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PROCESS COSTING
SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOMS TAXONOMY
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Brief Exercises
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Process Costing
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Note: TF = True-False
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Study Objective 7
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BE = Brief Exercise
Ex = Exercise
3-3
C = Completion
The chapter also contains one set of eight Matching questions and four Short-Answer Essay
questions.
3-4
4. Make the journal entries to assign manufacturing costs in a process cost system.
Entries to assign the costs of raw materials, labor, and overhead consist of a credit to Raw
Materials Inventory, Factory Labor, and Manufacturing Overhead, and a debit to Work in
Process for each department. Entries to record the cost of goods transferred to another
department are a credit to Work in Process for the department whose work is finished and a
debit to the department to which the goods are transferred. The entry to record units
completed and transferred to the warehouse is a credit for the department whose work is
finished and a debit to Finished Goods Inventory. The entry to record the sale of goods is a
credit to Finished Goods Inventory and a debit to Cost of Goods Sold.
5. Compute equivalent units. Equivalent units of production measure work done during a
period, expressed in fully completed units. Companies use this measure to determine the
cost per unit of completed product. Equivalent units are the sum of the units completed and
transferred out plus equivalent units of ending work in process.
6. Explain the four steps necessary to prepare a production cost report. The four steps to
complete a production cost report are: (1) Compute the physical unit flowthat is, the total
units to be accounted for. (2) Compute the equivalent units of production. (3) Compute the
unit production costs, expressed in terms of equivalent units of production. (4) Prepare a
cost reconciliation schedule, which shows that the total costs accounted for equal the total
costs to be accounted for.
7. Prepare a production cost report. The production cost report contains both quantity and
cost data for a production department. There are four sections in the report: (1) number of
physical units, (2) equivalent units determination, (3) unit costs, and (4) cost reconciliation
schedule.
a
8. Compute equivalent units using the FIFO method. Equivalent units under the FIFO
method are the sum of the work performed to: (1) Finish the units of beginning work in
process inventory, if any. (2) Complete the units started into production during the period. (3)
Start, but only partially complete, the units in ending work in process inventory.
Process Costing
3-5
TRUE-FALSE STATEMENTS
1.
Process cost accounting focuses on the process involved in mass-producing products that
are very similar in nature.
2.
Process cost systems are used to apply costs to a specific job, such as the manufacturing
of a specialized machine.
3.
A company that produces motion pictures would likely use a process cost system.
4.
In a process cost system, costs are tracked through a series of connected manufacturing
processes or departments, rather than by individual jobs.
5.
In a process cost system, total costs are determined at the end of a month or year.
6.
Separate work in process accounts are maintained for each production department or
manufacturing process in a process cost system.
7.
In a process cost system, materials, labor and overhead are only added in the first
production department.
8.
The assignment of the three manufacturing cost elements to Work in Process in a process
cost system is the same as in a job order cost system.
9.
Fewer materials requisitions are generally required in a process cost system than in a job
order cost system.
10.
In a process cost system, all labor costs incurred within a producing department are a cost
of processing the raw materials.
11.
12.
Equivalent units of production are used to determine the cost per unit of completed
products.
13.
Equivalent units of production measure the work done during a period, expressed in fully
completed units.
14.
Equivalent units of production is the sum of units completed and transferred out plus
equivalent units of beginning work in process.
15.
The weighted-average method of computing equivalent units is the most widely used
method in practice.
16.
There are no units in process at the beginning of the period, 1,000 units in process at the
end of the period that are 40% complete, and 10,000 units transferred out during the
period. Based on this information, there were 9,600 equivalent units of production during
the period.
17.
The first step performed in preparing a production cost report is computing the equivalent
units of production.
3-6
18.
Equivalent units of production must be calculated before the unit production costs can be
computed.
19.
The physical units in a department are another name for the equivalent units of
production.
20.
Unit material cost is computed by taking total material costs charged to the department for
the period and dividing by the physical units in the process during the period.
21.
When equivalent units of production are different for materials and conversion costs, unit
costs are computed for materials, conversion, and total manufacturing.
22.
The total manufacturing cost per unit is used in costing the units completed and
transferred during the period.
23.
A production cost report is an internal document for management that shows production
quantity and cost data for a particular job.
24.
Production cost reports provide a basis for evaluating the productivity of a department.
25.
Companies often use a combination of a process cost and a job order cost system, called
operations costing.
26.
The FIFO method is easier to understand and use than the weighted-average method.
27.
28.
When comparing the FIFO with the weighted-average method, the FIFO method provides
current cost information.
29.
There are no units in ending work in process at the end of the period under the FIFO
method.
30.
Companies using the weighted-average method do not complete units left over from the
previous accounting periods. They start new units.
32.
One similarity of process cost accounting with job order cost accounting is that both
determine total manufacturing costs after each job.
33.
The flow of costs in a process costing system requires that materials be added in one
department, labor added in another department and manufacturing overhead in a third
department.
34.
When finished goods are sold, the entry to record the cost of goods sold is a debit to
Finished Goods Inventory and a credit to Cost of Goods Sold.
Process Costing
3-7
35.
When there is no beginning work in process and materials are entered at the beginning of
the process, equivalent units of materials are the same as the units started into
production.
36.
In order to compute the physical unit flow, a company must first compute unit production
costs.
37.
Under the FIFO method, it is assumed that the beginning work in process is completed
before new work is started.
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40.
A process cost system would be used for all of the following products except
a. chemicals.
b. computer chips.
c. motion pictures.
d. soft drinks.
41.
3-8
42.
Differences between a job order cost system and a process cost system include all of the
following except the
a. documents used to track costs.
b. point at which costs are totaled.
c. unit cost computations.
d. flow of costs.
43.
Which of these best reflects a distinguishing factor between a job order cost system and a
process cost system?
a. The detail at which costs are calculated
b. The time period each covers
c. The number of work in process accounts
d. The manufacturing cost elements included
44.
45.
Job Order
several
one
one
several
Process
one for each process
one
one for each process
one
46.
47.
48.
Which of the following manufacturing cost elements occurs in a process cost system?
a. Direct materials
b. Direct labor
c. Manufacturing overhead
d. All of these
49.
Process Costing
3-9
50.
When manufacturing overhead costs are assigned to production in a process cost system,
they are debited to
a. the Finished Goods Inventory account.
b. Cost of Goods Sold.
c. a Manufacturing Overhead account.
d. the Work in Process account.
51.
52.
Which of the following would not appear as a debit in the Work in Process account of a
second department in a two stage production process?
a. Materials used
b. Overhead applied
c. Labor assigned
d. Cost of products transferred out
53.
54.
55.
Price Manufacturing assigns overhead based on machine hours. Department A logs 1,200
machine hours and Department B shows 2,000 machine hours for the period. If the
overhead rate is $5 per machine hour, the entry to assign overhead will show a
a. debit to Manufacturing Overhead for $16,000.
b. credit to Work in ProcessDepartment B for $10,000.
c. debit to Work in Process for $10,000.
d. credit to Manufacturing Overhead for $16,000.
