Chapter 18 cost accy dynamic study module

Artic Electronics manufactures and sells electronic goods. Compressors are added to the process at the beginning and evaporators added at a later point of the manufacturing process. Manufacturing labor costs are added to the process at a different time compared to other conversion costs. Which of the following statements will be true for Artic Electronics?

It will most likely have four distinct cost categories.

Transferred-in costs to account for are $90,000. Of the 750 units to account for, 500 were completed and transferred out. The ending WIP units are 100% complete as to direct materials and 60% complete as to conversion costs. What is the cost per equivalent unit of the work done to date, using the Weighted-average method?

$138.46

Aces Inc makes identical accessories for bathrooms and uses process costing. The flow of production at the end of April was as follows: Work in Process, beginning 420 Started during the current period 400 Units to account for 820 615 units were completed and transferred out during the current period. At the end of the period, how many units will remain in the work in process, beginning category using the FIFO method?

0 units

Which of the following statements is true of process-costing?

The weighted-average method results in a more representative average unit cost when input prices fluctuate month to month.

________ are costs incurred in previous departments that are carried forward as the product's cost when it moves to a subsequent department in the production cycle.

Transferred-in costs

Which of the following journal entries records the direct materials purchased and used in production in the assembly process under the process-costing system?

Work in Process—Assembly XXX Accounts Payable Control XXX

Laurence Plastic Products manufactures plastic chairs. It has two departments—Molding and Finishing. The Molding department started manufacturing 80,000 plastic chairs during the month of May and transferred 50,000 units to the Finishing department. The remaining units were 75% complete as to conversion costs. The following costs were incurred during the month: Direct materials $350,000 Conversion costs 145,000 Total costs $495,000 The company has two cost classifications—direct materials and conversion costs. What is the journal entry to record the cost of goods completed and transferred to Finishing department during May? Assume Laurence had no opening inventory and direct materials are introduced at the beginning of the process.

Work in Process—Finishing 318,750 Work in Process—Molding 318,750

________ are a derived measure of output calculated by converting the quantity of input in completed and incomplete units into the amount of completed output units that could be produced with that quantity of input.

equivalent units

The Controller at Jack's Machine Company believes the degree of completion is 60% but the department manager insists they are 75% complete. The department manager is probably trying to ________.

improve operating income

Overestimating the degree of completion for conversion costs results in ________.

increases operating income

Transferred-in costs are also called ________.

previous department costs

A company bottling cola drinks is most likely to use which costing system?

process-costing

In a(n) ________, the unit cost of a product or service is obtained by assigning total costs to many identical or similar units of output.

process-costing system

In process-costing, a cost category is required ________

when costs are introduced into the process

Hogan's Clothing Company started the production of 10,000 units during the month of April and completed production of 8,000 units in the same month. The remaining units were 75% complete with respect to conversion costs. The following costs were incurred during the month: Direct materials $990,000 Conversion costs $408,500 Total costs $1,398,500 The company has two cost classifications—direct materials and conversion costs. What is the cost per unit of ending work-in-process inventory? Assume Hogan's had no opening inventory and direct materials are introduced at the beginning of the process.

$142

John Clothing Company manufactures and sells shirts. It has two departments: Stitching and Packing. The Stitching department has opening inventory of 100 shirts comprised of direct materials of $1,500 and conversion costs of $500. The units are estimated to be 60% complete with respect to conversion costs. During the month of October, 900 units were started and 600 shirts were completed and transferred to the Packing department. The ending inventory is 75% complete with respect to conversion costs. The following costs were incurred during the month: Direct materials $13,500 Conversion costs 9,250 Total costs $22,750 The company has two cost classifications—direct materials and conversion costs. What is the cost per unit of ending inventory? Assume direct materials are introduced at the beginning of the process.

$25.83

Matthew's Steelworks makes steel rods. In July, Matthew's manufactured and sold 1,700 rods. The following costs were incurred during the month: Direct materials $419,900 Conversion costs 98,600 Total costs $518,500 The company has two cost classifications—direct materials and conversion costs. What is the cost per unit of rods manufactured by Matthew's Steelworks? Assume there was no opening or closing inventory.

$305

Jane Industries started and completed 800 units during the month of January. The following costs were incurred during the month: Direct materials $32,500 Conversion costs $17,500 Total costs $50,000 The company has two cost classifications—direct materials and conversion costs. What is the cost per unit for Jane Industries? Assume there was no opening or closing stock.

$62.50

Smith Shoe Sellers stitched and sold 400 units during the month of January. The following costs were incurred during the month: Direct materials $22,000 Conversion costs 8,000 Total costs $30,000 The company has two cost classifications—direct materials and conversion costs. What is the cost per unit of shoes manufactured by Smith Shoe Sellers? Assume there was no opening or closing inventory.

$75

Sapphire Inc. manufactures and sells shirts. It has two departments: Stitching and Finishing. The Stitching department has opening inventory of 500 shirts comprised of direct materials of $7,500 and conversion costs of $2,500. The units are estimated to be 60% complete with respect to conversion costs. During the month of December, 4,500 units were started and 3,000 shirts were completed and transferred to the Finishing department. The ending inventory is 75% complete with respect to conversion costs. The following costs were incurred during the month: Direct materials $67,500 Conversion costs 46,250 Total costs $113,750 The company has two cost classifications—direct materials and conversion costs. What is the total cost assigned to shirts completed and transferred out by the Stitching department? Assume direct materials are introduced at the beginning of the process. (Round to whole dollars)

$77,490

Serene Watch Company started the production of 5,000 units during the month of February and completed production of 3,000 units in the same month. The remaining units were 60% complete. The following costs were incurred during the month: Direct materials $200,000 Conversion costs $210,000 Total costs $410,000 The company has two cost classifications—direct materials and conversion costs. What is the cost per unit of ending work-in-process inventory? Assume Serene had no opening inventory and direct materials are introduced at the beginning of the process.

$90

Lehman Corp. has two departments: Assembly and Testing. Assembly department had beginning inventory of 750 units which were 50% complete. During the year, 1,200 units were completed and transferred to the Testing department. Ending inventory is comprised of 800 units which were 75% complete. Compute the equivalent units of work done for conversion costs during the year for Lehman Corp. assuming it follows the FIFO process-costing method. Assume direct materials were added at the beginning of the process.

2,175 units

________ blends characteristics from both job-costing and process-costing systems.

A hybrid-costing system

Under the ________, the equivalent units of work done on the beginning work-in-process inventory equal the physical units times the percentage of work remaining to be done in the current period.

FIFO method