Ch4 Process Costing

True/False Questions

1. In a process costing costing system, the costs costs of one processing processing department department become part part of the costs of the next processing department. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 2. The equivalent equivalent units of production production will be the same same under the weighted-aver weighted-average age and the FIFO method if there is no beginning work in process inventory. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 2,5 Level: Medium 3. Under the weighted-avera weighted-average ge method, the equivalent equivalent units units used to compute compute the unit costs of ending inventories relate only to work done during the current period. Ans: False AACSB: Analytic AICPA FN: Reporting LO: 2

AICPA BB: Critical Thinking Level: Hard

4. In order to equitably allocate allocate costs in a process costing costing system, dissimilar dissimilar products are restated in terms of equivalent units by weighting the number of units produced by their market values. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy 5. In a process costing costing system, units units transferred transferred to the next processing processing department department are presumed to be 100% complete with respect to the work performed by the transferring department. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy 6. Under a weighted-averag weighted-averagee process costing costing system when all all materials are added added at the beginning of the production process, the equivalent units for materials is equal to the units completed and transferred out. Ans: False AACSB: Analytic AICPA FN: Reporting LO: 2

AICPA BB: Critical Thinking Level: Hard

7. In calculating calculating cost per equivalent equivalent unit under the weighted-average weighted-average method, method, prior period costs are combined with current period costs. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Easy 8. The equivalent equivalent units of production production for a department using the FIFO process process costing method is equal to the number of units completed plus the equivalent units in the ending inventory. Ans: False AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5 Level: Hard 9. The step-down step-down method of cost allocation allocation is more accurate accurate than than the direct method method since the step-down method considers services that service departments provide to each other. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 8,9 Level: Easy 10. The step-down step-down method and the direct direct method of cost cost allocation allocation will result in the same amount of service department cost being allocated to a given operating department, although the step-down method is easier to apply than the direct method. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 8,9 Level: Medium 11. The order in which which the costs of service service departments departments are allocated allocated will affect the amounts allocated to an operating department when the direct method is used. Ans: False AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 8 Level: Medium 12. The units in beginning beginning work in process inventory inventory plus the units started into production production must equal the units transferred out of the department plus the units in ending work in process inventory. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 10 Level: Easy

13. In a process costing system, system, direct labor cost combined combined with manufacturing manufacturing overhead cost is known as conversion cost. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 10 Level: Easy 14. Process costing costing is employed in industries industries that produce basically basically homogeneous homogeneous products such as bricks, flour, or cement but would not be appropriate for assemblytype operations such as those that manufacture computers. Ans: False AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 10 Level: Medium 15. Process costing costing is used where many different different products are produced produced each period to customer specifications. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 10 Level: Easy

Multiple Choice Questions

16. Which of the following statements statements related to job-order job-order costing and process process costing are true? A) Under Under both both costin costing g methods methods,, manufac manufacturi turing ng overhe overhead ad costs costs are included included in the the computation of unit product costs. B) Under Under both both costing costing methods, methods, the journal journal entry entry to record record the the compl completio etion n of production will involve crediting a work in process account. C) Under Under both both costin costing g methods methods,, the journal journal entry entry to record record the the cost cost of goods goods sold sold will involve crediting the finished goods account. D) All All of of th the ab above ove are are tru true. Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Hard

17. The completion completion of goods is recorded recorded as a decrease decrease in the work in process process inventory inventory account when using: Job-o Job-ord rder er cost costin ing g Proce Process ss costi costing ng A) Yes No B) Yes Yes C) No Yes D) No No Ans: B AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy Source: CPA, adapted 18. In process costing, costing, a separate separate work in process account account is kept for for each: A) individual or order. B) equivalent unit. C) proc rocessin ssing g depa epartme tment. D) cost cost categ category ory (i.e., (i.e., mater material ials, s, conv convers ersion ion cost) cost).. Ans: C AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 19. The weighted-average weighted-average method method of process process costing differs differs from the FIFO method method of process costing in that the weighted-average method: A) does not consider consider the degree degree of compl completio etion n of beginnin beginning g work work in in proces processs inventory when computing equivalent units of production. B) consi conside ders rs endin ending g work work in proce process ss inve invento ntory ry to be be fully fully compl complet ete. e. C) will will alwa always ys yield yield a hig highe herr cost cost per per equ equiva ivale lent nt uni unit. t. D) All of the above. Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 2,3,5,6 Level: Hard

20. Which of the following are needed needed to compute equivalent equivalent units for conversion conversion costs under the weighted-average method of process costing?

A) B) C) D)

Percentage completion of beginning work in process Yes No Yes No

Percentage completion of ending work in process Yes Yes No No

Ans: B AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy 21. Malcolm Company Company uses a weighted-average weighted-average process costing costing system. All materials materials at Malcolm are added at the beginning of the production process. The equivalent units for materials at Malcolm would be the sum of: A) units units in in endi ending ng wor work k in proce process ss and and the units units sta starte rted. d. B) units units in in begi beginni nning ng work work in proc process ess and the the unit unitss star started ted.. C) units units in ending ending work in process process and the units units starte started d and and comple completed. ted. D) units units in beginni beginning ng work work in proce process ss and and the the units units started started and complete completed. d. Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Hard 22. In the computation computation of costs per equivalent equivalent unit, unit, the weighted-average weighted-average method method of process costing considers: A) costs costs incur incurred red durin during g the the curren currentt peri period od only. only. B) costs costs incurre incurred d during during the current current perio period d plus plus cost cost of of ending ending work in proce process ss inventory. C) costs costs incurre incurred d during during the current current perio period d plus plus cost cost of of beginn beginning ing work in proce process ss inventory. D) costs costs incurre incurred d during during the the curre current nt period period less cost of beginn beginning ing work work in process process inventory. Ans: C AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Easy Source: CPA, adapted

23. Which of the following following are needed needed to compute the cost cost per equivalent equivalent unit for materials under the weighted-average method of process costing?

A) B) C) D)

Material cost assigned to beginning work in process last period Yes No Yes No

Material cost added to production during the current period Yes Yes No No

Ans: A AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium 24. Under which of the following following conditions conditions will the FIFO FIFO method of process process costing result in the same amount of cost being transferred to the next department as the weighted-average method? A) When the beginnin beginning g and and ending ending invento inventories ries are each fifty fifty percen percentt complet complete. e. B) When When ther theree is is no no beg begin inni ning ng inve invent ntor ory. y. C) When When ther theree is is no no end endin ing g inv inven ento tory ry.. D) When units units in the begi beginnin nning g invent inventory ory are are all all comple completed ted and and trans transferr ferred ed at at the the same time. Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 4,7 Level: Hard Source: CMA, adapted 25. In order to compute equivalent equivalent units of production production using the FIF0 method of process process costing, work for the period must be broken down into parts: A) compl complet eted ed durin during g the the peri period od and and unit unitss in endi ending ng inve invento ntory ry.. B) complete completed d from from beginn beginning ing inventor inventory, y, starte started d and and comple completed ted durin during g the the month month,, and units in ending inventory. C) started started during during the the perio period d and and units units transfer transferred red out during during the period. period. D) processe processed d durin during g the the period period and units units complet completed ed durin during g the the period. period. Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium Source: CPA, adapted

26. Which of the following methods methods of allocating service service departments departments take into account all of the effects of interdepartmental services? Dire Direcct Ste Step-Do -Down A) Yes Yes B) Yes No C) No Yes D) No No Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 8,9 Level: Medium 27. All of the following statements statements are correct when referring referring to process costing except: except: A) Process Process costing costing would would be appropri appropriate ate for for a jeweler jeweler who who make makess custom custom jewelry jewelry to order. B) A proces processs costin costing g system system has the same basic basic purpo purposes ses as as a job-o job-order rder costing costing system. C) Units Units prod produc uced ed are are indi indisti stingu nguish ishab able le fro from m each each othe other. r. D) Cost Costss are are accu accumu mula late ted d by by dep depar artm tmen ent. t. Ans: A AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 10 Level: Medium 28. For which of the following following would it be best best to use an operation operation costing system? system? A) home re remodeling B) automo tomob bile prod roducti ction C) cemen ment used sed for for roadwa dways D) tras trash h bag bagss use used d for for yard yard wast wastee Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 10 Level: Medium

29. Health Beverage Beverage Company uses a process process costing system to collect collect costs related to the production of its celery flavored cola. The cola is first processed in a Mixing Department at Health and is then transferred out and finished up in the Bottling Department. The finished cases of cola are then transferred to Finished Goods Inventory. The following information relates to Health's two departments for the month of January: Mix Mixing ing Bottli tling Case Casess of of col colaa in in wor work k in in pro proce cess ss,, Jan Janua uary ry 1... 1..... .... .... .... .... .... .... .... .... 10,0 10,000 00 3,00 3,000 0 Cases of cola completed/transferred out during January. 77,000 ? Cases ses of of co cola in in wo work in pr process, ss, Ja Janua nuary 31 31.... ...... .... .... .... .... .... .... .. 4,0 4,000 8,00 ,000 How many cases of cola were completed and transferred to Finished Goods Inventory during January? A) 66,000 B) 71,000 C) 72,000 D) 74,000 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Medium Solution: To solve for units transferred: + Work Work in in proc proces ess, s, beg beginn inning ing... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ......... ..... + Units Units start started ed into into produ producti ction on durin during g the the month month.... .............. .............. .... − Work in process, process, ending. ending........ .............. .............. ............. ............. .............. ................... ............ = Units Units compl complet eted ed and and transf transferr erred ed out out during during the the month month...... ........

3,000 3,000 77,00 77,000 0 8,000 8,000 72,00 72,000 0

30. The Assembly Department Department started started the month with 83,000 83,000 units in its beginning beginning work in process inventory. An additional 334,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 34,000 units in the ending work in process inventory of the Assembly Department. How many units were transferred to the next processing department during the month? A) 417,000 B) 285,000 C) 451,000 D) 383,000 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy Solution: To solve for units transferred: + Work Work in proce process, ss, begin beginnin ning.. g..... ...... ....... ....... ...... ....... ....... ...... ....... ....... ...... ........ ....... .. 83,00 83,000 0 + Units Units started started into producti production on durin during g the the month.............. month.............. 334,000 334,000 − Work Work in process, process, ending... ending.......... ............. ............. .............. ............. .................... .............. 34,000 34,000 =Units =Units comple completed ted and and transf transferre erred d out during during the the month.... month.... 383,000 383,000

31. Colby Company Company has a process costing system system in which the weighted-average weighted-average method is used. The company adds all materials at the beginning of the process in the Molding Department, which is the first of two stages of its production process. Information concerning the materials used in the Molding Department during March is as follows:

Work in process at March 1............................................. Units started during March.............................................. Units completed and transferred to next department during March................................................................

Units 22,00 0 90,00 0 97,00 0

Materials Costs $11,000 $46,120

What was the materials cost of the work in process inventory at March 31? A) $11,220 B) $7,500 C) $5,100 D) $7,650 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3 Level: Medium Source: CPA, adapted

Solution: To solve for ending work in process: + Work Work in proce process, ss, beginn beginning ing... ....... ....... ....... ....... ...... ....... ....... ...... ........ .......... .......... .......... ..... + Units Units starte started d into prod product uctio ion n during during the the month. month.... ....... ......... .......... ....... .. − Units Units comp complet leted ed and and tran transfe sferr rred ed out out durin during g the the month month........ ........ = Work Work in proce process, ss, ending ending.... ....... ...... ....... ....... ....... ....... ...... ....... ......... .......... .......... .......... ......... ....

22,00 22,000 0 90,00 90,000 0 97,00 97,000 0 15,00 15,000 0

Equivalent Equivalent units of production production Materials Trans Transfer ferred red to next next depa depart rtmen ment... t...... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ... 97,00 97,000 0 Ending work in process (materials: 15,000 units × 100% compl complete ete).. )..... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... .... 15,00 15,000 0 Equiv Equival alent ent units units of produc productio tion.. n..... ....... ....... ...... ........ .......... ......... ......... .......... ......... .... 112,0 112,000 00 Cost per Equivalent Unit Materials Cost Cost of begi beginn nning ing work work in in proces process.. s..... ...... ....... ....... ....... ......... .......... .......... ........ ... $11,0 $11,000 00 Cost Cost adde added d durin during g the the perio period.. d...... ....... ...... ....... ....... ...... ....... ....... ....... ....... ....... ......... ....... 46,12 46,120 0 Total Total cost cost (a)....... (a).............. ............. ............. .............. .............. ............. ............. .............. ................. .......... $57,120 $57,120

Equiv Equival alent ent units units of produ producti ction on (b).... (b)........ ....... ...... ....... ....... ....... ....... ....... ......... ....... Cost Cost per per equ equiv ival alen entt unit unit,, (a) (a) ÷ (b) (b).. ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ...

112,0 112,000 00 $0.5 $0.51 1 Materials

Ending work in process inventory: Equivalent units of production (materials: 15,000 units × 100% complete; conversion: 15,000 units × % compl complete ete).. )..... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... .... Cost Cost per per equiv equival alen entt unit. unit... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ...... ...... ...... ..... Cost Cost of endin ending g work work in proce process ss inven inventor tory.. y..... ....... ........ ......... .......... ........ ...

15,00 15,000 0 $0.5 $0.51 1 $7,65 $7,650 0

32. Barnett Company Company uses the weighted-average weighted-average method method in its process costing system. system. The company adds materials at the beginning of the process in Department M. Conversion costs were 75% complete with respect to the 4,000 units in work in process at May 1 and 50% complete with respect to the 6,000 units in work in process at May 31. During May, 12,000 units were completed and transferred to the next department. An analysis of the costs relating to work in process at May 1 and to production activity for May follows: Mate Materi rial alss Conv Conver ersi sion on Work in process 5/1....................... $13,800 $3,740 Costs ad added du during Ma May................ $42,000 $26,260 The total cost per equivalent unit for May was: A) $5.02 B) $5.10 C) $5.12 D) $5.25 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3 Level: Medium Solution: Equivalent Equivalent units of production production Materials Conversion Conversion Trans Transfer ferred red to next next depar departme tment. nt.... ...... ....... ....... ...... ....... ......... ..... 12,00 12,000 0 12,00 12,000 0 Ending work in process (materials: 6,000 units × 100% complete; conversion: 6,000 units × 50% 50% comp comple lete te). )... ..... ..... .... .... ..... ..... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... 6,00 6,000 0 3,00 3,000 0 Equiv Equival alent ent units units of produ producti ction. on.... ...... ....... ....... ....... ....... ...... ...... ... 18,00 18,000 0 15,00 15,000 0 Cost per Equivalent Unit Materials Conversion Conversion Total Cost Cost of begin beginnin ning g work work in proce process ss..... .......... ............ .......... ... $13,80 $13,800 0 $ 3,740 3,740 Cost Cost added added durin during g the the perio period.. d...... ....... ...... ....... ......... .......... ........ ... 42,00 42,000 0 26,26 26,260 0 Total Total cost cost (a)....... (a).............. ............. ............. .............. .................. .................... ......... $55,800 $55,800 $30,000 $30,000

Equiv Equival alent ent units units of produ producti ction on (b)... (b)....... ........ ......... .......... ..... Cost Cost per per equi equiva vale lent nt unit unit,, (a) (a) ÷ (b). (b).... ..... .... .... ..... ..... ..... ...... .....

