CH 8

ch8
Student: ___________________________________________________________________________
1.
Process costing assumes all units are homogeneous and follow the same path through the production process. True False
2.
The equivalent unit concept refers to the actual amount of work during the period stated in terms of the work required to complete an equal number of whole units. True False
3.
The number of units in the beginning Work-in-Process Inventory plus the units transferred out during the period equals the number of units started during the period plus the number of units in the ending Work-inProcess Inventory. True False
4.
If materials are added continuously throughout the production process, then the equivalent units for materials will always equal the equivalent units for the conversion costs. True False
5.
If materials are only added at the beginning of the production process, then the degree of completion for materials in the ending Work-in-Process Inventory is always 100%. True False
6.
If materials are only added at the beginning of the production process, then the degree of completion for materials in the ending Work-in-Process Inventory will be the same as the degree of completion for the conversion costs. True False
7.
If materials are only added at the end of the production process, then the degree of completion for materials of units in the ending Work-in-Process Inventory is always 0%. True False
8.
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. True False
9.
The weighted-average approach to process costing combines the work and costs done in prior periods with the work and costs done in the current period. True False
10. In a weighted-average process costing system, the costs in the beginning Work-in-Process Inventory are not used to compute the costs transferred-out. True False
11. First-in, first-out (FIFO) process costing transfers out the costs in beginning inventory before transferring out the costs associated with units started and completed. True False
12. 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. True False
13. In general, the ending Work-in-Process Inventory value computed using first-in, first-out (FIFO) will be the same as the ending value computed using weighted-average process costing. True False
14. It is possible for units in the beginning Work-in-Process Inventory to also be part of the ending Work-inProcess Inventory. True False
15. The more prices change, the greater the difference between the costs assigned to units transferred out using weighted-average costing and the costs assigned to units transferred out using first-in, first-out (FIFO). True False
16. In general, weighted-average costing is simpler to use while first-in, first-out (FIFO) costing provides greater decision-making benefits to managers. True False
17. The degree of completion associated with prior department costs is always 100%. True False
18. Job costing requires more detailed recordkeeping than process costing. True False
19. Operation costing is used in manufacturing goods that have some common characteristics and some individual characteristics. True False
20. Operational costing accounts for material costs like job costing and conversion costs like process costing. True False
21. Which of the following statements is (are) true regarding product costing? (A) Twenty cans of paint that are 25% full are equivalent to four cans of paint that are completely full. (B) The equivalent unit concept refers to the actual amount of work during the period stated in terms of whole units. A. B. C. D. Only A is true. Only B is true. Both A and B are true. Neither A nor B is true.
22. Which of the following organizations would most likely use a process costing system? A. B. C. D. Gasoline refinery Automobile retailer Airplane manufacturer Public accounting firm
23. The following examples briefly describe the manufacture of two different products. Which costing method (job-order or process) would be the best method to use for each project? I. Fred Puetz manufactures Fred's Wine Cooler. Fred once made the statement, "People can have any flavor of Fred's Wine Cooler they want as long it's boysenberry." II. Ahmad Aerondonetics is manufacturing three space shuttles for the country of Kricherra. Each shuttle is slightly different and production will last approximately two years.
A. B. C. D.
a b c d
24. An equivalent unit of conversion costs is equal to the amount of conversion costs required to A. B. C. D. start a unit. start and complete a unit. transfer a unit in. transfer a unit out.
25. Of the following process costing steps, which must be done last? A. B. C. D. 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 for.
26. If the units in the beginning Work-in-Process Inventory are greater than the units in the ending Work-inProcess Inventory, then the units transferred out are A. B. C. D. more than the units started during the period. equal to the equivalent units of production. less than the units started during the period. equal to the actual work done during the period.
27. Which of the following statements concerning a process cost accounting system is false? AThe units in beginning inventory plus the units transferred out during the month should equal the units in . the ending inventory plus the units transferred in during the month. B If material is used evenly throughout a process, the number of equivalent material units will equal the . number of equivalent units for the conversion (processing) costs. C. Actual costing may be used in a process costing system to assign indirect overhead costs to departments. DThe units in beginning inventory plus the units transferred in during the month should equal the units in . the ending inventory plus the units transferred out during the month. 28. In the computation of the manufacturing cost per equivalent unit, the weighted average method of process costing considers A. B. C. D. current costs only. current costs plus cost of beginning Work-in-Process Inventory. current costs plus cost of ending Work-in-Process Inventory. current costs less cost of beginning Work-in-Process Inventory.
29. In order to compute equivalent units of production using the FIFO method of process costing, work for the period must be broken down to units A. completed during the period and units in ending inventory. B. started during the period and units transferred out during the period. C. completed from beginning inventory, started and completed during the month, and units in ending inventory. D. processed during the period and units completed during the period. 30. Blue Company has beginning and ending Work-in-Process Inventories that are 45% and 10% complete, respectively. Materials are added at the beginning of the process. If first-in, first-out (FIFO) process costing is used, the total equivalent units for materials will equal the number of units A. B. C. D. transferred out during the period. started and completed during the period. started into the process during the period. started into the process plus the units in the ending inventory.
31. Red Company had Work-in-Process Inventories that were 45% complete at the start of the month. Work-inProcess at the end of the month was 10% complete. Materials were added at the beginning of the process. If weighted-average process costing is used, the total equivalent units for materials will equal the number of units A. B. C. D. transferred out during the period. started and completed during the period. started into the process during the period. transferred out during the process plus the units in the ending inventory.
32. A form prepared periodically for each processing department summarizing (1) the units for which the department is accountable and the disposition of these units and (2) the costs charged to the department and the allocation of these costs is called a A. B. C. D. schedule of Cost of Goods Manufactured. production cost report. job order cost sheet. schedule for Cost of Goods Sold.
33. Materials are added at the beginning of a process in a process costing system. The beginning Work-inProcess Inventory was 30% complete as to conversion costs. Using first-in, first-out (FIFO) process costing, the total equivalent units for material are A. B. C. D. beginning inventory this period for this process. units started this period in this process. units started this period in this process plus the beginning inventory. units started this period in this process plus 70% of the beginning inventory this period.
34. An error was made by ROC Company in computing the percentage-of-completion of the current year's ending Work-in-Process Inventory. The error resulted in the assignment of a lower percentage of completion to each component of the inventory than actually was the case. There was no beginning Workin-Process Inventory. What is the effect of this error on (1) cost assigned to cost of goods completed for the period and (2) the computation of costs per equivalent unit? 12 A. B. C. D. Understated Understated Understated Overstated Overstated Understated Overstated Overstated
35. 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 started and completed. (B) First-in, first-out process costing requires one additional step in assigning costs to the units transferred out and the ending Work-in-Process Inventory. A. B. C. D. A only. B only. Both A and B. Neither A nor B.
36. In a production-cost report using process costing, transferred-in costs are most similar to A. B. C. D. material added at the beginning of the process. conversion costs added during the process. costs transferred-out to the next process. costs included in beginning inventory.
37. Additional materials are added in the second department of a four-department production process. However, this addition does not increase the number of units being produced in the second department, but will A. B. C. D. increase the equivalent units of production. increase the total cost per unit. decrease the value of the transferred-in costs. decrease the total costs to account for.
38. Under which of the following conditions will the FIFO method produce the same cost of goods manufactured as the weighted-average method? A. B. C. D. There is no ending inventory. There is no beginning inventory. The beginning and ending inventories are equal. The beginning and ending inventories are both 50% complete.
39. Which of the following statements is (are) true? I. For cost control, the FIFO method of process costing is better than the weighted-average method. II. The weighted-average method of process costing assigns more cost to units completed (transferred out) than the FIFO method. A. B. C. D. I only. II only. Both I and II. Neither I nor II.
40. Which of the following statements is (are) false? (A) Operations costing accounts for material costs like job costing and conversion costs like process costing. (B) An automobile manufacturer is more likely to use an operations costing system than a process costing system. A. B. C. D. A only. B only. Both A and B. Neither A nor B.
41. Operations costing systems are used when the products have A. used a standardized method that is repeatedly performed. B. common characteristics and no individual characteristics. C. individual characteristics and no common characteristics. D. been mass produced in a continuous production process. E. some common characteristics and some individual characteristics.
42. An operations costing system is A. identical to a process costing system except that actual cost is used for manufacturing overhead. B. the same as a process costing system except that materials are allocated on the basis of batches of production. C.the same as a job order costing system except that materials are accounted for in the same way as they are in a process costing system. D. the same as a job order costing system except that no overhead allocations are made since actual costs are used throughout. E. a system in which manufacturing activities are finely divided into individual, discrete steps or operations. 43. Predetermined manufacturing overhead rates can be used in all of the following costing systems except A. B. C. D. job costing. process costing. operations costing. actual costing.
44. 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 Inventory during February? A. 5,500. B. 5,380. C. 5,100. D. 4,400. E. 4,100. 45. 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 were started into production 50,000 units were completed and transferred to the next department The ending Work-in-Process Inventory is complete as to materials but only 3/8 complete with respect to conversion costs. What are the equivalent units of production (EUP) for materials in the month of September assuming ALG uses weighted-average process costing? A. B. C. D. 52,000 64,500 66,000 61,500
46. 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 were started into production 50,000 units were completed and transferred to the next department The ending Work-in-Process Inventory is complete as to materials but only 3/8 complete with respect to conversion costs. What are the equivalent units of production (EUP) for the conversion costs in the month of September assuming ALG uses weighted-average process costing? A. B. C. D. 64,500 56,000 61,500 54,000
47. ABC Company has a beginning Work-in-Process Inventory of 25,000 units (40% complete). During the period, 110,000 units were started and the ending Work-in-Process Inventory consisted of 20,000 units (80%). What are the equivalent units for conversion costs using weighted-average process costing? A. B. C. D. 110,000 115,000 121,000 131,000
48. 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 still in process at the end of September and were 3/5 finished. The equivalent units of material in September were A. B. C. D. 40,000 45,000 48,000 50,000
49. 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 still in process at the end of September and were 3/5 finished. The equivalent units for the conversion costs in September were A. B. C. D. 40,000 45,000 48,000 50,000
50. 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-average process costing? A. 800 units. B. 900 units. C. 1,100 units. D. 1,200 units. E. 1,400 units.
51. 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 month of April, assuming Sussex uses the weighted average method?
A. a B. b C. c D. d E. e 52. 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-Process account during the period
Assuming that all direct materials are placed in process at the beginning of production and Department A uses weighted-average process costing, what is the total cost of the departmental Work-in-Process Inventory at the end of the period? A. B. C. D. $3,650 $2,900 $2,000 $1,825
53. Read, Inc. instituted a new process in October 2008. During October, 10,000 units were started in Department A. Of the units started, 8,000 were transferred to Department B, and 2,000 remained in Workin-Process at October 31, 2008. The Work-in-Process at October 31, 2008, was 100% complete as to material costs and 50% complete as to conversion costs. Material costs of $27,000 and conversion costs of $36,000 were charged to Department A in October. What were the total costs transferred to Department B assuming Department A uses weighted-average process costing? A. B. C. D. $46,900 $53,600 $56,000 $57,120
54. 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 January 2009. On January 31, 2009, 15,000 units were on hand which were 30% complete as to conversion costs and 60% complete as to materials. What are the equivalent units of production for the conversion costs in January, assuming Viva uses first-in, first-out (FIFO)? A. B. C. D. 34,000 35,000 36,500 41,500
