ACCOUNTING CHAPTER 5
At Darwin Corporation, direct materials are added at the beginning of the process and conversions costs are uniformly applied. Other details include: Beginning WIP direct materials $38,000 Beginning WIP conversion costs $26,250 Costs of materials added $391,100 Costs of conversion added $280,125 WIP beginning (50% for conversion) 29,200 units Units started 122,500 units Units completed and transferred out 105,700 units WIP ending (60% for conversion) 46,000 units What is the total cost of units remaining in ending WIP? (Round intermediate calculations to the nearest cent and the final answer to the nearest dollar.) A) $235,842 B) $157,432 C) $193,660 D) $130,116
$193,660
Which of the following is not a step of the 5-step process costing procedure? A) Compute output in terms of equivalent units. B) Summarize total costs to account for. C) Summarize the flow of physical units. D) Compute total manufacturing overhead estimated.
Compute total manufacturing overhead estimated.
A hair product manufacturer offers the following information: WIP Inventory, January 1 0 units Units started 26,600 units Units completed and transferred out 19,200 units WIP Inventory, December 31 7,400 units Direct materials $284,480 Direct labor $583,000 Manufacturing Overhead $337,920 The units in ending WIP Inventory were 60% complete for materials and 40% complete for conversion costs. On December 31, the cost per equivalent unit for conversion costs would be closest to A) $31.15. B) $28.09. C) $41.56. D) $39.15.
$41.56
What are the ending inventory equivalent units for materials if 15,800 units are completed and transferred out and 4,800 remain in ending WIP at 35% complete? A) 3,850 B) 4,800 C) 1,680 D) 5,530
1,680
If all direct materials are added at the beginning of the production process, and the units have made it 50% of the way through the production process, then the percentage completion for direct materials is A) 100%. B) 0%. C) 50%. D) none of the above.
100%
Beginning WIP Inventory is 900 units; completed and transferred out were 3,600 units; and Ending WIP Inventory is 800 units. What is the number of units started? A) 3,500 B) 2,800 C) 3,600 D) 4,400
3,500
In a department, 30,000 units are completed and transferred out and 9,400 remain in ending WIP at 65% complete. If an equivalent unit costs $10.00 for direct materials, what is the value of materials transferred out? A) $61,100 B) $206,000 C) $94,000 D) $300,000
300,000
Assigning costs to units completed and to units in ending WIP Inventory in a second department is a three-step process.
False
Conversion costs are the sum of direct labor and direct materials
False
Cost for direct materials, direct labor and Manufacturing Overhead are assigned to each job.
False
Equivalent units express the amount of work done during a period in terms of partially completed units.
False
If a company has a series of processes, the company uses just one work-in-process account.
False
In process costing, units that are partially completed are accounted for the same as units in Finished Goods Inventory.
False
Process costing is typically used for businesses that make unique goods in relatively small amounts.
False
Product cost reports are done only for the final department in process costing.
False
The "total physical units to account for" is the sum of the units in beginning WIP Inventory plus the units in ending WIP Inventory.
False
The cost per equivalent unit for direct materials will always be equal to the cost per equivalent unit for conversion costs.
False
The entry to transfer goods in process from Dept. A to Dept. B includes increasing (debiting) WIP Inventory in Dept. A.
False
The number of equivalent units is usually the same for direct materials and conversion costs.
False
Unique or custom-made goods use a process costing system.
False
When units are moved from one processing department to the next, the cost associated with those units must also be moved from one WIP account to the next. What are these costs called? A) Transported costs B) Transmitted costs C) Transferred costs D) Conveyed costs
Transferred costs
A separate Work in Process Inventory account is maintained for each process.
True
Both process costing and job costing assign costs to units as they proceed through the process.
True
Companies that use automated production processes often condense the three manufacturing costs into two categories: Direct materials and Conversion costs.
True
Costs are transferred, along with the units, from one WIP Inventory to the next.
True
Direct materials are often added at a particular point in the production process.
True
Equivalent units express the amount of work done during a period of time in terms of fully completed units of output.
True
Equivalent units should be computed separately for direct materials and conversion costs.
True
If a company has 6,000 units that are 60% complete, the equivalent unit figure is 3,600.
True
In a job cost system, all costs flow to a particular job.