18,00 18,000 0 $3.1 $3.10 0

15,00 15,000 0 $2.0 $2.00 0

$5.1 $5.10 0

33. Maurice Company Company uses the weighted-average weighted-average method method in its process costing system. system. The company adds materials at the beginning of the process in the Forming Department, which is the first of two stages of its production process. Information concerning the materials used in the Forming Department in April follows:

Work Work in proc proces esss at at Apr April il 1... 1..... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Units started during April................................................ Units completed and transferred to next department durin during g April. April.... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ........ ........ ....

Materials Units Costs 12,0 12,000 00 $6,0 $6,000 00 100,00 0 $51,120 88,00 88,000 0

What was the materials cost of the work in process at April 30? A) $6,120 B) $11,040 C) $12,000 D) $12,240 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3 Level: Medium Source: CPA, adapted

Solution: To solve for ending work in process: + Work in in proce process, ss, beg beginn inning ing... ....... ....... ....... ......... .......... .......... ......... ......... .......... ....... 12,00 12,000 0 + Units Units starte started d into into produ productio ction n during during the the month month.............. .............. 100,000 100,000 − Units Units compl complete eted d and and transf transferre erred d out out during during the month... month... 88,000 88,000 = Work Work in process, process, ending. ending........ .............. .............. ............. ............. .............. ............... ........ 24,000 24,000 Equivalent Equivalent units of production production Materials Trans Transfer ferred red to next next depa depart rtmen ment... t...... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ... 88,00 88,000 0 Ending work in process (materials: 24,000 units × 100% compl complete ete).. )..... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... .... 24,00 24,000 0 Equiv Equival alent ent units units of produc productio tion.. n..... ....... ....... ...... ........ .......... ......... ......... .......... ......... .... 112,0 112,000 00 Cost per Equivalent Unit Materials Cost Cost of begin beginnin ning g work work in proce process ss.... ....... ....... ....... ....... ......... .......... .......... ......... .... $ 6,00 6,000 0 Cost Cost adde added d durin during g the the perio period.. d...... ....... ...... ....... ....... ...... ....... ....... ....... ....... ....... ......... ....... 51,12 51,120 0 Total Total cost cost (a)....... (a).............. ............. ............. .............. .............. ............. ............. .............. ................. .......... $57,120 $57,120

Equiv Equival alent ent units units of produ producti ction on (b).... (b)........ ....... ...... ....... ....... ....... ....... ....... ......... ....... Cost Cost per per equ equiv ival alen entt unit unit,, (a) (a) ÷ (b) (b).. ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ...

112,0 112,000 00 $0.5 $0.51 1 Materials

Ending work in process inventory: Equivalent units of production (materials: 24,000 units × 100% 100% comple complete) te).... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ......... .......... .......... .......... ....... Cost Cost per per equiv equival alen entt unit. unit... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ...... ...... ...... ..... Cost Cost of endi ending ng work work in proc proces esss inven inventor tory.. y..... ....... ........ ......... .......... ........ ...

24,00 24,000 0 $0.5 $0.51 1 $12,2 $12,240 40

34. Destry Company Company uses the weighted-average weighted-average method in its process process costing system. The first processing department, the Welding Department, started the month with 10,000 units in its beginning work in process inventory that were 30% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $19,200. An additional 60,000 units were started into production during the month. There were 19,000 units in the ending work in process inventory of the Welding Department that were 70% complete with respect to conversion costs. A total of $380,060 in conversion costs were incurred in the department during the month. What would be the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.) A) $6.400 B) $6.334 C) $6.209 D) $4.811 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3 Level: Medium Solution: To solve for units transferred: + Work Work in proce process, ss, beginn beginning ing... ....... ....... ....... ....... ...... ....... ....... ...... ........ .......... .......... .......... ..... + Units Units starte started d into prod product uctio ion n during during the the month. month.... ....... ......... .......... ....... .. − Work Work in proce process, ss, ending ending.... ....... ...... ....... ....... ....... ....... ...... ....... ......... .......... .......... .......... ......... .... = Units Units comp complet leted ed and and tran transfe sferr rred ed out out durin during g the the month month........ ........

10,00 10,000 0 60,00 60,000 0 19,00 19,000 0 51,00 51,000 0

Equivalent Equivalent units of production production Conversion Tran Transf sfer erre red d to next next depa depart rtme ment nt.. .... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ...... ...... ..... .. 51,0 51,000 00 Ending work in process (conversion: 19,000 units × 70% comp comple lete te). )... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ...... ...... ...... ...... ...... ..... 13,3 13,300 00 Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ...... ...... ...... ...... ..... 64,3 64,300 00 Cost per Equivalent Unit Conversion Cost of beginnin beginning g work in process process....... .............. .............. ............. ............... ......... $ 19,200 19,200 Cost Cost adde added d durin during g the the perio period.. d...... ....... ...... ....... ....... ....... ......... .......... .......... .......... ....... 380,0 380,060 60 Total Total cost cost (a).. (a)...... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ......... .......... .......... .......... .......... ....... $399,2 $399,260 60

Equi Equiva vale lent nt uni units ts of of prod produc ucti tion on (b) (b).. .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ..... ..

64,3 64,300 00

Cost Cost per per equ equiv ival alen entt unit unit,, (a) (a) ÷ (b) (b).. ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ..... ..

$6.2 $6.209 09

35. Limber Company Company uses the weighted-average weighted-average method in its process process costing system. system. Operating data for the first processing department for the month of June appear below:

Beginning Beginning work in process inventory....... inventory......... Started into production during June........... Ending work in process process inventory............. inventory............ .

Units 18,00 0 81,00 0 17,00 0

Percent Complete with Respect to Conversion 80%

80%

According to the company's records, the conversion cost in beginning work in process inventory was $15,264 at the beginning of June. Additional conversion costs of $68,208 were incurred in the department during the month. What was the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.) A) $0.873 B) $0.696 C) $0.842 D) $1.060 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3 Level: Medium

Solution:

To solve for units transferred: + Work Work in proce process, ss, beginn beginning ing... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ....... ........ .... + Units Units sta starte rted d into into prod product uctio ion n durin during g the the month month.............. .............. − Work Work in proce process, ss, ending ending.... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ......... ......... .... = Units Units comp complet leted ed and and tran transfe sferr rred ed out out durin during g the the month month... ...

18,00 18,000 0 81,00 81,000 0 17,00 17,000 0 82,00 82,000 0

Equivalent Equivalent units of production production Conversion Trans Transfer ferred red to next next depa depart rtmen ment... t...... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ... 82,00 82,000 0 Ending work in process (con (conve vers rsio ion: n: 17, 17,00 000 0 unit unitss × 80% 80% comp comple lete te).. )..... ...... ...... ...... ....... ...... 13,6 13,600 00 Equiv Equival alent ent units units of produ producti ction. on.... ...... ....... ....... ....... ......... .......... .......... .......... .......... ..... 95,60 95,600 0 Cost per Equivalent Unit Conversion Cost Cost of begi beginn nning ing work work in in proces process.. s..... ...... ....... ....... ....... ......... .......... .......... ........ ... $15,2 $15,264 64 Cost Cost adde added d durin during g the the perio period.. d...... ....... ...... ....... ....... ...... ....... ....... ....... ....... ....... ......... ....... 68,20 68,208 8 Total Total cost cost (a)....... (a).............. ............. ............. .............. .............. ............. ............. .............. ................. .......... $83,472 $83,472

Equiv Equival alent ent units units of produ producti ction on (b)... (b)....... ....... ...... ....... ....... ...... ....... ....... ........ ........ ... Cost Cost per equiv equival alent ent unit, unit, (a) (a) ÷ (b).... (b)....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ..... ..

95,60 95,600 0 $0.87 $0.873 3

36. Roy Company Company manufactures manufactures a product in Departments Departments A and B. Materials Materials are added at at the beginning of the process in Department B. Roy uses the weighted-average method in its process costing system. Conversion costs for Department B were 50% complete with respect to the 6,000 units in the beginning work in process and 75% complete with respect to the 8,000 units in the ending work in process. A total of 12,000 units were completed and transferred out of Department B during February. An analysis of the costs in Department B for February follows: Tran ransfe sferre rred In Mat Materi erials Conversio rsion n Work in process, February 1.......... $12,000 $2,500 $1,000 Costs added during February......... $29,000 $5,500 $5,000 The total cost per equivalent unit during February was closest to: A) $2.75 B) $2.78 C) $2.82 D) $2.85 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3 Level: Medium Source: CPA, adapted Solution:

Transferred to next department.......................... Ending work in process: Mate Materrials als: 8,0 8,000 units × 100 100% comp mpllete.. te..... ...... ... Conversion: 8,000 units × 75% complete....... Equivalent units of production...........................

Work in process, beginning... Cost added during the month Total cost (a).......................... Equivalent units (above) (b). . Cost per equivalent unit (a) ÷ (b)..............................

Materials 12,000

Conversion 12,000

8,0 8,000 20,000

6,000 18,000

Transferred In Materials Conversion $12,000 $2,500 $1,000 29,000 5,500 5,000 $41,000 $8,000 $6,000 20,000 20,000 18,000 $2.05

$0.40

$0.33

Total

$2.78

37. Hammoudi Company Company uses the weighted-average weighted-average method method in its process costing system. system. The first processing department, the Welding Department, started the month with 16,000 units in its beginning work in process inventory that were 90% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $61,920. An additional 53,000 units were started into production during the month and 45,000 units were completed in the Welding Department and transferred to the next processing department. There were 24,000 units in the ending work in process inventory of the Welding Department that were 70% complete with respect to conversion costs. A total of $194,340 in conversion costs were incurred in the department during the month. What would be the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.) A) $4.300 B) $4.147 C) $2.524 D) $3.667 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3 Level: Medium Solution: Equivalent Equivalent units of production production Conversion Tran Transf sfer erre red d to next next depa depart rtme ment nt.. .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... .. 45,0 45,000 00 Ending work in process (con (conve vers rsio ion: n: 24,0 24,000 00 unit unitss × 70% 70% comp comple lete te).. ).... .... ..... ...... ...... ...... ...... ...... ...... ...... ..... 16,8 16,800 00 Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... .. 61,8 61,800 00 Cost per Equivalent Unit Conversion Cost Cost of of begin beginnin ning g work work in in proce process ss.... ....... ....... ....... ...... ....... ....... ...... ........ .......... .......... .......... ....... .. $ 61,92 61,920 0 Cost Cost adde added d durin during g the perio period.. d...... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ........ ......... .... 194,3 194,340 40 Total Total cost cost (a)....... (a).............. ............. ............. .............. .............. ............. ............. .............. ............. ................. ................ ..... $256,26 $256,260 0

Equi Equiva vale lent nt units units of produ product ctio ion n (b). (b)... ..... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ... Cost Cost per per equiv equival alen entt unit, unit, (a) (a) ÷ (b).. (b)..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... .....

61,8 61,800 00 $4.1 $4.147 47

38. Paquet Company Company uses the weighted-average weighted-average method method in its process costing system. system. The Molding Department is the second department in its production process. The data below summarize the department's operations in January.

Beginning work in process inventory........... ...... .... .... ...... Transferred in from the prior................................. department during January.................................... Completed Completed and transferred to the next................... next.................. . department during January.................................... Ending work in process inventory....... ......... ...... .... ........ ...... ....

Percent Complete with Respect to Units Conversion 7,700 40% 56,00 0 58,40 0 5,300

90%

The accounting records indicate that the conversion cost that had been assigned to beginning work in process inventory was $16,940 and a total of $347,320 in conversion costs were incurred in the department during January. What was the cost per equivalent unit for conversion costs for January in the Molding Department? (Round off to three decimal places.) A) $5.500 B) $5.666 C) $5.766 D) $6.202 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3 Level: Medium Solution: Unit Unitss tran transf sfer erre red d out. out.... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ..... Add: equivalent units in the ending inventory (5300 × 90% compl complete ete).. )..... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ...... ........ ......... ...... .. Equiv Equival alent ent units units of produ product ction ion... ...... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ........ .... Cost in the beginnin beginning g inventor inventory..... y............ ............. ............. .............. .............. ............... ............. ..... Cost Cost adde added d durin during g the mont month.. h..... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ....... ......... .......... ........ ... Total Total cost....... cost............. ............. .............. ............. ............. .............. .............. ............. ............. .............. .............. ............. ...... $364,260 ÷ 63,170 units = $5.766 per unit

58,4 58,400 00 4,770 4,770 63,17 63,170 0 $ 16,940 16,940 347,3 347,320 20 $364,260 $364,260

39. Jimmy Company uses uses the weighted-average weighted-average method in its process costing costing system. The ending work in process inventory consists of 9,000 units. The ending work in process inventory is 100% complete with respect to materials and 70% complete with respect to labor and overhead. If the cost per equivalent unit for the period is $3.75 for material and $1.25 for labor and overhead, what is the balance of the ending work in process inventory account? A) $41,625 B) $33,750 C) $45,000 D) $31,500 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,4 Level: Medium Solution: Ending work in process: Mate Materrials als: 9,0 9,000 units × 100 100% comp mpllete... te..... Conv onversion sion:: 9,00 ,000 uni units × 70% com complete lete.. .... Ending work in process: Equivalent units of production............ Cost per equivalent unit...................... Cost of ending work in process...........

9,00 ,000 6,30 ,300

Materials Conversion 9,000 6,300 $3.75 $1.25 $33,750 $7,875

Total

$41,625

40. Lawton Company Company produces canned canned tomato soup in a single processing processing department department and has a process costing system in which it uses the weighted-average method. The company sold 250,000 units in the month of January. Data concerning inventories follow: Units Inventory at January 1: Work Work in proces process.. s...... ....... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ......... .......... ..... Finished goods.............................................................. Inventory at January 31: Work in process (conversion 75% complete)............... Finished goods..............................................................

None None 75,00 0 16,00 0 60,00 0

What were the equivalent units for conversion costs for January? A) 235,000 B) 247,000 C) 251,000 D) 253,000 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Source: CPA, adapted Solution: To calculate units transferred out: Units sold + End Endin ing g fin finis ishe hed d goo goods ds inve invent ntor ory. y.... ...... ...... ..... − Begi Beginn nnin ing g fini finish shed ed good goodss inve invent ntor ory... y...... ... = Units Units trans transfe ferr rred ed out. out... ..... ...... ...... ...... ...... ...... ...... ...... ...... ...

250,000 60,0 60,000 00 75,0 75,000 00 235, 235,00 000 0

Units Units transfer transferred red out....... out.............. ............. ............. ................. .............................. .................... Endin Ending g work work in proces processs (16, (16,00 000 0 uni units ts × 75% 75% com comple plete) te).. . Equival Equivalent ent units units of product production.. ion........ ............. .............. .............. ............. ............. .......