56.
Barnes and Miller Manufacturing is trying to determine the equivalent units for conversion
costs with 3,000 units of ending work in process at 80% completion and 14,000 physical
units. There are no beginning units in the department. Conversion costs occur evenly
throughout the entire production period. What are the equivalent units for conversion costs
for the current period?
a. 17,000
b. 16,800
c. 2,400
d. 13,400
3 - 10
57.
58.
A process with no beginning work in process, completed and transferred out 45,000 units
during a period and had 30,000 units in the ending work in process inventory that were
30% complete. The equivalent units of production for the period were
a. 45,000 equivalent units.
b. 75,000 equivalent units.
c. 54,000 equivalent units.
d. 22,500 equivalent units.
What were the equivalent units of production for materials for the month of January?
a. 88,000 equivalent units
b. 72,000 equivalent units
c. 60,000 equivalent units
d. 80,000 equivalent units
60.
What were the equivalent units of production for conversion costs for the month of
January?
a. 60,000 equivalent units
b. 72,000 equivalent units
c. 68,000 equivalent units
d. 80,000 equivalent units
61.
62.
Process Costing
63.
3 - 11
64.
Gantner Company had the following department information about physical units and
percentage of completion:
Physical Units
Work in process, May 1 (60%)
36,000
Completed and transferred out
90,000
Work in process, May 31 (40%)
30,000
If materials are added at the beginning of the production process, what is the total number
of equivalent units for materials during May?
a. 126,000
b. 120,000
c. 116,400
d. 102,000
65.
67.
3 - 12
68.
The equivalent units of production for conversion costs for June were
a. 40,000 equivalent units.
b. 47,000 equivalent units.
c. 45,000 equivalent units.
d. 50,000 equivalent units.
69.
A process with no beginning work in process, completed and transferred out 10,000 units
during a period and had 5,000 units in the ending work in process that were 50%
complete. How much is equivalent units of production for the period for conversion costs?
a. 12,500 equivalent units
b. 15,000 equivalent units
c. 17,500 equivalent units
d. 7,500 equivalent units
70.
A process with 800 units of beginning work in process, completed and transferred out
10,000 units during a period. There were 5,000 units in the ending work in process that
were 50% complete as to conversion costs. Materials are added 80% at the beginning of
the process and 20% when the units are 90% complete. How much is equivalent units of
production for the period for material costs?
a. 12,000 equivalent units
b. 15,000 equivalent units
c. 11,000 equivalent units
d. 14,000 equivalent units
71.
1,000
4,000
800
Materials are added at the beginning of the process. What is the total number of
equivalent units for materials during the period?
a. 4,200
b. 800
c. 4,800
d. 3,000
72.
Super-Tech Industries had the following department information about physical units and
percentage of completion:
Physical Units
Work in process, June 1 (75%)
2,000
Completed and transferred out
4,500
Work in process, June 30 (50%)
3,000
If materials are added at the beginning of the production process, what is the total number
of equivalent units for materials during June?
a. 3,750
b. 7,500
c. 8,000
d. 6,000
Process Costing
3 - 13
73.
Gloria Company had no beginning work in process. During the period, 5,000 units were
completed, and there were 500 units of ending work in process. How many units were
started into production?
a. 5,500
b. 5,000
c. 4,500
d. 500
74.
Cohen Manufacturing is trying to determine the equivalent units for conversion costs with
2,000 units of ending work in process at 80% completion and 14,000 physical units that
are 100% completed. There are no beginning units in the department. Materials are added
at the beginning of the process, and conversion costs occur evenly throughout the entire
production period. What is the equivalent units for conversion costs for the current period?
a. 16,000
b. 15,600
c. 1,600
d. 13,600
75.
If beginning work in process is 2,000 units, ending work in process is 1,000 units, and the
units accounted for equals 5,000 units, what must units started into production be?
a. 7,000
b. 6,000
c. 3,000
d. 4,000
76.
Cinder Company had the following department information for the month:
Total materials costs
Equivalent units of materials
Total conversion costs
Equivalent units of conversion costs
$ 80,000
10,000
$120,000
20,000
What was the total amount of manufacturing costs assigned to those units that were
completed and transferred out of the process in September?
a. $184,000
b. $391,000
c. $414,200
d. $425,200
3 - 14
78.
What was the total amount of manufacturing costs assigned to the 8,000 units in the
ending work in process?
a. $16,000
b. $7,200
c. $13,600
d. $23,200
79.
Charley Companys Assembly Department has materials cost at $3 per unit and
conversion cost at $6 per unit. There are 9,000 units in ending work in process, all of
which are 70% complete as to conversion costs. How much are total costs to be assigned
to inventory?
a. $37,800
b. $64,800
c. $56,700
d. $81,000
80.
Byrd Manufacturing decided to analyze certain costs for June of the current year. Units
started into production equaled 14,000 and ending work in process equaled 2,000 units.
With no beginning work in process inventory, how much is the conversion cost per unit if
ending work in process was 25% complete and total conversion costs equaled $50,000?
a. $3.13
b. $12.50
c. $4.00
d. $2.00
81.
Reed Manufacturing has recently tried to improve its analysis for its manufacturing
process. Units started into production equaled 6,000 and ending work in process equaled
400 units. Reed had no beginning work in process inventory. Conversion costs are applied
equally throughout production, and materials are applied at the beginning of the process.
How much is the materials cost per unit if ending work in process was 25% complete and
total materials costs equaled $60,000?
a. $10.00
b. $10.53
c. $37.50
d. $9.38
82.
Conversion cost per unit equals $6.00. Total materials costs are $40,000. Equivalent units
are 20,000. How much is the total manufacturing cost per unit?
a. $8.00
b. $6.00
c. $10.00
d. $2.00
83.
Physical units are 40,000. Total conversion costs are $197,500. There are 1,000 units in
ending inventory which are 50% complete as to conversion costs. How much are
conversion costs per unit?
a. $5.00
b. $4.93
c. $9.88
d. $4.82
Process Costing
3 - 15
84.
Madison Industries has equivalent units of 2,000 for materials and for conversion costs.
Total manufacturing costs are $200,000. Total materials costs are $150,000. How much is
the conversion cost per unit?
a. $10.00
b. $25.00
c. $100.00
d. $20.00
85.
Equivalent units for materials total 15,000. There were 12,000 units completed and
transferred out. Equivalent units for conversion costs equals 13,500. How much are the
physical units for conversion costs if ending work in process is 50% complete?
a. 14,000
b. 15,000
c. 4,000
d. 12,000
86.
If equivalent units are 6,000 for conversion costs and units transferred out equals 4,000,
what stage of completion should the ending work in process be for the 8,000 units
remaining?
a. 75%
b. 25%
c. 10%
d. 20%
The cost assigned to the units transferred to finished goods during April was
a. $900,000.
b. $905,000.
c. $940,000.
d. $895,000.
