Acct 102 - Ch. 17

The cost of production report may be used for all the following except analyzing the change in a) general and administrative costs per equivalent units between periods. b) direct materials costs per equivalent units between periods. c) conversion costs per equivalent units between periods. d) costs per equivalent units between periods.

a) general and administrative costs per equivalent units between periods.

To compute equivalent units for conversion costs, it is necessary to know a) how direct labor and factory overhead enter the manufacturing process. b) the cost of raw materials put into production. c) how many pounds of raw materials are needed at each stage of the manufacturing process. d) how many equivalent units of raw materials are calculated.

a) how direct labor and factory overhead enter the manufacturing process.

In a process cost system, the amount of work in process inventory at the end of a period is valued by a) summing the costs remaining in each department account at the end of the period. b) summing all actual costs that flowed through the department from the beginning to the end of the period. c) summing estimated costs budgeted for the inventory during the period. d) summing direct labor costs for the period.

a) summing the costs remaining in each department account at the end of the period.

The following production data were taken from the records of the Finishing Department for July: Inventory in process, March 1, 30% completed 4,000 units Transferred to finished goods during March 38,500 units Ending work in process during March, 40% completed 3,500 units Determine the total equivalent units for direct materials, assuming that the first-in, first-out method is used to cost inventories. Assume that all direct materials are placed in process at the beginning of production. a) 38,000 units b) 38,700 units c) 42,000 units d) 40,800 units

a) 38,000 units 38,500 - 4,000 = 34,500 34,500 + 3,500 = 38,000

What is the journal entry for the application of Factory Overhead to Work in Process if the driver is imprints, the rate is $1.80 per imprint, and the imprint meter reads 1,780 at the start of the day and 2,890 at the end of the day? a) Work in Process 1,998 Factory Overhead 1,998 b) Work in Process 1.80 Factory Overhead 1.80 c) Work in Process 1,998 Cash 1,998 d) Work in Process 1,998 Depreciation Expense 1,998

a) Work in Process 1,998 Factory Overhead 1,998 The amount of the transfer is $1.80 × (2,890 - 1,780) = $1,998. Work in Process is increased and Factory Overhead is decreased when applying factory overhead.

Guardino Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000.The journal entry to record the flow of costs into Department 1 during the period for factory overhead is a) Work in Process—Department 1 150,000 Factory Overhead—Department 1 150,000 b) Factory Overhead—Department 1 150,000 Work in Process—Department 1 150,000 c) Work in Process—Department 1 70,000 Factory Overhead—Department 1 70,000 d) Work in Process—Department 1 125,000 Factory Overhead—Department 1 125,000

a) Work in Process—Department 1 150,000 Factory Overhead—Department 1 150,000

The cost of production report may include all of the following except a) advertising costs. b) direct labor. c) cost per unit. d) direct materials.

a) advertising costs.

The last step in preparing a cost of production report is a) allocating costs to units transferred out. b) determining the cost per equivalent unit. c) determining the units to be assigned costs. d) computing the equivalent units of production.

a) allocating costs to units transferred out.

The journal entry to record applied factory overhead includes a(n) a) decrease to Factory Overhead. b) increase to Wages Payable. c) increase to Factory Overhead. d) decrease to Work in Process.

a) decrease to Factory Overhead.

The third step in preparing a cost of production report is a) determining the cost per equivalent unit of production. b) determining the units to be assigned costs. c) allocating costs to units transferred out. d) computing the equivalent units of production.

a) determining the cost per equivalent unit of production.

During the current month, Grey Company sold 60,000 units for $10 each. Each unit had an equivalent cost of $6 each. The journal entry to record the sale would include which of the following? a) Finished Goods 600,000 Cost of Goods Sold 600,000 b) Cost of Goods Sold 360,000 Finished Goods 360,000 c) Cost of Goods Sold 600,000 Finished Goods 600,000 d) Finished Goods 360,000 Cost of Goods Sold 360,000

b) Cost of Goods Sold 360,000 Finished Goods 360,000 Cost of Goods Sold is increased for the cost of the goods; Finished Goods is decreased. The cost of the goods is 60,000 units × $6 each = $360,000.

Which of the following measures would not help managers to control and improve operations? a) Yield trends b) Marketing plan c) Units produced per time period d) Cost trends of a product

b) Marketing plan

Conversion costs are comprised of a) direct labor and selling expenses. b) direct labor and factory overhead. c) direct labor and direct materials. d) factory overhead and direct materials.

b) direct labor and factory overhead.

