Cost Ch 17 theory/problems
6) What is the total amount debited to the Work-in-Process account during the month of June?
B) $1,000,000 $500,000 + $500,000 = $1,000,000
32) What is the cost of the goods transferred out during October?
A) $363,000 60,000 - 22,000 = 38,000 (28,000 × 0.75) + 38,000 + (22,000 × 0.5) = 70,000 $90,000/60,000 = $1.50 × 22,000 = $33,000 The costs in beginning inventory $39,200 + $30,800 = $ 70,000 Direct materials = $1.50 x 38,000 = 57,000 Conversion costs = [$280,000/(21,000 + 11,000 + 38,000)] × 38,000 = 152,000 also FG beginning inventory (28,000 × 0.75 × $4.00) = 84,000 Total $363,000
7) What is the direct materials cost per equivalent unit during June?
A) $561.90 Direct materials Conversion costs Completed and transferred out 900 900.0 Work in process, ending 150 112.5 Total equivalent units 1,050 1,012.5 $90,000 + $500,000 = $590,000 $590,000/1,050 units =$561.90
8) What is the conversion cost per equivalent unit in June?
A) $627.16 Direct materials Conversion costs Completed and transferred out 900 900.0 Work in process, ending 150 112.5 Total equivalent units 1,050 1,012.5 $135,000 + $500,000 = $635,000 $635,000/1,012.5 = $627.16
9) What amount of direct materials costs is assigned to the ending Work-in-Process account for June?
A) $84,285 Direct materials Conversion costs Completed and transferred out 900 900.0 Work in process, ending 150 112.5 Total equivalent units 1,050 1,012.5 ($500,000 = $90,000)/1,050= $561.90 cost per equivalent unit $561.90 × 150= $84,285
19) What were the equivalent units for conversion costs for February if the beginning inventory was 70% complete as to conversion costs and the ending inventory was 40% complete as to conversion costs?
A) 178,000 170,000 + (0.4 × 20,000) = 178,000
18) What were the equivalent units for materials for February?
A) 190,000 chairs 20,000 + 170,000 = 190,000
2) Which of the following manufactured products would NOT use process costing?
A) 747 jet aircraft C) Construction of a commercial office building D) Both A and C are correct.
6) Dustin Plastics, Inc., manufactures plastic moldings for car seats. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through Department A and Department B. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Data for Department A for February 2012 are: Work in process, beginning inventory, 40% converted 200 units Units started during February 600 units Work in process, ending inventory: 100 units 30% complete as to conversion costs 100% complete as to materials Costs for the Department A for February 2012 are: Work in process, beginning inventory: Direct materials $200,000 Conversion costs $200,000 Direct materials costs added during February $2,000,000 Conversion costs added during February $2,500,000 What were the equivalent units of direct materials and conversion costs, respectively, at the end of February? Assume Dustin Plastics, Inc., uses the weighted-average process costing method.
A) 800; 730 Equivalent units of direct materials under weighted average = units completed + equivalent units in ending inventory = 700 + 100 Conversion costs = 700 + (100 × 30%) = 730
26) What were the equivalent units for conversion costs during February?
A) 83,500 (15,000 × 0.7) + 65,000 + (10,000 × 0.8) = 83,500
7) Which of the following statement(s) concerning conversion costs is correct?
A) Estimating the degree of completion of direct materials in a partially completed unit is usually easier to calculate than estimating the degree of completion for conversion costs.
33) A reason(s) why "pure" FIFO is rarely encountered in process costing is that:
A) FIFO is usually applied within a department to compute the cost of units transferred out B) the units transferred into the department during a given time period are usually carried at a single average unit cost C) tracking costs on a "pure" FIFO basis is very difficult D) All of these answers are correct.
4) Which one of the following statements is true?
A) In a job-costing system, individual jobs use different quantities of production resources. B) In a process-costing system each unit uses approximately the same amount of resources. D) Both A and B are correct.
1) In a process-costing system average unit costs are calculated
A) by dividing total costs in a given accounting period by total units produced in that period.
34) Operating income can differ materially between the results for the weighted-average and FIFO methods when:
A) direct materials or conversion costs per unit vary significantly from period to period B) the physical inventory levels of work in process are large relative to the total number of units transferred out D) Both of these answers is correct.