55. RST Company incurred $126,000 in material costs during July. Additionally, the 12,000 units in the Workin-Process Inventory on July 1 had materials assigned to them of $32,000, even though they were only 5% complete as to materials. No additional units were started during July, and there were no unfinished units on hand on July 31. What is the material cost per unit for July, assuming RST uses weighted-average process costing? A. B. C. D. $10.50 $11.59 $13.17 $15.49
56. 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 costs and material costs were $9,440 and $6,250, respectively. There was no beginning inventory on May 1, 2008. What is the cost of the work transferredout during May? A. B. C. D. $8,510 $14,950 $15,690 $16,250
57. 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 month of April, assuming Sussex uses first-in, first-out (FIFO), process costing.
A. a B. b C. c D. d E. e The WISCO Company uses a weighted-average process costing system. The following data are available:
58. Equivalent units of production for material are A. B. C. D. 16,000. 17,000. 19,000. 20,000.
59. Equivalent units of production for labor and overhead are A. B. C. D. 16,000. 17,000. 19,000. 20,000.
60. Unit cost of material is A. B. C. D. $2.20. $2.07. $1.85. $1.76.
61. Unit cost of labor and overhead is A. B. C. D. $2.34. $2.20. $1.97. $1.87.
62. Total cost of the 16,000 units finished is A. B. C. D. $63,360. $67,320. $72,640. $65,120.
63. Total cost of the 4,000 units of the ending inventory A. B. C. D. $15,840. $14,520. $9,240. $8,910.
The Finishing Department had 5,000 incomplete units in its beginning Work-in-Process Inventory which were 100% complete as to materials and 30% complete as to conversion costs. 15,000 units were received from the previous department. The ending Work-in-Process Inventory consisted of 2,000 units which were 50% complete as to materials and 30% complete as to conversion costs. The Finishing Department uses first-in, first-out (FIFO) process costing. 64. How many units were transferred-out during the period? A. B. C. D. 12,000 13,000 18,000 20,000
65. The How many units were started and completed during the period? A. B. C. D. 12,000 13,000 18,000 20,000
66. What are the equivalent units of production for materials during the period? A. B. C. D. 12,000 13,000 14,000 15,000
67. What are the equivalent units of production for the conversion costs during the period? A. B. C. D. 14,500 15,100 16,500 17,100
The debits to Work-in-Process for Department #2 for the month of April of the current year, together with information concerning production, are presented below. All direct materials come from Department #1. The units completed include the 1,200 in process at the beginning of the period. Department #2 uses FIFO costing.
68. What are the total costs to be accounted for on the production cost report for Department #2 for the period? A. B. C. D. $16,400 $17,600 $11,600 $12,660
69. Determine the equivalent units of production for conversion costs. A. 500 B. 5,500 C. 5,900 D. 6,400 E. 6,900 70. The conversion costs per equivalent units is A. B. C. D. $1.00 $1.50 $2.00 $2.55
71. The unit cost of Product X started in the prior period and completed in the current period is A. B. C. D. $2.00 $2.50 $2.55 $3.45
72. The unit cost of Product X started and completed in the current period is A. B. C. D. $2.00 $2.50 $2.55 $2.60
73. The cost of goods transferred to finished goods is A. B. C. D. $17,660 $16,000 $13,000 $12,800
74. The cost of the ending Work-in-Process Inventory is A. B. C. D. $2,600 $1,600 $600 $1,000
75. 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)
A. B. C. D.
a b c d
76. A process costing system was used for a department that began operations in January 2008. Approximately the same number of physical units, at the same degree of completion, were in work-in-process at the end of both January and February. Monthly conversion costs are allocated between ending work-in-process and units completed. Compared to the FIFO method, would the weighted average method use the same or a greater number of equivalent units to calculate the monthly allocations? (CPA adapted, 5/91)
A. B. C. D.
a b c d
77. In a process costing system, the application of factory overhead usually would be recorded as an increase in: (CPA adapted) A. B. C. D. Finished goods inventory control Factory overhead control Cost of goods sold Work-in-process inventory control
78. Yarn Co.'s inventories in process were at the following stages of completion at April 30:
Equivalent units of production in ending inventory amounted to: (CPA adapted) A. B. C. D. 150 180 330 350
79. 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) A. $0.59 B. $0.55 C. $0.45 D. $0.43 E. $0.48 80. In computing the current period's manufacturing cost per equivalent unit, the FIFO method of process costing considers: (CPA adapted) A. B. C. D. only current period costs. current period costs plus cost of beginning work-in-process inventory current period costs less cost of beginning work-in-process inventory current period costs plus the cost of ending work-in-process inventory
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 materials and 20% complete as to conversion costs. The ending inventory was 90% complete as to materials and 40% complete as to conversion costs. Costs pertaining to November are as follows: Beginning inventory: direct materials, $54,560; direct labor, $20,320; manufacturing overhead, $15,240 Costs incurred during the month: direct materials, $468,000; direct labor, $182,880; manufacturing overhead, $391,160
81. What is the equivalent unit cost for materials assuming Kimbeth uses first-in, first-out (FIFO) process costing? A. $4.12 B. $4.50 C. $4.60 D. $4.80 E. $5.46 82. What is the equivalent unit cost for the conversion costs assuming Kimbeth uses first-in, first-out (FIFO) process costing? A. $5.65 B. $5.83 C. $6.00 D. $6.20 E. $6.62 83. What are the total costs in the ending Work-in-Process Inventory assuming Kimbeth uses first-in, first-out (FIFO) process costing? A. $153,168 B. $154,800 C. $155,328 D. $156,960 E. $159,648 84. What is the equivalent unit cost for materials assuming Kimbeth uses weighted-average process costing? A. $4.12 B. $4.50 C. $4.60 D. $4.80 E. $5.46 85. What is the equivalent unit cost for the conversion costs assuming Kimbeth uses weighted-average process costing? A. $5.65 B. $5.83 C. $6.00 D. $6.20 E. $6.62 86. What are the total costs in the ending Work-in-Process Inventory assuming Kimbeth uses weighted-average process costing? A. $86,400 B. $153,960 C. $154,800 D. $155,328 E. $156,960
87. The St. Vincent Manufacturing Company produces a single product in a single processing department. The material is added when 25% of the conversion costs have been added. The Work-in-Process Inventory account on April 30th includes the following information:
During the month, the company finished and transferred 72,000 units out of the Work-in-Process Inventory. 9,000 units were in process at the beginning of the month and were 40% complete. 8,000 units were in process at the end of the month, and were 70% complete. The company uses first-in, first-out (FIFO) process costing. Required (use 4 decimal places for computations): (a) Compute the equivalent units of production (EUP) for materials and conversion costs in April. (b) Compute the unit conversion costs and unit material costs for April. (c) Compute the total cost transferred out of the Work-in-Process Inventory during the month of April. (d) Compute the cost of the ending inventory for April.
88. The Edna Millay Manufacturing Company produces a single product in a single processing department. The material is added when 25% of the conversion costs have been added. The Work-in-Process Inventory account on April 30th includes the following information: Beginning balance $1,682 ($600 is materials)
During the month, the company finished and transferred 72,000 units out of the Work-in-Process Inventory. 9,000 units were in process at the beginning of the month and were 40% complete. 8,000 units were in process at the end of the month, and were 70% complete. The company uses weighted average process costing. Required (use 4 decimal places for computations): (a) Compute the equivalent units of production (EUP) for materials and conversion costs in April. (b) Compute the unit conversion costs and unit material costs for April. (c) Compute the total cost transferred out of the Work-in-Process Inventory during the month of April. (d) Compute the cost of the ending inventory for April.
89. The Clarke Chemical Company produces a special kind of body oil that is widely used by professional sports trainers. The oil is produced in three processes: Refining, Blending, and Mixing. Raw oil materials are introduced at the beginning of the refining process. A "mountain-air scent" material is added in the blending process when processing is 50% completed. The following Work-in-Process account for the Refining Department is available for the month of July. The July 1 Work-in-Process Inventory contains $1,500 in material costs.
The following Work-in-Process account for the Blending Department is available for the month of July. The July 1 Work-in-Process inventory contains $5,920 in material costs, and $1.56/unit in costs transferred in from the Refining Department.
The Clarke Chemical Company uses first-in, first-out (FIFO) costing for the Refining Department and weighted-average costing for the Blending Department. Required (use 4 decimal places for computations): Part 1: Refining Department (a) Compute the equivalent units of production for July. (b) Compute the material cost per unit and the conversion cost per unit for July. (c) Compute the costs transferred to the Blending Department for July. (d) Compute the July 31 Work-in-Process Inventory balance. Part 2: Blending Department (e) Compute the equivalent units of production. (f) Compute the unit costs in the Blending Department for the month of July. (HINT: There are three!!) (g) Compute the costs transferred out for July. (h) Compute the July 31 Work-in-Process Inventory balance.
The Clarke Chemical Company uses first-in, first-out (FIFO) costing. Required (use 4 decimal places for computations): (a) Compute the equivalent units of production for Refining for July. (b) Compute the material cost per unit and the conversion cost per unit for July. (c) Compute the costs transferred to the Blending Department for July. (d) Compute the July 31 Work-in-Process Inventory balance.
The Clarke Chemical Company uses weighted-average costing. Required (use 4 decimal places for computations): (a) Compute the equivalent units of production for Refining for July. (b) Compute the material cost per unit and the conversion cost per unit for July. (c) Compute the costs transferred to the Blending Department for July. (d) Compute the July 31 Work-in-Process Inventory balance.
92. The Clarke Chemical Company produces a special kind of body oil that is widely used by professional sports trainers. The oil is produced in three processes: Refining, Blending, and Mixing. Raw oil materials are introduced at the beginning of the refining process. A "mountain-air scent" material is added in the blending process when processing is 50% completed. The following Work-in-Process account for the Blending Department is available for the month of July. The July 1 Work-in-Process inventory contains $10,370 in conversion costs, and $1.56/unit in costs transferred in from the Refining Department.
The Clarke Chemical Company uses first-in, first-out (FIFO) costing. Required (use 4 decimal places for computations): (a) Compute the equivalent units of production for Blending. (b) Compute the unit costs in the Blending Department for the month of July. (HINT: There are three!!) (c) Compute the costs transferred out to the Mixing Department for July. (d) Compute the July 31 Work-in-Process Inventory balance.
93. The Clarke Chemical Company produces a special kind of body oil that is widely used by professional sports trainers. The oil is produced in three processes: Refining, Blending, and Mixing. Raw oil materials are introduced at the beginning of the refining process. A "mountain-air scent" material is added in the blending process when processing is 50% completed. The following Work-in-Process account for the Blending Department is available for the month of July. The July 1 Work-in-Process inventory contains $5,920 in material costs, and $1.56/unit in costs transferred in from the Refining Department.
The Clarke Chemical Company uses weighted average costing. Required (use 4 decimal places for computations): (a) Compute the equivalent units of production for Blending. (b) Compute the unit costs in the Blending Department for the month of July. (HINT: There are three!!) (c) Compute the costs transferred out to the Mixing Department for July. (d) Compute the July 31 Work-in-Process Inventory balance.
94. Brady Products manufactures a silicone paste wax that goes through three processing departments: cracking, blending, and packing. All raw materials are introduced at the start of work in the cracking department, with conversion costs being incurred uniformly in each department. The Work-in-Process Taccount for the cracking department for July is:
The beginning balance inventory consists of $43,400 in materials cost. Brady uses the weighted-average method to account for its operations. Required (use 4 decimal places for computations): (a) What would be the Cracking Department inventory balance on July 31? (b) What would be the cost transferred to the Blending Dept. in July?
95. Brady Products manufactures a silicone paste wax that goes through three processing departments: cracking, blending, and packing. All raw materials are introduced at the start of work in the cracking department, with conversion costs being incurred uniformly in each department. The Work-in-Process Taccount for the cracking department for July is:
The beginning balance inventory consists of $43,400 in materials cost. Brady uses the first-in, first-out (FIFO) method to account for its operations. Required (use 4 decimal places for computations): (a) What would be the Cracking Department inventory balance on July 31? (b) What would be the cost transferred to the Blending Dept. in July?
96. Leisure-Time (LT) Sports manufactures and distributes two types of tennis rackets: Ace Master (AM) and Smash Supreme (SS). Both types of rackets go through Operations 1 and 3. SS also goes through Operation 2, which adds a layer of graphite for additional strength. All material is added at the beginning of their respective operations. The following information relates to a work order from Discount Warehouse, Inc. for 30,000 units of AM (Work order #286) and 8,000 units of SS (Work order #354).
Required: Assume that there are 3,000 units of AM and 2,000 units of SS in Operation 3 at the end of the reporting period 45% and 65% complete respectively. Compute the ending inventory for Operation #3.
97. Gregg Industries uses three operations in sequence to manufacture an assortment of flower baskets. In each operation, the same procedures, time, and costs are used to perform that operation, regardless of the basket style being produced. During March, a batch of 500 baskets of style D and a batch of 800 baskets of style F were put through the first operation. All materials for a batch are introduced at the beginning of the operation for that batch. The costs shown below were incurred in March for the first operation:
There were no inventories at the beginning of the month; 400 units of Style D and 600 units of Style F were transferred to the next operation. The ending inventories were 30% and 60% complete for Styles D and F, respectively. Required: What is the total cost of the ending inventory in process for operation #1?