The journal entry to record direct labor for Department A and Department B would include a(n) a) decrease to Work in Process for both departments summed together. b) increase to Wages Payable. c) decrease to Wages Payable. d) decrease to Work in Process for each department individually.

b) increase to Wages Payable.

Conversion costs are a) total equivalent units of conversion costs for the period divided by total conversion costs for the period. b) one part of a cost of production report that is prepared to show greater detail, including multiple cost categories. c) total conversion costs for the period divided by total equivalent units of direct materials cost for the period. d) total direct materials cost for the period divided by total equivalent units of conversion costs for the period.

b) one part of a cost of production report that is prepared to show greater detail, including multiple cost categories.

For the month of July, Jacobs Company incurs a direct materials cost of $6,000 for 6,000 gallons of paint produced in its Mixing Department. It also incurs conversion costs of $1,470 with 70% completed. If the conversion cost per equivalent unit was $0.25 per gallon in June, what is the difference in the conversion cost per equivalent unit between the two months? a) $0.75 b) $1.00 c) $0.10 d) $0.35

c) $0.10 The conversion cost per equivalent unit for July is $1,470 ÷ (6,000 × 70%) or $0.35; the difference between June and July is an increase of $0.10 or ($0.35 - $0.25).

The following production data were taken from the records of the Finishing Department for July: Inventory in process, July 1, 40% completed 4,000 units Transferred to finished goods during July 37,500 units Ending work in process during July, 20% completed 3,500 units Determine the total equivalent units for direct materials, assuming that the first-in, first-out method is used to cost inventories. Assume that all direct materials are placed in the process at the beginning of production. a) 41,000 units b) 36,600 units c) 37,000 units d) 39,400 units

c) 37,000 units 37,500 - 4,000 = 33,500 33,500 + 3,500 = 37,000

Which of the following measures would not help managers to control and improve manufacturing operations? a) Unit production b) Cost changes for specific products c) Commissions paid per time period d) Product yields

c) Commissions paid per time period

Which of the following statements is false? a) Materials losses can be investigated to improve the efficiency in using materials. b) Cost of production reports can be used to compare materials output quantity to the materials input quantity. c) Dividing materials input quantities by output quantities is the method used to calculate yield. d) A company may often experience materials losses from waste.

c) Dividing materials input quantities by output quantities is the method used to calculate yield.

Which of the following is not a use of the cost of production report? a) To help managers control operations b) To help managers isolate problems c) To project production d) To help managers improve operations

c) To project production

The first step in preparing a cost of production report is a) allocating costs to units transferred out. b) determining the cost per equivalent unit. c) determining the units to be assigned costs. d) computing the equivalent units of production.

c) determining the units to be assigned costs.

A __________ cost system produces goods that are indistinguishable from each other using a continuous process production process. a) job order b) production c) process d) continuous

c) process

For the month of September, Florida, Inc., incurs a direct materials cost of $12,000 for 7,500 gallons of strawberry lemonade produced in its Mixing Department. It also incurs conversion costs of $6,000 with 80% completed. If the conversion cost per equivalent unit was $1.15 per gallon in August, what is the difference in the conversion cost per equivalent unit between the two months? a) $0.45 b) $1.15 c) $1.60 d) $0.15

d) $0.15 The conversion cost per equivalent unit for September is $6,000 ÷ (7,500 × 80%) or $1.00; the difference between August and September is a decrease of $0.15 or ($1.15 - $1.00).

Carmel Company manufactures a single product by a continuous process, involving the production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $160,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $40,000, $60,000, and $70,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000.The journal entry to record the flow of costs into Department 2 during the period for direct materials is a) Materials 40,000 Work in Process—Department 2 40,000 b) Work in Process—Department 1 170,000 Materials 170,000 c) Materials 160,000 Work in Process—Department 1 160,000 d) Work in Process—Department 2 40,000 Materials 40,000

d) Work in Process—Department 2 40,000 Materials 40,000

If the materials output is less than the materials input into a process, a company may be experiencing a) conversion losses from waste. b) conversion gains from waste. c) materials gains from waste. d) materials losses from waste.

d) materials losses from waste.

When using the cost of production report to analyze the change in direct materials cost per equivalent unit compared to conversion cost per equivalent unit, an investigation may reveal that direct materials costs a) will never decrease when conversion costs decrease. b) always decrease between periods if conversion costs increase. c) always increase between periods if conversion costs increase. d) may increase while conversion costs decrease because the two are separately calculated and depend on separate costs.

d) may increase while conversion costs decrease because the two are separately calculated and depend on separate costs.