost per unit = $1.75 ($161,000** 92,000 units)
Total unit cost $4.45
*($80,000 + $190,000) **($28,000 + $133,000)
Total cost assigned to units transferred out: 90,000 $4.45 = $400,500
4. Total cost of July 31 inventory: (10,000 $2.70) + (2,000 $1.75) = $30,500

Ex. 160
The Finishing Department of Edwards Manufacturing has the following production and cost data
for July:
1. Transferred out, 3,000 units.

2. Started 5,000 units that are 40% completed at July 31.
3. Materials added, $32,000; conversion costs incurred, $12,500.
Materials are entered at the beginning of the process. Conversion costs are incurred uniformly
during the process.
Instructions
(a) Compute the equivalent units of production for materials and conversion costs for the month
of July.
(b) Compute unit costs and prepare a cost reconciliation schedule.

(a) Equivalent Units
Transferred Out 3,000 3,000 3,000
Work in Process, July 31 5,000 5,000 2,000*
Total 8,000 8,000 5,000
*(5,000 .40)
(b) Materials cost per unit = $4.00 ($32,000 8,000 units)

Conversion cost per unit = 2.50 ($12,500 5,000 units)
$6.50

Costs accounted for
Transferred out (3,000 $6.50) $19,500
Work in process, July 31
Materials (5,000 $4.00) $20,000
Conversion costs (2,000 $2.50) 5,000 $25,000
Total costs $44,500
Ex. 161
Massey Corporation uses a process cost system and the weighted-average cost flow assumption.
Production begins in the Fabricating Department where materials are added at the beginning of
the process and conversion costs are incurred uniformly throughout the process. On March 1, the
beginning work in process inventory consisted of 20,000 units which were 60% complete and had
a cost of $125,000, $95,000 of which were materials costs. During March, the following occurred:
Materials added $230,000

Conversion costs incurred $129,000
Units completed and transferred out in March 50,000
Units in ending work in process March 31 (20% complete) 15,000
Ex. 161 (cont.)

Instructions
Answer the following questions and show the computations that support your answers.
1. What are the equivalent units of production for materials and conversion costs in the
Fabricating Department for the month of March?
2. What are the costs assigned to the ending work in process inventory on March 31?
3. What are the costs assigned to units completed and transferred out during March?

1. Equivalent units of production:
Equivalent Units
Transferred out 50,000 50,000 50,000
Work in process, March 31 15,000 15,000 3,000*
Total 65,000 65,000 53,000
*(15,000 .20)
2. Materials unit cost $5 ($325,000* 65,000 units)

Conversion unit cost 3 ($159,000** 53,000 units)
Total unit cost $8
*($95,000 + $230,000) **[($125,000 $95,000) + $129,000]
Costs assigned to work in process, March 31
Materials costs $75,000 (15,000 units $5)
Conversion costs 9,000 (3,000 units $3)
Total $84,000
3. Costs assigned to units completed and transferred out: 50,000 $8 = $400,000
Ex. 162
Given below are the production data for Department No. 1 for the first month of operation:
Costs charged to Department 1:
Materials $12,000
Labor 2,800
Overhead 12,400
During this first month of operations, 4,000 units were started into production; 3,500 units were
transferred out; and the remaining 500 units are 100% completed with respect to materials and
60% complete with respect to conversion costs.
Instructions
Compute the following:
(a) Unit materials cost.
(b) Equivalent units of conversion costs.
(c) Unit conversion cost.
(d) Total cost of 500 units in process at end of month.
(e) Total cost of 3,500 units transferred out.

(a) Unit materials cost: $12,000 4,000 equivalent units for materials = $3.00.
(b) Equivalent units of conversion costs: 3,500 completed + (60% 500) = 3,800 equivalent
units of conversion costs.
(c) Unit conversion cost: ($2,800 + $12,400) 3,800 equivalent units = $4.00.
(d) Total cost of 500 units in work in process

Materials, 500 $3.00 = $1,500
Conversion costs, 300 $4.00 = 1,200
Total $2,700
(e) Total cost of 3,500 transferred out units: 3,500 ($3.00 + $4.00) = $24,500.
Ex. 163
Grey Building Supplies' total materials costs are $40,000 and total conversion costs are $39,000.
Equivalent units of production for materials are 10,000, and 6,500 for conversion costs.
Instructions
Compute the unit costs for materials, conversion costs, and total manufacturing costs for the
month.