98. Viking Sports is a manufacturer of sportswear. Viking produces its products in two departments. The information for the current month for Department #2 is as follows:
Beginning WIP was half complete as to conversion costs. Direct materials for Department #2 are added at when the process is 25% complete. Factory overhead is applied at a rate equal to 50 percent of direct manufacturing labor. Ending WIP was 60 percent complete. Viking Sports uses weighted average costing. Required: HINT: use 4 decimal places in your calculations a. Compute the equivalent units of production for each input. b. Compute the cost per unit. c. Compute the cost transferred out to finished goods. d. Compute the ending work in process inventory balance.
99. Viking Sports is a manufacturer of sportswear. Viking produces its products in two departments. The information for the current month for Department #2 is as follows:
Beginning WIP was half complete as to conversion costs. Direct materials for Department #2 are added at when the process is 25% complete. Factory overhead is applied at a rate equal to 50 percent of direct manufacturing labor. Ending WIP was 60 percent complete. Viking Sports uses first-in, first-out (FIFO) costing. Required: HINT: use 4 decimal places in your calculations a. Compute the equivalent units of production for each input. b. Compute the cost per unit. c. Compute the cost transferred out to finished goods. d. Compute the ending work in process inventory balance.
100.Bisson Furniture uses a process cost system to account for its chair factory. Beginning inventory consisted of 5,000 units (100% complete as to material, 55% complete as to labor) with a cost of $124,800 materials and $104,500 conversion. 58,000 units were started into production during the month with material costs of $1,537,000 and $2,124,375 of conversion costs. The ending inventory of 6,000 chairs was 100% complete as to materials and 40% complete as to labor. Bisson uses weighted average costing. Required: HINT: use 4 decimal places in your calculations a. Compute the equivalent units of production for each input. b. Compute the cost per unit. c. Compute the cost transferred out to finished goods. d. Compute the ending work in process inventory balance.
101.Bisson Furniture uses a process cost system to account for its chair factory. Beginning inventory consisted of 5,000 units (100% complete as to material, 55% complete as to labor) with a cost of $124,800 materials and $104,500 conversion. 58,000 units were started into production during the month with material costs of $1,537,000 and $2,124,375 of conversion costs. The ending inventory of 6,000 chairs was 100% complete as to materials and 40% complete as to labor. Bisson uses first-in, first-out (FIFO) costing. Required: HINT: use 4 decimal places in your calculations a. Compute the equivalent units of production for each input. b. Compute the cost per unit. c. Compute the cost transferred out to finished goods. d. Compute the ending work in process inventory balance.
102.Brisebois Hardwoods uses a process costing system to account for its wood processing plant. Beginning inventory consisted of 4,000 board feet of lumber (100% complete as to material, 35% complete as to labor). Brisebois added 132,000 board feet into the process during April. On April 30th there were 10,000 board feet still in process (100% complete as to material, 22% complete as to labor). Required: (a) Calculate the equivalent units of production for each input, assuming Brisebois uses weighted average. (b) Calculate the equivalent units of production for each input, assuming Brisebois uses FIFO.
103.Giguere Processing uses a process costing system to account for its solvent plant. Beginning inventory consisted of 14,000 gallons (80% complete as to material, 55% complete as to labor). Giguere added 213,000 gallons into the process during April. On April 30th there were 18,000 gallons still in process (60% complete as to material, 45% complete as to labor). Required: (a) Calculate the equivalent units of production for each input, assuming Giguere uses weighted average. (b) Calculate the equivalent units of production for each input, assuming Giguere uses FIFO.
104.Franken Chemicals produces a solvent in its Thorp plant. Three chemicals are combined at the start of the process and blended under pressure for a period of time. At the 75% point of completion, an additional chemical is added. The following information has been gathered:
Franken completed 98,000 gallons during the month. The process engineer informs you that the beginning WIP was at the 30% completion point, the ending WIP is at 70%. Franken uses weighted average costing. Required: HINT: use 4 decimal places in your calculations a. Compute the equivalent units of production for each input. b. Compute the cost per unit c. Compute the cost transferred out to finished goods d. Compute the ending work in process inventory balance
105.Franken Chemicals produces a solvent in its Thorp plant. Three chemicals are combined at the start of the process and blended under pressure for a period of time. At the 75% point of completion, an additional chemical is added. The following information has been gathered:
Franken completed 98,000 gallons during the month. The process engineer informs you that the beginning WIP was at the 40% completion point, the ending WIP is at 70%. Franken uses first-in, first out (FIFO) costing. Required: HINT: use 4 decimal places in your calculations a. Compute the equivalent units of production for each input. b. Compute the cost per unit c. Compute the cost transferred out to finished goods d. Compute the ending work in process inventory balance
106.Kumalae Products makes four models of ukuleles. All of the models go through the same assembly line but they differ as to the materials used and the degree of finishing. The Basic model has a low gloss finish and goes immediately to Packaging upon completion in Assembly. The Swietenia model and the Acacia model go through a Buffing process upon completion in Assembly. They then go on to Packaging. The Koa model is the top of the line and goes first to Buffing from the Assembly, then to Special Polishing, then to Packaging. Kumalae uses operations costing and allocates conversion costs based on the number of units processed in each department.
Required: (a) What is the cost per unit of each of the completed ukuleles?
107.Is cost accumulation easier under a process costing system or a job-order costing system? Why or why not?
108.Describe the five steps in preparing a production cost report.
109.Explain the major differences between the weighted average costing and FIFO costing.
110.What characteristics of the production process would lead a company to use process costing rather than job costing?
111.What would happen to the equivalent units, production cost per unit and costs transferred out for a company using weighted average if the degree of completion of the ending inventory were underestimated?
ch8 Key
1. Process costing assumes all units are homogeneous and follow the same path through the production process. TRUE This is a basic concept of process costing. Job costing assumes differing units.
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Easy Lanen - Chapter 08 #1 Learning Objective: 1 Topic Area: Determining Equivalent Units
2.
The equivalent unit concept refers to the actual amount of work during the period stated in terms of the work required to complete an equal number of whole units. TRUE This is a definition of equivalent units.
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Medium Lanen - Chapter 08 #2 Learning Objective: 1 Topic Area: Determining Equivalent Units
3.
The number of units in the beginning Work-in-Process Inventory plus the units transferred out during the period equals the number of units started during the period plus the number of units in the ending Work-in-Process Inventory. FALSE Beginning WIP + started = Transferred out + Ending WIP
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Medium Lanen - Chapter 08 #3 Learning Objective: 2 Topic Area: Measure the Physical Flow of Resources
4.
If materials are added continuously throughout the production process, then the equivalent units for materials will always equal the equivalent units for the conversion costs. TRUE Conversion costs are added continuously; if materials are as well there is no need to separately compute equivalent units since they would be the same.
AACSB: Analytic AICPA: FN-Measurement Blooms: Knowledge Difficulty: Medium Lanen - Chapter 08 #4 Learning Objective: 2 Topic Area: Compute the Equivalent Units of Production
5.
If materials are only added at the beginning of the production process, then the degree of completion for materials in the ending Work-in-Process Inventory is always 100%. TRUE All the materials would be there, otherwise the units would not be in process.
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Easy Lanen - Chapter 08 #5 Learning Objective: 1 Topic Area: Compute the Equivalent Units of Production
6.
If materials are only added at the beginning of the production process, then the degree of completion for materials in the ending Work-in-Process Inventory will be the same as the degree of completion for the conversion costs. FALSE This would be true if materials are added continuously.
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Medium Lanen - Chapter 08 #6 Learning Objective: 1 Topic Area: Compute the Equivalent Units of Production
7.
If materials are only added at the end of the production process, then the degree of completion for materials of units in the ending Work-in-Process Inventory is always 0%. TRUE None of the materials would be there. Once the materials are added, the units are complete.
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Hard Lanen - Chapter 08 #7 Learning Objective: 1 Topic Area: Compute the Equivalent Units of Production
8.
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. TRUE EUP = transferred out + % completed ending inventory. The number transferred can equal EUP, but can never be greater.
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Hard Lanen - Chapter 08 #8 Learning Objective: 2 Topic Area: Compute the Equivalent Units of Production
9.
The weighted-average approach to process costing combines the work and costs done in prior periods with the work and costs done in the current period. TRUE This is the basic concept of weighted average.
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Easy Lanen - Chapter 08 #9 Learning Objective: 3 Topic Area: Compute the Costs per Equivalent Unit: Weighted Average
10.
In a weighted-average process costing system, the costs in the beginning Work-in-Process Inventory are not used to compute the costs transferred-out. FALSE In weighted average, the beginning WIP costs are combined with the current period costs to determine cost per unit.
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Hard Lanen - Chapter 08 #10 Learning Objective: 3 Topic Area: Compute the Costs per Equivalent Unit: Weighted Average
11.
First-in, first-out (FIFO) process costing transfers out the costs in beginning inventory before transferring out the costs associated with units started and completed. TRUE This is a basic concept of FIFO.
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Medium Lanen - Chapter 08 #11 Learning Objective: 5 Topic Area: Assigning Costs Using FIFO Process Costing
12.
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. TRUE It is the beginning WIP costs that create differences between weighted average and FIFO. If there are no beginning WIP, there will be no difference.
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Hard Lanen - Chapter 08 #12 Learning Objective: 5 Topic Area: Assigning Costs Using FIFO Process Costing
13.
In general, the ending Work-in-Process Inventory value computed using first-in, first-out (FIFO) will be the same as the ending value computed using weighted-average process costing. FALSE The two approaches will have different unit costs, so the costs assigned to ending WIP will differ.
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Hard Lanen - Chapter 08 #13 Learning Objective: 5 Topic Area: Assigning Costs Using FIFO Process Costing
14.
It is possible for units in the beginning Work-in-Process Inventory to also be part of the ending Workin-Process Inventory. TRUE If the time to complete a unit is longer than a month, it may be possible that not all units in beginning WIP would be completed during the month.
AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Medium Lanen - Chapter 08 #14 Learning Objective: 5 Topic Area: Assigning Costs Using FIFO Process Costing
15.
The more prices change, the greater the difference between the costs assigned to units transferred out using weighted-average costing and the costs assigned to units transferred out using first-in, first-out (FIFO). TRUE Weighted average combines several periods' costs, so the larger the change, the greater the difference.
AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Medium Lanen - Chapter 08 #15 Learning Objective: 6 Topic Area: Determining Which Is Better: FIFO or Weighted Average?
16.
In general, weighted-average costing is simpler to use while first-in, first-out (FIFO) costing provides greater decision-making benefits to managers. TRUE Weighted average is simpler since there is less attention paid to when units are completed. FIFO does a better job for cost control since it identifies the period better.
AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Easy Lanen - Chapter 08 #16 Learning Objective: 6 Topic Area: Determining Which Is Better: FIFO or Weighted Average?
17.
The degree of completion associated with prior department costs is always 100%. TRUE It is the same as a material added at the start of the process. All the effort is there.
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Medium Lanen - Chapter 08 #17 Learning Objective: 6 Topic Area: Using Costs Transferred in from Prior Departments
18.
Job costing requires more detailed recordkeeping than process costing. TRUE Job costing traces costs to jobs or units while process costing averages.
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Easy Lanen - Chapter 08 #18 Learning Objective: 7 Topic Area: Choosing between Job and Process Costing
19.
Operation costing is used in manufacturing goods that have some common characteristics and some individual characteristics. TRUE The common characteristics are normally conversion costs; individual are the materials.
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Easy Lanen - Chapter 08 #19 Learning Objective: 8 Topic Area: Operation Costing
20.
Operational costing accounts for material costs like job costing and conversion costs like process costing. TRUE Materials vary and can be traced; conversion costs are consistent and can be averaged.
21.
Which of the following statements is (are) true regarding product costing? (A) Twenty cans of paint that are 25% full are equivalent to four cans of paint that are completely full. (B) The equivalent unit concept refers to the actual amount of work during the period stated in terms of whole units. A. B. C. D. Only A is true. Only B is true. Both A and B are true. Neither A nor B is true.
(a) 20 25% = 5
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Easy Lanen - Chapter 08 #21 Learning Objective: 1 Topic Area: Determining Equivalent Units
22.
Which of the following organizations would most likely use a process costing system? A. B. C. D. Gasoline refinery Automobile retailer Airplane manufacturer Public accounting firm
(b) is a retailer, (c) and (d) would use job costing.

AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Easy Lanen - Chapter 08 #22 Learning Objective: 1 Topic Area: Process Costing
23.
The following examples briefly describe the manufacture of two different products. Which costing method (job-order or process) would be the best method to use for each project? I. Fred Puetz manufactures Fred's Wine Cooler. Fred once made the statement, "People can have any flavor of Fred's Wine Cooler they want as long it's boysenberry." II. Ahmad Aerondonetics is manufacturing three space shuttles for the country of Kricherra. Each shuttle is slightly different and production will last approximately two years.
A. B. C. D.
a b c d
Fred's product is uniform, Ahmad's are not.

AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Medium Lanen - Chapter 08 #23 Learning Objective: 1 Topic Area: Process Costing
24.
An equivalent unit of conversion costs is equal to the amount of conversion costs required to A. B. C. D. start a unit. start and complete a unit. transfer a unit in. transfer a unit out.
This is a definition of equivalent units.

AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Medium Lanen - Chapter 08 #24 Learning Objective: 2 Topic Area: Compute the Equivalent Units of Production
25.
Of the following process costing steps, which must be done last? A. B. C. D. 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 for.
need to know the costs and the equivalent units before you can calculate cost per unit.
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Medium Lanen - Chapter 08 #25 Learning Objective: 2 Topic Area: Using Product Costing in a Process Industry
26.
If the units in the beginning Work-in-Process Inventory are greater than the units in the ending Work-inProcess Inventory, then the units transferred out are A. B. C. D. more than the units started during the period. equal to the equivalent units of production. less than the units started during the period. equal to the actual work done during the period.
BWIP + TI - TO = EWIP BWIP - EWIP = TO - TI. If BWIP > EWIP then TO > TI
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Easy Lanen - Chapter 08 #26 Learning Objective: 2 Topic Area: Measure the Physical Flow of Resources
27.
Which of the following statements concerning a process cost accounting system is false? A The units in beginning inventory plus the units transferred out during the month should equal the units . in the ending inventory plus the units transferred in during the month. B If material is used evenly throughout a process, the number of equivalent material units will equal the . number of equivalent units for the conversion (processing) costs. C. Actual costing may be used in a process costing system to assign indirect overhead costs to departments. D The units in beginning inventory plus the units transferred in during the month should equal the units . in the ending inventory plus the units transferred out during the month. (b) is true, (c) actual costing MAY be used but is not necessary, (d) is the correct formula
28.
In the computation of the manufacturing cost per equivalent unit, the weighted average method of process costing considers A. B. C. D. current costs only. current costs plus cost of beginning Work-in-Process Inventory. current costs plus cost of ending Work-in-Process Inventory. current costs less cost of beginning Work-in-Process Inventory.
This is the basic concept of weighted average. FIFO considers current costs only.
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Medium Lanen - Chapter 08 #28 Learning Objective: 2 Topic Area: Compute the Costs per Equivalent Unit: Weighted Average
29.
In order to compute equivalent units of production using the FIFO method of process costing, work for the period must be broken down to units A. completed during the period and units in ending inventory. B. started during the period and units transferred out during the period. C. completed from beginning inventory, started and completed during the month, and units in ending inventory. D. processed during the period and units completed during the period. finish off the beginning, start & finish, and start the ending WIP
30.
Blue Company has beginning and ending Work-in-Process Inventories that are 45% and 10% complete, respectively. Materials are added at the beginning of the process. If first-in, first-out (FIFO) process costing is used, the total equivalent units for materials will equal the number of units A. B. C. D. transferred out during the period. started and completed during the period. started into the process during the period. started into the process plus the units in the ending inventory.
Beginning WIP has all the materials. The equivalent units will be started & completed plus the ending WIP = units started.
AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Medium Lanen - Chapter 08 #30 Learning Objective: 2 Topic Area: Compute the Equivalent Units of Production
31.
Red Company had Work-in-Process Inventories that were 45% complete at the start of the month. Work-in-Process at the end of the month was 10% complete. Materials were added at the beginning of the process. If weighted-average process costing is used, the total equivalent units for materials will equal the number of units A. B. C. D. transferred out during the period. started and completed during the period. started into the process during the period. transferred out during the process plus the units in the ending inventory.
It doesn't matter when the units were started.

32.
A form prepared periodically for each processing department summarizing (1) the units for which the department is accountable and the disposition of these units and (2) the costs charged to the department and the allocation of these costs is called a A. B. C. D. schedule of Cost of Goods Manufactured. production cost report. job order cost sheet. schedule for Cost of Goods Sold.
This is the description of a production cost report. A job order cost sheet is used in job costing and contains mostly tracing rather than allocation.
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Easy Lanen - Chapter 08 #32 Learning Objective: 4 Topic Area: Production Cost Report
33.
Materials are added at the beginning of a process in a process costing system. The beginning Workin-Process Inventory was 30% complete as to conversion costs. Using first-in, first-out (FIFO) process costing, the total equivalent units for material are A. B. C. D. beginning inventory this period for this process. units started this period in this process. units started this period in this process plus the beginning inventory. units started this period in this process plus 70% of the beginning inventory this period.
Since materials are added at the start, beginning WIP will contain all the materials from last period. Only the goods started this month will contain this month's materials.
34.
An error was made by ROC Company in computing the percentage-of-completion of the current year's ending Work-in-Process Inventory. The error resulted in the assignment of a lower percentage of completion to each component of the inventory than actually was the case. There was no beginning Work-in-Process Inventory. What is the effect of this error on (1) cost assigned to cost of goods completed for the period and (2) the computation of costs per equivalent unit? 12 A. B. C. D. Understated Understated Understated Overstated Overstated Understated Overstated Overstated
The cost per equivalent unit will be overstated since the denominator will be too small. Since the per unit is overstated, the cost of goods completed will be overstated as well. The equivalent units of the completed would not be affected by the error, only the rate.
AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Hard Lanen - Chapter 08 #34 Learning Objective: 5 Topic Area: Compute the Equivalent Units of Production
35.
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 started and completed. (B) First-in, first-out process costing requires one additional step in assigning costs to the units transferred out and the ending Work-in-Process Inventory. A. B. C. D. A only. B only. Both A and B. Neither A nor B.
FIFO uses the same 5 steps as weighted average.

AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Easy Lanen - Chapter 08 #35 Learning Objective: 5 Topic Area: Assigning Costs Using FIFO Process Costing
36.
In a production-cost report using process costing, transferred-in costs are most similar to A. B. C. D. material added at the beginning of the process. conversion costs added during the process. costs transferred-out to the next process. costs included in beginning inventory.
Most like materials added at the beginning since all costs transferred-in are there as well.
37.
Additional materials are added in the second department of a four-department production process. However, this addition does not increase the number of units being produced in the second department, but will A. B. C. D. increase the equivalent units of production. increase the total cost per unit. decrease the value of the transferred-in costs. decrease the total costs to account for.
Costs added will increase, leading to an increase in the cost per unit.
38.
Under which of the following conditions will the FIFO method produce the same cost of goods manufactured as the weighted-average method? A. B. C. D. There is no ending inventory. There is no beginning inventory. The beginning and ending inventories are equal. The beginning and ending inventories are both 50% complete.
Weighted average and FIFO are the same when there is no beginning WIP.
AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Medium Lanen - Chapter 08 #38 Learning Objective: 6 Topic Area: Determining Which Is Better: FIFO or Weighted Average?
39.
Which of the following statements is (are) true? I. For cost control, the FIFO method of process costing is better than the weighted-average method. II. The weighted-average method of process costing assigns more cost to units completed (transferred out) than the FIFO method. A. B. C. D. I only. II only. Both I and II. Neither I nor II.
I is true; II may be true in certain circumstances, but not in every situation.

AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Easy Lanen - Chapter 08 #39 Learning Objective: 6 Topic Area: Determining Which Is Better: FIFO or Weighted Average?
40.
Which of the following statements is (are) false? (A) Operations costing accounts for material costs like job costing and conversion costs like process costing. (B) An automobile manufacturer is more likely to use an operations costing system than a process costing system. A. B. C. D. A only. B only. Both A and B. Neither A nor B.
Both of these statements are true.

AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Medium Lanen - Chapter 08 #40 Learning Objective: 8 Topic Area: Operation Costing
41.
Operations costing systems are used when the products have A. B. C. D. E. used a standardized method that is repeatedly performed. common characteristics and no individual characteristics. individual characteristics and no common characteristics. been mass produced in a continuous production process. some common characteristics and some individual characteristics.
(a) alone is insufficientthere must be some individual characteristics as well. (a) could also describe a process costing.
42.
An operations costing system is A. identical to a process costing system except that actual cost is used for manufacturing overhead. B. the same as a process costing system except that materials are allocated on the basis of batches of production. C. the same as a job order costing system except that materials are accounted for in the same way as they are in a process costing system. D. the same as a job order costing system except that no overhead allocations are made since actual costs are used throughout. E. a system in which manufacturing activities are finely divided into individual, discrete steps or operations. This is based on the definition of operations costing.
43.
Predetermined manufacturing overhead rates can be used in all of the following costing systems except A. B. C. D. job costing. process costing. operations costing. actual costing.
Actual costing would not use predetermined rates.

AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Easy Lanen - Chapter 08 #43 Learning Objective: 8 Topic Area: Comparing Job, Process, and Operation Costing
44.
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 Inventory during February? A. B. C. D. E. 5,500. 5,380. 5,100. 4,400. 4,100.
4,800 + 700 - 400 = 5,100

AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Medium Lanen - Chapter 08 #44 Learning Objective: 2 Topic Area: Assign Product Cost
45.
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 were started into production 50,000 units were completed and transferred to the next department The ending Work-in-Process Inventory is complete as to materials but only 3/8 complete with respect to conversion costs. What are the equivalent units of production (EUP) for materials in the month of September assuming ALG uses weighted-average process costing? A. B. C. D. 52,000 64,500 66,000 61,500
50,000 + 16,000 = 66,000

46.
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 were started into production 50,000 units were completed and transferred to the next department The ending Work-in-Process Inventory is complete as to materials but only 3/8 complete with respect to conversion costs. What are the equivalent units of production (EUP) for the conversion costs in the month of September assuming ALG uses weighted-average process costing? A. B. C. D. 64,500 56,000 61,500 54,000
50,000 + 16,000 3/8 = 56,000

47.
ABC Company has a beginning Work-in-Process Inventory of 25,000 units (40% complete). During the period, 110,000 units were started and the ending Work-in-Process Inventory consisted of 20,000 units (80%). What are the equivalent units for conversion costs using weighted-average process costing? A. B. C. D. 110,000 115,000 121,000 131,000
Started and completed (115,000) + Ending inventory (.80 20,000) = 131,000

AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Easy Lanen - Chapter 08 #47 Learning Objective: 2 Topic Area: Compute the Equivalent Units of Production
48.
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 still in process at the end of September and were 3/5 finished. The equivalent units of material in September were A. B. C. D. 40,000 45,000 48,000 50,000
Started and completed (50,000 - 5,000) + ending WIP 5,000 = 50,000

49.
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 still in process at the end of September and were 3/5 finished. The equivalent units for the conversion costs in September were A. B. C. D. 40,000 45,000 48,000 50,000
45,000 + 5,000(.60) = 48,000

50.
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-average process costing? A. B. C. D. E. 800 units. 900 units. 1,100 units. 1,200 units. 1,400 units.
1,000 + (300 2/3) = 1,200

51.
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 month of April, assuming Sussex uses the weighted average method?
A. B. C. D. E.
a b c d e
Materials: 255,000 (started and completed) + 25,000 (ending inventory) = 280,000; Conversion costs: 255,000 + 25,000(.60) = 270,000
AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Hard Lanen - Chapter 08 #51 Learning Objective: 2 Topic Area: Compute the Equivalent Units of Production
52.
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-Process account during the period
Assuming that all direct materials are placed in process at the beginning of production and Department A uses weighted-average process costing, what is the total cost of the departmental Work-in-Process Inventory at the end of the period? A. B. C. D. $3,650 $2,900 $2,000 $1,825
Materials: $12,000/1,200 = $10.00 per unit; Conversion costs: ($5,500 + 4,400)/1,100 = $9.00; Ending inventory: 200($10.00) + 100($9.00) = $2,900
AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Hard Lanen - Chapter 08 #52 Learning Objective: 3 Topic Area: Assign Product Cost
53.
Read, Inc. instituted a new process in October 2008. During October, 10,000 units were started in Department A. Of the units started, 8,000 were transferred to Department B, and 2,000 remained in Work-in-Process at October 31, 2008. The Work-in-Process at October 31, 2008, was 100% complete as to material costs and 50% complete as to conversion costs. Material costs of $27,000 and conversion costs of $36,000 were charged to Department A in October. What were the total costs transferred to Department B assuming Department A uses weighted-average process costing? A. B. C. D. $46,900 $53,600 $56,000 $57,120
[($27,000/10,000) 8,000] + [($36,000/9,000) 8,000] = $21,600 + 32,000 = $53,600

54.
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 January 2009. On January 31, 2009, 15,000 units were on hand which were 30% complete as to conversion costs and 60% complete as to materials. What are the equivalent units of production for the conversion costs in January, assuming Viva uses first-in, first-out (FIFO)? A. B. C. D. 34,000 35,000 36,500 41,500
Beginning inventory (20,000 .60) + started and completed (20,000) + ending inventory (15,000 .30) = 36,500
55.
RST Company incurred $126,000 in material costs during July. Additionally, the 12,000 units in the Work-in-Process Inventory on July 1 had materials assigned to them of $32,000, even though they were only 5% complete as to materials. No additional units were started during July, and there were no unfinished units on hand on July 31. What is the material cost per unit for July, assuming RST uses weighted-average process costing? A. B. C. D. $10.50 $11.59 $13.17 $15.49
($126,000 + 32,000)/12,000 = $13.17

AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Easy Lanen - Chapter 08 #55 Learning Objective: 3 Topic Area: Compute the Costs per Equivalent Unit
56.
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 costs and material costs were $9,440 and $6,250, respectively. There was no beginning inventory on May 1, 2008. What is the cost of the work transferred-out during May? A. B. C. D. $8,510 $14,950 $15,690 $16,250
Started and completed units = 2,300; EUP (mat'l) = 2,300 + 200 = 2,500; EUP (conversion costs) = 2,300 + 60 = 2,360; Unit cost (mat'l) = $6,250/2,500 = $2.50; EUP (CC) = $9,440/2,360 = $4.00 2,300 ($2.50 + 4.00) = $14,950
57.
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 month of April, assuming Sussex uses first-in, first-out (FIFO), process costing.
A. B. C. D. E.
a b c d e
Units started & completed: 280,000 - 25,000 - 40,000 = 215,000; Materials EUP = 215,000 + 25,000 = 240,000; Conversion EUP = 40,000(.75) + 215,000 + 25,000(.60) = 260,000
The WISCO Company uses a weighted-average process costing system. The following data are available:
Lanen - Chapter 08
58.
Equivalent units of production for material are A. B. C. D. 16,000. 17,000. 19,000. 20,000.
16,000 + 4,000 = 20,000

59.
Equivalent units of production for labor and overhead are A. B. C. D. 16,000. 17,000. 19,000. 20,000.
16,000 + 4,000(.25) = 17,000

60.
Unit cost of material is A. B. C. D. $2.20. $2.07. $1.85. $1.76.
$35,200/20,000 = $1.76
61.
Unit cost of labor and overhead is A. B. C. D. $2.34. $2.20. $1.97. $1.87.
$37,400/17,000 = $2.20
62.
Total cost of the 16,000 units finished is A. B. C. D. $63,360. $67,320. $72,640. $65,120.
16,000 (1.76 + 2.20) = $63,360

63.
Total cost of the 4,000 units of the ending inventory A. B. C. D. $15,840. $14,520. $9,240. $8,910.
4,000(1.76) + 1,000(2.20) = $9,240

The Finishing Department had 5,000 incomplete units in its beginning Work-in-Process Inventory which were 100% complete as to materials and 30% complete as to conversion costs. 15,000 units were received from the previous department. The ending Work-in-Process Inventory consisted of 2,000 units which were 50% complete as to materials and 30% complete as to conversion costs. The Finishing Department uses first-in, first-out (FIFO) process costing.
Lanen - Chapter 08
64.
How many units were transferred-out during the period? A. B. C. D. 12,000 13,000 18,000 20,000
5,000 + 15,000 - 2,000 = 18,000

AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Easy Lanen - Chapter 08 #64 Learning Objective: 5 Topic Area: Measure the Physical Flow of Resources
65.
The How many units were started and completed during the period? A. B. C. D. 12,000 13,000 18,000 20,000
15,000 - 2,000 = 13,000

AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Easy Lanen - Chapter 08 #65 Learning Objective: 5 Topic Area: Measure the Physical Flow of Resources
66.
What are the equivalent units of production for materials during the period? A. B. C. D. 12,000 13,000 14,000 15,000
Beginning inventory (0) + started and completed (13,000) + ending inventory .50(2,000) = 14,000
67.
What are the equivalent units of production for the conversion costs during the period? A. B. C. D. 14,500 15,100 16,500 17,100
5,000(.70) + 13,000 + 2,000(.30) = 17,100

The debits to Work-in-Process for Department #2 for the month of April of the current year, together with information concerning production, are presented below. All direct materials come from Department #1. The units completed include the 1,200 in process at the beginning of the period. Department #2 uses FIFO costing.
Lanen - Chapter 08
68.
What are the total costs to be accounted for on the production cost report for Department #2 for the period? A. B. C. D. $16,400 $17,600 $11,600 $12,660
$1,200 + 3,600 + 8,000 + 4,800 = $17,600

AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Easy Lanen - Chapter 08 #68 Learning Objective: 4 Topic Area: Identify the Product Costs for Which to Account
69.
Determine the equivalent units of production for conversion costs. A. B. C. D. E. 500 5,500 5,900 6,400 6,900
1,200(.75) + 5,000 + 1,000(.50) = 6,400

70.
The conversion costs per equivalent units is A. B. C. D. $1.00 $1.50 $2.00 $2.55
($8,000 + 4,800)/6,400 = $2.00

AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Medium Lanen - Chapter 08 #70 Learning Objective: 5 Topic Area: Compute the Costs per Equivalent Unit
71.
The unit cost of Product X started in the prior period and completed in the current period is A. B. C. D. $2.00 $2.50 $2.55 $3.45
[$1,200 + (900)(2.00)]/1,200 = $2.50

AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Hard Lanen - Chapter 08 #71 Learning Objective: 5 Topic Area: Compute the Costs per Equivalent Unit
72.
The unit cost of Product X started and completed in the current period is A. B. C. D. $2.00 $2.50 $2.55 $2.60
($3,600/6,000) + $2.00 = $2.60

AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Hard Lanen - Chapter 08 #72 Learning Objective: 5 Topic Area: Compute the Costs per Equivalent Unit
73.
The cost of goods transferred to finished goods is A. B. C. D. $17,660 $16,000 $13,000 $12,800
[$1,200 + 900(2.00)] + [5,000 ($2.60)] = $16,000

74.
The cost of the ending Work-in-Process Inventory is A. B. C. D. $2,600 $1,600 $600 $1,000
1,000($.60) + 500($2.00) = $1,600

75.
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)
A. B. C. D.
a b c d
The addition point for the material has not yet been reached, so material G is 0% in ending WIP.
AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Easy Lanen - Chapter 08 #75 Learning Objective: 1 Topic Area: Determining Equivalent Units
76.
A process costing system was used for a department that began operations in January 2008. Approximately the same number of physical units, at the same degree of completion, were in workin-process at the end of both January and February. Monthly conversion costs are allocated between ending work-in-process and units completed. Compared to the FIFO method, would the weighted average method use the same or a greater number of equivalent units to calculate the monthly allocations? (CPA adapted, 5/91)
A. B. C. D.
a b c d
January would be the same since there is no beginning WIP; Weighted average would be greater in February since the work already in the Feb 1 inventory is included in the equivalent units (but excluded for FIFO).
AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Easy Lanen - Chapter 08 #76 Learning Objective: 6 Topic Area: Determining Which Is Better: FIFO or Weighted Average?
77.
In a process costing system, the application of factory overhead usually would be recorded as an increase in: (CPA adapted) A. B. C. D. Finished goods inventory control Factory overhead control Cost of goods sold Work-in-process inventory control
Same as for job costingthe application of overhead increases the WIP account.
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Easy Lanen - Chapter 08 #77 Learning Objective: 2 Topic Area: Identify the Product Costs for Which to Account
78.
Yarn Co.'s inventories in process were at the following stages of completion at April 30:
Equivalent units of production in ending inventory amounted to: (CPA adapted) A. B. C. D. 150 180 330 350
(100*.9) + (50*.8) + (200*.1) = 150

79.
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) A. B. C. D. E. $0.59 $0.55 $0.45 $0.43 $0.48
($5,500 + 18,000)/(42,500 + 12,500) = $0.43

80.
In computing the current period's manufacturing cost per equivalent unit, the FIFO method of process costing considers: (CPA adapted) A. B. C. D. only current period costs. current period costs plus cost of beginning work-in-process inventory current period costs less cost of beginning work-in-process inventory current period costs plus the cost of ending work-in-process inventory
FIFO includes only the current period costs. Beginning WIP is segregated; ending WIP is not part of the cost per unit.
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Easy Lanen - Chapter 08 #80 Learning Objective: 5 Topic Area: Compute the Costs per Equivalent Unit
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 materials and 20% complete as to conversion costs. The ending inventory was 90% complete as to materials and 40% complete as to conversion costs. Costs pertaining to November are as follows: Beginning inventory: direct materials, $54,560; direct labor, $20,320; manufacturing overhead, $15,240 Costs incurred during the month: direct materials, $468,000; direct labor, $182,880; manufacturing overhead, $391,160
Lanen - Chapter 08
81.
What is the equivalent unit cost for materials assuming Kimbeth uses first-in, first-out (FIFO) process costing? A. B. C. D. E. $4.12 $4.50 $4.60 $4.80 $5.46
$468,000/[(16,000 .40) + 76,000 + (24,000 .90)] = $4.50