True
In a mass-production environment, direct labor is usually a relatively small component of the total manufacturing costs.
True
In a process costing system, costs flow into Finished Goods Inventory only from the Work in Process Inventory of the last process.
True
In process costing, the costs flow from Raw Materials Inventory, to Work in Process Inventory, to Finished Goods Inventory.
True
In process costing, the manufacturing costs assigned to the product must always follow the physical movement of the product.
True
In the process costing method, when multiple production steps are required, the five-step process costing procedure must be completed in each production department.
True
Prime costs include direct labor and direct materials.
True
Process costing is typically used for businesses that make large quantities of identical items.
True
Second or subsequent departments must account for units and costs transferred in from previous departments.
True
The "total physical units accounted for" is the sum of the units completed and transferred out during the period plus the units in ending WIP Inventory.
True
The cost per equivalent unit must be computed for transferred-in costs, as well as direct materials and conversions costs, in a subsequent department.
True
The existence of ending Work in Process Inventory necessitates how much of the total manufacturing cost should be assigned to units still in ending WIP Inventory, and how much of the cost should be assigned to units completed during the period.
True
The first step of the 5-step process costing procedure is to summarize the flow of physical units.
True
The last step of the 5-step process costing procedure is to assign total costs to units completed and to units in ending Work in Process Inventory.
True
The number of equivalent units is computed before computing the cost per equivalent unit.
True
The weighted average and FIFO methods differ only in how they treat beginning inventory.
True
The weighted-average method of process costing is simpler than the FIFO method.
True
To find the "cost per equivalent unit," the "total costs to account for" are divided by the "total equivalent units."
True
Total direct materials = $67,500, and there is no beginning WIP Inventory. Units completed are 15,000 with no ending Work in Process Inventory. The cost per unit is $4.50.
True
Transferred-in costs are incurred in a previous process and are carried forward as part of the product's cost when it moves to the next process.
True
Wong completed 24,000 units and had another 6,000 units 45% complete. The total equivalent units for the period are 26,700.
True
Equivalent units are calculated by A) multiplying the physical number of units by the percentage of completion. B) adding the physical number of units with the number of units completed last period. C) subtracting the physical units finished this period from the physical units in beginning inventory. D) dividing the physical number of units by the percentage of completion.
multiplying the physical number of units by the percentage of completion.
At Global Tech Inc., direct materials are added at the beginning of the process and conversions costs are uniformly applied. Other details include: WIP beginning (50% for conversion) 26,200 units Units started 125,500 units Units completed and transferred out 114,700 units WIP ending (60% for conversion) 37,000 units Beginning WIP direct materials $32,000 Beginning WIP conversion costs $22,500 Costs of materials added $389,100 Costs of conversion added $271,125 What is the cost per equivalent unit for direct materials? (Round your final answer to the nearest cent.) A) $2.56 B) $2.78 C) $3.08 D) $2.99
$2.78
At Darwin Corporation, direct materials are added at the beginning of the process and conversions costs are uniformly applied. Other details include: Beginning WIP direct materials $32,000 Beginning WIP conversion costs $38,000 Costs of materials added $384,100 Costs of conversion added $393,100 WIP beginning (50% for conversion) 29,200 units Units started 127,500 units Units completed and transferred out 106,700 units WIP ending (60% for conversion) 50,000 units What is the cost per equivalent unit for conversion costs? A) $3.55 B) $2.88 C) $3.15 D) $2.75
$3.15
Simply Natural has 3,100 gallons of chocolate milk in WIP Inventory, with 71% of materials already added. What are equivalent units in ending WIP Inventory for materials if the chocolate milk is 59% through the process? A) 1,829 B) 2,201 C) 0 D) 372
2,201
A company manufactures purses. Last month's costs were: Direct materials $221,000 Direct labor 157,000 Manufacturing Overhead 80,000 What were the conversion costs for the month? A) $221,000 B) $378,000 C) $237,000 D) $458,000
237,000
32) In Step 1 of the process costing procedure, the "total units to account for" is the sum of A) the units in beginning WIP plus the units in ending WIP. B) the units in ending WIP plus the units started in production during the month. C) the units in beginning WIP plus the units started in production during the month. D) the units completed and transferred out plus the units started in production during the month.
the units in beginning WIP plus the units started in production during the month.