2) In the computation of the cost per equivalent unit, the weighted-average method of process costing considers all the costs:
A) entering work in process from the units in beginning inventory plus the costs for the work completed during the current accounting period
3) If there was no beginning work in process and no ending work in process under the weighted-average process costing method, the number of equivalent units for direct materials, if direct materials were added at the start of the process, would be:
A) equal to the units started or transferred in B) equal to the units completed D) Both A and B are correct.
39) Standard costing is popular among companies that:
A) produce masses of similar or identical products B) manufacture textiles or ceramics C) produce a product that uses few direct materials items, and has relatively few operational activities D) All of these answers are correct.
2) In a process-costing system, the calculation of equivalent units is used for calculating:
A) the dollar amount of ending inventory B) the dollar amount of the cost of goods sold for the accounting period D) Both A and B are correct.
3) Process costing should be used to assign costs to products when the:
A) units produced are similar C) calculation of unit costs requires the averaging of unit costs over all units produced D) Either A or C are correct.
38) FIFO Aluminum processes a single type of aluminum. During the current period the following information was given: Units Material Costs Conversion Costs Beginning Inventory 3,000 $4,500 $4,800 Started During the Current Period 20,000 48,000 65,000 Ending Inventory 2,500 All materials are added at the beginning of the production process. The beginning inventory was 30% complete as to conversion, while the ending inventory was 40% completed for conversion purposes. FIFO Aluminum uses the first-in, first-out system of process costing. What were the costs assigned to the units transferred out this period (round equivalent unit cost to the nearest penny)?
B) $113,236
27) What is the amount of direct materials cost assigned to ending work-in-process inventory at the end of February?
B) $22,400 $168,000/75,000 = $2.24 × 10,000 = $22,400
Dustin Plastics, Inc., manufactures plastic moldings for car seats. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through Department A and Department B. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Data for Department A for February 2012 are: Work in process, beginning inventory, 40% converted 200 units Units started during February 600 units Work in process, ending inventory 100 units Costs for Department A for February 2012 are: Work in process, beginning inventory: Direct materials $200,000 Conversion costs $200,000 Direct materials costs added during February $2,000,000 Conversion costs added during February $2,500,000 4) What is the unit cost per equivalent unit of beginning inventory in Department A?
B) $3,500 Direct materials per unit ($200,000/200 units) $ 1,000 Conversion costs per unit ($200,000/(200 × 0.40) units) 2,500 Total costs per unit $3,500
28) What is the cost of the goods transferred out during February?
B) $456,015 75,000 - 10,000 = 65,000 (15,000 × 0.7) + 65,000 + (10,000 × 0.8) = 83,500 $168,000/75,000 = $2.24 × 10,000 = $22,400 The costs in beginning inventory $24,000 + $35,000 = $ 59,000 Direct materials = $2.24 x 65,000 = 145,600 Conversion costs = [$278,000/(10,500 + 8,000 + 65,000)] × 65,000 = 216,450 also FG beginning inventory (15,000 × 0.7 × $3.33) = 34,965 Total $456,015
10) What amount of conversion costs are assigned to the ending Work-in-Process account for June?
B) $70,555.50 $135,000 + $500,000 = $635,000 $635,000/1,012.5 = $627.16 (150 units × 75%) × $627.16 = $70,555.50
14) What is the conversion cost per equivalent unit in April?
B) $945.76 Direct materials Conversion costs Completed and transferred out 1,350 1,350 Work in process, ending 250 125 Total equivalent units 1,600 1,475 $220,000 + $1,175,000 = $1,395,000 $1,395,000/1,475 units = $ 945.76
The Cuckoo Clock Shop manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Cuckoo Clock Shop uses weighted-average costing. Data for the Assembly Department for June 2013 are: Work in process, beginning inventory 250 units Direct materials (100% complete) Conversion costs (50% complete) Units started during June 800 units Work in process, ending inventory: 150 units Direct materials (100% complete) Conversion costs (75% complete) Costs for June 2013: Work in process, beginning inventory: Direct materials $90,000 Conversion costs $135,000 Direct materials costs added during June $500,000 Conversion costs added during June $500,000 5) What are the equivalent units for direct materials and conversion costs, respectively, for June?