82.
What is the equivalent unit cost for the conversion costs assuming Kimbeth uses first-in, first-out (FIFO) process costing? A. B. C. D. E. $5.65 $5.83 $6.00 $6.20 $6.62
($182,880 + 391,160)/[(16,000 .80) + 76,000 + (24,000 .40)] = $5.83

83.
What are the total costs in the ending Work-in-Process Inventory assuming Kimbeth uses first-in, firstout (FIFO) process costing? A. B. C. D. E. $153,168 $154,800 $155,328 $156,960 $159,648
[21,600 ($4.50)] + [9,600 ($5.83)] = $153,168

84.
What is the equivalent unit cost for materials assuming Kimbeth uses weighted-average process costing? A. B. C. D. E. $4.12 $4.50 $4.60 $4.80 $5.46
($54,560 + 468,000)/[92,000 + (24,000 .90)] = $4.60

85.
What is the equivalent unit cost for the conversion costs assuming Kimbeth uses weighted-average process costing? A. B. C. D. E. $5.65 $5.83 $6.00 $6.20 $6.62
($20,320 + 15,240 + 182,880 + 391,160)/[92,000 + (24,000 .40)] = $6.00

86.
What are the total costs in the ending Work-in-Process Inventory assuming Kimbeth uses weightedaverage process costing? A. B. C. D. E. $86,400 $153,960 $154,800 $155,328 $156,960
[21,600 ($4.60)] + [9,600 ($6.00)] = $156,960

87.
The St. Vincent Manufacturing Company produces a single product in a single processing department. The material is added when 25% of the conversion costs have been added. The Work-in-Process Inventory account on April 30th includes the following information:
During the month, the company finished and transferred 72,000 units out of the Work-in-Process Inventory. 9,000 units were in process at the beginning of the month and were 40% complete. 8,000 units were in process at the end of the month, and were 70% complete. The company uses first-in, firstout (FIFO) process costing. Required (use 4 decimal places for computations): (a) Compute the equivalent units of production (EUP) for materials and conversion costs in April. (b) Compute the unit conversion costs and unit material costs for April. (c) Compute the total cost transferred out of the Work-in-Process Inventory during the month of April. (d) Compute the cost of the ending inventory for April. (a) Mat: 71,000; Conversion: 74,000 (b) Mat: $0.075; Conversion: $0.3497 (c) $30,026 (d) $2,558 Feedback: (a) EUP Materials: BWIP (0% 9,000) + (100% 63,000) + (100% 8,000) = 71,000 EUP Conversion: BWIP (60% 9,000) + (100% 63,000) + (70% 8,000) = 74,000 (b) Materials: $5,325/71,000 = $0.075; Conversion: ($10,863 + 15,012)/74,000 = $0.3497
AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Medium Lanen - Chapter 08 #87 Learning Objective: 5 Topic Area: Assigning Costs Using FIFO Process Costing
88.
The Edna Millay Manufacturing Company produces a single product in a single processing department. The material is added when 25% of the conversion costs have been added. The Work-in-Process Inventory account on April 30th includes the following information: Beginning balance $1,682 ($600 is materials)
During the month, the company finished and transferred 72,000 units out of the Work-in-Process Inventory. 9,000 units were in process at the beginning of the month and were 40% complete. 8,000 units were in process at the end of the month, and were 70% complete. The company uses weighted average process costing. Required (use 4 decimal places for computations): (a) Compute the equivalent units of production (EUP) for materials and conversion costs in April. (b) Compute the unit conversion costs and unit material costs for April. (c) Compute the total cost transferred out of the Work-in-Process Inventory during the month of April. (d) Compute the cost of the ending inventory for April. (a) Mat: 80,000; Conversion: 77,600 (b) Mat: $0.0741; Conversion: $0.3474 (c) $30,348 (d) $2,538 Feedback: (a) EUP Materials: 72,000 + (100% 8,000) = 80,000 EUP Conversion: 72,000 + (70% 8,000) = 77,600 (b) Materials: ($600 + 5,325)/80,000 = $0.0741; Conversion: ($1,082 + 10,863 + 15,012)/77,600 = $0.3474 (c) Transferred out: 72,000 ($0.0741 + 0.3474) = $30,348
AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Medium Lanen - Chapter 08 #88 Learning Objective: 2 Topic Area: Using Product Costing in a Process Industry
89.
The Clarke Chemical Company produces a special kind of body oil that is widely used by professional sports trainers. The oil is produced in three processes: Refining, Blending, and Mixing. Raw oil materials are introduced at the beginning of the refining process. A "mountain-air scent" material is added in the blending process when processing is 50% completed. The following Work-in-Process account for the Refining Department is available for the month of July. The July 1 Work-in-Process Inventory contains $1,500 in material costs.
The following Work-in-Process account for the Blending Department is available for the month of July. The July 1 Work-in-Process inventory contains $5,920 in material costs, and $1.56/unit in costs transferred in from the Refining Department.
The Clarke Chemical Company uses first-in, first-out (FIFO) costing for the Refining Department and weighted-average costing for the Blending Department. Required (use 4 decimal places for computations): Part 1: Refining Department (a) Compute the equivalent units of production for July. (b) Compute the material cost per unit and the conversion cost per unit for July. (c) Compute the costs transferred to the Blending Department for July. (d) Compute the July 31 Work-in-Process Inventory balance. Part 2: Blending Department (e) Compute the equivalent units of production. (f) Compute the unit costs in the Blending Department for the month of July. (HINT: There are three!!) (g) Compute the costs transferred out for July. (h) Compute the July 31 Work-in-Process Inventory balance. (a) Mat EUP: 30,000; Conv EUP: 29,000 (b) Mat: $0.41; Conv: $1.25 (c) $47,590 (d) $7,460 (e) Trans-in EUP: 37,000; Mat EUP: 33,000; Conv EUP: 34,600 (f) Trans-in: $1.6235; Mat: $0.81; Conv: $0.6222 (g) $101,096 (h) $7,502 Feedback: Refining started & completed: 30,000 - 6,000 = 24,000; transferred out: 5,000 + 30,000 6,000 = 29,000; Blending transferred out: 8,000 + 29,000 - 4,000 = 33,000 (a) Mat EUP = (0% 5,000) + (100% 24,000) + (100% 6,000) = 30,000 Conv EUP: (20% 5,000) + (100% 24,000) + (2/3 6,000) = 29,000 (b) Mat: $12,300/30,000 = $0.41; Conv: ($14,500+ 21,750)/29,000 = $1.25
90.
The Clarke Chemical Company uses first-in, first-out (FIFO) costing. Required (use 4 decimal places for computations): (a) Compute the equivalent units of production for Refining for July. (b) Compute the material cost per unit and the conversion cost per unit for July. (c) Compute the costs transferred to the Blending Department for July. (d) Compute the July 31 Work-in-Process Inventory balance. (a) Mat EUP: 30,000; Conv EUP: 29,000 (b) Mat: $0.41; Conv: $1.25 (c) $48,590 (d) $7,460 Feedback: started & completed: 30,000 - 6,000 = 24,000; transferred out: 5,000 + 30,000 - 6,000 = 29,000 (a) Mat EUP = (0% 5,000) + (100% 24,000) + (100% 6,000) = 30,000 Conv EUP: (20% 5,000) + (100% 24,000) + (2/3 6,000) = 29,000 (b) Mat: $12,300/30,000 = $0.41; Conv: ($14,500+ 21,750)/29,000 = $1.25
AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Medium Lanen - Chapter 08 #90 Learning Objective: 5 Topic Area: Assigning Costs Using FIFO
91.
The Clarke Chemical Company uses weighted-average costing. Required (use 4 decimal places for computations): (a) Compute the equivalent units of production for Refining for July. (b) Compute the material cost per unit and the conversion cost per unit for July. (c) Compute the costs transferred to the Blending Department for July. (d) Compute the July 31 Work-in-Process Inventory balance. (a) Mat EUP: 35,000; Conv EUP: 33,000 (b) Mat: $0.3943; Conv: $1.25 (c) $47,685 (d) $7,366 Feedback: transferred out: 5,000 + 30,000 - 6,000 = 29,000 (a) Mat EUP = (100% 29,000) + (100% 6,000) = 35,000 Conv EUP: (100% 29,000) + (2/3 6,000) = 33,000 (b) Mat: ($1,500 + 12,300)/35,000 = $0.3943; Conv: [($6,500 - 1,500) + $14,500+ 21,750]/33,000 = $1.25 (c) 29,000 ($0.3943 = 1.25) = $47,685 (d) Ending WIP
92.
The Clarke Chemical Company produces a special kind of body oil that is widely used by professional sports trainers. The oil is produced in three processes: Refining, Blending, and Mixing. Raw oil materials are introduced at the beginning of the refining process. A "mountain-air scent" material is added in the blending process when processing is 50% completed. The following Work-in-Process account for the Blending Department is available for the month of July. The July 1 Work-in-Process inventory contains $10,370 in conversion costs, and $1.56/unit in costs transferred in from the Refining Department.
The Clarke Chemical Company uses first-in, first-out (FIFO) costing. Required (use 4 decimal places for computations): (a) Compute the equivalent units of production for Blending. (b) Compute the unit costs in the Blending Department for the month of July. (HINT: There are three!!) (c) Compute the costs transferred out to the Mixing Department for July. (d) Compute the July 31 Work-in-Process Inventory balance. (a) Trans-in EUP: 29,000; Mat EUP: 33,000; Conv EUP: 32,200 (b) Trans-in: $1.6621; Mat: $0.6306; Conv: $0.5388 (c) $101,700 (d) $7,510 Feedback: Blended started & completed: 29,000 - 4,000 = 25,000; transferred out: 8,000 + 29,000 - 4,000 = 33,000 (a) Tran-in EUP = (0% 8,000) + (100% 25,000) + (100% 4,000) = 29,000 Mat EUP = (100% 8,000) + (100% 25,000) + (0% 4,000) = 33,000 Conv EUP: (70% 8,000) + (100% 25,000) + (40% 4,000) = 32,200 (b) Trans-in: $48,200/29,000 = $1.6621; Mat: $20,810/33,000 = $0.6306; Conv: ($5,748+ 11,600)/ 32,200 = $0.5388
AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Hard Lanen - Chapter 08 #92 Learning Objective: 5 Topic Area: Assigning Costs Using FIFO
93.
The Clarke Chemical Company produces a special kind of body oil that is widely used by professional sports trainers. The oil is produced in three processes: Refining, Blending, and Mixing. Raw oil materials are introduced at the beginning of the refining process. A "mountain-air scent" material is added in the blending process when processing is 50% completed. The following Work-in-Process account for the Blending Department is available for the month of July. The July 1 Work-in-Process inventory contains $5,920 in material costs, and $1.56/unit in costs transferred in from the Refining Department.
The Clarke Chemical Company uses weighted average costing. Required (use 4 decimal places for computations): (a) Compute the equivalent units of production for Blending. (b) Compute the unit costs in the Blending Department for the month of July. (HINT: There are three!!) (c) Compute the costs transferred out to the Mixing Department for July. (d) Compute the July 31 Work-in-Process Inventory balance. (a) Trans-in EUP: 37,000; Mat EUP: 33,000; Conv EUP: 34,600 (b) Trans-in: $1.64; Mat: $0.81; Conv: $0.63 (c) $101,640 (d) $7,568 Feedback: transferred out: 8,000 + 29,000 - 4,000 = 33,000 (a) Trans-in EUP: (100% 33,000) + (100% 4,000) = 37,000 Mat EUP: (100% 33,000) + (0% 4,000) = 33,000 Conv EUP: (100% 33,000) + (40% 4,000) = 34,600 (b) Trans-in: [($1.56 8,000) + 48,200]/37,000 = $1.64 Mat: ($5,920 + 20,810)/33,000 = $0.81 Conv: [($22,850 - 5,920 - 12,480) + 5,748 + 11,600]/34,600 = $0.63 (c) 33,000 ($1.64 + .81 + .63) = $101,640 (d) EWIP:
AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Hard Lanen - Chapter 08 #93 Learning Objective: 3 Topic Area: Using Product Costing in a Process Industry
94.
Brady Products manufactures a silicone paste wax that goes through three processing departments: cracking, blending, and packing. All raw materials are introduced at the start of work in the cracking department, with conversion costs being incurred uniformly in each department. The Work-in-Process T-account for the cracking department for July is:
The beginning balance inventory consists of $43,400 in materials cost. Brady uses the weighted-average method to account for its operations. Required (use 4 decimal places for computations): (a) What would be the Cracking Department inventory balance on July 31? (b) What would be the cost transferred to the Blending Dept. in July? (a) $84,000 (b) $567,000 Feedback: transferred-out = 35,000 + 280,000 - 45,000 = 270,000 EUP: Mat: 270,000 + (100% 45,000) = 315,000; Conv: 270,000 + (2/3 45,000) = 300,000 Unit costs: Mat: ($43,400 + 397,600)/315,000 = $1.40 Conv: [($63,700 - 43,400) + 189,700)]/300,000 = .70 (a) EWIP: Mat 45,000 1.40 + Conv 30,000 .70 = $84,000 (b) 270,000 ($1.40 + .70) = $567,000
95.
Brady Products manufactures a silicone paste wax that goes through three processing departments: cracking, blending, and packing. All raw materials are introduced at the start of work in the cracking department, with conversion costs being incurred uniformly in each department. The Work-in-Process T-account for the cracking department for July is:
The beginning balance inventory consists of $43,400 in materials cost. Brady uses the first-in, first-out (FIFO) method to account for its operations. Required (use 4 decimal places for computations): (a) What would be the Cracking Department inventory balance on July 31? (b) What would be the cost transferred to the Blending Dept. in July? (a) $84,822 (b) $566,171 Feedback: started & completed: 280,000 - 45,000 = 235,000 EUP: Mat: (0% 35,000) + (100% 235,000) + (100% 45,000) = 280,000; Conv: (1/5 35,000) + (100% 235,000) + (2/3 45,000) = 272,000 Unit costs: Mat: $397,600/280,000 = $1.42 Conv: $189,700/272,000 = .6974 (a) EWIP: Mat (45,000 1.42) + Conv (30,000 .6974) = $84,822
96.
Leisure-Time (LT) Sports manufactures and distributes two types of tennis rackets: Ace Master (AM) and Smash Supreme (SS). Both types of rackets go through Operations 1 and 3. SS also goes through Operation 2, which adds a layer of graphite for additional strength. All material is added at the beginning of their respective operations. The following information relates to a work order from Discount Warehouse, Inc. for 30,000 units of AM (Work order #286) and 8,000 units of SS (Work order #354).
Required: Assume that there are 3,000 units of AM and 2,000 units of SS in Operation 3 at the end of the reporting period 45% and 65% complete respectively. Compute the ending inventory for Operation #3. Job 286: $18,633; Job 354: $42,276 Feedback: Job 286: Materials: ($120,000 + 45,000)/30,000 = $5.50/unit EUP: (30,000 - 3,000) + (3,000 45%) = 27,000 + 1,350 = 28,350 Conversion cost: ($30,000 + 14,793)/28,350 = $1.58 Ending Inv: (3,000 $5.50) + (1,350 $1.58) = $16,500 + 2,133 = $18,633 Job 354: Materials: ($80,000 + 20,000 + 30,000)/8,000 = $16.25/unit EUP: (8,000 - 2,000) + (2,000 65%) = 6,000 + 1,300 = 7,300 Conversion cost: ($15,000 + 25,000 + 14,896)/7,300 = $7.52 Ending Inv: (2,000 $16.25) + (1,300 $7.52) = $32,500 + 9,776 = $42,276
97.
Gregg Industries uses three operations in sequence to manufacture an assortment of flower baskets. In each operation, the same procedures, time, and costs are used to perform that operation, regardless of the basket style being produced. During March, a batch of 500 baskets of style D and a batch of 800 baskets of style F were put through the first operation. All materials for a batch are introduced at the beginning of the operation for that batch. The costs shown below were incurred in March for the first operation:
There were no inventories at the beginning of the month; 400 units of Style D and 600 units of Style F were transferred to the next operation. The ending inventories were 30% and 60% complete for Styles D and F, respectively. Required: What is the total cost of the ending inventory in process for operation #1? Style D: $450 + Style F: $1,440 = $1,890 Feedback: EUP Style D: 400 + [(500 - 400) 30%) = 400 + 30 = 430 EUP Style F: 600 + [(800 - 600) 60%] = 600 + 120 = 720 Conversion cost: ($4,450 + 3,600)/(430 + 720) = $7.00 Style D: Materials: $1,200/500 = $2.40/unit Ending Inv: (100 $2.40) + (30 $7) = $240 + 210 = $450 Style F: Materials: $2,400/800 = $3/unit Ending Inv: (200 $3) + (120 $7) = $600 + 840 = $1,440
98.
Viking Sports is a manufacturer of sportswear. Viking produces its products in two departments. The information for the current month for Department #2 is as follows:
Beginning WIP was half complete as to conversion costs. Direct materials for Department #2 are added at when the process is 25% complete. Factory overhead is applied at a rate equal to 50 percent of direct manufacturing labor. Ending WIP was 60 percent complete. Viking Sports uses weighted average costing. Required: HINT: use 4 decimal places in your calculations a. Compute the equivalent units of production for each input. b. Compute the cost per unit. c. Compute the cost transferred out to finished goods. d. Compute the ending work in process inventory balance. (a) EUP TI: 60,000; Mat: 60,000; Conv: 56,000 (b) TI: $2.50; Mat: $1.20; Conv: $0.6214; Total $4.3214 (c) $216,070 (d) $40,728 Feedback: Overhead applied = 50% $20,000 = $10,000 (a) TI EUP: 50,000 + (100% 10,000) = 60,000 Mat EUP: 50,000 + (100% 10,000) = 60,000 Conv EUP: 50,000 + (60% 10,000) = 56,000 (b) TI: ($50,000 + 100,000)/60,000 = $2.5000 Mat: ($12,000 + 60,000)/60,000 = $1.2000 Conv: ($3,200 + 1,600 + 20,000 + 10,000)/56,000 = $0.6214 (c) transferred out: 50,000 ($2.5000 + 1.2000 + 0.6214) = $216,070 (d) EWIP:
Total EWIP $40,728

