Managerial Accounting Chapter 3

Conversion costs are/can be: Product or production costs which do not include direct materials A combination of direct labor and manufacturing overhead Manufacturing costs necessary to turn raw materials into finished inventory All of the above

All of the above

Conversion costs can include:

Both Direct labor & factory overhead

How are job costing and processing costing systems different?

Can be applied to the same types of products

A _______________ costing system accumulates costs incurred in production according to the processes, or departments, a product goes through on its journey to completion.

Process

How are job costing and process costing systems the same?

They have the same cost flows

Which two cash flow assumptions are most commonly used when determining equivalent unit costs?

Weighted Average and FIFO

___________________________costs are the costs incurred to convert raw materials into the final product.

conversion

____________________units represent the number of partially completed units as a portion of fully completed units when accounting for the flow of costs and movement of materials/inventory through production.

equivalent

Shine Company uses a process cost system to account for the costs incurred in making its single product, a hair conditioner. This product is processed in Department A and then in Department B. Materials are added in both departments. Production for May in Department A was as follows: Units started or transferred in 200,000 Units completed and transferred out 160,000 Stage of completion of May 31 inventory: Materials 100% Conversion 50% Costs incurred this month: Direct materials costs $250,000 Conversion costs $540,000 There was no May 1 inventory in either department. Prepare a production cost report for Department A in May.

a: 200,000 b: 160,000 c: 40,000 d: 40,000 e: 20,000 f: 200,000 g: 180,000 h: 200,000 i: 180,000 j: 1.25 k: 3.00

Pure Aqua Company is a producer of flavored mineral water. These data are for its March production: Work in process inventory, March 1, (3,000 units): Direct materials $12,600 Direct labor 6,000 Manufacturing overhead (1,500 machine-hours at $6 per machine-hour) $9,000 Units started in March 9,000 Costs incurred in March: Direct materials $36,360 Direct labor 55,200 Manufacturing overhead applied (13,800 machine-hours) $6 POHR The ending inventory consisted of 4,500 units (100% complete as to materials, 60% complete as to conversion). Compute the following: Number of units completed and transferred to finished goods inventory. The equivalent units of production for materials and conversion costs using the weighted average method. Cost per equivalent unit for materials and conversion costs. Cost of units completed and transferred. Cost of ending inventory. Please enter all answers with numbers only. Do NOT enter answers with spaces, decimals, $ signs, etc. or it will be counted wrong. All blanks must be correct to receive points for this question.

a: 9,000 b: 12,000 c: 7,500 d: 7,500 e: 7,500 f: 7,500 g: 4,500 h: 2,700 i: 2,700 j: 12,000 k: 10,200 l: 10,200 m: 36,360 n: 55,200 o: 82,800 p: 4.08 q: 6.00 r: 9.00