Chapter 17

Which of the following measures would not help managers to control and improve operations?

Marketing plan

Which of the following represents the computation of direct materials cost per equivalent unit?

Total direct cost for the period divided by total equivalent units of direct materials.

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?

$0.15

What is the conversion cost per equivalent unit, when the total conversion cost for the period is $1,225 and the total units of packaged drinking water produced during the same period is 5,000 gallons (70 percent complete).

$0.35 per gallon

The yield is the ratio of

the quantity of materials output to the quantity of materials input.

Rambo-Conduit Corporation manufactures plastic conduit that is used in the cable industry. A conduit is a tube that encircles and protects the underground cable. In the process of making the plastic conduit, called extrusion, the melted plastic (resin) is pressed through a die to form a tube. Scrap is produced in this process. Information from the cost of production reports for three months is as follows, assuming that inventory remains constant: MayJuneJulyResin pounds input into the process470,000700,000650,000Price per pound×$1.50×$1.50×$1.50Plastic material costs$493,000$640,000$677,000Conversion costs$80,000$120,000$115,000Conduit output from the process (feet)800,0001,200,0001,130,000 Assuming that there is one-half pound of resin per foot of the finished product, determine the conversion cost per foot of finished product for May.

$0.10

Equivalent units of production are the

portion of whole units that are complete with respect to materials or conversion costs.

In a process cost system, the amount of work in process inventory at the end of a period is valued by

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

Units to be Assigned Costs Kraus Steel Company has two departments, Casting and Rolling. In the Rolling Department, ingots from the Casting Department are rolled into steel sheet. The Rolling Department received 4,000 tons from the Casting Department in October. During October, the Rolling Department completed 3,900 tons, including 200 tons of work in process on October 1. The ending work in process inventory on October 31 was 300 tons. How many tons were started and completed during October?

3,700 Tons 3,900 - 200 = 3,700

Equivalent Units of Conversion Costs The Rolling Department of Kraus Steel Company had 200 tons in beginning work in process inventory (60% complete) on October 1. During October, 3,900 tons were completed. The ending work in process inventory on October 31 was 300 tons (25% complete). What are the total equivalent units for conversion costs?

3,855 Units

Process and job order cost systems are similar in ________ manner. recording and summarizing product costs classifying product costs as direct materials, direct labor, and factory overhead allocating factory overhead costs to products All of these choices are correct.

All of these choices are correct.

Rambo-Conduit Corporation manufactures plastic conduit that is used in the cable industry. A conduit is a tube that encircles and protects the underground cable. In the process of making the plastic conduit, called extrusion, the melted plastic (resin) is pressed through a die to form a tube. Scrap is produced in this process. Information from the cost of production reports for three months is as follows, assuming that inventory remains constant: MayJuneJulyResin pounds input into the process470,000700,000650,000Price per pound×$1.50×$1.50×$1.50Plastic material costs$493,000$640,000$677,000Conversion costs$80,000$120,000$115,000Conduit output from the process (feet)800,0001,200,0001,130,000 Assuming that there is one-half pound of resin per foot of the finished product, determine the resin materials cost per foot of finished product for June.

$0.53

Which of the following industries would typically use job order costing, and which would typically use process costing? 1. Steel manufacturing ________ 2. Business consulting ________ 3. Web designer ______ 4. Computer chip manufacturing ______ 5. Candy making ______ 6.Designer clothes manufacturing ______

1. Process Costing 2.Job order costing 3. Job order costing 4. Process costing 5. Process costing 6. Job order costing

The following production data were taken from the records of the Finishing Department for July: Inventory in process, March 1, 30% completed4,000 unitsTransferred to finished goods during March38,500 unitsEnding work in process during March, 40% completed3,500 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.

38,000 units

Equivalent Units of Materials Cost The Rolling Department of Kraus Steel Company had 200 tons in beginning work in process inventory (60% complete) on October 1. During October, 3,900 tons were completed. The ending work in process inventory on October 31 was 300 tons (25% complete). What are the total equivalent units for direct materials for October if materials are added at the beginning of the process?

4,000 Tons 3,900-200= 3,700 300*100%= 300 3,700+300 = 4,000

Process and job order cost systems are similar in that both systems _______. record and summarize product costs classify product costs as direct materials, direct labor, and factory overhead allocate factory overhead costs to products All of these choices are correct.

All of these choices are correct.

For which of the following businesses would a process cost system be appropriate?

Beverage producer

Cost per Equivalent Unit The cost of direct materials transferred into the Rolling Department of Kraus Company is $3,000,000. The conversion cost for the period in the Rolling Department is $462,600. The total equivalent units for direct materials and conversion are 4,000 tons and 3,855 tons, respectively. Determine the direct materials and conversion costs per equivalent unit.

Direct materials cost per equivalent unit: $3,000,000 / 4,000 tons = $750 per ton Conversion cost per equivalent unit: $462,600 / 3,855 tons = $120 per ton

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

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

During the current month, Grey Company transferred 60,000 units of finished production out of the Mixing Department at a cost of $6 each. They were transferred to finished goods. The journal entry to record the transfer would be which of the following?

Finished Goods360,000 Work in Process360,000

What do electric companies, such as Duke Energy Corporation, use to match power supply to demand?

Power stack

Which of the following manufacturers is most likely to use a process cost system?

Sports drink manufacturer

When can process costing be used in service businesses?

Where the nature of the service is uniform across all units.

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

Work in Process—Department 150,000 Factory Overhead—Department 150,000

The journal entry to recognize depreciation on machinery is ________.

a debit to Factory Overhead and a credit to Accumulated Depreciation

The cost per megawatt hour is determined by using process costing by

accumulating the conversion costs.

The last step in preparing a cost of production report is to _____.

allocate costs to units transferred out and partially completed units

When using the cost of production report to analyze the change in direct materials cost per equivalent unit, an investigation may reveal that direct materials costs

may increase or decrease between periods, depending on the fluctuation of the cost of the direct materials.

The first step in preparing a cost of production report is to _____.

determine the units to be assigned costs

To compute equivalent units for conversion costs, it is necessary to know

how direct labor and factory overhead enter the manufacturing process.

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.

work in process--department 2 60,000 Wages Payable 60,000