B) 1,050 units; 1,012.5 units Direct materials Conversion costs Completed and transferred out 900 900.0 Work in process, ending 150 112.5 Total equivalent units 1,050 1,012.5
The Morgan Models company manufacturers replica plastic airplane and motorized vehicle models. During October, the firm's Assembly Department started production of 60,000 models. During the month, the firm completed 66,000 models, and transferred them to the Finishing Department. The firm ended the month with 22,000 models in ending inventory. There were 28,000 models in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Morgan. Beginning work in process was 25% complete as to conversion costs, while ending work in process was 50% complete as to conversion costs. Beginning inventory: Direct materials costs $39,200 Conversion costs $30,800 Manufacturing costs added during the accounting period: Direct materials costs $90,000 Conversion costs $280,000 29) How many of the units that were started during October were completed during October?
B) 38,000 60,000 - 22,000 = 38,000
1) The purpose of the equivalent-unit computation is to:
B) assist the business in determining the cost assigned to ending inventory and work-in-process inventory. C) convert partially completed units into the amount of completed output units that could be made with that quantity of input D) Both B and C are correct.
6) An example of a business which would have no beginning or ending inventory but which could use process costing to compute unit costs would be a:
B) corporation whose sole business activity is processing the customer deposits of several banks
5) Conversion costs:
B) include direct labor and overhead C) in process costing are usually considered to be added evenly throughout the production process D) Both B and C are correct.
37) Activity-based costing has less applicability in a process-costing environment because:
B) the products tend to be similar and thus use the resources in a similar manner C) cost control in process costing is achieved by controlling the cost of the various processes rather than the individual activities D) Both B and C are correct.
24) An assumption of the FIFO process-costing method is that:
B) the units in beginning inventory are assumed to be completed first
22) A distinct feature of the FIFO process-costing method is that the:
B) work done on beginning inventory before the current period is kept separate from the work done during the current period in the calculation of equivalent units
Roosevelt Cabinetry, Inc., manufactures standard sized modular cabinet units for kitchens and other applications within the home. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through the rough cut department and the finish department. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Data for Finish Department for March 2012 are: Work in process, beginning inventory, 25% converted 1,000 units Units started during February 1,400 units Work in process, ending inventory 300 units Costs for Finish department for March 2012 are: Work in process, beginning inventory: Direct materials $300,000 Conversion costs $200,000 Direct materials costs added during February $420,000 Conversion costs added during February $1,600,000 7) What is the unit cost per equivalent unit of the beginning inventory in the Finishing Department?
C) $1,100.00 Direct materials per unit ($300,000/1,000 units) $ 300 Conversion costs per unit ($200,000/(1,000 × 0.25) units) 800 Total costs per unit $ 1,100
12) What is the total amount debited to the Work-in Process account during the month of April?
C) $1,875000 $700,000 + $1,175,000 = $1,875,000
21) Weighty Steel processes a single type of steel. For the current period the following information is given: Units Material Costs Conversion Costs Beginning Inventory 3,000 $4,500 $5,400 Started During the Current Period 20,000 32,000 78,200 Ending Inventory 2,500 All materials are added at the beginning of the production process. The beginning inventory was 40% complete as to conversion, while the ending inventory was 30% completed for conversion purposes. Weighty uses the weighted-average costing method. What is the total cost assigned to the units completed and transferred this period?
C) $113,160 EU (materials) = 20,500 + (2,500 × 100%) = 23,000. ($4,500 + $32,000) / 23,000 = $1.59 per unit for material EU (conversion) = 20,500 + (2,500 × 30%) = 21,250. ($5,400 + $78,200) / 21,250 = $3.93 per unit for conversion. Total cost per unit = $1.59 + $3.93 = $5.52 Cost of transferred units = 20,500 × $5.52 = $113,160
16) What amount of conversion costs are assigned to the ending Work-in-Process account for April?