88.
The cost assigned to the units in the ending work in process inventory on April 30 was
a. $180,000.
b. $105,000.
c. $80,000.
d. $145,000.
89.
Zibba Company enters materials at the beginning of the process. In January, there was no
beginning work in process, but there were 100 units in the ending work in process
inventory. The number of units completed equals the number of
a. units started.
b. units started less 100.
c. units started plus 100.
d. equivalent units.
3 - 16
90.
91.
Which of the following is not a necessary step in preparing a production cost report?
a. Compute the equivalent units of production
b. Compute the physical unit flow
c. Prepare the job order cost sheet
d. Prepare a cost reconciliation schedule
92.
Honrad Company's Assembly Department has materials cost at $4 per unit and
conversion cost at $8 per unit. There are 9,000 units in ending work in process, all of
which are 70% complete as to conversion costs. How much are total costs to be assigned
to inventory?
a. $50,400
b. $86,400
c. $75,600
d. $108,000
93.
In a process cost system, units to be accounted for in a department are equal to the
a. number of units started or transferred into the department.
b. number of units transferred out of the department.
c. units in the beginning inventory plus the units started or transferred into the department.
d. ending inventory plus the units started or transferred into the department.
94.
Units
10,000
50,000
120,000
95.
96.
Process Costing
97.
3 - 17
Units
20,000
50,000
90,000
How many total units are to be accounted for by the Assembly Department?
a. 140,000
b. 50,000
c. 70,000
d. 120,000
98.
The last department in a production process shows the following information at the end of
the period:
Units
Beginning Work in Process
15,000
Started into Production
105,000
Ending Work in Process
30,000
How many units have been transferred out to finished goods during the period?
a. 105,000
b. 120,000
c. 135,000
d. 90,000
99.
A process began the month with 3,000 units in the beginning work in process inventory
and ended the month with 2,000 units in the ending work in process. If 9,000 units were
completed and transferred out of the process during the month, how many units were
started into production during the month?
a. 8,000
b. 10,000
c. 9,000
d. 7,000
100.
If 75,000 units are started into production and 30,000 units are in process at the end of the
period, how many units were completed and transferred out?
a. 75,000
b. 30,000
c. 45,000
d. 105,000
101.
Total units to be accounted for less units in beginning work in process equals
a. total units accounted for.
b. units transferred out.
c. units started into production.
d. equivalent units.
102.
If 80,000 units are transferred out of a department and there are 16,000 units still in
process at the end of a period, the number of units that were started into production
during the period is
a. 96,000.
b. 80,000.
c. 64,000.
d. 16,000.
3 - 18
103.
Materials
$2.40
$2.40
$3.00
$3.60
Conversion Costs
$2.10
$2.63
$2.10
$3.15
104.
Conversion cost per unit equals $6.00. Total materials costs equal $60,000. Equivalent
units for materials are 20,000. How much is the total manufacturing cost per unit?
a. $9.00
b. $6.00
c. $12.00
d. $3.00
105.
$120,000
60,000
$70,000
30,000
Byers Company had the following department information for the month:
Total materials costs
Equivalent units of materials
Total conversion costs
Equivalent units of conversion costs
$30,000
5,000
$50,000
10,000
Physical units are 80,000. Total conversion costs are $197,500. There are 2,000 units in
ending inventory which are 50% complete as to conversion costs. How much is the
conversion cost per unit?
a. $2.50
b. $2.47
c. $2.44
d. $2.41
Process Costing
108.
3 - 19
$120,000
$3.00
$5.00
Maisley Manufacturing decided to analyze certain costs for June of the current year. Units
started into production equaled 28,000 and ending work in process equaled 4,000. With
no beginning work in process inventory, how much is the conversion cost per unit if ending
work in process was 25% complete and total conversion costs equaled $50,000?
a. $1.57
b. $6.25
c. $2.00
d. $1.00
What was the total amount of manufacturing costs assigned to those units that were
completed and transferred out of the process in September?
a. $750,000
b. $1,000,000
c. $803,250
d. $682,500
111.
What was the total amount of manufacturing costs assigned to the 5,000 units in the
ending work in process?
a. $227,500
b. $250,000
c. $160,000
d. $100,000
112.
Snead Manufacturing has recently tried to improve its analysis for its manufacturing
process. Units started into production equaled 9,000 and ending work in process equaled
600 units. Snead had no beginning work in process inventory. Conversion costs are
applied equally throughout production, and materials are applied at the beginning of the
process. How much is the materials cost per unit if ending work in process was 25%
complete and total materials costs equaled $60,000?
a. $6.67
b. $7.02
c. $25.00
d. $6.25
3 - 20
113.
Madison Industries has equivalent units of 4,000 for materials and for conversion costs.
Total manufacturing costs are $200,000. Total materials costs are $150,000. How much is
the conversion cost per unit?
a. $37.50
b. $12.50
c. $50.00
d. $10.00
114.
115.
116.
117.
The Cutting Departments output during the period consists of 12,000 units completed and
transferred out, and 3,000 units in ending work in process that were 25% complete as to
materials and conversion costs. Beginning inventory was 1,500 units that were 25%
complete as to materials and conversion costs. Under the FIFO method, what are the
equivalent units of production for materials?
a. 13,725
b. 12,375
c. 14,475
d. 13,500
118.
The Wrapping Departments output during the period consists of 10,000 units completed
and transferred out, and 600 units in ending work in process that were 75% complete as
to materials and conversion costs. Beginning inventory was 800 units that were 30%
complete as to materials and conversion costs. Under the FIFO method, what are the
equivalent units of production for materials?
a. 10,690
b. 11,010
c. 10,450
d. 10,210
Process Costing
a
119.
How much are equivalent units for conversion costs if the FIFO method is used?
a. 25,200
b. 27,300
c. 23,000
d. 24,300
120.
How much are equivalent units for materials if the FIFO method is used?
a. 25,200
b. 26,000
c. 23,000
d. 29,000
3 - 21
121. Schiller Company has unit costs of $5 for materials and $15 for conversion costs. There
are 4,200 units in ending work in process which are 25% complete as to conversion costs,
and fully complete as to materials cost. How much is the total cost assignable to the
ending work in process inventory if the FIFO method is used?
a. 36,750
b. 84,000
c. 21,000
d. 15,750
122.
Solis Company uses the FIFO method to compute equivalent units. It has 2,000 units in
beginning work in process, 20% complete as to conversion costs and 50% complete as to
materials costs, 25,000 units started, and 3,000 units in ending work in process, 30%
complete as to conversion costs, and 80% complete as to materials cost. How much are
the equivalent units for materials under the FIFO method?
a. 25,400
b. 25,000
c. 26,400
d. 27,000
123.
Special Company had the following department information about physical units and
percentage of completion:
Physical Units
Work in process, May 1 (60%)
14,400
Completed and transferred out
26,000
Work in process, May 31 (50%)
12,000
Materials are added at the beginning of the production process. Conversion costs are
added equally throughout production. What is the total number of equivalent units during
May for conversion costs if the FIFO method is used?
a. 52,400
b. 32,000
c. 23,360
d. 43,760
124.