235,000 235,000 12,00 12,000 0 247,000 247,000

41. Jersey Company Company has a process costing system system in which it uses the weighted-average weighted-average method. The equivalent units for conversion costs for the month were 47,500 units. The beginning work in process inventory consisted of 15,000 units, 60% complete with respect to conversion costs. The ending work in process inventory consisted of 10,000 units, 75% complete with respect to conversion costs. The number of units started during the month was: A) 25,000 units B) 34,000 units C) 35,000 units D) 40,000 units Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Hard Solution:

Unit Unitss tran transf sfer erre red d out. out.... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... Endi Ending ng work work in proc proces esss (10 (10,0 ,000 00 unit unitss × 75% 75% comp comple lete te)..... )..... Equiv Equival alent ent units units for conve conversi rsion on cos costs. ts..... ........ ......... .......... .......... .......... ......... ...... * Solve backwards: 47,500 − 7,500 = 40,000

40,0 40,000 00 * 7,50 7,500 0 47,50 47,500 0

Units Units in begin beginnin ning g inven invento tory. ry...... .......... ........... ......... ... 15,00 15,000 0 + Unit Unitss star starte ted. d... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ..... 35,0 35,000 00 * − Units Units in endi ending ng inve invento ntory. ry...... .......... .......... .......... ....... 10,00 10,000 0 = Units Units transf transfer erred red out.. out..... ...... ....... ........ ......... .......... ......... .... 40,00 40,000 0 * Solve backwards: Units started = 40,000 −15,000 + 10,000 = 35,000

42. Boswal Company Company uses the weighted-average weighted-average method in its process process costing system. system. The Assembly Department started the month with 6,000 units in its beginning work in process inventory that were 80% complete with respect to conversion costs. An additional 52,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 18,000 units in the ending work in process inventory of the Assembly Department that were 20% complete with respect to conversion costs. What were the equivalent units for conversion costs in the Assembly Department for the month? A) 43,600 B) 40,000 C) 38,800 D) 64,000 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Solution: To solve for units transferred: Work Work in proce process, ss, begin beginnin ning.. g..... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ........ ......... ..... + Units Units sta starte rted d into into prod product uctio ion n durin during g the the month month...... .............. ........ − Work Work in proce process, ss, ending ending.... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ....... ...... .. = Units Units comp complet leted ed and and tran transfe sferr rred ed out out durin during g the the month month... ...

Tran Transf sfer erre red d to next next depa depart rtme ment nt.. .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ... Endi Ending ng work work in proc proces esss (18 (18,0 ,000 00 unit unitss × 20% 20% com compl plet ete) e).. Equi Equiva vale lent nt units units of prod produc ucti tion on.. .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ..... ..

6,000 6,000 52,00 52,000 0 18,00 18,000 0 40,00 40,000 0 Conversion 40,0 40,000 00 3,60 3,600 0 43,6 43,600 00

43. Jolly Company uses uses the weighted-average weighted-average method in its process costing costing system. Operating data for the Painting Department for the month of April appear below:

Begin ginning ing work ork in proces cess inven ventory.. ry.... .... .... .... .... .... .... .... .... .... .... .... .... .... Transf Transferr erred ed in from from the the prior prior dep depart artmen mentt during during Apri April. l. . Endin ding wor work in proc rocess inv invento ntory.. ry.... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ..

Units 4,70 ,700 59,70 59,700 0 7,30 ,300

Percent Complete with Respect to Conversion 90% 80%

What were the equivalent units for conversion costs in the Painting Department for April? A) 62,940 B) 62,300 C) 65,540 D) 57,100 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Solution: Unit Unitss in beg begin inni ning ng inv inven ento tory ry... ...... ...... ...... ...... ....... ...... 4,70 4,700 0 + Units Units star started ted into into prod produc uctio tion... n........ .............. ......... 59,70 59,700 0 − Unit Unitss in in end ending ing inve invento ntory. ry...... .......... .......... .......... ....... 7,300 7,300 = Units transf transfer erred red out.. out..... ...... ....... ........ ......... .......... ......... .... 57,10 57,100 0 Equiv Equival alent ent units units transf transferr erred ed out.... out....... ...... ....... ....... ...... ....... ....... ....... ......... ..... Add: Equivalent units in the ending work in process inve invent ntor ory y (7,3 (7,300 00 unit unitss × 80% 80% comp comple lete te).. ).... .... ..... ..... .... .... ..... ..... Equi Equiva vale lent nt unit unitss for conv conver ersi sion on cost costs. s... ..... ..... .... .... ..... ...... ...... ...... ...... ...

57,10 57,100 0 5,84 5,840 0 62,9 62,940 40

44. Parks Company Company uses the weighted-avera weighted-average ge method in its process process costing costing system. At the start of the year, the company had 5,000 units in process in Department A that were 60% complete with respect to conversion costs. At the end of the year, 6,500 units were in process, 40% complete with respect to conversion costs. During the year, 30,000 units were completed and transferred on to the next department. The equivalent units for conversion costs would be: A) 32,600 units B) 29,600 units C) 33,000 units D) 30,000 units Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy Solution: Equiv Equival alent ent units units transf transferr erred ed out.... out....... ...... ....... ....... ...... ....... ........ ......... ......... .... Add: Equivalent units in the ending work in process inve invent ntor ory y (6,5 (6,500 00 unit unitss × 40% 40% com compl plet ete) e).. .... .... ..... ..... ..... ...... ...... ... Equiv Equival alent ent units units for conve conversi rsion on costs costs... ....... ........ ........ ......... .......... ........ ...

30,00 30,000 0 2,60 2,600 0 32,60 32,600 0

45. Bart Co. adds materials materials at the beginning beginning of the process process in Department Department M. The company uses the weighted-average method in its process costing system. The following information pertains to Department M's work in process during April:

Work Work in in pro proce cess, ss, April April 1 (co (conv nvers ersion ion 60% compl complet ete)... e)... . Started in April................................................................ Completed........................................................................ Work Work in in pro proce cess, ss, April April 30 (conve (conversi rsion on 75% 75% comp comple lete) te).. .

Units 3,000 3,000 25,00 0 20,00 0 8,000 8,000

The equivalent units for conversion cost are: A) 26,000 B) 25,000 C) 24,200 D) 21,800 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Source: CPA, adapted Solution: Equi Equiva vale lent nt units units trans transfe ferr rred ed out... out..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ...... ..... Add: Equivalent units in the ending work in process inve invent ntor ory y (8,0 (8,000 00 unit unitss × 75% 75% comp comple lete te).. ).... .... ..... ..... .... .... ..... ..... Equi Equiva vale lent nt uni units ts for for con conve vers rsio ion n cost costs. s... ..... ..... .... .... ..... ...... ...... ...... ...... ...

20,0 20,000 00 6,00 6,000 0 26,0 26,000 00

46. Fatas Corporation Corporation uses the weighted-averag weighted-averagee method in its process costing system. system. The Assembly Department started the month with 8,000 units in its beginning work in process inventory that were 20% complete with respect to conversion costs. An additional 95,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. During the month 102,000 units were completed in the Assembly Department and transferred to the next processing department. There were 1,000 units in the ending work in process inventory of the Assembly Department that were 20% complete with respect to conversion costs. What were the equivalent units for conversion costs in the Assembly Department for the month? A) 102,200 B) 100,600 C) 102,000 D) 88,000 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy Solution: Equiv Equival alent ent units units transf transferr erred ed out.... out....... ...... ........ .......... .......... .......... .......... ........ ... Add: Equivalent units in the ending work in process inve invent ntor ory y (1,0 (1,000 00 unit unitss × 20% 20% comp comple lete te).. )..... ...... ...... ...... ...... ....... .... Equival Equivalent ent units units for conversi conversion on costs... costs.......... .............. .............. ............. ......

102,00 102,000 0 200 200 102,200 102,200

47. Natiello Corporation Corporation uses the weighted-averag weighted-averagee method in its process costing costing system. Operating data for the Lubricating Department for the month of October appear below:

Begin ginning ing work ork in proces cess inven ventory.. ry.... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Transferred in from the prior department during October......................................................................... Completed and transferred to the next department during October............................................................. Endin ding wor work in proc rocess inv invento ntory.. ry.... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ....

Percent Complete with Respect Units to Conversion 9,1 9,100 20% 38,50 0 41,00 0 6,6 6,600 70%

What were the equivalent units for conversion costs in the Lubricating Department for October? A) 41,000 B) 43,120 C) 36,000 D) 45,620 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy Solution: Uni Units in begin ginning ing inven ventory.. ry.... .... .... .... .... .... .... .... .... + Uni Units star tarted ted into pro product uction.. on.... .... .... .... .... .... .... .... .... − Units in in en ending in inventory........ ......... ...... ....... ...... .... = Uni Units tra transfer ferred red out out.... ...... .... .... .... .... .... .... .... .... .... .... .... .... .... ..

9,10 ,100 38,5 38,50 00 6,600 41,0 41,00 00

Equiv Equival alent ent units units transf transferr erred ed out.... out....... ...... ....... ......... .......... .......... .......... ..... Add: Equivalent units in the ending work in process inve invent ntor ory y (6, (6,60 600 0 uni units ts × 70% 70% comp comple lete te).. )..... ...... ...... ...... ...... ... Equiv Equival alent ent units units for conve conversi rsion on costs costs..... .......... .......... .......... .......... .....

41,00 41,000 0 4,62 4,620 0 45,62 45,620 0

48. Kew Company uses uses the weighted-average weighted-average method method in its process process costing system. system. The company had 3,000 units in work in process at April 1 that were 60% complete with respect to conversion cost. During April, 10,000 units were completed. At April 30, 4,000 units remained in work in process and they were 40% complete with respect to conversion cost. Direct materials are added at the beginning of the process. How many units were started during April? A) 9,000 B) 9,800 C) 10,000 D) 11,000 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Source: CPA, adapted Solution: To solve for units started into production: + Work Work in proce process, ss, endin ending.. g..... ...... ....... ....... ...... ....... ....... ...... ....... ....... ........ .......... .......... ......... .... + Unit Unitss comp complet leted ed and and transf transferr erred ed out out during during the month....... month....... − Work Work in proce process, ss, begin beginni ning. ng..... ....... ...... ....... ....... ...... ....... ....... ...... ....... ......... .......... ......... .... = Units Units sta starte rted d into into prod product uctio ion n durin during g the the month month... ...... ...... ........ .......... .....

4,000 4,000 10,00 10,000 0 3,000 3,000 11,00 11,000 0

49. Pelican Corporation Corporation uses a weighted-averag weighted-averagee process costing system system to collect costs related to production. The following selected information relates to production for March: Unit Unitss comp comple lete ted d and and tran transf sfer erre red d out. out..... ........ ...... Uni Units in wo work in in pr process, ss, Ma March 31 31.... ...... .... .... .... Equiv Equivale alent nt units units,, mater material ials.. s...... ....... ...... ....... ........ ......... ..... Equiv Equivale alent nt units units,, conv convers ersion ion costs. costs...... .......... ....... ..

5,00 5,000 0 800 5,800 5,800 5,200 5,200

Mate Materi rial alss Conv Conver ersi sion on Costs in work in process on March 1.... ...... .... ........ ...... .... .... .... $ 2,900 $ 4,680 Costs Costs added added to produ product ction ion durin during g March March.............. .............. 71,05 71,050 0 131,0 131,040 40 Tota Totall cost cost.. .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ..... .. $73, $73,95 950 0 $135 $135,7 ,720 20 All materials at Pelican are added at the beginning of the production process. Conversion costs are incurred uniformly over the production process. What total amount of cost should be assigned to the units in work in process at the end of March? A) $14,840 B) $15,420 C) $24,920 D) $25,860 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3,4 Level: Hard Solution:

Tota otal cost.... ...... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ÷ Equi quivale alent units its.... ...... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. = Cost per equivalent unit............................ × Endi nding inv inventor tory Mate Materi rial als: s: 800 800 unit unitss × $12. $12.75 75.. .... .... .... .... ..... ...... ... Conversion costs: *200 units × $26.10. .

Materials $73 $73,950 ,950 5,800 ,800 $12.75

Conversion $135,7 5,720 5,2 5,200 $26.10

Total

$5,220

$15,42 0

$10, $10,20 200 0

Units Units in work work in in proc proces ess, s, March March 31... 31....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ......... .......... ....... .. Less Less:: Unco Uncomp mple lete ted d as to con conve vers rsio ion n (5,8 (5,800 00 tot total al − 5,20 5,200 0 equ equiv ival alen entt unit units) s).. Equi Equiva vale lent nt unit unitss in endin ending g work work in proc proces ess: s: conv conver ersi sion on.. ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... ..

800 800 600 600 200 200

50. Kwan Manufacturing Manufacturing Company Company uses a process process costing system. system. All materials at Kwan are added at the beginning of the production process. For the month of October, equivalent units for materials were 40,000 under the weighted-average method and 36,000 under the FIFO method. Kwan's costs for October were as follows: Cost Cost in beginnin beginning g work work in process process (Octobe (Octoberr 1)........ 1)............... ....... Cost Cost added added to produ productio ction n during during October. October....... ............. .............. .......... ... Total cost.........................................................................

$ 25,20 25,200 0 262,800 262,800 $288,00 0

What are Kwan’s equivalent costs per equivalent unit for October for materials under both process costing methods? Weighted-Average A) $6.57 B) $6.57 C) $7.20 D) $7.20

FIFO $8.00 $7.30 $8.00 $7.30

Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 3,6 Level: Medium Solution:

Total cost........................... ÷ Equivalent units............. Cost per equivalent unit. . . .

Weighted-Average $288,000 40,000 $7.20

FIFO $262,800 36,000 $7.30

51. Safia Corporation Corporation uses the weighted-averag weighted-averagee method in its process costing system. system. The Fitting Department is the second department in its production process. The data below summarize the department's operations in March.

Beginning work in process inventory................. ...... .... .. Transferred in from the prior department during March.... March........... .............. .............. ............. ............. .............. ............. ............. ................ ......... Ending work in process inventory....... ............. ............ ....

Units 3,300


67,000 67,000 5,60 ,600

30%

The Fitting Department's cost per equivalent unit for conversion cost for March was $4.70. How much conversion cost was assigned to the units transferred out of the Fitting Department during March? A) $330,410.00 B) $314,900.00 C) $304,090.00 D) $297,886.00 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium Solution:

+ − = ×

Units in beginning inventory................... Units tr transferred in in.................................. Units in ending inventory........................ Units transferred out................................ Cost per equivalent unit...........................

3,300 67,000 5,600 64,700 $4.70 $304,090

52. The following data wer weree taken from the accounting accounting records of the Mixing Department Department of Kappa Company which uses the weighted-average method in its process costing system: Beginning work in process inventory: Cost Cost... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ... $19, $19,00 000 0 Units.... Units........... .............. ............. ............. .............. .............. .................. ................................ ..................... 30,000 30,000 units units Percentage completion with respect to materials.... ...... .... .... 100% Percentage completion with respect to conversion..... ....... 60% Units Units comple completed ted and transfer transferred red out....... out.............. .............. ................ ........... .. 82,000 82,000 units units Cost per equivalent unit: Mate Materi rial al.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... $1.5 $1.50 0 Conv Conver ersi sion on.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. $0.7 $0.75 5 The cost of units transferred out was: A) $184,500 B) $149,500 C) $167,500 D) $145,000 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium Solution: Cost computation for units transferred out: 82,000 units × ($1.50 + $0.75) = $184,500

53. Wit Company uses uses the weighted-average weighted-average method method in its process process costing system. system. Information for the month of May concerning Department A, the first stage of the company's production process follows:

Work in in pr process, be beginning....................... Curr Curren entt cost costss adde added. d... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Total costs...... ............ ............ ............. ............. ...... .... .... .. Equivalent units......................................... Costs per equivalent unit........................... Goods Goods comple complete ted.. d..... ....... ....... ....... ....... ........ .......... .......... .......... ..... Work Work in proce process, ss, endin ending.. g...... ........ ......... .......... .......... ........ ...