COSTS
Unit Costs Materials Conversion Costs Total
Costs incurred $40,000 $39,000 $79,000
Unit costs $4.00 $6.00 $10.00
Ex. 164
Glazer, Inc. has the following production data for June:
Transferred out 50,000 units
Ending work in process 6,000 units
The units in work in process are 100% complete for materials and 60% complete for conversion
costs. Materials costs are $8 per unit and conversion costs are $11 per unit.
Instructions
process.

Costs accounted for
Transferred out (50,000 $19) $ 950,000
Materials (6,000 $8) $48,000
Conversion costs (3,600* $11) 39,600 87,600
*(6,000 60%)
Ex. 165
Production costs chargeable to the Sanding Department in July in Magnum Company are
$20,000 for materials, $17,000 for labor, and $10,000 for manufacturing overhead. Equivalent
units of production are 25,000 for materials and 18,000 for conversion costs.
Instructions
Compute the unit costs for materials and conversion costs.
Solution 165 (6-8 min.)

COSTS
Costs in July $20,000 $27,000 $47,000
Unit costs $0.80 $1.50 $2.30
Ex. 166
Poole Manufacturing Company uses a process cost system. The Molding Department adds
materials at the beginning of the process and conversion costs are incurred uniformly throughout
the process. Work in process on May 1 was 75% complete and work in process on May 31 was
40% complete.
Instructions
Complete the Production Cost Report for the Molding Department for the month of May using the
above information and the information below.
Ex. 166 (cont.)
POOLE MANUFACTURING COMPANY

Molding Department
Production Cost Report
For the Month Ended May 31, 2008
Equivalent Units
Work in process, May 1 16,000
Total units 66,000
Units accounted for

Total units 66,000
COSTS
Costs in May $198,000 $135,000 $333,000
Equivalent units
Unit costs $ $ $
Costs to be accounted for

Work in process, May 1 $ 83,000
Total costs $333,000

Costs accounted for
Transferred out $
Materials $
Conversion costs

POOLE MANUFACTURING COMPANY
Molding Department
Equivalent Units
Total units 66,000
Units accounted for

Transferred out 46,000 46,000 46,000
Work in process, May 31 20,000 20,000 8,000 (20,000 40%)
Total units 66,000 66,000 54,000
COSTS
Costs in May $198,000 $135,000 $333,000
Unit costs $ 3.00 $ 2.50 $ 5.50

Work in process, May 1 $ 83,000

Costs accounted for
Transferred out (46,000 $5.50) $253,000
Materials (20,000 $3.00) $ 60,000
Conversion costs (8,000 $2.50) 20,000 80,000
Ex. 167
Baker Winery manufactures fine wine in two departments, Fermenting and Bottling. In the
Fermenting Department, grapes are aged in casks for a period of 30 days. In the Bottling
Department, the wine is bottled and then sent to the finished goods warehouse. Labor and
overhead are incurred uniformly through both processes. Materials are entered at the beginning
of both processes. Cost and production data for the Fermenting Department for December 2008
are presented below:
Cost data
Beginning work in process inventory $ 37,000 ($30,000 of materials cost)
Materials 390,000
Conversion costs 153,000
Ex. 167 (cont.)

Production data
Beginning work in process (gallons) 10,000 (40%)
Gallons started into production 130,000
Ending work in process (gallons) 16,000 (25%)
Instructions
(a) Compute the equivalent units of production.
(b) Determine the unit production costs.
(c) Determine the costs to be assigned to units transferred out and ending work in process.

(a) Equivalent Units
Transferred out 124,000* 124,000 124,000
Ending work in process 16,000 16,000 4,000 (16,000 .25)
Total 140,000 140,000 128,000
*(10,000 + 130,000) 16,000
(b) Unit Production Costs:

Materials $3.00 ($420,000* 140,000)
Conversion costs 1.25 ($160,000** 128,000)
Total unit cost $4.25
*($30,000 + $390,000) **[($37,000 $30,000) + $153,000]
(c) Costs assigned to units transferred out and ending work in process:
Total Costs Assigned
Transferred out (124,000 $4.25) $527,000
Materials (16,000 $3.00) $48,000
Conversion costs (4,000 $1.25) 5,000 53,000
$580,000
Ex. 168
The Assembly Department of Lynn Company has the following production and cost data at the
end of May, 2008.
Production: 35,000 units started into production; 25,000 units transferred out and 10,000 units
100% completed as to materials and 40% completed as to conversion costs.
Manufacturing Costs: Materials added at beginning of process, $70,000; labor, $100,000;

overhead $74,000.
Instructions
Prepare a production cost report for the month of May.