1,000
4,000
800
3 - 22
A process cost system would be used by all of the following except a(n)
a. chemical company.
b. advertising company.
c. oil company.
d. computer chip company.
126.
Which of the following is considered a difference between a job order cost and a process
cost system?
a. The manufacturing cost elements
b. Documents used to track costs
c. The accumulation of the costs of materials, labor, and overhead
d. The flow of costs
127.
The basic similarities between job order cost and process cost systems include all of the
following except the
a. manufacturing cost elements.
b. flow of costs.
c. point at which costs are totaled.
d. accumulation of the costs of materials, labor, and overhead.
128
129.
130.
Process Costing
3 - 23
131.
In Saint-Simon, Inc., the Assembly Department started 12,000 units and completed
14,000 units. If beginning work in process was 6,000 units, how many units are in ending
work in process?
a. 0
b. 2,000
c. 4,000
d. 8,000
132.
133.
In the Camria Company, materials are entered at the beginning of the process. If there is
no beginning work in process, but there is an ending work in process inventory, the
number of equivalent units as to materials costs will be
a. the same as the units started.
b. the same as the units completed.
c. less than the units started.
d. less than the units completed.
134.
For the Assembly Department, unit materials cost is $8 and unit conversion cost is $12. If
there are 6,000 units in ending work in process 75% complete as to conversion costs, the
costs to be assigned to the inventory are
a. $120,000.
b. $102,000.
c. $90,000.
d. $108,000.
135.
The total costs accounted for in a production cost report equal the
a. cost of units completed and transferred out only.
b. cost of units started into production.
c. cost of units completed and transferred out plus the cost of ending work in process.
d. cost of beginning work in process plus the cost of units completed and transferred out.
136.
In a production cost report, which one of the following sections is not shown under Costs?
a. Unit costs
b. Costs to be accounted for
c. Costs during the period
d. Units accounted for
3 - 24
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
Ans.
c
a
c
c
d
c
b
c
b
c
d
b
d
c
d
Item
53.
54.
55.
56.
57.
58.
59.
60.
61.
62.
63.
64.
65.
66.
67.
Ans.
c
c
d
d
c
c
d
c
c
d
c
b
b
c
b
Item
Ans.
68.
69.
70.
71.
72.
73.
74.
75.
76.
77.
78.
79.
80.
81.
82.
b
a
d
c
b
a
b
c
a
b
d
b
c
a
a
Item
83.
84.
85.
86.
87.
88.
89.
90.
91.
92.
93.
94.
95.
96.
97.
Ans.
Item
Ans.
Item
Ans.
a
b
b
b
a
b
b
d
c
b
c
c
d
b
a
98.
99.
100.
101.
102.
103.
104.
105.
106.
107.
108.
109.
110.
111.
112.
d
a
c
c
a
b
a
c
d
a
a
c
a
c
a
113.
114.
115.
116.
a
117.
a
118.
a
119.
a
120.
a
121.
a
122.
a
123.
a
124.
125.
126.
127.
b
c
c
b
b
d
d
c
a
a
c
b
b
b
c
Item
128.
129.
130.
131.
132.
133.
134.
135.
136.
Ans.
d
b
b
c
c
a
b
c
d
BRIEF EXERCISES
BE 137
Tip Top Painting Company has the following production data for January:
Solution 137
(4 min.)
QUANTITIES
Physical Units
0
39,000
39,000
35,000
4,000
39,000
Equivalent Units
Materials
Conversion Costs
35,000
4,000
39,000
35,000
1,200 (4,000 30%)
36,200
Process Costing
3 - 25
BE 138
Tip Top Painting Company has the following production data for March:
(4 min.)
QUANTITIES
Physical Units
2,000
46,000
48,000
42,000
6,000
48,000
Equivalent Units
Materials
Conversion Costs
42,000
6,000
48,000
42,000
4,800 (6,000 80%)
46,800
BE 139
The Kirkland Department of Delta Manufacturing began the month of December with beginning
work in process of 4,000 units that are 100% complete as to materials and 30% complete as to
conversion costs. Units transferred out are 10,000 units. Ending work in process contains 1,000
units that are 100% complete as to materials and 60% complete as to conversion costs.
Instructions
Compute the equivalent units of production for materials and conversion costs for the month of
December.
Solution 139
QUANTITIES
(4 min.)
Physical Units
Equivalent Units
Materials
Conversion Costs
4,000
7,000
11,000
10,000
1,000
11,000
10,000
600 (1,000 60%)
10,600
3 - 26
BE 140
White Supplies total material costs are $50,000 and total conversion costs are $65,000.
Equivalent units of production for materials are 10,000, and 3,250 for conversion costs.
Instructions
Compute the unit costs for materials, conversion costs, and total manufacturing costs for the
month.
Solution 140
(3 min.)
COSTS
Unit costs
Costs incurred
Equivalent units
Unit costs
Materials
$50,000
10,000
$ 5.00
Conversion Costs
$65,000
3,250
$ 20.00
Total
$115,000
$25.00
BE 141
Apoly Manufacturing Company has the following production data for January.
Ending Work in Process
Beginning
Work in Process
Units
% Complete as to
Conversion Cost
-0-
6,500
700
30%
Instructions
Compute the physical units for January.
Solution 141
(4 min.)
-06,500
6,500
Transferred out
Ending work in process
Total units accounted for
5,800
700
6,500
BE 142
Sandusky Widget Company has the following production data for March.
Ending Work in Process
Month
Beginning
Work in Process
Units
Transferred Out
Units
% Complete as to
Conversion Cost
March
1,200
5,100
800
20%
Process Costing
BE 142
3 - 27
(cont.)
Instructions
Compute the physical units for March.
Solution 142
(4 min.)
1,200
4,700
5,900
Transferred out
Ending work in process
Total units accounted for
5,100
800
5,900
BE 143
Sequal Company has the following production data for June: units transferred out 46,000, and
ending work in process 4,000 units that are 100% complete for materials and 30% complete for
conversion costs. Unit materials cost is $5 and unit conversion cost is $11.
Instructions
Determine the costs to be assigned to the units transferred out and the units in ending work in
process.
Solution 143
(4 min.)
$20,000
13,200
$33,200
$736,000
BE 144
Tomlinson Company has the following production data for May:
Beginning work in process, 0 units
Units started, 62,000
Ending work in process, 7,000 units that are 100% complete for materials and 60% complete
for conversion costs
Unit materials cost, $7
Unit conversion cost, $10
Instructions
Determine the costs to be assigned to the units transferred out and the units in ending work in
process.
3 - 28
Solution 144
(4 min.)
$49,000
42,000
$91,000
$935,000
BE 145
Dirt Cleaners, Inc. has the following production data for January:
Transferred out
Ending work in process
50,000 units
6,000 units
The units in ending work in process are 100% complete for materials and 60% complete for
conversion costs. There is no beginning work in process. Materials cost is $10 per unit and
conversion costs are $11 per unit.