Mate Materi rial alss Conv Conver ersi sion on $ 4, 4,000 $ 3, 3,000 20,0 20,000 00 16,0 16,000 00 $24,000 $19,000 100,000 95,000 $0.24 $0.20 90,00 90,000 0 units units 10,00 10,000 0 units units

Material costs are added at the beginning of the process. The ending work in process is 50% complete with respect to conversion costs. How would the costs be distributed?

Goods completed and transferred out A) $39,600 B) $39,600 C) $43,000 D) $44,000

Ending work in process $3,400 $4,400 $0 $3,400

Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium Source: CPA, adapted

Solution:

Transferred to to ne next de department........... Ending work in process: Materials: 10,000 units × 100% comp comple lete te.. .... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ..... .. Conversion: 10,000 units × 50% complete....................................... Equivalent units of production............

Mat Materia rials 90,000

Conve nversion sion 90,000

10,0 10,000 00

100,000

5,000 95,000

Mat Materia rials Conve nversion sion Work in process, beginning... ....... ...... .... .... .... .... $ 4,000 $ 3,000 Cost Cost added added durin during g the the month month..... ......... ......... ..... 20,00 20,000 0 16,00 16,000 0 Total cost (a)....... ............ ........... ....... ...... .... .... ........ .... $24,000 $19,000 Equivalent un units (a (above) (b (b)............... 100,000 95,000 Cost per equivalent unit (a) ÷ (b)........ $0.24 $0.20

Units tr transferred ou out........................... Cost per equivalent unit...................... Cost tra transferred out out.............................

Equivalent units of production: ending wo work in in pr process.................... Cost per equivalent unit...................... Cost of ending work in process...........

Materials Conversion 90,000 90,000 $0.24 $0.20 $21,600 $18,000

Total

$39,600

Materials

Conversion

Total

10,000 $0.24 $2,400

5,000 $0.20 $1,000

$3,400

54. Lap Company uses uses the weighted-average weighted-average method in its process costing costing system. The beginning work in process inventory in a particular department consisted of 80,000 units, 100% complete with respect to materials and 25% complete with respect to conversion costs. The total dollar value of this inventory was $226,000. During the month, 150,000 units were transferred out of the department. The costs per equivalent unit for the month were $2.00 for materials and $3.50 for conversion costs. The value of the units completed and transferred out of the department was: A) $681,000 B) $765,000 C) $821,000 D) $825,000 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium Solution: 150,000 units × ($2.00 + $3.50) = $825,000 55. Bly Company uses the weighted-ave weighted-average rage method in its process costing costing system. During March, Bly Company's Department Y costs per equivalent unit were as follows: $ Materials................ 1 $ Conversion............. 3 $ Transferred-in........ 5 There were 4,000 units (40% complete with respect to conversion cost and 0% complete with respect to materials cost) in Work in Process at March 31. The total costs assigned to the March 31, Work in Process inventory should be: A) $36,000 B) $28,800 C) $27,200 D) $24,800 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Hard Source: CPA, adapted Solution: Endin Ending g work work in proces process: s: Conve Conversi rsion on costs costs (4,00 (4,000 0 × 40%) 40%) × $3.... $3.... Trans Transfer ferred red in costs costs (4,0 (4,000 00 × $5).. $5)..... ...... ....... ....... ...... ....... ....... ....... ......... .......... ......... ......... ........ ...

$ 4,80 4,800 0 20,00 20,000 0

Total Total cost cost:: Work Work in proc process ess,, March March 31... 31...... ....... ....... ...... ....... ......... .......... .......... .......... ....... ..

$24,8 $24,800 00

56. The following following information information was provided by Fystro Fystro Corporation Corporation for the month month of March. Fystro uses the weighted-average method in its process costing system.

Total cost transferred transferred out during March........ March............... ......... Cost in Work in Process, March 1......................... Cost Cost in Work Work in in Proc Process ess,, March March 31.... 31....... ...... ........ .......... ........ ...

$74,00 0 $12,00 0 $5,00 $5,000 0

How much cost did Fystro add to production during March? A) $57,000 B) $62,000 C) $67,000 D) $81,000 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium Solution: Work in process, process, ending.. ending......... .............. .............. ............... .............................. ........................ + Cost Cost tran transfe sferre rred d out out durin during g the the mont month.. h..... ....... ....... ...... ....... ......... .......... ....... − Work in process, process, beginni beginning... ng.......... .............. .............. ............. ...................... ................ = Cost Cost added added to producti production on during during the month............... month..................... ......

$ 5,000 5,000 74,00 74,000 0 12,000 12,000 $67,000 $67,000

57. Rangan Corporation Corporation uses the weighted-avera weighted-average ge method in its process costing costing system. The Molding Department is the second department in its production process. The data below summarize the department's operations in January.

Beginning work in process inventory........ Transferred in from the prior department during January...................................... January........................................ .. Completed and transferred to the next department department during January................... January..................... .. Ending work in process inventory.............

Units 2,100 76,00 0 74,20 0 3,900


70%

The Molding Department's cost per equivalent unit for conversion cost for January was $3.91. How much conversion cost was assigned to the ending work in process inventory in the Molding Department for January? A) $10,674.30 B) $15,249.00 C) $4,574.70 D) $4,105.50 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Easy Solution: Equivalent units in ending inventory: 3,900 units × 70% complete.............................................................................. Conve Conversi rsion on cos costs ts in in endin ending g work work in in proce process ss inve invent ntory ory... ....... ........ ....

2,730 × $3.91 $10,67 $10,674.3 4.3 0

58. Merckley Company Company has a process process costing system system and uses the FIFO FIFO method. For May, the company's beginning work in process inventory was 80% complete with respect to conversion, and the ending work in process inventory was 50% complete with respect to conversion. Information on units processed and conversion costs incurred during May follow:

Work in proces cess inven ventory on May May 1.... ...... .... .... .... .... .... .... .... .. Units started into production, and costs incurred during the month................................................ Units completed and transferred to finished goods during the month...................................... Work Work in proce process ss inven invento tory ry on May 31.... 31......... .............. .........

Conversion Units Cost 25,0 5,000 $22,0 2,000 135,00 0 $143,000 100,00 0 60,00 60,000 0

The amount of conversion cost in the ending work in process inventory was: A) $33,000 B) $38,100 C) $39,000 D) $45,000 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5,6,7 Level: Medium Source: CMA, adapted

Solution: Equivalent Units Units of Production Production

Conversion To complete beginning work in process (conversion: 25,00 ,000 uni units × 20% com comple plete). te)... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Units started and completed during the period (135,000 units its st starte rted − 60,00 ,000 unit nits in in en endin ding in invento ntory). ry)... .... .... .... ....

75,00 ,000

Endin ding work work in proce ocess (60 (60,000 ,000 units its × 50% comp mpllete).. te).. Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... .....

30,00 ,000 110, 110,00 000 0

5,00 ,000

Cost per Equivalent Unit

Cost Cost add added ed dur durin ing g the the peri period od (a) (a).. ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... ..... ...... ...... ..... Equi Equiva vale lent nt unit unitss of prod produc ucti tion on (b). (b)... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Cost ost pe per eq equiv uivalen lent un unit (a) ÷ (b) (b).... ...... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ..

Conversion $143 $143,0 ,000 00 110, 110,00 000 0 $1.30 .30

Costs of Ending Work in Process Inventory and Units Transferred Out Conversion Ending work in process inventory: Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. 30,0 30,000 00 Cost ost per per equi equiv valen lent unit unit.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. $1.30 .30 Cost Cost of endi ending ng work work in proc proces esss inv inven ento tory ry.. .... .... .... .... .... .... .... .... ..... ...... ... $39, $39,00 000 0

59. Doofus Music Company Company manufactures manufactures air guitars guitars and uses a FIFO FIFO process costing costing system to collect costs related to its production. Doofus only accounts for conversion costs because the only direct material, air, has no cost. The following information relates to September production:

Work in process, September 1....... Uni Units sta starte rted in into prod roductio tion... n...... ...... ... Work in process, September 30.... .

Number of units 20,000 90,00 ,000 8,000

Percent complete with respect to conversion costs 20% 75%

Conve Conversi rsion on cost cost in work work in proc proces esss on Septe Septembe mberr 1.......... Conversi Conversion on cost added added to to produ productio ction n durin during g Sept Septembe ember.. r.. ..

$ 263,1 263,120 20 5,262,40 5,262,400 0 $5,525,52 Total cost............................................................................. 0

What amount of cost should Doofus assign to the units (guitars) in work in process on September 30? A) $125,580 B) $303,600 C) $318,780 D) $343,200 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5,6,7 Level: Hard

Solution: Equivalent Equivalent Units of Production Production

Materia Materials ls Conversi Conversion on To complete beginning work in process (materials: 20,000 units × 100% complete; conversion: 20,000 units × 80% compl complet ete). e).... ...... ....... ....... ...... ....... ....... ...... ....... ........ ......... ....... .. 20,00 20,000 0 Units started and completed during the period (90,000 units started − 8,000 units in endin ending g inven inventor tory). y)..... ........ ......... .......... .......... .......... ......... .... 82,00 82,000 0 Ending work in process (materials: 8,000 units × 0% complete; conversion: 8,000 units units × 75% comple complete te)... )...... ....... ....... ...... ....... ........ ......... ....... 0 Equival Equivalent ent units units of product production. ion........... .................... .......... 102,000 102,000

16,00 16,000 0

82,00 82,000 0

6,000 6,000 104,000 104,000


Materia Materials ls Conversi Conversion on Cost added du durin ring the the perio riod (a) (a).. .... .... .... .... .... .... .... .... .. $0 $5,2 $5,26 62,4 2,400 Equival Equivalent ent units units of product production ion (b)............... (b)............... 102,000 102,000 104,000 104,000 Cost Cost per per equi equiva vale lent nt unit unit (a) (a) ÷ (b). (b).... ...... ...... ...... ....... .... $0.0 $0.00 0 $50. $50.60 60 Costs of Ending Work in Process Inventory and Units Transferred Out

Mate Materi rial alss Conv Conver ersi sion on Ending work in process inventory: Equivalent units of production...... ........ ...... .... .... ....... ... Cost Cost per per equi equiva vale lent nt unit unit.. ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... .. Cost of ending work work in proces cess inven ventory.. ry.... ..

0 $0.0 $0.00 0 $0

Tota Totall

6,000 $50. $50.60 60 $303,6 3,600 $30 $303 3,600 ,600

60. Edwin Company Company uses the FIFO method method in its process process costing system. system. The first processing department, the Welding Department, started the month with 22,000 units in its beginning work in process inventory that were 20% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $24,200. An additional 96,000 units were started into production during the month. There were 20,000 units in the ending work in process inventory of the Welding Department that were 90% complete with respect to conversion costs. A total of $585,900 in conversion costs were incurred in the department during the month. What would be the cost per equivalent unit for conversion costs? (Round off to three decimal places.) A) $6.103 B) $5.170 C) $5.500 D) $5.250 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5,6 Level: Medium Solution: Equivalent Equivalent Units of Production Production

Conversion To complete beginning work in process (22,000 units × 80% comp comple lete te). )... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ... Units started and completed during the period (96,000 units star starte ted d − 20, 20,00 000 0 uni units ts in in end endin ing g inv inven ento tory ry). )... .... .... .... .... .... .... .... .... .... .... .... .... .. Endi Ending ng work work in proc proces esss (20 (20,0 ,000 00 unit unitss × 90% 90% com compl plet ete) e).. .... ..... ...... ... Equi Equiva vale lent nt unit unitss of produ product ctio ion. n... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ..... ..

17,6 17,600 00 76,0 76,000 00 18,0 18,000 00 111, 111,60 600 0


Cost Cost added added during during the the per period iod (a).. (a)..... ...... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ........ ...... Equi Equiva vale lent nt uni units ts of of pro produ duct ctio ion n (b). (b)... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ..... .. Cost Cost per per equi equiva vale lent nt unit unit (a) (a) ÷ (b). (b).... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...

Conversion $585, $585,90 900 0 111, 111,60 600 0 $5.2 $5.250 50

61. Makridakis Makridakis Corporation Corporation uses the FIFO method method in its process process costing system. system. Operating data for the Casting Department for the month of September appear below:

Beginning Beginning work in process inventory............................ inventory.............................. .. Transferred in from the prior department during September.................................................................... Ending work in process process inventory................................... inventory................................ ...

Units 17,00 0 50,00 0 17,00 0


40%

According to the company's records, the conversion cost in beginning work in process inventory was $3,434 at the beginning of September. Additional conversion costs of $117,914 were incurred in the department during the month. What would be the cost per equivalent unit for conversion costs for September? (Round off to three decimal places.) A) $2.020 B) $1.811 C) $2.140 D) $2.358 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5,6 Level: Medium Solution: Equivalent Equivalent Units of Production Production

Conversion To complete beginning work in process (17,000 units × 90% 90% comp comple lete te). ).... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ... Units started and completed during the period (50,000 unit unitss star starte ted d − 17,0 17,000 00 unit unitss in endi ending ng inve invent ntor ory) y).. .... ..... ..... Endin ding wor work in proc rocess (17 (17,00 ,000 unit nits × 40% com omp plete lete)) Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ..... ..

15,3 15,300 00 33,0 33,000 00 6,80 ,800 55,1 55,100 00


Cost Cost added added during during the the per period iod (a).. (a)..... ...... ....... ....... ...... ....... ....... ...... ....... ......... ..... Equi Equiva vale lent nt uni units ts of of prod produc ucti tion on (b) (b).. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ..

Conversion $117, $117,91 914 4 55,1 55,100 00

Cost Cost per per equ equiv ival alen entt unit unit (a) (a) ÷ (b) (b).. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ..

$2.1 $2.140 40

62. Krumbly Company Company uses the FIFO method method in its process process costing system. system. At the beginning of the month, Department D's work in process inventory contained 2,000 units. These units were fully complete with respect to materials and 40% complete with respect to conversion costs, with a total cost at that point of $3,600. During the month, conversion costs amounted to $8 per equivalent unit. If all 2,000 units are fully complete by the end of the month, their total cost by that time will be: A) $19,600 B) $10,000 C) $13,200 D) $9,000 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5,6 Level: Medium Solution: Cost Cost from beginnin beginning g inventor inventory..... y............ .............. ............. .............. ............... ....... Cost to finish beginning inventory: (1 − 40%) = 60% × 2,000 2,000 = 1,20 1,200 0 EU EU × $8 cost cost per per EU.... EU....... ....... ....... ...... ........ .......... ....... .. Total cost of units from beginning beginning inventory......... inventory................. ..........

