Chapter 4 - MC

Texas Plating Company reported a cost of goods manufactured of $526,000, with the firm's year-end balance sheet revealing work in process and finished goods of $81,000 and $140,000 respectively. If supplemental information disclosed raw materials used in production of $91,000, direct labor of $148,000, and manufacturing overhead of $249,000, the company's beginning work in process must have been:

$119,000 Explnation: Ending work in process + Cost of goods manufactured - Raw Materials - Direct Labor - Manufacturing Overhead = Beginning Work-in-Process = $81,000 + $526,000 - $148,000 - $249,000 = $119,000.

Universal Manufacturing uses a weighted-average process-costing system. All materials are introduced at the start of manufacturing, and conversion costs are incurred evenly throughout the process. The company's beginning and ending work-in-process inventories totaled 17,000 units and 21,000 units, respectively, with the latter units being 2/3 complete at the end of the period. Universal started 35,900 units into production and completed 31,900 units Manufacturing costs follow Beginning work in process: Materials, $62,100; conversion cost, $210,000 Current costs: Materials, $226,000; conversion cost, $512,000 Universal's equivalent-unit cost for conversion is:

$15.53 Explnation Equivalent unit cost for conversion is (Beginning WIP cost + Current costs) / (Completed units + Partial conversion on Ending WIP) = ($201,000 + $512,00) / [31,900 + (21,000 2/3)] = 15.53

The accounting records of Camacho Company revealed the following costs, among others: Factor insurance $35,000 Raw material used 258,000 Customer entertainment 17,000 Indirect labor 48,00 Depreciation on salesperson's cars 31,000 Production equipment rental costs 74,000 Costs that would be considered in the calculation of manufacturing overhead total:

$157,000 Explnation: Manufacturing Overhead Costs = Factory insurance + indirect labor + production equipment rental costs = $35,000 + $48,000 + $74,000 = $157,000

Lakeland Chemical manufactures a product called Zing. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 60% complete with respect to conversion; the ending work-in-process inventory is 20% complete. The following data pertain to May: Work in process, May 1 5,600 Units started during May 63,000 Units completed and transferred our 71,000 Work in process, May 31 7,600 Costs Work in process, May 1 (Total: $43,650) (Direct Material: 17,000) Cost incurred during May (Total: 236,430) (Direct Material: 72,600) Totals 280,000 89,7000 Using the weighted-average method of process costing, the cost per unit conversion activity is:

$2.63 Explnation: The equivalent units of conversion are equal to Units completed and transferred out (100% conversion) + Ending WIP (20% conversion) = 71,000 + (7,600 x 20%) = 72,520 Total conversion costs / Equivalent units for total conversion costs = $190,380 / 72,520 = $2.63

The accounting records of Younkin Corporation revealed the following selected costs: Sales commissions, $67,000; plant supervision, $200,000, and administrative expenses, $189,000. Younkin's period costs total

$256,000 Explnation Period costs = Sales commissions + Administrative expenses = $67,000 + $189,000 = $256,000

Universal Manufacturing uses a weighted-average process-costing system. All materials are introduced at the start of manufacturing, and conversion costs are incurred evenly throughout the process. The company's beginning and ending work-in process inventories totaled 16,900 units and 18,000 units, respectively, with the latter units being 2/3 complete at the end of the period. Universal started 39,600 units into production and completed 38,500 units. Manufacturing costs follow. Beginning work in process: Materials, $67,300; conversion cost, $242,000 Current costs: Materials, $259,000; conversion cost $571,000 Universal's equivalent-unit cost for materials is:

$5.78 Explnation: Equivalent unit cost for materials is (Beginning WIP cost + Current cost) / (Production Completed + Ending WIP unites) = ($67,300 + $259,000) / (38,500 + 18,000) = $5.78

The accounting records of Stingray Company revealed the following information: Total manufacturing costs $700,000 Work-in-process inventory, 1/1 73,000 Finished-goods inventory 1/1 163,000 Work-in-process inventory, 12/31 95,000 Finished-goods inventory, 12/31 140,0000 Stingray's cost of goods sold is