Instructions
Determine the costs to be assigned to the units transferred out and the units in ending work in
process.
Solution 145
(4 min.)
$1,050,000
$ 60,000
39,600
99,600
$1,149,600
BE 146
Production costs chargeable to the Sanding Department in July for Joyful Art are $12,500 for
materials, $26,000 for labor, and $10,000 for manufacturing overhead. Equivalent units of
production are 25,000 for materials and 18,000 for conversion costs.
Instructions
Compute the unit costs for materials and conversion costs.
Process Costing
Solution 146
3 - 29
(4 min.)
COSTS
Unit costs
Costs in July
Equivalent units
Unit costs
a
Materials
$12,500
25,000
$0.50
Conversion Costs
$36,000
18,000
$2.00
Total
$48,500
$2.50
BE 147
Tip Top Painting Company has the following production data for March:
Beginning work in process, 2,000 units, which are 30% complete for conversion costs
Units transferred out, 42,000
Units in ending work in process, 6,000, which are 80% complete for conversion costs
Materials are added only at the beginning of the process.
Instructions
Compute equivalent units of production for both materials and conversion costs using the FIFO
method.
Solution 147
(5 min.)
QUANTITIES
Physical Units
2,000
46,000
48,000
2,000
40,000
6,000
48,000
Equivalent Units
Materials
0
40,000
6,000
46,000
Conversion Costs
1,400
40,000
4,800
46,200
(2,000 70%)
(6,000 80%)
BE 148
The Kirkland Department of Delta Manufacturing began the month of December with beginning
work in process of 4,000 units that are 100% complete as to materials and 20% complete as to
conversion costs. Units transferred out are 10,000 units. Ending work in process contains 1,000
units that are 100% complete as to materials and 60% complete as to conversion costs.
Instructions
Compute equivalent units of production for both materials and conversion costs for the month of
December using the FIFO method.
3 - 30
a
Solution 148
(5 min.)
QUANTITIES
Physical Units
4,000
7,000
11,000
4,000
6,000
1,000
11,000
Equivalent Units
Materials
Conversion Costs
0
6,000
1,000
7,000
3,200
6,000
600
9,800
(4,000 80%)
(1,000 60%)
EXERCISES
Ex. 149
Baez Manufacturing Company produces a product in two departments: (1) Mixing and (2)
Finishing. The company uses a process cost accounting system.
(a) Purchased raw materials for $50,000 on account.
(b) Raw materials requisitioned for production were:
Direct materials
Mixing department
Finishing department
$20,000
14,000
$48,000
32,000
(e) Manufacturing overhead is applied to the product based on machine hours used in each
department:
Mixing department600 machine hours at $45 per machine hour.
Finishing department500 machine hours at $30 per machine hour.
(f)
Units costing $66,000 were completed in the Mixing Department and were transferred to the
Finishing Department.
(g) Units costing $60,000 were completed in the Finishing Department and were transferred to
finished goods.
(h) Finished goods costing $30,000 were sold on account for $45,000.
Instructions
Prepare the journal entries to record the preceding transactions for Baez Manufacturing
Company.
Process Costing
Solution 149
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
3 - 31
(2028 min.)
50,000
Work in ProcessMixing..............................................................
Work in ProcessFinishing..........................................................
Raw Materials Inventory......................................................
(To record materials used in production)
20,000
14,000
Factory Labor...............................................................................
Wages Payable....................................................................
(To record payroll liability)
80,000
Work in ProcessMixing..............................................................
Work in ProcessFinishing..........................................................
Factory Labor.......................................................................
(To assign factory labor to production)
48,000
32,000
27,000
15,000
Work in ProcessFinishing..........................................................
Work in ProcessMixing.....................................................
(To record transfer of units to the Finishing Department)
66,000
60,000
Accounts Receivable....................................................................
Sales....................................................................................
(To record sale of finished goods on account)
45,000
30,000
50,000
34,000
80,000
80,000
42,000
66,000
60,000
45,000
30,000
Ex. 150
Sanders Company has two production departments: Fabricating and Finishing. Beginning
inventories are: Work in ProcessFabricating, $6,030; Work in ProcessFinishing, $4,100; and
Finished Goods, $5,600. During the month the following transactions occurred:
1. Purchased $45,000 of raw materials on account.
2. Incurred $65,000 of factory labor. Wages are unpaid.
3. Incurred $50,000 of manufacturing overhead; $44,000 was paid and the remainder is unpaid.
4. Requisitioned materials for Fabricating, $10,000 and Finishing, $8,000.
3 - 32
Ex. 150
(1216 min.)
45,000
2. Factory Labor..................................................................................
Wages Payable.......................................................................
65,000
3. Manufacturing Overhead.................................................................
Accounts Payable...................................................................
Cash.......................................................................................
50,000
4. Work in ProcessFabricating.........................................................
Work in ProcessFinishing.............................................................
Raw Materials Inventory.........................................................
10,000
8,000
5. Work in ProcessFabricating.........................................................
Work in ProcessFinishing.............................................................
Factory Labor.........................................................................
13,000
52,000
6. Work in ProcessFabricating.........................................................
Work in ProcessFinishing.............................................................
Manufacturing Overhead........................................................
15,000
30,000
45,000
65,000
6,000
44,000
18,000
65,000
45,000
Ex. 151
The Pasta Factory manufactures spaghetti sauce through two production departments: Cooking
and Packaging. For the month of February, the work in process accounts show the following
debits:
Cooking
Packaging
Beginning work in process
$ -0$ 6,000
Materials
40,000
21,000
Labor
21,000
9,000
Overhead
25,000
14,000
Costs transferred in
50,000
Instructions
Journalize the February transactions that involved the work in process accounts.
Process Costing
Solution 151
3 - 33
(1015 min.)
Work in ProcessCooking....................................................................
Work in ProcessPackaging................................................................
Raw Materials Inventory...............................................................
40,000
21,000
Work in ProcessCooking....................................................................
Work in ProcessPackaging................................................................
Factory Labor...............................................................................
21,000
9,000
Work in ProcessCooking....................................................................
Work in ProcessPackaging................................................................
Manufacturing Overhead..............................................................
25,000
14,000
Work in ProcessPackaging................................................................
Work in ProcessCooking...........................................................
50,000
61,000
30,000
39,000
50,000
Ex. 152
Benson Industries uses a process cost system. Products are processed first by Department A,
second by Department B, and then they are transferred to the finished goods warehouse. Shown
below is the cost information for Department B during the month of October:
Costs of units transferred in
Manufacturing costs added in Department B:
Direct materials
Direct labor
Manufacturing overhead
Total costs charged to Department B in October
$120,000
$40,000
11,000
19,000
70,000
$190,000
The cost of work in process in Department B at October 1 is $25,000, and the cost of work in
process at October 31 has been determined to be $30,000.