LYNN COMPANY
Assembly DepartmentProduction Cost Report
Equivalent Units
QUANTITIES
Work in process, May 1 0
Total units 35,000
Units accounted for

Transferred out 25,000 25,000 25,000
Work in process, May 31 10,000 10,000 4,000
Total units accounted for 35,000 35,000 29,000
COSTS
Costs in May $70,000 $174,000 $244,000
Unit costs $2.00 $6.00 $8.00

Work in process, May 1 $ 0

Costs accounted for
Transferred out (25,000 $8) $200,000
Materials (10,000 $2) 20,000
Conversion Costs (4,000 $6) 24,000 44,000
Ex. 169
Bunker CompanyPerth Division is a new state of the art production facility that manufactures
landing gear for airplanes. The ending September 30th work in process is comprised of labor and
overhead and is approximately 60% complete. All materials are assumed to be 100% complete.
Total materials costs during the period totaled $910,000.
Instructions
As the new plant accountant, you are asked to complete the production cost report which appears
as follows:
Ex. 169 (cont.)

BUNKER COMPANYPerth Division
Assimilation Department
For the Month Ended September 30, 2008
Equivalent Units
Work in process, September 1 300
Total units 1,300
Units accounted for

Transferred out 900 900 900
Work in process, September 30 400 400
Total units 1,300 1,300
COSTS
Costs in September $910,000 $ $1,195,000
Equivalent units
Unit costs $ $ 250 $

Work in process, Sept. 1 $ 263,400
Started into production
Total costs $

Costs accounted for
Transferred out $
Work in process, September
Materials $
Conversion costs 60,000
Solution 169 (10-15 min.)
BUNKER COMPANYPerth Division

Assimilation Department
For the Month Ended September 30, 2008
Equivalent Units
Work in process, September 1 300
Total units 1,300
Units accounted for

Transferred out 900 900 900
Work in process, September 30 400 400 240
Total units 1,300 1,300 1,140
COSTS
Costs in September $910,000 $285,000 $1,195,000
Unit costs $ 700 $ 250 $950

Work in process, Sept. 1 $ 263,400

Costs accounted for
Transferred out (900 $950) $ 855,000
Work in process, September
Materials (400 $700) $280,000
Conversion costs (240 $250) 60,000 340,000
a
Ex. 170
At Oxley Company, materials are entered at the beginning of each process. The company uses
the FIFO method for process costing. Work in process inventories, with the percentage of work
done on conversion, and production data for its Finishing Department for March are as follows:
Beginning Work in Process Ending Work in Process
Percentage Units Completed Percentage
Month Units Completed and Transferred Out Units Completed
March 1,400 60% 11,000 500 90%
Instructions
(a) Compute the physical units for March.
(b) Compute the equivalent units of production for materials and conversion costs for March.
a
(a) COMPUTATION OF PHYSICAL UNITS
Beginning work in process 1,400

(b) COMPUTATION OF EQUIVALENT UNITS

Equivalent Units
Units accounted for Physical Units Materials Conversion Costs
Work in process, March 1 1,400 0 560 (1,400 .40)
Work in process, March 30 500 500 450 (500 .90)
Total equivalent units 11,500 10,100 10,610
a
Ex. 171
Taco Ranch uses a process cost system and the FIFO cost flow assumption. Production begins in
the Crafting Department where materials are added at the beginning of the process and
conversion costs are incurred uniformly throughout the process. On November 1, the beginning
work in process inventory consisted of 10,000 units, which were 60% complete and had a cost of
$190,000, $100,000 of which were materials costs. During November, the following occurred:
Materials added $225,000
Conversion costs incurred $45,000
Units completed and transferred out in November 40,000
Units in ending work in process November 30 (20% complete) 25,000
Instructions
Answer the following questions and show the computations that support your answers:
(a) What are the equivalent units of production for materials and conversion costs in the Crafting
Department for the month of November?
(b) What are the costs assigned to the ending work in process inventory on November 30?
(c) What are the costs assigned to units completed and transferred out during November?
a
(a) Equivalent units of production:
Equivalent Units
Work in process, November 1 10,000 0 4,000 (10,000 .40)
Transferred out 30,000 30,000 30,000
Work in process, November 30 25,000 25,000 5,000 (25,000 .20)
Total 65,000 55,000 39,000
a
Solution 171 (cont.)
(b) Materials unit cost $4,09 ($225,000 55,000 units)
Conversion unit cost 1.15 ($45,000 39,000 units)
Total unit cost $5,24