99.
Viking Sports is a manufacturer of sportswear. Viking produces its products in two departments. The information for the current month for Department #2 is as follows:
Beginning WIP was half complete as to conversion costs. Direct materials for Department #2 are added at when the process is 25% complete. Factory overhead is applied at a rate equal to 50 percent of direct manufacturing labor. Ending WIP was 60 percent complete. Viking Sports uses first-in, first-out (FIFO) costing. Required: HINT: use 4 decimal places in your calculations a. Compute the equivalent units of production for each input. b. Compute the cost per unit. c. Compute the cost transferred out to finished goods. d. Compute the ending work in process inventory balance. (a) EUP TI: 40,000; Mat: 40,000; Conv: 46,000 (b) TI: $2.50; Mat: $1.50; Conv: $0.6522; Total $4.6522 (c) $212,888 (d) $43,913 Feedback: Overhead applied = 50% $20,000 = $10,000; started & completed: 40,000 - 10,000 = 30,000 (a) TI EUP: (0% 20,000) + 30,000 + (100% 10,000) = 40,000 Mat EUP: (0% 20,000) + 30,000 + (100% 10,000) = 40,000 Conv EUP: (50% 20,000) + 30,000 + (60% 10,000) = 46,000 (b) TI: $100,000/40,000 = $2.5000 Mat: $60,000/40,000 = $1.5000
100.
Bisson Furniture uses a process cost system to account for its chair factory. Beginning inventory consisted of 5,000 units (100% complete as to material, 55% complete as to labor) with a cost of $124,800 materials and $104,500 conversion. 58,000 units were started into production during the month with material costs of $1,537,000 and $2,124,375 of conversion costs. The ending inventory of 6,000 chairs was 100% complete as to materials and 40% complete as to labor. Bisson uses weighted average costing. Required: HINT: use 4 decimal places in your calculations a. Compute the equivalent units of production for each input. b. Compute the cost per unit. c. Compute the cost transferred out to finished goods. d. Compute the ending work in process inventory balance. (a) EUP Mat: 63,000; Conv: 59,400 (b) Mat: $26.3778; Conv: $37.5231; Total $63.9009 (c) $3,642,351 (d) $248,322 Feedback: transferred out: 5,000 + 58,000 - 6,000 = 57,000 (a) Mat EUP: 57,000 + (100% 6,000) = 63,000 Conv EUP: 57,000 + (40% 6,000) = 59,400 (b) Mat: ($124,800 + 1,537,000)/63,000 = $26.3778 Conv: ($104,500 + 2,124,375)/59,400 = $37.5231 (c) transferred out: 57,000 ($26.3778 + 37.5231) = $3,642,351 (d) EWIP:
101.
Bisson Furniture uses a process cost system to account for its chair factory. Beginning inventory consisted of 5,000 units (100% complete as to material, 55% complete as to labor) with a cost of $124,800 materials and $104,500 conversion. 58,000 units were started into production during the month with material costs of $1,537,000 and $2,124,375 of conversion costs. The ending inventory of 6,000 chairs was 100% complete as to materials and 40% complete as to labor. Bisson uses first-in, first-out (FIFO) costing. Required: HINT: use 4 decimal places in your calculations a. Compute the equivalent units of production for each input. b. Compute the cost per unit. c. Compute the cost transferred out to finished goods. d. Compute the ending work in process inventory balance. (a) EUP Mat: 58,000; Conv: 56,650 (b) Mat: $26.50; Conv: $37.50; Total $64 (c) $3,641,675 (d) $249,000 Feedback: started & completed: 58,000 - 6,000 = 52,000 (a) Mat EUP: (0% 5,000) + 52,000 + (100% 6,000) = 58,000 Conv EUP: (45% 5,000) + 52,000 + (40% 6,000) = 56,650 (b) Mat: $1,537,000/58,000 = $26.50 Conv:$2,124,375/56,650 = $37.50
102.
Brisebois Hardwoods uses a process costing system to account for its wood processing plant. Beginning inventory consisted of 4,000 board feet of lumber (100% complete as to material, 35% complete as to labor). Brisebois added 132,000 board feet into the process during April. On April 30th there were 10,000 board feet still in process (100% complete as to material, 22% complete as to labor). Required: (a) Calculate the equivalent units of production for each input, assuming Brisebois uses weighted average. (b) Calculate the equivalent units of production for each input, assuming Brisebois uses FIFO. (a) Mat: 136,000; Conv: 128,200 (b) Mat: 132,000; Conv: 126,800 Feedback: transferred out: 4,000 + 132,000 - 10,000 = 126,000; started & completed: 132,000 - 10,000 = 122,000 (a) EUP Mat: 126,000 + (100% 10,000) = 136,000 EUP Conv: 126,000 + (22% 10,000) = 128,200 (b) Mat: (0% 4,000) + 122,000 + (100% 10,000) = 132,000 Conv: (65% 4,000) + 122,000 + (22% 10,000) = 126,800
AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Medium Lanen - Chapter 08 #102 Learning Objective: 1 Topic Area: Determining Equivalent Units
103.
Giguere Processing uses a process costing system to account for its solvent plant. Beginning inventory consisted of 14,000 gallons (80% complete as to material, 55% complete as to labor). Giguere added 213,000 gallons into the process during April. On April 30th there were 18,000 gallons still in process (60% complete as to material, 45% complete as to labor). Required: (a) Calculate the equivalent units of production for each input, assuming Giguere uses weighted average. (b) Calculate the equivalent units of production for each input, assuming Giguere uses FIFO. (a) Mat: 219,800; Conv: 217,100 (b) Mat: 208,600; Conv: 209,400 Feedback: transferred out: 14,000 + 213,000 - 18,000 = 209,000; started & completed: 213,000 - 18,000 = 195,000 (a) EUP Mat: 209,000 + (60% 18,000) = 219,800 EUP Conv: 209,000 + (45% 18,000) = 217,100 (b) Mat: (20% 14,000) + 195,000 + (60% 18,000) = 208,600 Conv: (45% 14,000) + 195,000 + (45% 18,000) = 209,400
AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Medium Lanen - Chapter 08 #103 Learning Objective: 1 Topic Area: Determining Equivalent Units
104.
Franken Chemicals produces a solvent in its Thorp plant. Three chemicals are combined at the start of the process and blended under pressure for a period of time. At the 75% point of completion, an additional chemical is added. The following information has been gathered:
Franken completed 98,000 gallons during the month. The process engineer informs you that the beginning WIP was at the 30% completion point, the ending WIP is at 70%. Franken uses weighted average costing. Required: HINT: use 4 decimal places in your calculations a. Compute the equivalent units of production for each input. b. Compute the cost per unit c. Compute the cost transferred out to finished goods d. Compute the ending work in process inventory balance (a) Mix: 110,000; Added Chem: 98,000; Conversion: 106,400 (b) Mix: $0.6363; Added Chem: $0.1531; Conversion: $0.3571 (c) $112,357 (d) $10,635 Feedback: (a) Chem Mix: (100% 98,000) + (100% 12,000) = 110,000 Added Chemical: (100% 98,000) + (0% 12,000) = 98,000 Conversion: (100% 98,000) + (70% 12,000) = 106,400 (b) Chem Mix: ($5,000 + 65,000)/110,000 = $0.6363 Added Chemical: $15,000/98,000 = $0.1531 Conversion: ($3,000 + 35,000)/106,400 = $0.3571 (c) 98,000 $1.1465 = $112,357 (d) (12,000 $0.6363) + (8,400 $0.3571) = $10,635
AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Hard Lanen - Chapter 08 #104 Learning Objective: 5 Topic Area: Assigning Costs Using FIFO Process Costing
105.
Franken Chemicals produces a solvent in its Thorp plant. Three chemicals are combined at the start of the process and blended under pressure for a period of time. At the 75% point of completion, an additional chemical is added. The following information has been gathered:
Franken completed 98,000 gallons during the month. The process engineer informs you that the beginning WIP was at the 40% completion point, the ending WIP is at 70%. Franken uses first-in, first out (FIFO) costing. Required: HINT: use 4 decimal places in your calculations a. Compute the equivalent units of production for each input. b. Compute the cost per unit c. Compute the cost transferred out to finished goods d. Compute the ending work in process inventory balance (a) Mix: 100,000; Added Chem: 98,000; Conversion: 102,400 (b) Mix: $0.6500; Added Chem: $0.1531; Conversion: $0.3418 (c) $112,333 (d) $10,671 Feedback: Started & completed: 100,000 started - 12,000 EWIP = 88,000 (a) Chem Mix: (0% 10,000) + (100% 88,000) + (100% 12,000) = 100,000 Added Chemical: (100% 10,000) + (100% 88,000) + (0% 12,000) = 98,000 Conversion: (60% 10,000) + (100% 88,000) + (70% 12,000) = 102,400 (b) Chem Mix: $65,000/100,000 = $0.6500 Added Chemical: $15,000/98,000 = $0.1531 Conversion: $35,000/102,400 = $0.3418 (c) BWIP $8,000 + Added (10,000 $0.1531) + (6,000 $0.3418) + (88,000 $1.1449) = $112,333 (d) (12,000 $0.65) + (8,400 $0.3418) = $10,671
AACSB: Analytic AICPA: FN-Measurement Blooms: Application Difficulty: Hard Lanen - Chapter 08 #105 Learning Objective: 5 Topic Area: Assigning Costs Using FIFO Process Costing
106.
Kumalae Products makes four models of ukuleles. All of the models go through the same assembly line but they differ as to the materials used and the degree of finishing. The Basic model has a low gloss finish and goes immediately to Packaging upon completion in Assembly. The Swietenia model and the Acacia model go through a Buffing process upon completion in Assembly. They then go on to Packaging. The Koa model is the top of the line and goes first to Buffing from the Assembly, then to Special Polishing, then to Packaging. Kumalae uses operations costing and allocates conversion costs based on the number of units processed in each department.
Required: (a) What is the cost per unit of each of the completed ukuleles? Basic: $75/unit; Swietenia: $135/unit; Acacia: $155/unit; Koa: $285/unit Feedback: Assembly: $54,000/(1,000 + 500 + 250 + 50) = $30/unit Buffing: $32,000/(500 + 250 + 50) = $40/unit Sp Polish: $3,000/50 = $60/unit Packaging: $9,000/1,800 = $5/unit Basic: $40,000/1,000 + $30 + $5 = $75/unit Swietenia: $30,000/500 + $30 + $40 + $5 = $135/unit Acacia: $20,000/250 + $30 + $40 + $5 = $155/unit Koa: $7,500/50 + $30 + $40 + $60 + $5 = $285/unit
107.
Is cost accumulation easier under a process costing system or a job-order costing system? Why or why not? Job costing requires more recordkeeping (e.g., detailed subsidiary ledgers for each individual job) while process costing requires more estimates (e.g., degree of completion, cost flow assumption, and equivalent units of production).
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Medium Lanen - Chapter 08 #107 Learning Objective: 7 Topic Area: Choosing between Job and Process Costing
108.
Describe the five steps in preparing a production cost report. Step 1: Measure the physical flow of the resources. Step 2: Compute the equivalent units of production. Step 3: Identify the product costs for which to account. Step 4: Compute the cost per equivalent unit. Step 5: Assign the product cost to batches of work.
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Medium Lanen - Chapter 08 #108 Learning Objective: 4 Topic Area: Reporting This Information to Managers: The Production Cost Report
109.
Explain the major differences between the weighted average costing and FIFO costing. Weighted average combines the effort that is present in the beginning work-in-process with the effort added this period. FIFO keeps the beginning costs and efforts segregated from the current period. This results in differences in the equivalent units, the costs included in the unit cost calculations, and the computation of costs transferred out to the next department.
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Medium Lanen - Chapter 08 #109 Learning Objective: 6 Topic Area: Determining Which Is Better: FIFO or Weighted Average?
110.
What characteristics of the production process would lead a company to use process costing rather than job costing? Process costing assumes that each unit produced is relatively uniform or is essentially identical. This implies that the inputs (materials, labor, and overhead) are relatively uniform and the production process is consistent.
AACSB: Analytic AICPA: FN-Measurement Blooms: Comprehension Difficulty: Medium Lanen - Chapter 08 #110 Learning Objective: 7 Topic Area: Choosing between Job and Process Costing
111.
What would happen to the equivalent units, production cost per unit and costs transferred out for a company using weighted average if the degree of completion of the ending inventory were underestimated? If the degree of completion of ending inventory were underestimated, the equivalent units would be understated. Since equivalent units are the denominator for the cost per unit, this would be overstated since the denominator is too small. Since the cost per unit is overstated, the costs transferred out would also be overstated. Feedback: Although it is not requested, the ending inventory cost would be understated due to the understatement of the equivalent units in ending inventory.
AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Medium Lanen - Chapter 08 #111 Learning Objective: 3 Topic Area: Compute the Costs per Equivalent Unit: Weighted Average
ch8 Summary
Category AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Blooms: Application Blooms: Comprehension Blooms: Knowledge Difficulty: Easy Difficulty: Hard Difficulty: Medium Lanen - Chapter 08 Learning Objective: 1 Learning Objective: 2 Learning Objective: 3 Learning Objective: 4 Learning Objective: 5 Learning Objective: 6 Learning Objective: 7 Learning Objective: 8 Topic Area: Assign Product Cost Topic Area: Assigning Costs Using FIFO Topic Area: Assigning Costs Using FIFO Process Costing Topic Area: Choosing between Job and Process Costing Topic Area: Comparing Job, Process, and Operation Costing Topic Area: Compute the Costs per Equivalent Unit Topic Area: Compute the Costs per Equivalent Unit: Weighted Average Topic Area: Compute the Equivalent Units of Production Topic Area: Determining Equivalent Units Topic Area: Determining Which Is Better: FIFO or Weighted Average? Topic Area: Identify the Product Costs for Which to Account Topic Area: Measure the Physical Flow of Resources Topic Area: Operation Costing Topic Area: Process Costing Topic Area: Production Cost Report Topic Area: Reporting This Information to Managers: The Production Cost Report Topic Area: Using Costs Transferred in from Prior Departments Topic Area: Using Product Costing in a Process Industry # of Questions 111 111 4 69 37 1 32 20 59 115 11 23 19 3 29 15 3 9 10 4 8 3 1 11 4 26 6 6 2 6 8 2 1 1 3 9