$ 3,600 3,600 9,600 9,600 $13,20 0

63. Inka Corporation Corporation uses the FIFO FIFO method in its process process costing costing system. The first processing department, the Forming Department, started the month with 13,000 units in its beginning work in process inventory that were 20% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $4,160. An additional 97,000 units were started into production during the month and 97,000 units were completed and transferred to the next processing department. There were 13,000 units in the ending work in process inventory of the Forming Department that were 30% complete with respect to conversion costs. A total of $136,637 in conversion costs were incurred in the department during the month. What would be the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.) A) $1.390 B) $1.600 C) $1.409 D) $1.280 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5,6 Level: Medium Solution: Equivalent Equivalent Units of Production Production

To comp comple lete te begi beginn nnin ing g work work in proc proces esss (13, (13,00 000 0 unit unitss × 80% 80% comp comple lete te). ). Units started and completed during the period (97,000 units started − 13,0 13,000 00 unit unitss in endi ending ng inve invent ntor ory) y)... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ..... Endi Ending ng work work in proc proces esss (13, (13,00 000 0 unit unitss × 30% 30% com compl plet ete) e).. .... .... .... ..... ..... .... .... ..... ..... ..... ..... .. Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ...... .....

Conversion 10,4 10,400 00 84,0 84,000 00 3,90 3,900 0 98,3 98,300 00


Conversion Cost Cost added added during during the the period period (a).... (a)....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ........ .......... .......... .......... .......... ....... $136,6 $136,637 37 Equiv Equival alent ent units units of produ producti ction on (b)... (b)....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ........ .......... ....... 98,30 98,300 0 Cost Cost per equiv equivale alent nt unit unit (a) (a) ÷ (b)... (b)....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ...... .. $1.39 $1.390 0

64. Qvr Corporation Corporation uses the FIFO FIFO method in its process process costing system. system. Operating data data for the Cutting Department for the month of March appear below:

Beginning work in process inventory.......... ............ ....... ...... ........ .... Transferred in from the prior department during March. Completed and transferred to the next department during March................................................................ Ending work in process inventory....... ............. ......... ...... ....... ...... .... ....

Units 2,500 45,00 0 40,50 0 7,000


70%

According to the company's records, the conversion cost in beginning work in process inventory was $3,600 at the beginning of March. Additional conversion costs of $99,477 were incurred in the department during the month. What would be the cost per equivalent unit for conversion costs for March? (Round off to three decimal places.) A) $2.211 B) $2.400 C) $2.170 D) $2.266 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5,6 Level: Medium Solution: Equivalent Equivalent Units of Production Production

Conversion To complete beginning work in process (2,500 units × 40% comp comple lete te). )... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ...... ...... ... Units started and completed during the period (45,000 units star starte ted d − 7,00 7,000 0 unit unitss in endi ending ng inve invent ntor ory) y).. .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ..... Endi Ending ng work work in proc proces esss (7,0 (7,000 00 unit unitss × 70% 70% comp comple lete te). )... .... .... .... .... ..... ... Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... .....

1,00 1,000 0 38,0 38,000 00 4,90 4,900 0 43,9 43,900 00


Cost Cost adde added d durin during g the peri period od (a). (a).... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ..... Equi Equiva vale lent nt unit unitss of prod produc ucti tion on (b). (b)... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ..... .. Cost Cost per per equi equiva vale lent nt unit unit (a) (a) ÷ (b). (b).... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...

Conversion $99, $99,47 477 7 43,9 43,900 00 $2.2 $2.266 66

65. Marston Company Company uses the FIFO method in its process costing costing system. The equivalent equivalent units for March for conversion costs totaled 37,500 units. The beginning work in process inventory in March consisted of 15,000 units, 60% complete with respect to conversion costs. The ending work in process inventory in March consisted of 10,000 units, 75% complete with respect to conversion costs. The number of units started during the month was: A) 41,500 units B) 34,000 units C) 25,000 units D) 72,500 units Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5 Level: Hard Solution: Equivalent Units of Production Calculation: To complete beginning work in process (15,000 units × 40% complet complete)... e).......... ............. ............. .............. ............. ............. .............. .............. ............. ............. .............. .............. ............. .......... .... Units started and completed during the period (? units started − 10,000 unit unitss in endi ending ng inve invent ntor ory) y).. .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ... Ending Ending work work in process process (10,0 (10,000 00 units units × 75% compl complete ete)....... )............. ............. ............ .....

6,000 6,000

? 7,500 7,500 37,50 Equivalent units of production................................................................ 0 To solve for Units started and completed during the period, solve algebraically: 6,000 + ? + 7,500 = 37,500 ? = 24,000 Next: Units started and completed = units started – 10,000 units from ending inventory 24,000 = units started – 10,000 = 34,000

66. Catin Company Company uses the FIFO method in its process costing costing system. The Assembly Department started the month with 7,000 units in its beginning work in process inventory that were 40% complete with respect to conversion costs. An additional 60,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 19,000 units in the ending work in process inventory of the Assembly Department that were 90% complete with respect to conversion costs. What were the equivalent units for conversion costs in the Assembly Department for the month? A) 48,000 B) 72,000 C) 62,300 D) 65,100 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium Solution:

+ + − =

To solve for units transferred: Work Work in proce process, ss, begi beginni nning. ng.... ....... ....... ...... ....... ....... ....... ......... .......... .......... .......... ....... .. 7,000 7,000 Units Units sta starte rted d into into prod produc uctio tion n durin during g the the mont month... h........ .......... ......... .... 60,00 60,000 0 Work Work in proc process ess,, ending ending.... ....... ...... ....... ....... ....... ....... ........ ......... ......... .......... .......... ......... .... 19,00 19,000 0 Units Units comple completed ted and and tra transf nsferr erred ed out during during the the mon month.... th.... . 48,00 48,000 0 Equivalent Equivalent Units of Production Production

Conversion To complete beginning work in process (7,000 units × 60% comp comple lete te). )... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ..... .. Units started and completed during the period (60,000 units star starte ted d − 19,0 19,000 00 uni units ts in in endi ending ng inv inven ento tory ry). )... .... .... .... .... .... .... .... .... .... .... .... .. Endi Ending ng work work in proc proces esss (19 (19,0 ,000 00 unit unitss × 90% 90% comp comple lete te). )... .... .... .... .. Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...

4,20 4,200 0 41,0 41,000 00 17,1 17,100 00 62,3 62,300 00

67. Kavadias Corporation Corporation uses the FIFO FIFO method in its process costing system. system. Operating data for the Enameling Department for the month of May appear below:

Beginning work in process inventory........ Transferred in from the prior..................... depart departme ment nt durin during g May..... May.......... .......... ......... ......... .......... ..... Ending work in process inventory.............

Units 7,400


75,20 75,200 0 3,000

90%

What were the equivalent units for conversion costs in the Enameling Department for May? A) 79,600 B) 82,300 C) 76,380 D) 70,800 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium Solution:

+ + − =

To solve for units transferred: Work Work in proce process, ss, begi beginni nning. ng.... ....... ....... ...... ....... ....... ....... ......... .......... .......... .......... ....... .. 7,400 7,400 Units Units sta starte rted d into into prod produc uctio tion n durin during g the the mont month... h........ .......... ......... .... 75,20 75,200 0 Work Work in proce process, ss, endi ending ng.... ....... ...... ....... ....... ....... ....... ........ ......... ......... .......... .......... ......... .... 3,000 3,000 Units Units comple completed ted and and tra transf nsferr erred ed out during during the the mon month.... th.... . 79,60 79,600 0 Equivalent Equivalent Units of Production Production

Conversion To complete beginning work in process (7,400 units × 20% comp comple lete te). )... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ...... ...... ... Units started and completed during the period (75,200 units star starte ted d − 3,00 3,000 0 unit unitss in endi ending ng inve invent ntor ory) y).. .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ..... Endin ding wo work in in pro proccess (3,0 (3,000 00 units its × 90 90% co comp mpllete ete)... )..... .... .... .... .... .... Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... .....

1,48 1,480 0 72,2 72,200 00 2,700 ,700 76,3 76,380 80

68. Kale Company uses uses the FIFO method method in its process costing costing system. system. At the beginning of March, the inventory in the Blending Processing Center consisted of 3,000 units, 90% complete with respect to conversion costs. At the end of the month, the inventory consisted of 2,000 units that were 60% complete with respect to conversion costs. If 10,000 units were transferred to the next processing center during the period, the equivalent units for conversion costs would be: A) 8,500 units B) 11,500 units C) 10,500 units D) 9,500 units Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium Solution: To solve for units started into production: + Work Work in in pro proce cess ss,, endi ending ng... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... .. + Unit Unitss com compl plet eted ed and and tra trans nsfe ferr rred ed out out dur durin ing g the the mo mont nth..... h..... − Work Work in proce process, ss, begi beginni nning. ng.... ....... ....... ...... ....... ....... ....... ......... .......... .......... .......... ....... .. = Unit Unitss sta start rted ed into into prod produc ucti tion on duri during ng the the mont month. h.... ...... ...... ...... ...... .....

2,00 2,000 0 10,0 10,000 00 3,000 3,000 9,00 9,000 0

Equivalent Equivalent Units of Production Production

Conversion To complete beginning work in process (3,000 units × 10% comp comple lete te). )... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Units started and completed during the period (9,000 units star starte ted d − 2,00 2,000 0 uni units ts in endi ending ng inve invent ntor ory) y).. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Endi Ending ng work work in proc proces esss (2,0 (2,000 00 unit unitss × 60% 60% comp comple lete te). )... .... .... .... .... .... .... Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ....

300 300 7,00 7,000 0 1,20 1,200 0 8,50 8,500 0

69. Billings Company Company uses the FIFO FIFO method in its process process costing system. system. On July 1, Department A had 10,000 units in process that were 80% complete with respect to conversion. On July 31 the department had 8,000 units in process that were 60% complete with respect to conversion. The department transferred 40,000 units out during the month, of which 10,000 units came from the beginning work in process inventory, and 30,000 units were started and completed during the month. All materials are added at the beginning of the process in Department A. What are the equivalent units for the month for materials and conversion, respectively? A) 38,0 38,000 00 unit units, s, and and 36, 36,80 800 0 uni units ts B) 38,0 38,000 00 unit units, s, and and 38, 38,00 000 0 uni units ts C) 48,0 48,000 00 unit units, s, and and 44, 44,80 800 0 uni units ts D) 48,0 48,000 00 unit units, s, and and 48, 48,00 000 0 uni units ts Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium Source: CMA, adapted Solution:

+ + − =

To solve for units started into production: Work Work in proc proces ess, s, endin ending. g.... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ...... ...... ...... ... Units Units comple completed ted and and transf transferr erred ed out during during the the month...... month...... Work Work in in proc process ess,, begi beginni nning. ng.... ....... ....... ...... ....... ....... ...... ....... ....... ....... ......... .......... ........ ... Units Units starte started d into into produ producti ction on durin during g the the month month.... ....... ....... ......... ....... ..

8,00 8,000 0 40,00 40,000 0 10,00 10,000 0 38,00 38,000 0


Mate Materi rial alss Conve onvers rsio ion n To complete beginning work in process (materials: 10,000 units × 0% complete; conversion: 10,000 units × 20% complete)................................................. Units started and completed during the period (38,000 units st started − 8,000 un units in in en ending in inventory).......... Ending work in process (materials: 8,000 units × 100% comp comple lete te;; conv conver ersi sion on:: 8,00 8,000 0 unit unitss × 60% 60% comp comple lete te). ). . Equiv uivalen lent units of prod roduct uction.. on.... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ..

0

2,000

30,000

30,000

8,00 8,000 0 38,00 ,000

4,80 4,800 0 36,800 ,800

70. Gadroy Corporation Corporation uses the FIFO method method in its process costing system. system. The Grinding Department started the month with 13,000 units in its beginning work in process inventory that were 80% complete with respect to conversion costs. An additional 52,000 units were transferred in from the prior department during the month to begin processing in the Grinding Department. During the month 55,000 units were completed in the Grinding Department and transferred to the next processing department. There were 10,000 units in the ending work in process inventory of the Grinding Department that were 70% complete with respect to conversion costs. What were the equivalent units for conversion costs in the Grinding Department for the month? A) 62,000 B) 49,000 C) 55,000 D) 51,600 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium Solution: Equivalent Equivalent Units of Production Production

Conversion To complete beginning work in process (13,000 units × 20% comp comple lete te). )... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ..... .. Units started and completed during the period (52,000 units star starte ted d − 10,0 10,000 00 unit unitss in endi ending ng inve invent ntor ory) y).. .... ..... ..... .... .... ..... ..... ..... ...... ...... ... Endi Ending ng work work in proc proces esss (10, (10,00 000 0 unit unitss × 70% 70% comp comple lete te). ).... ...... ...... ... Equi Equiva vale lent nt uni units ts of of prod produc ucti tion on.. .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ..... ..

2,60 2,600 0 42,0 42,000 00 7,00 7,000 0 51,6 51,600 00

71. Outiniki Company Company uses the FIFO FIFO method in its process process costing system. system. Operating data data for the Brazing Department for the month of November appear below:

Beginning wo work in in pr process in inventory.......... ......... ...... ....... ...... .... Transferred in from the prior department during November................................................................. Completed and transferred to the next department during November..................................................... Ending wo work in in pr process in inventory....... .............. .......... ...... .... .... .....

Percent Complete with Respect to Units Conversion 3,400 30% 54,10 0 52,60 0 4,900 70%

What were the equivalent units for conversion costs in the Brazing Department for November? A) 55,010 B) 55,600 C) 56,030 D) 52,600 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium Solution: Equivalent Equivalent Units of Production Production

Conversion To complete beginning work in process (3,400 units × 70% comp comple lete te). )... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ...... ...... ... Units started and completed during the period (54,100 units star starte ted d − 4,90 4,900 0 unit unitss in endi ending ng inve invent ntor ory) y).. .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ..... Endin ding wo work in in pro proccess (4,9 (4,900 00 units its × 70 70% co comp mpllete ete)... )..... .... .... .... .... .... Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... .....

2,38 2,380 0 49,2 49,200 00 3,430 ,430 55,0 55,010 10

72. Steven Company Company uses the FIFO FIFO method in its process process costing system. system. The following following data were taken from the accounting records of a particular department for last month: Beginning work in process inventory: (10,000 units; mate materi rial alss 100% 100% comp comple lete te,, con conve vers rsio ion n 60% 60% comp comple lete te). )... .... .... .... .... $17, $17,50 500 0 Units Units comple completed ted and and tran transfer sferred red out during during the the month month....... ............. ...... 60,000 60,000 units units Cost per equivalent unit: Mate Materi rial al.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. $2.5 $2.50 0 Conv Conver ersi sion on.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... $2.0 $2.00 0 The cost of units transferred out of the department during the month is: A) $270,000 B) $242,500 C) $254,500 D) $250,500 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 7 Level: Medium Solution: EU Total Materials Conversion

Total Cost

Transferred to the next department: From beginning beginning work in process*. process*. . From started and completed during month..........................................