Work in process, November 1 $190,000
Started in production 270,000
Costs assigned to work in process, November 30

Materials costs $102,250 (25,000 units $4.09)
Conversion costs 5,750 (5,000 units $1.15)
Total $108,000
(c) Costs assigned to units completed and transferred out:

Transferred out
Work in Process, November 1 $190,000
Cost to complete beginning work in process 4,600 (4,000 $1.15)
Units started and completed 157,200 (30,000 $5.24)
Total costs transferred out $351,800
COMPLETION STATEMENTS
172. Process cost systems are used to apply costs to similar products that are ____________
in a ____________ fashion.
173. Separate _________________ accounts are maintained for each production department
or manufacturing process in a process cost system.
174. In a process cost system, manufacturing costs are summarized in a ________________
report for each department.
175. A primary driver of overhead costs in continuous manufacturing operations is
_______________.
176. Equivalent units of production measure the work done during the period, expressed in fully
________________ units.
177. Unit production costs are expressed in terms of _____________ units of production.
178. If a processing department has 27,000 units in process at the beginning of the period,
completes and transfers out 80,000 and has 18,000 units in process at the end of the
period, then the number of units started into production during the period was
______________ units.
179. A cost reconciliation schedule is prepared to assign total costs to units ______________,
and to the units in the _________________ work in process.
180. The production cost report is an internal document that shows production quantity and
______________ for a production department.
Answers to Completion Statements

172. mass-produced, continuous
173. work in process
174. production cost
175. machine hours
176. completed
177. equivalent
178. 71,000
179. transferred out, ending
180. cost data
MATCHING
181. Match the items in the two columns below by entering the appropriate code letter in the
space provided.
A. Total manufacturing cost per unit E. Cost reconciliation schedule

B. Equivalent units of production F. Units transferred out
C. Total units accounted for G. Unit production costs
D. Production cost report H. Physical units
____ 1. A summary of both production quantity and cost data for a production department.
____ 2. Shows that the total costs accounted for equal the total costs to be accounted for.
____ 3. Work done during a period expressed in fully completed units.
____ 4. Costs expressed in terms of equivalent units of production.
____ 5. Actual units to be accounted for during a period, irrespective of any work performed.
____ 6. Units transferred out during the period plus units in ending work in process.
____ 7. Unit materials costs plus unit conversion costs.
____ 8. Total units accounted for minus units in ending work in process.
Answers to Matching
1. D 5. H
2. E 6. C
3. B 7. A
4. G 8. F
SHORT-ANSWER ESSAY QUESTIONS

S-A E 182
Why do some companies need a cost accounting system while others do not? What are the
determining characteristics or factors that influence the type of cost accounting system that is
appropriate for a company?
Solution 182
Companies need a cost accounting system only if they need to measure, record, and report the
costs of manufacturing products. The two basic types of cost accounting systems are job order
costing and process costing. A job order cost system is appropriate when production consists of
batches of unique products (jobs). A process cost system is used to apply costs to similar
products that are mass-produced in a continuous fashion.
S-A E 183
The production cost report summarizes the activities that have taken place in a department or
process over a period of time. Identify the major types of information found on a production cost
report, and indicate who in the business organization uses this type of information and for what
purpose the information is used.
Solution 183
The types of information found in a production cost report are units to be accounted for and units
accounted for, unit costs, and costs to be accounted for and costs accounted for. Production cost
reports provide a basis for evaluating the productivity of a department and so are used by
production managers. In addition, the cost data can be used by middle management to assess
whether unit costs and total costs are reasonable. When the quantity and cost data are compared
with predetermined goals, top management can also ascertain whether current performance is
meeting planned objectives. Of course, the information in the report is also used for
recordkeeping and income determination by the accounting department.
S-A E 184 (Ethics)