$701,000 Explnation Cost of Goods Sold = Total manufacturing costs - (Change in WIP) + (Change in Finished Goods) = $700,000 - ($95,000 - $73,000) + ($163,000 - $140,000) = $701,000

The accounting records for Stingray Company revealed the following information: Total manufacturing costs $720,000 Work-in-process inventory, 1/1 75,000 Finished-goods inventory, 1/1 165,000 Work-in-process inventory, 12/31 97,000 Finished-goods inventory, 12/31 142,000

$721,000 Explnation Cost of Goods sold = Total manufacturing costs - (Change in WP) + (Change in Finished Goods) = $720,000 - ($97,000 - $75,000) + ($165,000 - $142,000) = $721,000

Norton Textile Co. manufactures a variety of fabrics. All materials are introduced at the beginning of production; conversion cost is incurred evenly through manufacturing . The Weaving Department had 2,000 units of work in process on April 1 that were 40% complete as to conversion costs. During April 8,000 units were completed and on April 30, 3,500 units remained in production, 60% complete with respect to conversion costs. The equivalent units of direct materials for April total:

11,500 Explnation: The equivalent units of direct materials for April total = April units completed + Units remaining in production = 8,000 + 3,500 = 11,500. Equivalent units of direct materials (because material is added at the beginning of the process).

What is the missing amount in this physical flow of units? Work in process, August 1 7,200 tons Units started in August ? Unites completed during August 22,500 Work in process, August 31 2,700 tons

18,000 Explnation: WIP, Beginning + Units started - Units completed = WIP, ending; 7,200 + x - 22,500 = 2,700; x = 18,000

Linder Corporation had 8,600 units of work in process on November 1. During November, 29,800 units were started and as of November 30. 6,500 units remained in production. How many units were completed during November?

31,900 Explnation: Beginning WIP Inventory (Nov. 1) + units started in November - units remaining in production = Units completed; 8,600 + 29,800 - 6,500 = 31,900

The accounting records of Falcon Company revealed the following information Raw materials used $62,000 Direct labor 127,000 Manufacturing overhead 362,000 Work-in-process inventory, 1/1/ 52,000 Finished-goods inventory, 1/1 191,000 Work-in-process inventory, 12/31 78,000 Finished-goods inventory, 12/31 142,000

525,000 Explnation: Cost of goods manufactured = [Raw materials + Direct labor + Manufacturing Overhead] - Change in WIP = [$62,000 + $127,000 + $363,000] - ($78,000 - $52,000) = $525,000

Mohawk Machining, which uses a process-costing system, adds material at the beginning of production and incurs conversion costs evenly throughout manufacturing. The following selected information was taken from the company's accounting records; Total equivalent units of materials: 11,500 Total equivalent units of conversion: 10,850 Units started and completed during the period: 8,900 On the basis of this information, the ending work-in-process inventory's stage of completion is:

75% Based on this information, the ending work-in-process is 75% complete: Materials started and completed + Units in ending WIP = Total materials or 8,900 x = 11,500' x = 2,600; Equivalent units of conversion- Started and completed = Partial units with conversion costs in ending inventory or 10,580 - 8,900 = 1,950 units; the percentage of partial conversion work is: 1,950 / 2,600 = 75% complete

Lakeland Chemical manufactures a product called Zing. Direct materials are added at the beginning of the process and conversion activity occurs uniformly throughout the production. The beginning work-in-process inventory is 70% complete with respect to conversion; the ending work-in-process inventory is 30% complete. The following data pertain to May: Work in Process, May 17,600 UNites started during May 69,000 Units completed and transferred out 79,600 Work in process, May $49,000 22,500 Cost incurred during May 304,200 75,200 Total 353,200 97,700 Using the weighted-average method of process costing, the equivalent units of conversion activity total:

81,730 Explnation The equivalent units of conversion are equal to Units completed and transferred out (100% conversion) + Ending WIP (30% conversion) = 76,600 + (7,100 x 30%) = 81,730 units

Which the following manufacturers would most likely not use a process-cost accounting system

A builder of customized yatcts

Alton Company uses a process-costing system for its single product. Material A is added at the beginning of the process; in contrast, material B is added when the units are 75% complete. The firm's ending work-in-process inventory consists of 13,900 units that are 85% complete. Which of the following correctly expresses the equivalent units of production with respect to materials A and B in the ending work-in-process inventory?