10,00 0 50,00 0 60,00 0

0

4,000

50,000

50,000

Total EU this period....................... 50,000 54,000 Cost pe per EU EU.................................... $2.50 $2.00 Cost from current period (EU × Cost per EU)............................... $125,000 $108,000 $233,000 Cost from beginning work in process......................................... 17,500 Total cost of units transferred out of the department during current month.......................................... $250,500 *(Materials=100% complete; 0% needed to complete with respect to materials; Conversion=60% complete; (1 − 0.6) = 40% × 10,000 units to complete units with respect to conversion)

73. Teboul Corporation Corporation uses the FIFO method method in its process costing system. system. Operating data for the Curing Department for the month of March appear below:

Beginning wo work in pr process in inventory.................... Transferred in from the prior department during March................................................................. Completed and transferred to the next department during March...................................................... Ending wo work in in pr process in inventory.........................

Units 7,900 40,00 0 43,90 0 4,000


60%

According to the company's records, the conversion cost in beginning work in process inventory was $11,850 at the beginning of March. The cost per equivalent unit for conversion costs for March was $7.40. How much conversion cost would be assigned to the units completed and transferred out of the department during March? A) $325,018 B) $313,168 C) $296,000 D) $324,860 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 7 Level: Medium Solution: Equivalent Equivalent Units of Production Production

Materials Materials Conversion Conversion To complete beginning work in process (materials: 7,900 units × 100% complete; conv conver ersi sion on:: 7,90 7,900 0 unit unitss × 80% 80% comp comple lete te).. )...... ...... .. Units started and completed during the period (40,000 units started − 4,000 units in ending inven inventor tory). y).... ....... ....... ...... ....... ....... ....... ....... ...... ....... ......... .......... ......... ......... ........ ... Ending work in process (materials: 4,000 units × % complete; conversion: 4,000 units × 60% compl complete ete).. )...... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ........ ......... .......... ....... Equi Equiva valen lentt units units of produc producti tion. on.... ....... ....... ....... ....... ...... ........ ........ ...

7,90 7,900 0

6,32 6,320 0

36,00 36,000 0

36,00 36,000 0

0 43,90 43,900 0

2,400 2,400 44,72 44,720 0


Materials Materials Conversion Conversion Cost Cost adde added d duri during ng the the peri period od (a). (a)... .... .... .... .... .... .... .... .... .... .... .... .... $0 $330 $330,9 ,928 28 $330 $330,9 ,928 28 Equi Equiva valen lentt units units of produc producti tion on (b).... (b)........ ......... .......... .......... ..... 43,90 43,900 0 44,72 44,720 0 Cost Cost per per equi equiva vale lent nt unit unit (a) (a) ÷ (b). (b)... .... .... .... ..... ...... ...... ...... ...... ..... $0.0 $0.00 0 $7.4 $7.40 0 Costs of Ending Work in Process Inventory and Units Transferred Out

Mate Materi rial alss Conv Conver ersi sion on Ending work in process inventory: inventory: Equi quivalent lent units of prod roduct uction... n..... .... .... .... .... .... .... .... .... .... .... .... .... .. Cost Cost per per equiv equivale alent nt unit.. unit..... ...... ....... ....... ....... ......... .......... .......... ......... ...... Cost Cost of endi ending ng work work in proc proces esss inve invent ntor ory. y.... ...... ...... ..... Units transferred out: Cost Cost in begi beginn nnin ing g inve invent ntor ory. y... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Cost to complete the units in beginning inventory: Equivalent units of production required to comp comple lete te the the begi beginn nnin ing g inve invent ntor ory. y.... ...... ...... ...... ...... ...... ..... Cost Cost per per equiv equivale alent nt unit.. unit..... ...... ....... ....... ....... ......... .......... .......... ......... ...... Cost to complete the units in beginning inve invent ntor ory. y... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ... Cost of units started and completed this period: Units Units starte started d and and compl complete eted d this this perio period.. d..... ....... ......... ....... Cost Cost per per equiv equivale alent nt unit.. unit..... ...... ....... ....... ....... ......... .......... .......... ......... ...... Cost Cost of unit unitss star starte ted d and and comp comple lete ted d this this peri period od... ... Cost of units transferred out.................................

Tota Totall

0 $0.00 $0.00 $0

2,40 ,400 $7.40 $7.40 $17, $17,76 760 0 $17, $17,76 760 0

$0

$11, $11,85 850 0 $ 11,8 11,850 50

7,90 7,900 0 $0.00 $0.00

6,32 6,320 0 $7.40 $7.40

$0

$46, $46,76 768 8

46,7 46,768 68

36,00 36,000 0 36,00 36,000 0 $0.00 $0.00 $7.40 $7.40 $0 $266 $266,4 ,400 00 266, 266,40 400 0 $325,018

74. Koehl Corporation Corporation uses the direct method method to allocate service department department costs to operating departments. The company has two service departments, Administrative and Facilities, and two operating departments, Assembly and Wholesaling. Service De Department Admi Admini nist stra rati tive ve Faci Facili liti ties es Departmental costs.... $19,440 $71,340 Employee hours.... .... 4,000 2,000 Space occupied.... .... . 3,000 1,000

Operating De Department Assembl y Wholesaling $185,580 $392,950 22,000 14,000 39,000 2,000

Administrative costs are allocated on the basis of employee hours and Facilities costs are allocated on the basis of space occupied. The total Wholesaling Department cost after the allocations of service department costs is closest to: A) $403,990 B) $396,430 C) $403,642 D) $402,601 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 8 Level: Easy Solution: Service Department AdminFacilistrative ities Departmental costs before allocation..... Allocation: Administrative costs (22/36, 14/36) *...... Facilities costs (39/41, 2/41)**....... Total cost after allocation................

$19,440

$71,340

(19,440) (71,340) $

0

$

0

Operating Department AssemWholebly saling $185,580

$392,950

11,880

7,560

67,860

3,480

$265,320

$403,990

Total $669,310

$669,310

* Based on the employee hours in the two operating departments, which are 22,000 hours + 14,000 hours = 36,000 hours **Based on the space occupied by the two operating departments, which is 39,000 + 2,000 = 41,000.

75. Behrend Clinic Clinic uses the direct direct method to allocate allocate service department department costs costs to operating departments. The clinic has two service departments, Personnel and Support, and two operating departments, Prenatal and Pediatrics. Service De Department Personnel Support $29,200 $55,040 5,000 1,000 3,000 2,000

Departmental costs.... Employee hours.... .... Space occupied.... .... .

Operating De Department Prenatal Pediatrics $242,050 $423,200 26,000 14,000 35,000 8,000

Personnel Department costs are allocated on the basis of employee hours and Support Department costs are allocated on the basis of space occupied in square feet. The total Pediatrics Department cost after the allocations of service department costs is closest to: A) $441,260 B) $443,660 C) $433,440 D) $444,471 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 8 Level: Easy Solution: Serv Servic icee Dep Depar artm tmen entt Personnel Support Departmental costs before allocation............ Allocation: Personnel costs (26/40, 14/40)* Support costs (35/43, 8/43)** Total cost after allocation............

$29,200

$55,040

(29,200) (55,040) $

0

$

0

Oper Operat atin ing g Depa Depart rtme ment nt Prenatal Pediatrics Total

$242,050

$423,200

18,980

10,220

44,800

10,240

$305,830

$443,660

$749,490

$749,490

* Based on the employee hours in the two operating departments, which are 26,000 hours + 14,000 hours = 40,000 hours **Based on the space occupied by the two operating departments, which is 35,000 + 8,000 = 43,000.

76. Stoltz Corporation Corporation uses the direct direct method to allocate service department department costs to operating departments. The company has two service departments, Data Processing and Personnel, and two operating departments, Assembly and Finishing.

Departmental costs.. .. . . . .. Computer workstations. . . Employees......................

Service Department Data Processing Personnel $26,488 $18,630 37 12 35 11

Operating Department Assembly Finishing $188,980 $506,980 45 41 46 35

Data Processing Department costs are allocated on the basis of computer workstations and Personnel Department costs are allocated on the basis of employees. The total amount of Data Processing Department cost allocated to the two operating departments is closest to: A) $23,245 B) $26,488 C) $61,567 D) $16,874 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 8 Level: Easy

Solution: Operating Department

Service Department Data Processing Personnel Assembly Departmental costs before allocation............. Allocation: Data processing costs (45/86, 41/86)*................. Personnel costs (46/81, 35/81)**............... Total cost after allocation

$26,488

$18,630

(26,488) (18,630) $

0

$

0

Finishing Total $741,07 $188,980 $506,960 8

13,860

12,628

10,580

8,050

$213,420

$527,638

* Based on the number of computer workstations in the two operating departments, which are 45 + 41 = 86 **Based on the number of employees in the two operating departments, which is 46 + 35 = 81

$741,07 8

77. The direct method is used by Marrero Marrero Publishing, Publishing, Inc., to allocate service department department costs to operating departments. The company has two service departments, Information Technology and Personnel, and two operating departments, Prepress and Printing.

Service Department Information Technology Personnel Departmental costs........ $27,412 $27,008 Computer workstations. 28 19 Employees..................... 27 14

Operating Department Prepress Printing $376,940 $530,110 51 38 98 30

Information Technology Department costs are allocated on the basis of computer workstations and Personnel Department costs are allocated on the basis of employees. The total Prepress Department cost after service department allocations is closest to: A) $406,961 B) $413,326 C) $402,881 D) $410,563 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 8 Level: Easy

Solution: Service Department Information Technology Personnel Departmental costs before allocation........... Allocation: Information technology costs (51/89, 38/89)* Personnel costs (98/128, 30/128)**.......... Total cost after allocation

$27,412

$27,008

(27,412) (27,008) $

0

$

0

Operating Department Prepress $376,940

Printing

Total $961,47 $530,110 0

15,708

11,704

20,678

6,330

$413,326

$548,144

* Based on the number of computer workstations in the two operating departments, which are 51 + 38 = 89 **Based on the number of employees in the two operating departments, which is 98 + 30 = 128

$961,47 0

78. Kolinski Surgical Surgical Hospital uses the direct direct method to allocate service service department costs costs to operating departments. The hospital has two service departments, Telecommunications and Administration, and two operating departments, Surgery and Recovery. Operating Service Department Department Telecomm- Adminisunications tration Surgery Recovery Departmental co costs........ $26,344 $27,472 $282,750 $599,690 Telecommunications ports........................... 31 14 40 34 Employees..................... 30 11 74 27 Telecommunications Department costs are allocated on the basis of the number of telecommunications ports in departments and Administration Department costs are allocated on the basis of employees. The total Surgery Department cost after service department allocations is closest to: A) $317,118 B) $314,853 C) $310,244 D) $305,921 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 8 Level: Easy

Solution: Service Department TelecomAdminismunications tration Departmental costs before al allocation.. Allocation: Telecommunication costs (40/74, 34/74) *............... Administration costs (74/101, 27/101)**............ Total cost after allocation.............

$26,344

$27,472

(26,344)

(27,472) $

0

$

0

Operating Department Surgery Recovery Total $282,75 0 $599,690 $936,256

14,240

12,104

20,128 $317,11 8

7,344 $619,138

$936,256

* Based on the number of telecommunication ports in the two operating departments, which are 40 + 34 = 74 **Based on the number of employees in the two operating departments, which is 74 + 27 = 101

79. Dainels Corporation Corporation uses the step-down step-down method to allocate service service department department costs to operating departments. The company has two service departments, General Management and Physical Plant, and two operating departments, Sales and AfterSales. Data concerning those departments follow: Operating Service Department Department General Physical AfterManagement Plant Sales Sales Departmental costs. . . . . . $36,550 $70,300 $412,500 $492,780 Employee time............. 5,000 2,000 27,000 14,000 Space occupied............ 1,000 1,000 38,000 7,000 General Management Department costs are allocated first on the basis of employee time and Physical Plant Department costs are allocated second on the basis of space occupied. The total After-Sales Department cost after allocations is closest to: A) $516,196 B) $515,880 C) $503,980 D) $513,911 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 9 Level: Easy

Solution: Service Department General Physical Mgmt Plant Departmental costs befor beforee alloc allocat ation ion....... ....... Allocation: General costs (2/43, 27/43, 14/43)*.... ...... .... .... .. Physical plant costs (38/45, 7/45)**....... ..

$36,5 $36,550 50

(36,550)

Operating Department AfterSales Sales

Total

$70,30 $70,300 0 $41 $412,5 2,500 00 $492 $492,78 ,780 0 $1,012 $1,012,13 ,130 0

1,700

22,950

11,900

0

(72,000)

60,800

11,200

0

Total costs after allocat allocation. ion.................. ................. $ 0 $ 0 $496,250 $496,250 $515,88 $515,880 0 $1,012,1 $1,012,130 30 *Based on the employee time in Physical Plant and the two operating departments, which are 2,000 + 27,000 + 14,000 = 43,000. **Based on the space occupied by the two operating departments, 38,000 + 7,000 = 45,000.

80. Cervetti, Cervetti, Inc., allocates service department department costs to operating operating departments departments using the step-down method. The company has two service departments, Administration and Physical Plant, and two operating departments, Assembly and Testing. Data concerning those departments follow: Operating Service Department Department Physical Administration Plant Assembly Testing Departmental co costs. . $26,220 $78,860 $127,160 $737,860 Employee time.. . . . . . . 4,000 1,000 25,000 12,000 Space occupied........ 9,000 1,000 37,000 6,000 Administration Department costs are allocated first on the basis of employee time and Physical Plant Department costs are allocated second on the basis of space occupied. The total Testing Department cost after allocations is closest to: A) $754,279 B) $757,240 C) $748,960 D) $757,368 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 9 Level: Easy

Solution: Service Department AdminiPhysical stration Plant Departmental costs befo before re allo alloca cati tion on.... ........ .... Allocation: Administration costs (1/38, 25/38, 12/38)*. Physical plant costs (37/43, 6/43)**..........

$26, $26,22 220 0

(26,220)

Operating Department Assembly Testing

Total

$78, $78,86 860 0 $127 $127,1 ,160 60 $737 $737,8 ,860 60 $970, $970,10 100 0

690 (79,550)

17,250

8,280

0

68,450

11,100

0

Total costs after allo alloca cati tion on.. .... .... .... .... .... .... .... ..... ... $ 0 $ 0 $212 $212,8 ,860 60 $757 $757,2 ,240 40 $970 $970,1 ,100 00 *Based on the employee time in Physical Plant and the two operating departments, which are 1,000 + 25,000 + 12,000 = 38,000. **Based on the space occupied by the two operating departments, 37,000 + 6,000 = 43,000.

81. Reddicks Reddicks Clinic uses the step-down method method to allocate service service department costs to operating departments. The clinic has two service departments, Personnel and Information Technology (IT), and two operating departments, Family Medicine and Pediatric. Data concerning those departments follow: Operating Service Department Department Family Personnel IT Medicine Pediatric Departmental costs. . $86,184 $45,995 $608,130 $316,290 Employees............... 18 26 128 188 PCs.......................... 19 26 125 156 Personnel costs are allocated first on the basis of employees and IT costs are allocated second on the basis of PCs. The total Pediatric Department cost after allocations is closest to: A) $345,462 B) $393,099 C) $392,838 D) $383,307 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 9 Level: Easy Solution: Service Department Personnel Departmental costs before before allocati allocation.......... on.......... Allocation: Personnel costs (26/342, 128/3 8/342, 188 188/342 342)*..... IT costs (125/281, 156/281)**...................