Dolly's Dream Homes, Inc. manufactures doll houses in a continuous process. Various
customizing features and furnishings are added at the end of the process to create the various
models that are sold. The basic design and floor plans of all the houses are identical, however.
During the most recent month, the lumber used in trimming the houses was inadvertently
recorded as direct materials. At month end, when the error was discovered, Betty Gray, the
accountant, was told by the accounting manager, Donna Foxx, not to bother with correcting the
error, because the dollar amount of the error was not "worth it." Betty believes that the dollar
amount is not as important as the quality of the reports. She wonders whether she would be
committing an unethical act if she were to make the changes anyway, despite her superior's
telling her not to.
Required:
1. Who are the stakeholders in this situation?
2. Was it unethical for the company to ask that the error not be corrected? Explain briefly.
3. Would it be unethical for Betty to correct the error? Explain briefly.
Solution 184
1. The stakeholders include:
Betty Gray and Donna Foxx
Dolly's Dream Homes
possibly the present customer, or future customers
2. The company was not unethical in asking that the error not be corrected because it was too
small in dollar amount to be considered material. In fact, ignoring small errors improves
efficiency.
3. Betty would be failing in the obedience due to her superior if she went ahead and corrected
the error. Whether it would be a serious fault depends upon how easily the error could be
corrected. The superior probably would not care, either way, if the dollar amount is small and
the correction procedure is minor. However, just letting the matter drop would be better.
S-A E 185 (Communication)

Lawrence Leather Goods recently instituted just-in-time management of its inventories. The
accounting department carefully modified all its reports to reflect these changes.
Required:
Prepare a short memo to production department managers, briefly explaining the primary
changes they will see on the production cost report.
Solution 185
TO: Managers in all Production Departments

FROM: Accounting
RE: JIT and reporting
Congratulations on a job well done, in instituting JIT! You are already realizing many
of the benefits of efficient handling of inventory. Another of the benefits you will enjoy
is simplified reporting.
In the production cost reports you have been provided, there have been separate
categories for materials and conversion costs. In some cases, there were several
kinds of materials. JIT has allowed us to simplify this, and now there is only one
column, for Raw and In Process.
You may remember that each category was also adjusted for beginning and ending
inventories. Since we no longer will have routine levels of inventory, we will be able
to simplify this part of the reporting as well. We will now report only this month's use
of materials, for example, and only the costs added to work in process costs this
month, and only finished goods completed this period. If adjustments are needed for
ending inventories, we will make them at the end of the year as a single adjustment.
Please contact the accounting department if you have further questions.
(signed)

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CHAPTER 3

SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOMS TAXONOMY

SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOMS TAXONOMY

SUMMARY OF STUDY OBJECTIVES BY QUESTION TYPE

CHAPTER STUDY OBJECTIVES

11. A primary driver of overhead costs in continuous manufacturing operations is machine

Additional True-False Questions

Answers to True-False Statements

MULTIPLE CHOICE QUESTIONS

39. A characteristic of products that are mass-produced in a continuous fashion is that

41. In a process cost system,

45. Which of the following is correct regarding cost systems?

46. In a process cost system, unit costs are determined using a

47. In process cost accounting, manufacturing costs are summarized on a

49. In a process cost system, product costs are summarized

53. Materials requisitions are

54. A primary driver of overhead costs in continuous manufacturing operations is

Use the following information for questions 5960.

61. Equivalent units are calculated by

62. Minor Company had the following department data:

63. Corsi Company had the following department data:

65. It is necessary to calculate equivalent units of production in a department because

Use the following information for questions 6668.

Use the following information for questions 7778.

Use the following information for questions 8788.

94. The total units accounted for equals units in

Use the following information for questions 9596.

95. How many units were started into production in Department 1?

96. How many units were transferred out to Department 2?

97. The Assembly Department shows the following information:

105. The following department data are available:

108. A department had the following information for the month:

Use the following information for questions 110111.

114. In a process cost system, a production cost report is prepared

115. A production cost report

116. In the production cost report, the total

Use the following information to answer questions 119120.

Additional Multiple Choice Questions

128 Equivalent units of production are a measure of

132. The total units to be accounted for is computed by adding

Answers to Multiple Choice Questions

Solution 137 (4 min.)

Units to be accounted for

Units accounted for

Solution 138 (4 min.)

Solution 139 (4 min.)

Solution 140 (3 min.)

Solution 141 (4 min.)

Transferred out 5,800

Solution 142 (4 min.)

Transferred out 5,100

Solution 143 (4 min.)

Units transferred out (46,000 $16) $736,000

Solution 144 (4 min.)

Units transferred out (55,000 $17) $935,000

Solution 145 (4 min.)

Solution 146 (4 min.)

Solution 147 (5 min.)

Units accounted for

Units accounted for

(a) Purchased raw materials for $50,000 on account.

(b) Raw materials requisitioned for production were:

(c) Incurred labor costs of $80,000.