A. 13,900; B. 13,900 Explanation: Equivalent units are 13,900 for each Material A and B, since A is added at the beginning and the 75% mark for B s addition has already passed when the product is 85% complete.

Which of the following best describes the procedures used in operation costing to assign direct-material and conversion costs to production?

Choice B (Direct-Material Costs: Similar to those in job costing) (Conversion Costs: Similar to those in process costing)

Which of the following choices correctly shows how costs are accumulated in a process costing system?

Choice D (By Batch: No) (By Time Period: Yes) (By Process or Department: Yes)

Which of the following companies would likely use a process costing system?

Choice D (Custom Furniture Manufacturer: No) (Chemical Producer: Yes) (Soft Drink Bottler: Yes)

Gutierrez, which uses a process-costing system, adds all material at the beginning of production and incurs conversion cost evenly throughout manufacturing. The information that follows relates to the period just ended Units started and completed: 85,000 Units in ending work-in-process inventory: 20,000, 40% complete Which of the following choices correctly expresses the total equivalent units of production with respect to material and conversion cost?

Choice D (Material 105,00)) (Conversion 93,000) Explnation: The material equivalent units is equal to 105,000 units (or 85,000 started and completed + 20,000 ending WIP, materials at beginning of process) and the conversion equivalent units is equal to 93,000 units for 85,000 Started and completed + (20,0000 x 40%) Ending WIP of 40% conversion costs added early in the process).

Which the following is a key document in a typical process-costing system?

Departmental production report

Which of the following is true concerning cost drivers for the predetermined overhead rate in a process costing system?

If direct labor cost is the cost driver, direct labor and manufacturing overhead may be combined into the single element of conversion cost.

Covington Corporation uses a process-costing accounting system. The company added direct materials at the start of its production process; conversion costs, on the other hand, is incurred evenly throughout manufacturing. The firm has no beginning work-in-process inventory; its ending work in process is 8% complete. Which of the following sets of percentages would be used to calculate the correct number of equivalent units in the ending work-in-process inventory?

Materials, 100%, conversion costs, 80%

Corrigan, Inc. overstated the percentage of work completed with respect to conversion cost on the ending work-in-process inventory.What is the effect of this overstatement on conversion costs equivalent units and physical units manufactured, respectively?

Overstated, none

Domkowski began operations on January 1 of the current year. The company uses a process-costing system, and conversion cost is incurred evenly throughout manufacturing. By January 31, the firm had completed 50,000 units. Which of the following statements is true about the ending work-in-process inventory if equivalent units for conversion cost totaled 56,000 units

The ending work-in-process inventory of 10,000 physical units was 60% complete

Gulliver, Inc. which uses a process-costing system, transfers completed production from Department no. 1 to Department no. 2 for further work. Which of the following best describes the account that would be debited to record this transfer?

Work-in-Process Inventory: Department no. 2

Bright, Inc. which uses a process-costing system, transfers completed production from Department no.1 to Department no. 2 for further work. Which of the following best describes the account that would be created to record this transfer?

Work-in-Process Inventory: Department no.1

Harrington Industries, which uses a process costing system, had a balance in its Work-in-Process account of $154,000 on January 1. The account was charged with direct materials, direct labor, and manufacturing overhead of $509,000 throughout the year. If a review of the accounting records determined that $128,000 of goods were still in production at year-end, Harrington should make a journal entry on December 31 that includes:

a credit to Work-in-Process Inventory for $535,000 Explnation: The balance of Work-in-Process at the end of the year is calculated as $154,000 (Jan. 1) + $509,000 (Added during the year) - $128,000 (Dec. 31 balance) = $535,000; Harrington should make a journal entry with a credit to Work-in-Process Inventory for $535,000.

Mulligan, Inc. which uses a process cost accounting system, passes completed production from Department A to Department B for further manufacturing. The journal entry to record completed production in Department A requires:

a debit to Work-in-Process Inventory: Department B and a credit to Work-in-Process Inventory: Department A.

Operation costing might be used to determine the cost of all of the following product except:

dishwashing detergent