Instructions
Prepare journal entries to record for the month of October:
(a) The transfer of production from Department A to B.
(b) The manufacturing costs incurred by Department B.
(c) The transfer of completed units from Department B to the finished goods warehouse.
Solution 152
(811 min.)
120,000
70,000
185,000
120,000
11,000
40,000
19,000
185,000
3 - 34
Ex. 153
Hardy Company manufactures a single product by a continuous process, involving two production
departments. The records indicate that $120,000 of direct materials were issued to and $200,000
of direct labor was incurred by Department 1 in the manufacture of the product. The factory
overhead rate is $15 per machine hour; machine hours were 6,000 in Department 1. Work in
process in the department at the beginning of the period totaled $35,000; and work in process at
the end of the period was $25,000.
Instructions
Prepare entries to record
(a) The flow of costs into Department 1 for
(1) direct materials
(2) direct labor
(3) overhead
(b) The transfer of production costs to Department 2.
Solution 153
(a)
(1)
(2)
(3)
(b)
(710 min.)
120,000
200,000
90,000
120,000
200,000
90,000
420,000
Ex. 154
Muffy Painting Company has the following production data for March.
Month
March
Beginning
Units
Work in Process Transferred Out
2,000
42,000
Instructions
Compute equivalent units of production for March for both materials and conversion costs.
Materials are entered at the beginning of the process.
Process Costing
Solution 154
3 - 35
(10 min.)
Quantities
Units to be accounted for
Work in process, March 1
Started into production
Total units
Physical Units
Equivalent Units
Materials
Conversion Costs
2,000
48,000
50,000
42,000
8,000
50,000
42,000
8,000
50,000
42,000
6,400 (8,000 80%)
48,400
Ex. 155
The Nitrogen Fixation Department of Tomco Manufacturing began the month of December with
beginning work in process of 4,000 units that are 100% complete as to materials and 30%
complete as to conversion costs. Units transferred out are 10,000 units. Ending work in process
contains 3,000 units that are 100% complete as to materials and 60% complete as to conversion
costs.
Instructions
Compute the equivalent units of production for materials and conversion costs for the month of
December.
Solution 155
(10 min.)
Quantities
Physical Units
Units to be accounted for
Work in process, December 1
4,000
Started into production
9,000
Total units
13,000
Units accounted for
Transferred out
Work in process, December 31
Total units
10,000
3,000
13,000
Equivalent Units
Materials
Conversion Costs
10,000
3,000
13,000
10,000
1,800
11,800
(3,000 60%)
Ex. 156
At Crenshaw Company, materials are entered at the beginning of each process. Work in process
inventories, with the percentage of work done on conversion, and production data for its Painting
Department in selected months are as follows:
Month
July
Sept.
Units Completed
and Transferred Out
10,000
9,000
3 - 36
Ex. 156
(cont.)
Instructions
(a) Compute the physical units for July.
(b) Compute the equivalent units of production for materials and conversion costs for
September.
Solution 156
(a)
(b)
(1014 min.)
July
-010,500
10,500
Transferred out
Ending work in process
Total units accounted for
10,000
500
10,500
Physical Units
9,000
4,000
13,000
Equivalent Units
Materials Conversion Costs
9,000
9,000
4,000
2,800 (4,000 .70)
13,000
11,800
Ex. 157
Watts Company adds materials at the beginning of the process and conversion costs are incurred
uniformly throughout the process.
Instructions
Complete the following calculation of equivalent units for materials and conversion costs.
Physical Units
Completed and transferred out
Equivalent Units
Materials
Conversion Costs
40,000
18,000
Process Costing
Solution 157
3 - 37
(47 min.)
Equivalent Units
Materials
Conversion Costs
40,000
40,000
Physical Units
40,000
24,000*
24,000*
64,000
18,000
58,000
*18,000 .75
Ex. 158
The general ledger of Oates Company has the following work in process account.
WORK IN PROCESSFINISHING
6/1
6/30
6/30
6/30
6/30
Balance
Materials
Labor
Overhead
Balance
8,000
1,800
2,400
3,350
?
6/30
Transferred out
Production records show that there were 2,000 units in beginning inventory, 50% complete; 5,000
units started, and 4,500 units transferred out. The beginning work in process had conversion
costs of $3,700. The units in ending inventory were 60% complete. Materials are added at the
beginning of the process.
Instructions
Answer the following questions.
(a) How many units are in process at June 30?
(b) What is the unit conversion cost for June?
(c) What is the conversion cost in the June 30 inventory?
Solution 158
(1014 min.)
(a)
2,000
5,000
7,000
4,500
2,500
(b)
Conversion costs
Transferred out
Work in process, June 30
Total
Physical Units
4,500
2,500
7,000
Equivalent Units
4,500
1,500 (2,500 .60)
6,000
3 - 38
Ex. 159
The Assembly Department uses a process cost accounting system and a weighted-average cost
flow assumption. The department adds materials at the beginning of the process and incurs
conversion costs uniformly throughout the process. During July, $190,000 of materials costs and
$133,000 in conversion costs were charged to the department. The beginning work in process
inventory was $108,000 on July 1, comprised of $80,000 of materials costs and $28,000 of
conversion costs.
Other data for the month of July are as follows:
Beginning work in process inventory, 7/1
Units completed and transferred out
Ending work in process inventory, 7/31
25,000 units
90,000 units
10,000 units
(40% complete)
(20% complete)
Instructions
Answer the following questions and show computations to support your answers.
1. How many physical units have to be accounted for in July?
2. What are the equivalent units of production for materials and for conversion costs for the
month of July?
3. What is the total cost assigned to the 90,000 units that were transferred out of the process in
July?
4. What is the total cost of the July 31 inventory?
Solution 159
(1520 min.)
90,000
10,000
100,000
Physical Units
90,000
10,000
100,000
Equivalent Units
Materials
Conversion Costs
90,000
90,000
10,000
2,000*
100,000
92,000
*(10,000 .20)
3. Materials cost per unit =
Conversion cost per unit =
Total unit cost
*($80,000 + $190,000)
$2.70
$1.75
$4.45
**($28,000 + $133,000)
Process Costing
3 - 39
Ex. 160
The Finishing Department of Edwards Manufacturing has the following production and cost data
for July:
1. Transferred out, 3,000 units.
2. Started 5,000 units that are 40% completed at July 31.
3. Materials added, $32,000; conversion costs incurred, $12,500.
Materials are entered at the beginning of the process. Conversion costs are incurred uniformly
during the process.
Instructions
(a) Compute the equivalent units of production for materials and conversion costs for the month
of July.
(b) Compute unit costs and prepare a cost reconciliation schedule.
Solution 160
(1520 min.)
(a)
Transferred Out
Work in Process, July 31
Total
Physical Units
3,000
5,000
8,000
Equivalent Units
Materials
Conversion Costs
3,000
3,000
5,000
2,000*
8,000
5,000
*(5,000 .40)
(b)
$19,500
$20,000
5,000
$25,000
$44,500
Ex. 161
Massey Corporation uses a process cost system and the weighted-average cost flow assumption.