IT

$86,184 $86,184 $45,995 $45,995

(86 (86,184 ,184))

Operating Department Family Medicine Pediatric

Total

$608,130 $608,130 $316,29 $316,290 0 $1,056,5 $1,056,599 99

6,55 ,552

32,25 ,256

47,3 7,376

0

(52,547)

23,375

29,172

0

Total costs after allocation.......... allocation.................. ........... ... $ 0 $ 0 $663,761 $392,838 $1,056,599 *Based on the employees in IT and the two operating departments, which are 26 + 128 + 188 = 342. **Based on PCs of the two operating departments, 125 + 156 = 281.

82. Rondo Children's Children's Clinic allocates allocates service department department costs to operating operating departments departments using the step-down method. The clinic has two service departments, Administration and Information Technology (IT), and two operating departments, Prenatal and Pediatric. Data concerning those departments follow: Operating Service Department Department Administration IT Prenatal Pediatric Departmental costs. . $54,736 $37,449 $383,270 $259,590 Employees............... 15 21 118 172 PCs.......................... 15 21 102 109 Administration costs are allocated first on the basis of employees and IT costs are allocated second on the basis of PCs. The total Pediatric Department cost after allocations is closest to: A) $311,117 B) $280,845 C) $304,995 D) $311,400 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 9 Level: Easy

Solution: Service Department Administration IT Departmental costs befo before re allo alloca cati tion on.. ..... ..... .... .. Allocation: Administration costs (21/311, 118/311, 172/311)*...................

Operating Department Prenatal Pediatric

Total

$54, $54,73 736 6 $37, $37,44 449 9 $383, $383,27 270 0 $259 $259,5 ,590 90 $735 $735,0 ,045 45

(54,736)

IT costs (102/211, 109/211)**.................

3,696

20,768

30,272

0

(41,145)

19,890

21,255

0

Total costs after allo alloca cati tion on.. .... .... .... .... .... .... .... .... .... .. $ 0 $ 0 $423 $423,9 ,928 28 $311 $311,1 ,117 17 $735 $735,0 ,045 45 *Based on the employee time in IT and the two operating departments, which are 21 + 118 + 172 = 311. **Based on the number of PCs of the two operating departments, 102 + 109 = 211. Use the following to answer questions 83-86: Kota Toy Company manufactures lizard dolls in two departments, Molding and Hairification. In the Molding Department, plastic is injected into a lizard-shaped mold. The dolls that come out of the molds are then transferred to the Hairification Department where hair is applied. Kota uses a weighted-average process cost system to collect costs in both departments. On January 1, the Molding Department had 4,000 dolls in process. These dolls were 100% complete with respect to direct materials and 70% complete with respect to conversion cost. During January, Molding completed 79,000 dolls. On January 31, Molding had 7,000 dolls in work in process. These dolls were 100% complete with respect to direct materials and 25% complete with respect to conversion cost.

83. How many dolls were started started in the Molding Molding Department Department during January? January? A) 75,000 B) 76,000 C) 82,000 D) 86,000 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Medium Solution: Begi Beginn nnin ing g wor work k in in pro proce cess ss inve invent ntor ory... y... + Unit Unitss star starte ted d into into pro produ duct ctio ion. n.... ...... ....... ...... .. − Units Units com compl plet eted ed and and tra trans nsfe ferr rred ed.. .... .... .... .. = End Endin ing g wor work k in in pro proce cess ss inve invent ntor ory. y..... ....

4,00 4,000 0 82,0 82,00 0 * 0 79,0 79,00 0 0 7,00 7,000 0

* 4000 + Units started into production − 79,000 = 7,000 Units started into production = 82,000 84. What account account would Kota debit to record record the transfer transfer of dolls out of the Molding Molding Department? A) Work Work in Pro Proce cess ss–H –Hai airi rifi fica cati tion on B) Finished Goods C) Man Manufac facturi uring Ove Overhea head D) Work ork in in Pro Proccess–M ss–Mol old ding Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy

85. What are the Molding Department's Department's equivalent equivalent units related to materials materials for January? A) 79,000 B) 86,000 C) 89,000 D) 93,000 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Solution:

Tran Transf sfer erre red d to to nex nextt dep depar artm tmen ent. t... .... .... .... .... .... Ending work in process: Mat Material ials: 7,000 ,000 dolls lls × 100%... %..... .... .... .... Equi Equiva vale lent nt uni units ts of prod produc ucti tion on.. .... .... .... .... .... ....

Materials 79,0 79,000 00 7,00 ,000 86,0 86,000 00

86. What are the Molding Department's Department's equivalent equivalent units related to conversion conversion costs for January? A) 77,950 B) 80,750 C) 83,750 D) 84,250 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Solution:

Tran ransfe sferre rred to next departme rtmen nt... t..... .... .... .... .... Ending work in process: Conversion: 7,000 dolls × 25%.... ...... .... .. Equiv uivalen lent units of prod roduct uction.. on.... .... .... .... .... ....

Conversion 79,00 ,000 1,750 80,75 ,750

Use the following to answer questions 87-89: Yoder Company uses the weighted-average method in its process costing system. The following data pertain to operations in the first processing department for a recent month: Work in process, beginning: Unit Unitss in proc proces ess. s... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ..... .. Perce rcent co comp mple lette wit with h re respe spect to to ma mater terial ials... s..... .... .... .... .... .... .... .... Perce rcent co comp mple lette wit with h re respe spect to to co conversio rsion. n... .... .... .... .... .... .... .. Costs in the beginning inventory: Mate Materi rial alss cost cost.. .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... .. Conv Conver ersi sion on cost cost... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ..... Units Units sta starte rted d into into prod produc uctio tion n duri during ng the the month. month..... ........ ......... ....... Units completed and transferred out during the month... Costs added to production during the month: Material Materialss cost....... cost............. ............. .............. .............. ............. ............. .............. .............. .......... ... Convers Conversion ion cost..... cost............ .............. ............. ............. ............... ............................ .................... Work in process, ending: Unit Unitss in proc proces ess. s... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ..... .. Perce rcent co comp mple lette wit with h re respe spect to to ma mater terial ials... s..... .... .... .... .... .... .... .... Perce rcent co comp mple lette wit with h re respe spect to to co conversio rsion. n... .... .... .... .... .... .... ..

40,0 40,000 00 70% 60% $8,6 $8,600 00 $4,8 $4,800 00 750,00 750,000 0 ? $223,000 $223,000 $149,000 $149,000 30,0 30,000 00 40% 30%

87. How many units were completed completed and transferred transferred to the the next department department during the month? A) 750,000 units B) 790,000 units C) 760,000 units D) 740,000 units Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Solution:

+ + − =

To solve for units transferred: Work Work in in proc process ess,, begi beginni nning. ng.... ....... ....... ...... ....... ....... ...... ....... ....... ....... ......... .......... ....... .. 40,00 40,000 0 Units Units started started into producti production on during during the month..... month................. ............ 750,000 750,000 Work Work in proce process, ss, endi ending ng.... ....... ...... ....... ....... ....... ....... ...... ....... ....... ........ .......... .......... ........ ... 30,00 30,000 0 Units Units comp complet leted ed and and transf transferr erred ed out out during during the the month month.... ...... 760,0 760,000 00

88. What was the cost per equivalen equivalentt unit for materials materials during the month? month? A) $0.30 B) $0.25 C) $0.20 D) $0.15 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium Solution:

+ + − =

To solve for units transferred: Work Work in in proc process ess,, begi beginni nning. ng.... ....... ....... ...... ....... ....... ...... ....... ....... ....... ......... .......... ....... .. 40,00 40,000 0 Units Units started started into producti production on during during the month..... month................. ............ 750,000 750,000 Work Work in proce process, ss, endi ending ng.... ....... ...... ....... ....... ....... ....... ...... ....... ....... ........ .......... .......... ........ ... 30,00 30,000 0 Units Units comp complet leted ed and and transf transferr erred ed out out during during the the month month.... ...... 760,0 760,000 00

Equivalent Equivalent units of productio production n Materials Transfe Transferred rred to next next departme department.... nt........... .............. ............. ............. .............. .............. ......... 760,000 760,000 Endi Ending ng work work in proc process ess (30,00 (30,000 0 unit unitss × 40% 40% comp complet lete). e)..... ...... .. 12,00 12,000 0 Equi Equiva valen lentt units units of produc producti tion. on.... ....... ....... ....... ....... ........ ......... ......... .......... .......... ......... .... 772,00 772,000 0 Cost per Equivalent Unit Materials Cost Cost of beginnin beginning g work in process. process........ ............. ................ .......................... ................ $ 8,600 8,600 Cost Cost added added during during the the period period....... .............. .............. ............. ............. .............. ............... ........ 223,000 223,000 Total Total cost cost (a)....... (a).............. .............. ............. ............. .............. .............. ............. ............. .................... ............. $231,600 $231,600

Equiva Equivalent lent units units of producti production on (b)........ (b)............... .............. ............. ................ ............. ... Cost Cost per per equiv equival alen entt unit, unit, (a) (a) ÷ (b).. (b).... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..

772,000 772,000 $0.3 $0.30 0

89. How much cost, in total, total, was assigned to the ending ending work in process process inventory? inventory? A) $2,600 B) $4,300 C) $15,000 D) $5,400 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium Solution:

+ + − =

To solve for units transferred: Work Work in proce process, ss, begi beginni nning. ng.... ....... ....... ...... ....... ....... ....... ......... .......... .......... .......... ....... .. Units Units sta starte rted d into into prod produc uctio tion n durin during g the the mont month... h........ .......... ......... .... Work Work in proce process, ss, endi ending ng.... ....... ...... ....... ....... ....... ....... ........ ......... ......... .......... .......... ......... .... Units Units comple completed ted and and tra transf nsferr erred ed out during during the the mon month.... th.... .

40,00 40,000 0 750,00 750,000 0 30,00 30,000 0 760,00 760,000 0

Equivalent Equivalent units of production production

Transferred to next department................................ Ending work in process (materials: 30,000 units × 40% complete; conversion: 30,000 units × 30% complete) Equivalent units of production.................................

Materials Conversion Conversion 760,000 760,000 12,000 772,000

9,000 769,000


Cost of beginning work in process........................... Cost added during the period........... ............ ............. ......... ... Total cost (a) (a).... ...... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Equivalent units of production (b)............................ Cost per equivalent unit, (a) ÷ (b)............................

Materials Conversion Conversion $ 8,600 $ 4,800 223,000 149,000 $231,6 31,60 00 $153,8 3,800 772,000 $0.30

769,000 $0.20

Materi Materials als Conv Convers ersio ion n Tota Totall Ending work in process inventory: Equivalent units of production (materials: 30,000 units × 40% complete; conversion: 30,000 units × 30% complete) Cost per equivalent unit............................................ Cost of ending work in process inventory................

12,000 $0.30 $3,600

9,000 $0.20 $1,800 $5,400

Use the following to answer questions 90-91: Onitsha Corporation uses a weighted-average process costing system to collect costs related to production. The following selected information relates to production for June: Unit Unitss star starte ted d into into pro produ duct ctio ion. n... .... .... ..... ..... .... ..... ...... ...... ...... ... Unit Unitss comp comple lete ted d and and tran transf sfer erre red d out. out.... ....... ........ ...... .. Equi Equiva vale lent nt unit units, s, mate materi rial als. s... ..... ..... .... .... ..... ...... ...... ...... ...... ..... .. Equi Equiva vale lent nt unit units, s, conv conver ersi sion on cost costs. s.... ...... ...... ...... ...... .....

25,0 25,000 00 20,0 20,000 00 28,0 28,000 00 26,0 26,000 00

Mate Materi rial alss Conv Conver ersi sion on Costs in wo work in pr process on on June 1. 1................ $ 6, 6,720 $ 9, 9,100 Costs Costs added added to produ product ction ion durin during g June June.......... .......... 57,12 57,120 0 88,40 88,400 0 Tota Totall cost cost.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. $63, $63,84 840 0 $97, $97,50 500 0 All materials at Onitsha are added at the beginning of the production process. Conversion costs are incurred uniformly over the production process. 90. How many partially partially completed completed units were in work in process process inventory inventory at the beginning of June? A) 3,000 B) 5,000 C) 7,000 D) 8,000 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Hard Solution: Since all materials are added at the beginning of the production process, the “equivalent units, materials” of 28,000 units represents the number of units that were in ending work in process inventory plus the units completed transferred out. Thus: Begi Beginn nnin ing g work work in proc proces esss inv inven ento tory ry.. .... .... ..... ..... .... ..... ...... ...... ...... ...... ..... .. + Unit Unitss star starte ted d into into pro produ duct ctio ion. n... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...... ...... ..... = Equi Equiva vale lent nt unit units. s... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ...... ...... ...... ...... ...... ...

*

Beginni Beginning ng work work in in proces processs invent inventory ory + 25,000 25,000 = 28,000 28,000

3,00 3,000 0 * 25,0 25,00 0 0 28,0 28,00 0 0

Beginning work in process inventory = 3,000

91. What total amount amount of cost should be assigned assigned to the units units completed completed and transferred transferred out during June? A) $102,510 B) $108,800 C) $120,600 D) $136,000 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3,4 Level: Hard Solution: Mate Materi rial alss Conve onvers rsio ion n Work in in pr process, be beginning................. $ 6, 6,720 $ 9, 9,100 Cost Cost adde added d duri during ng the the mo mont nth. h... ..... ...... ...... ...... ... 57,1 57,120 20 88,4 88,400 00 Total cost (a).... ...... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. $63 $63,840 ,840 $97 $97,500 ,500 Equivalent units (above) (b)................ 28,000 26,000 Cost per equivalent unit (a) ÷ (b)......... $2.28 $3.75 Materials Conversion Units transferred out............................ 20,000 20,000 Cost per equivalent unit....................... $2.28 $3.75 Cost tra transfe nsferrred red out.... ...... .... .... .... .... .... .... .... .... .... .... .... .... ..

$45,6 5,600

$75,00 ,000

Total

$120,60 0

Use the following to answer questions 92-96: Aple Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 300 units. The costs and percentage completion of these units in beginning inventory were:

Materials costs................... Conversion Conversion costs................ costs.............. ..

Cost $3,10 0 $2,90 0

Percent Co Complete 70% 50%

A total of 8,500 units were started and 8,100 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:

Materials costs..................... Conversion costs.................

$110,50 0 $153,90 0

The ending inventory was 90% complete with respect to materials and 55% complete with respect to conversion costs. Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.

92. What are the equivalent equivalent units for conversion conversion costs for the month in the first processing processing department? A) 385 B) 8,800 C) 8,100 D) 8,485 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Solution:

+ + − =

To solve for ending work in process: Work Work in proc proces ess, s, begi beginn nnin ing. g... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Unit Unitss star starte ted d into into prod produc ucti tion on duri during ng the the mo mont nth. h.... ...... ...... ...... ...... ..... Unit Unitss com compl plet eted ed and and tra trans nsfe ferr rred ed out out dur durin ing g the the mo mont nth..... h..... Work Work in proc proces ess, s, endi ending ng... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... ..