C) $118,220.00 Direct materials Conversion costs Completed and transferred out 1,350 1,350 Work in process, ending 250 125 Total equivalent units 1,600 1,475 $220,000 + $1,175,000 = $1,395,000 $1,395,000/1,475 units = $945.76 125 units × $900.00 = $118,220
The Daltry Tractor Company manufactures small garden tractors on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each tractor must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Daltry Tractor uses weighted-average costing. Data for the Assembly Department for April 2012 are: Work in process, beginning inventory 400 units Direct materials (100% complete) Conversion costs (30% complete) Units started during April 1,200 units Work in process, ending inventory: 250 units Direct materials (100% complete) Conversion costs (50% complete) Costs for April 2012: Work in process, beginning inventory: Direct materials $230,000 Conversion costs $220,000 Direct materials costs added during April $700,000 Conversion costs added during April $1,175,000 11) What are the equivalent units for direct materials and conversion costs, respectively, for April?
C) 1,600 units; 1,475 units Direct materials Conversion costs Completed and transferred out 1,350 1,350 Work in process, ending 250 125 Total equivalent units 1,600 1,475
20) Of the 150,000 units Lumbar started during February, how many were finished during the month?
C) 130,000 150,000 - 20,000 = 130,000
8) How many units were completed and transferred out of the Finishing Department during March?
C) 2,100 units
30) What were the equivalent units for conversion costs during October?
C) 70,000 (28,000 × 0.75) + 38,000 + (22,000 × .50) = 70,000
5) How many units were completed and transferred out of Department A during February?
C) 700 units 200 units + 600 units - 100 units = 700 units
35) A major advantage of using the FIFO process-costing method is that:
C) FIFO provides managers with information about changes in the costs per unit from one period to the next
3) When a Bakery transfers goods from the Mixing Department to the Baking Department, the accounting entry is:
C) Work in Process _ Baking Department Work in Process _ Mixing Department
4) Under the weighted-average method, the stage of completion of beginning work in process:
C) is irrelevant in determining the equivalent-unit calculation
1) Costing systems that are used for the costing of like or similar units of products in mass production are called:
C) process-costing systems
31) What is the amount of direct materials cost assigned to ending work-in-process inventory at the end of October?
D) $ 33,000 $90,000/60,000 = $1.50 × 22,000 = $33,000
15) What amount of direct materials costs are assigned to the ending Work-in-Process account for April?
D) $145,312.50 Direct materials Conversion costs Completed and transferred out 1,350 1,350 Work in process, ending 250 200 Total equivalent units 1,600 1,550 $230,000 + $700,000 = $930,000 $930,000/1,600 units = $581.25 250 units × $581.25 = $145,312.50
13) What is the direct materials cost per equivalent unit during April?
D) $581.25 Direct materials Conversion costs Completed and transferred out 1,350 1,350 Work in process, ending 250 125 Total equivalent units 1,600 1,475 $230,000 + $700,000 = $930,000 $930,000/1,600 units = $581.25
The Lumbar Chair Company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 150,000 chairs. During the month, the firm completed 170,000 chairs and transferred them to the Finishing Department. The firm ended the month with 20,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle. Weighted-average costing is used by Lumbar. 17) How many chairs were in inventory at the beginning of the month? Conversion costs are incurred uniformly over the production cycle.
D) 40,000 chairs
The Rest-a-Lot chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 75,000 chairs. During the month, the firm completed 80,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. There were 15,000 chairs in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Rest-a-Lot. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 80% complete as to conversion costs. Beginning inventory: Direct materials $24,000 Conversion costs $35,000 Manufacturing costs added during the accounting period: Direct materials $168,000 Conversion costs $278,000 25) How many of the units that were started during February were completed during February?
D) 65,000 75,000 - 10,000 = 65,000
1) The weighted-average process-costing method calculates the equivalent units by:
D) the equivalent units completed during the current period plus the equivalent units in ending inventory
36) A disadvantage of the weighted-average method compared to the FIFO process-costing method is that:
D) the information it provides about changes in unit prices from one period to the next is less useful than the information provided by FIFO
23) On occasion, the FIFO and the weighted-average methods of process costing will result in the same dollar amount of costs being transferred to the next department. Which of the following scenarios would have that result?
D) when there is no beginning inventory