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60. Unit cost of material is A. B. C. D. $2.20. $2.07. $1.85. $1.76.

108.Describe the five steps in preparing a production cost report.

(b) is a retailer, (c) and (d) would use job costing.

Fred's product is uniform, Ahmad's are not.

This is a definition of equivalent units.

It doesn't matter when the units were started.

FIFO uses the same 5 steps as weighted average.

I is true; II may be true in certain circumstances, but not in every situation.

Both of these statements are true.

Actual costing would not use predetermined rates.

4,800 + 700 - 400 = 5,100

50,000 + 16,000 = 66,000

50,000 + 16,000 3/8 = 56,000

Started and completed (115,000) + Ending inventory (.80 20,000) = 131,000

Started and completed (50,000 - 5,000) + ending WIP 5,000 = 50,000

45,000 + 5,000(.60) = 48,000

1,000 + (300 2/3) = 1,200

[($27,000/10,000) 8,000] + [($36,000/9,000) 8,000] = $21,600 + 32,000 = $53,600

($126,000 + 32,000)/12,000 = $13.17

16,000 + 4,000 = 20,000

16,000 + 4,000(.25) = 17,000

Unit cost of material is A. B. C. D. $2.20. $2.07. $1.85. $1.76.

Unit cost of labor and overhead is A. B. C. D. $2.34. $2.20. $1.97. $1.87.

16,000 (1.76 + 2.20) = $63,360

4,000(1.76) + 1,000(2.20) = $9,240

5,000 + 15,000 - 2,000 = 18,000

15,000 - 2,000 = 13,000

5,000(.70) + 13,000 + 2,000(.30) = 17,100

$1,200 + 3,600 + 8,000 + 4,800 = $17,600

1,200(.75) + 5,000 + 1,000(.50) = 6,400

($8,000 + 4,800)/6,400 = $2.00

[$1,200 + (900)(2.00)]/1,200 = $2.50

($3,600/6,000) + $2.00 = $2.60

[$1,200 + 900(2.00)] + [5,000 ($2.60)] = $16,000

1,000($.60) + 500($2.00) = $1,600

(100*.9) + (50*.8) + (200*.1) = 150

($5,500 + 18,000)/(42,500 + 12,500) = $0.43

$468,000/[(16,000 .40) + 76,000 + (24,000 .90)] = $4.50

($182,880 + 391,160)/[(16,000 .80) + 76,000 + (24,000 .40)] = $5.83

[21,600 ($4.50)] + [9,600 ($5.83)] = $153,168

($54,560 + 468,000)/[92,000 + (24,000 .90)] = $4.60

($20,320 + 15,240 + 182,880 + 391,160)/[92,000 + (24,000 .40)] = $6.00

[21,600 ($4.60)] + [9,600 ($6.00)] = $156,960

Total EWIP $40,728

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(100.9) + (50.8) + (200*.1) = 150