Production begins in the Fabricating Department where materials are added at the beginning of
the process and conversion costs are incurred uniformly throughout the process. On March 1, the
beginning work in process inventory consisted of 20,000 units which were 60% complete and had
a cost of $125,000, $95,000 of which were materials costs. During March, the following occurred:
Materials added
Conversion costs incurred
Units completed and transferred out in March
Units in ending work in process March 31 (20% complete)
$230,000
$129,000
50,000
15,000
3 - 40
Ex. 161
Instructions
Answer the following questions and show the computations that support your answers.
1. What are the equivalent units of production for materials and conversion costs in the
Fabricating Department for the month of March?
2. What are the costs assigned to the ending work in process inventory on March 31?
3. What are the costs assigned to units completed and transferred out during March?
Solution 161
(1520 min.)
Physical Units
50,000
15,000
65,000
Equivalent Units
Materials
Conversion Costs
50,000
50,000
15,000
3,000*
65,000
53,000
*(15,000 .20)
2.
$5
3
$8
Ex. 162
Given below are the production data for Department No. 1 for the first month of operation:
Costs charged to Department 1:
Materials
$12,000
Labor
2,800
Overhead
12,400
During this first month of operations, 4,000 units were started into production; 3,500 units were
transferred out; and the remaining 500 units are 100% completed with respect to materials and
60% complete with respect to conversion costs.
Instructions
Compute the following:
(a) Unit materials cost.
(b) Equivalent units of conversion costs.
(c) Unit conversion cost.
(d) Total cost of 500 units in process at end of month.
(e) Total cost of 3,500 units transferred out.
Process Costing
Solution 162
3 - 41
(1418 min.)
(a)
Unit materials cost: $12,000 4,000 equivalent units for materials = $3.00.
(b)
Equivalent units of conversion costs: 3,500 completed + (60% 500) = 3,800 equivalent
units of conversion costs.
(c)
(d)
(e)
$1,500
1,200
$2,700
Total cost of 3,500 transferred out units: 3,500 ($3.00 + $4.00) = $24,500.
Ex. 163
Grey Building Supplies' total materials costs are $40,000 and total conversion costs are $39,000.
Equivalent units of production for materials are 10,000, and 6,500 for conversion costs.
Instructions
Compute the unit costs for materials, conversion costs, and total manufacturing costs for the
month.
Solution 163
(68 min.)
COSTS
Unit Costs
Costs incurred
Equivalent units
Unit costs
Materials
$40,000
10,000
$4.00
Conversion Costs
$39,000
6,500
$6.00
Total
$79,000
$10.00
Ex. 164
Glazer, Inc. has the following production data for June:
Transferred out
Ending work in process
50,000 units
6,000 units
The units in work in process are 100% complete for materials and 60% complete for conversion
costs. Materials costs are $8 per unit and conversion costs are $11 per unit.
Instructions
Determine the costs to be assigned to the units transferred out and the units in ending work in
process.
3 - 42
Solution 164
(8 min.)
$ 950,000
$48,000
39,600
87,600
$1,037,600
Ex. 165
Production costs chargeable to the Sanding Department in July in Magnum Company are
$20,000 for materials, $17,000 for labor, and $10,000 for manufacturing overhead. Equivalent
units of production are 25,000 for materials and 18,000 for conversion costs.
Instructions
Compute the unit costs for materials and conversion costs.
Solution 165
(6-8 min.)
COSTS
Unit Costs
Costs in July
Equivalent units
Unit costs
Materials
$20,000
25,000
$0.80
Conversion Costs
$27,000
18,000
$1.50
Total
$47,000
$2.30
Ex. 166
Poole Manufacturing Company uses a process cost system. The Molding Department adds
materials at the beginning of the process and conversion costs are incurred uniformly throughout
the process. Work in process on May 1 was 75% complete and work in process on May 31 was
40% complete.
Instructions
Complete the Production Cost Report for the Molding Department for the month of May using the
above information and the information below.
Process Costing
Ex. 166
3 - 43
(cont.)
POOLE MANUFACTURING COMPANY
Molding Department
Production Cost Report
For the Month Ended May 31, 2008
QUANTITIES
Units to be accounted for
Work in process, May 1
Started into production
Total units
Units accounted for
Transferred out
Work in process, May 31
Total units
COSTS
Unit costs
Costs in May
Equivalent units
Unit costs
Physical Units
Equivalent Units
Materials
Conversion Costs
16,000
50,000
66,000
46,000
20,000
66,000
Materials
$198,000
$
Conversion Costs
$135,000
$
Total
$333,000
$
$ 83,000
250,000
$333,000
$
$
$333,000
3 - 44
Solution 166
(1216 min.)
POOLE MANUFACTURING COMPANY
Molding Department
Production Cost Report
For the Month Ended May 31, 2008
QUANTITIES
Units to be accounted for
Work in process, May 1
Started into production
Total units
Units accounted for
Transferred out
Work in process, May 31
Total units
Physical Units
Materials
Equivalent Units
Conversion Costs
16,000
50,000
66,000
46,000
20,000
66,000
COSTS
Unit costs
Costs in May
Equivalent units
Unit costs
46,000
20,000
66,000
Materials
$198,000
66,000
$
3.00
46,000
8,000 (20,000 40%)
54,000
Conversion Costs
$135,000
54,000
$
2.50
Total
$333,000
$
5.50
$ 83,000
250,000
$333,000
$253,000
$ 60,000
20,000
80,000
$333,000
Ex. 167
Baker Winery manufactures fine wine in two departments, Fermenting and Bottling. In the
Fermenting Department, grapes are aged in casks for a period of 30 days. In the Bottling
Department, the wine is bottled and then sent to the finished goods warehouse. Labor and
overhead are incurred uniformly through both processes. Materials are entered at the beginning
of both processes. Cost and production data for the Fermenting Department for December 2008
are presented below:
Cost data
Beginning work in process inventory
Materials
Conversion costs
Process Costing
Ex. 167
Total costs
(cont.)
3 - 45
$580,000
Production data
Beginning work in process (gallons)
Gallons started into production
Ending work in process (gallons)
10,000 (40%)
130,000
16,000 (25%)
Instructions
(a) Compute the equivalent units of production.
(b) Determine the unit production costs.
(c) Determine the costs to be assigned to units transferred out and ending work in process.
Solution 167
(1725 min.)
(a)
Physical Units
Transferred out
124,000*
Ending work in process
16,000
Total
140,000
Equivalent Units
Materials
Conversion Costs
124,000
124,000
16,000
4,000 (16,000 .25)
140,000
128,000
(c) Costs assigned to units transferred out and ending work in process:
Transferred out (124,000 $4.25)
Ending work in process
Materials (16,000 $3.00)
Conversion costs (4,000 $1.25)
53,000
$580,000
Ex. 168
The Assembly Department of Lynn Company has the following production and cost data at the
end of May, 2008.
