Cost Ch 18
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
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
Overestimating the degree of completion for conversion costs results in ________.
Increases Operating Income
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
________ calculates the cost per equivalent unit of all work done to date (regardless of the accounting period in which it was done) and assigns this cost to equivalent units completed and transferred out of the process and to equivalent units in ending work-in-process inventory.
The Weighted-Average Process-Costing Method
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.
____, managers should ask supervisors specific questions about the process they followed.
To guard against the possibility of bias
In other words, estimates of degree of completion can help ____.
To smooth earnings from one period to the next.
________ 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
The cost per equivalent unit ____ between the two methods because each method uses ___ costs as the numerator of the calculation.
differs, different
This emphasis drives ___ throughout the organization.
ethical actions
Managers may have an incentive, however, to use the ____ method and show higher income if the managers' compensation increases with ____ operating income or if there are debt covenants that would be violated by showing ____ income.
weighted-average, higher, lower
In process-costing, a cost category is required ________.
when costs are introduced into the process
Transferred-in costs to account for are $100,000 of which $60,000 were added during the current period. Of the 800 units to account for, 400 were from beginning work in process, 250 were started and completed and 225 remained in ending work in process inventory. The ending work in process units are 100% complete as to direct materials and 70% complete as to conversion costs. What is the cost per equivalent unit of the transferred in costs in the current period, using the FIFO method?
$126.32
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
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
Which of the following companies is most likely to adopt process-costing over job-costing?
A company that manufactures and sells mobile phones in North America
________ blends characteristics from both job-costing and process-costing systems.
A hybrid-costing system
To a show better performance, a department supervisor might report a ____ degree of completion resulting in ____ cost per equivalent unit and ____ operating income.
higher, understated, overstated
An operation-costing system is a ________.
hybrid-costing system
Top management should always emphasize ____.
obtaining the correct answer, regardless of how it affects reported performance
The FIFO methods uses ____ and the weighted-average method uses ____.
only the costs added during the current period, costs from the beginning WIP as well as costs added during the current period
Transferred-in costs are also called ________.
previous department costs
Another advantage of the FIFO method is that it provides better information for managing the business because it keeps ____.
separate the costs of the current period from costs incurred in previous periods.
In a manufacturing process-costing setting, each unit receives ________ of direct material costs, direct manufacturing labor costs and indirect manufacturing costs (manufacturing overhead).
the same or similar amount
________ 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
Fielding's managers should consider the ____ method because even though it shows ____ operating income and ____ cost of goodssold, it ____ taxes.
FIFO, lower, higher, lower
Both methods use ___ equivalent units in the denominator.
Different