Production: 35,000 units started into production; 25,000 units transferred out and 10,000 units
100% completed as to materials and 40% completed as to conversion costs.
Manufacturing Costs: Materials added at beginning of process, $70,000; labor, $100,000;
overhead $74,000.
Instructions
Prepare a production cost report for the month of May.
3 - 46
Solution 168
(2230 min.)
LYNN COMPANY
Assembly DepartmentProduction Cost Report
For the Month Ended May 31, 2008
Physical Units
QUANTITIES
Units to be accounted for
Work in process, May 1
Started into production
Total units
0
35,000
35,000
25,000
10,000
35,000
COSTS
Unit costs
Costs in May
Equivalent units
Unit costs
Materials
$70,000
35,000
$2.00
Equivalent Units
Materials
Conversion Costs
25,000
10,000
35,000
Conversion Costs
$174,000
29,000
$6.00
25,000
4,000
29,000
Total
$244,000
$8.00
$
0
244,000
$244,000
$200,000
20,000
24,000
44,000
$244,000
Ex. 169
Bunker CompanyPerth Division is a new state of the art production facility that manufactures
landing gear for airplanes. The ending September 30th work in process is comprised of labor and
overhead and is approximately 60% complete. All materials are assumed to be 100% complete.
Total materials costs during the period totaled $910,000.
Instructions
As the new plant accountant, you are asked to complete the production cost report which appears
as follows:
Process Costing
Ex. 169
(cont.)
BUNKER COMPANYPerth Division
Assimilation Department
Production Cost Report
For the Month Ended September 30, 2008
QUANTITIES
Physical Units
Units to be accounted for
Work in process, September 1
300
Started into production
1,000
Total units
1,300
Units accounted for
Transferred out
Work in process, September 30
Total units
COSTS
Unit Costs
Costs in September
Equivalent units
Unit costs
900
400
1,300
Materials
$910,000
$
Equivalent Units
Materials
Conversion Costs
900
400
1,300
Conversion Costs
$
$
250
900
Total
$1,195,000
$
$ 263,400
$
$
$
60,000
$1,195,000
3 - 47
3 - 48
Solution 169
(10-15 min.)
BUNKER COMPANYPerth Division
Assimilation Department
Production Cost Report
For the Month Ended September 30, 2008
QUANTITIES
Physical Units
Units to be accounted for
Work in process, September 1
300
Started into production
1,000
Total units
1,300
Units accounted for
Transferred out
Work in process, September 30
Total units
900
400
1,300
COSTS
Unit Costs
Costs in September
Equivalent units
Unit costs
Materials
$910,000
1,300
$
700
Equivalent Units
Materials
Conversion Costs
900
400
1,300
Conversion Costs
$285,000
1,140
$
250
900
240
1,140
Total
$1,195,000
$950
$ 263,400
931,600
$1,195,000
$ 855,000
$280,000
60,000
340,000
$1,195,000
Ex. 170
At Oxley Company, materials are entered at the beginning of each process. The company uses
the FIFO method for process costing. Work in process inventories, with the percentage of work
done on conversion, and production data for its Finishing Department for March are as follows:
Month
March
Units Completed
and Transferred Out
11,000
Instructions
(a) Compute the physical units for March.
(b) Compute the equivalent units of production for materials and conversion costs for March.
Process Costing
a
Solution 170
3 - 49
(57 min.)
11,000
500
11,500
Equivalent Units
Materials
Conversion Costs
0
560 (1,400 .40)
9,600
9,600
500
450 (500 .90)
10,100
10,610
Ex. 171
Taco Ranch uses a process cost system and the FIFO cost flow assumption. Production begins in
the Crafting Department where materials are added at the beginning of the process and
conversion costs are incurred uniformly throughout the process. On November 1, the beginning
work in process inventory consisted of 10,000 units, which were 60% complete and had a cost of
$190,000, $100,000 of which were materials costs. During November, the following occurred:
Materials added
Conversion costs incurred
Units completed and transferred out in November
Units in ending work in process November 30 (20% complete)
$225,000
$45,000
40,000
25,000
Instructions
Answer the following questions and show the computations that support your answers:
(a) What are the equivalent units of production for materials and conversion costs in the Crafting
Department for the month of November?
(b) What are the costs assigned to the ending work in process inventory on November 30?
(c) What are the costs assigned to units completed and transferred out during November?
Solution 171
(1012 min.)
Equivalent Units
Materials
Conversion Costs
0
4,000 (10,000 .40)
30,000
30,000
25,000
5,000 (25,000 .20)
55,000
39,000
3 - 50
a
Solution 171
(cont.)
$4,09
1.15
$5,24
$190,000
270,000
$460,000
(4,000 $1.15)
(30,000 $5.24)
Process Costing
3 - 51
COMPLETION STATEMENTS
172.
Process cost systems are used to apply costs to similar products that are ____________
in a ____________ fashion.
173.
174.
175.
176.
Equivalent units of production measure the work done during the period, expressed in fully
________________ units.
177.
178.
If a processing department has 27,000 units in process at the beginning of the period,
completes and transfers out 80,000 and has 18,000 units in process at the end of the
period, then the number of units started into production during the period was
______________ units.
179.
180.
The production cost report is an internal document that shows production quantity and
______________ for a production department.
mass-produced, continuous
work in process
production cost
machine hours
completed
equivalent
71,000
transferred out, ending
cost data
3 - 52
MATCHING
181.
Match the items in the two columns below by entering the appropriate code letter in the
space provided.
A.
B.
C.
D.
E.
F.
G.
H.
____
1.
A summary of both production quantity and cost data for a production department.
____
2.
Shows that the total costs accounted for equal the total costs to be accounted for.
____
3.
____
4.
____
5.
Actual units to be accounted for during a period, irrespective of any work performed.
____
6.
Units transferred out during the period plus units in ending work in process.
____
7.
____
8.
Answers to Matching
1.
2.
3.
4.
D
E
B
G
5.
6.
7.
8.
H
C
A
F
Process Costing
3 - 53
3 - 54
Solution 184
1. The stakeholders include:
FROM: Accounting
RE:
Congratulations on a job well done, in instituting JIT! You are already realizing many
of the benefits of efficient handling of inventory. Another of the benefits you will enjoy
is simplified reporting.
In the production cost reports you have been provided, there have been separate
categories for materials and conversion costs. In some cases, there were several
kinds of materials. JIT has allowed us to simplify this, and now there is only one
column, for Raw and In Process.
You may remember that each category was also adjusted for beginning and ending
inventories. Since we no longer will have routine levels of inventory, we will be able
to simplify this part of the reporting as well. We will now report only this month's use
of materials, for example, and only the costs added to work in process costs this
month, and only finished goods completed this period. If adjustments are needed for
ending inventories, we will make them at the end of the year as a single adjustment.
Please contact the accounting department if you have further questions.
(signed)