300 300 8,50 8,500 0 8,10 8,100 0 700 700


Conversion Tran Transf sfer erre red d to next next depa depart rtme ment nt.. .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ...... ..... 8,10 8,100 0 Ending work in process (materials: 700 units × 90% comp comple lete te;; conv conver ersi sion on:: 700 700 unit unitss × 55% 55% comp comple lete te). )... .... .... .... .... .... .. 385 385 Equi Equiva vale lent nt unit unitss of of prod produc ucti tion on.. ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ..... 8,48 8,485 5

93. The cost per equivalent equivalent unit unit for materials for the month month in the first processing processing department is closest to: A) $12.91 B) $12.66 C) $12.56 D) $13.01 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium Solution:

+ + − =

To solve for ending work in process: Work Work in proc proces ess, s, begi beginn nnin ing. g... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Unit Unitss star starte ted d int into o pro produ duct ctio ion n dur durin ing g the the mo mont nth. h.... ...... ...... ...... ...... ..... Unit Unitss com compl plet eted ed and and tra trans nsfe ferr rred ed out out dur durin ing g the the mo mont nth..... h..... Work Work in proc proces ess, s, endi ending ng... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... ..

300 300 8,50 8,500 0 8,10 8,100 0 700 700

Equivalent units units of production production

Materials Tran Transf sfer erre red d to next next depa depart rtme ment nt.. .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ..... .. 8,10 8,100 0 Ending work in process (materials: 700 units × 90% comp mpllete; ete; conversio rsion n: 700 units its × 55% comp mpllete ete).... )....... ... 630 Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ..... 8,73 8,730 0 Cost per Equivalent Unit

Materials Cost of beginnin beginning g work in process. process....... ............. .............. .............. ............... ........ $ 3,100 3,100 Cost Cost added added duri during ng the the perio period.. d...... ....... ....... ....... ...... ....... ......... .......... .......... .......... ....... 110,5 110,500 00 Total Total cost cost (a)....... (a).............. .............. ............. ............. .............. ...................... ............................ ............. $113,60 $113,600 0 Equi Equiva vale lent nt unit unitss of prod produc ucti tion on (b). (b)... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ... Cost Cost per per equ equiv ival alen entt unit unit,, (a) (a) ÷ (b). (b)... .... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... .....

8,73 8,730 0 $13. $13.01 01

94. The cost per equivalent equivalent unit for conversion conversion costs for the first department department for the month is closest to: A) $17.82 B) $19.40 C) $18.14 D) $18.48 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium Solution:

+ + − =

To solve for ending work in process: Work Work in in pro proce cess ss,, begi beginn nnin ing. g... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Unit Unitss star starte ted d int into o pro produ duct ctio ion n dur durin ing g the the mo mont nth. h.... ...... ....... ........ .... Unit Unitss com compl plet eted ed and and tra trans nsfe ferr rred ed out out dur durin ing g the the mo mont nth. h.... ... Work Work in proc proces ess, s, endi ending ng... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... .....

300 300 8,50 8,500 0 8,10 8,100 0 700 700

Equivalent Equivalent units of productio production n

Conversion Trans ransfe ferr rred ed to next next depa depart rtme ment nt.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. 8,10 8,100 0 Endi nding wor work in proc rocess (70 (700 uni units × 55% 55% comple plete).... 385 Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ..... .. 8,48 8,485 5 Cost per Equivalent Unit

Conversion Cost Cost of beginn beginnin ing g work work in proce process. ss.... ....... ....... ...... ....... ......... .......... .......... ..... $ 2,900 2,900 Cost Cost added added during during the the period period.... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ...... 153,9 153,900 00 Total Total cost cost (a)....... (a).............. .............. ............. ............. .............. .............. ............. ............. ............. ...... $156,80 $156,800 0 Equi Equiva vale lent nt unit unitss of prod produc ucti tion on (b). (b).... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ... Cost Cost per per equ equiv ival alen entt uni unit, t, (a) (a) ÷ (b) (b).. .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... .....

8,48 8,485 5 $18. $18.48 48

95. The total cost transferred transferred from the first processing processing department department to the next processing department during the month is closest to: A) $264,400 B) $277,138 C) $270,400 D) $255,093 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium Solution:

+ + − =


300 300 8,50 8,500 0 8,10 8,100 0 700 700


Transferred to next department............................. Ending work in process (materials: 700 units × 90% complete; conversion: 700 units × 55% complete) Equivalent units of production..............................

Materials Materials Conversion Conversion 8,100 8,100 630 8,730

385 8,485


Cost of beginning work in process........................ Cost added during the period........... ............ ............. ...... ... Total cost (a) (a).... ...... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Equivalent units of production (b)......................... Cost per equivalent unit, (a) ÷ (b).........................

Materials Materials Conversion Conversion $ 3,100 $ 2,900 110,500 153,900 $11 $113,60 ,600 $15 $156,80 ,800 8,730 $13.01

8,485 $18.48

Mate Materi rial alss Conv Conver ersi sion on Total otal Units transferred out: Units transferred to the next department............... Cost per equivalent unit......................................... Cost of units transferred out.......... ........... ....... ...... .... .... ........ ......

8,100 8,100 $13.01 $18.48 $105,402 $149,685 $2 $255,087

96. The cost of ending ending work in process process inventory in the the first processing processing department department according to the company's cost system is closest to: A) $19,841 B) $15,313 C) $22,045 D) $12,125 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium Solution:

+ + − =


300 300 8,50 8,500 0 8,10 8,100 0 700 700


Transferred to next department............................. Ending work in process (materials: 700 units × 90% complete; conversion: 700 units × 55% complete)............. . Equivalent units of production..............................

Materials Conversion Conversion 8,100 8,100 630 8,730

385 8,485


Cost of beginning work in process........................ Cost added during the period................................. Total cost (a).......... ............. ............ ............ ............ ........... ...... ... Equivalent units of production (b)......................... Cost per equivalent unit, (a) ÷ (b).........................

Materials Conversion Conversion $3,100 $2,900 110,500 153,900 $113,600 $156,80 ,800 8,730 $13.01

8,485 $18.48

Mate Materi rial alss Conv Conver ersi sion on Tota Totall Ending work in process inventory: Equivalent units of production (materials: 700 units × 90% complete; conversion: 700 units × 55% complete) Cost per equivalent unit.........................................

630 $13.01

385 $18.48

Cost of ending work in process inventory.............

$8,198

$7,115 $15,313

Use the following to answer questions 97-102: Buklin Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 700 units. The costs and percentage completion of these units in beginning inventory were:

Materials costs................... Conversion costs................

Cost Percent Complete $15,70 0 85% $4,800 45%


Materials costs................... Conv Conver ersi sion on cost costs. s... ..... ...... ...... ...... .....

$166,50 0 $96, $96,30 300 0

The ending inventory was 75% complete with respect to materials and 15% complete with respect to conversion costs. Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places. 97. How many units are in ending ending work in process process inventory inventory in the first processing processing department at the end of the month? A) 1,600 B) 700 C) 7,300 D) 900 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy Solution: To solve for ending work in process: + Work Work in proc proces ess, s, begi beginn nnin ing. g... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... + Unit Unitss star starte ted d into into prod produc ucti tion on duri during ng the the mo mont nth. h... .... .... .... ..... ...... ..... − Unit Unitss com compl plet eted ed and and tra trans nsfe ferr rred ed out out dur durin ing g the the mo mont nth. h.... ...

700 700 8,00 8,000 0 7,10 7,100 0

= Work Work in in pro proce cess ss,, endi ending ng... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ...... ...... ...... .....

1,60 1,600 0

98. What are the equivalent equivalent units for conversion conversion costs for the month in the first processing processing department? A) 7,340 B) 8,700 C) 7,100 D) 240 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Solution:

+ + − =

To solve for ending work in process: Work Work in proc proces ess, s, begi beginn nnin ing. g... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Unit Unitss star starte ted d into into prod produc ucti tion on duri during ng the the mo mont nth. h... .... .... .... ..... ...... ..... Unit Unitss com compl plet eted ed and and tra trans nsfe ferr rred ed out out dur durin ing g the the mo mont nth. h.... ... Work Work in in pro proce cess ss,, endi ending ng... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ...... ...... ...... .....

700 700 8,00 8,000 0 7,10 7,100 0 1,60 1,600 0


Conversion Tran Transf sfer erre red d to to nex nextt dep depar artm tmen ent. t... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ...... ..... 7,10 7,100 0 Endi nding wor work k in proc rocess (1,6 (1,60 00 un units its × 15% co comp mpllete). te)... .... .... 240 Equi Equiva vale lent nt uni units ts of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ..... .. 7,34 7,340 0

99. The cost per equivalent equivalent unit unit for materials for the month month in the first processing processing department is closest to: A) $21.95 B) $20.94 C) $19.14 D) $20.06 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium Solution:

+ + − =


700 700 8,00 8,000 0 7,10 7,100 0 1,60 1,600 0


Materials Tran Transf sfer erre red d to to nex nextt dep depar artm tmen ent. t... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ...... ..... 7,10 7,100 0 Endin nding g wor work k in in pro proce cess ss (1,6 (1,600 00 unit unitss × 75% 75% com compl plet ete) e)... ...... ... 1,20 1,200 0 Equi Equiva vale lent nt uni units ts of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ..... .. 8,30 8,300 0 Cost per Equivalent Unit

Materials Cost Cost of beginnin beginning g work in process. process........ ............. ............. .............. ............. .......... .... $ 15,700 15,700 Cost Cost added added during during the the period period.... ....... ...... ....... ....... ....... ....... ...... ........ .......... .......... ......... .... 166,50 166,500 0 Total Total cost cost (a)....... (a).............. .............. ............. ............. .............. .............. ...................... ....................... ........ $182,200 $182,200 Equi Equiva vale lent nt unit unitss of prod produc ucti tion on (b). (b).... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ..... Cost Cost per per equiv equivale alent nt unit, unit, (a) ÷ (b).. (b)..... ...... ....... ....... ....... ....... ...... ....... ......... ......... ......

8,30 8,300 0 $21.95 $21.95

100. The cost per equivalent equivalent unit for conversion conversion costs for the first department department for the month is closest to: A) $13.12 B) $11.62 C) $14.46 D) $13.77 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium Solution:

+ + − =


700 700 8,00 8,000 0 7,10 7,100 0 1,60 1,600 0


Conversion Tran Transf sfer erre red d to to nex nextt dep depar artm tmen ent. t... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ...... ..... 7,10 7,100 0 Endin nding g work work in proc proces esss (1,6 (1,600 00 unit unitss × 15% 15% comp comple lete te). ).... ..... .. 240 240 Equi Equiva vale lent nt uni units ts of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ..... .. 7,34 7,340 0 Cost per Equivalent Unit

Conversion Cost Cost of beginnin beginning g work in process. process........ ............. ............. .............. ............. .......... .... $ 4,800 4,800 Cost Cost adde added d duri during ng the period period.... ....... ...... ....... ....... ....... ....... ...... ........ .......... .......... ......... .... 96,30 96,300 0 Total Total cost cost (a)....... (a).............. .............. ............. ............. .............. .............. ...................... ....................... ........ $101,100 $101,100 Equi Equiva vale lent nt unit unitss of prod produc ucti tion on (b). (b).... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ..... Cost Cost per per equi equiva valen lentt unit, unit, (a) (a) ÷ (b).. (b)..... ...... ....... ....... ....... ....... ...... ....... ......... ......... ......

7,34 7,340 0 $13.77 $13.774 4

101. The total cost transferred transferred from the first processing processing department department to the next processing department during the month is closest to: A) $310,816 B) $262,800 C) $283,300 D) $253,655 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium Solution:

+ + − =


700 700 8,00 8,000 0 7,10 7,100 0 1,60 1,600 0


Transferred to next department............................... Ending work in process (materials: 1,600 units × 75% complete; conversion: 1,600 units × 15% complete) Equivalent units of production................................

Materials Materials Conversion Conversion 7,100 7,100 1,200 8,300

240 7,340


Cost of beginning work in process.......................... Cost added during the period... ............. ......... ...... ....... ...... .... .... ..... Tota otal cost (a).. a).... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Equivalent units of production (b).......................... Cost per equivalent unit, (a) ÷ (b)...........................


7,340 $13.774

Mate Materi rial alss Conv Conver ersi sion on Total otal Units transferred out: Units transferred to the next department................. Cost per equivalent unit.......................................... Cost of uni units tran ransfe sferre rred out. out... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ....

7,100 $21.95 $15 $155,85 ,858

7,100 $13.77 $97,79 ,794 $253,6 3,652

102. The cost of ending ending work in process process inventory in the the first processing processing department department according to the company's cost system is closest to: A) $57,162 B) $42,871 C) $29,648 D) $8,574 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium Solution:

+ + − =


700 700 8,00 8,000 0 7,10 7,100 0 1,60 1,600 0


Transferred to next department................................ Ending work in process (materials: 1,600 units × 75% complete; conversion: 1,600 units × 15% complete) Equivalent units of production.................................

Materials Conversion Conversion 7,100 7,100 1,200 8,300

240 7,340


Cost of beginning work in process........................... Cost added during the period... ............. ............ ............ ........ ... Tota otal cost (a).. a).... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Equivalent units of production (b)............................ Cost per equivalent unit, (a) ÷ (b)............................

Materials Conversion Conversion $ 15,700 $ 4,800 166,50 ,500 96,30 ,300 $182,2 2,200 $101,10 ,100 8,300 $21.952

7,340 $13.774

Mate Materi rial alss Conv Conver ersi sion on Tota Totall Ending work in process inventory: Equivalent units of production (materials: 1,600 units × 75% complete; conversion: 1,600 units × 15% complete) Cost per equivalent unit............................................

1,200 $21.95

240 $13.77

Cost of ending work in process inventory................

$26,342

$3,306 $29,648

Use the following to answer questions 103-106: Cavalerio Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 700 units. The costs and percentage completion of these units in beginning inventory were:


Cost Percent Co Complete $9,10 0 80% $5,40 0 25%

A total of 7,200 units were started and 6,400 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month: Mate Materi rial alss cost costs. s.... ...... ...... ...... ...... ...... ... Conversion Conversion costs................ costs.............. ..

$96, $96,70 700 0 $180,70 0

The ending inventory was 80% complete with respect to materials and 70% complete with respect to conversion costs. Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places. 103. How many units are in ending ending work in process process inventory inventory in the first processing processing department at the end of the month? A) 800 B) 1,500 C) 900 D) 6,500 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy Solution: To solve for ending work in process: + Work Work in proc proces ess, s, begi beginn nnin ing. g... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ..

700 700

+ Unit Unitss star starte ted d into into prod produc ucti tion on duri during ng the the mo mont nth. h.... ...... ...... ...... ...... ..... − Unit Unitss com compl plet eted ed and and tra trans nsfe ferr rred ed out out dur durin ing g the the mo mont nth..... h..... = Work Work in proc proces ess, s, endi ending ng... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... ..

7,20 7,200 0 6,40 6,400 0 1,50 1,500 0

104. What are the equivalent equivalent units for conversion conversion costs for the month in the first processing processing department? A) 7,900 B) 7,450 C) 6,400 D) 1,050 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Solution:

+ + − =


700 700 7,20 7,200 0 6,40 6,400 0 1,50 1,500 0


Conversion Tran Transf sfer erre red d to to nex nextt depa depart rtme ment nt.. .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ...... ...... ...... ..... 6,40 6,400 0 Endin nding g wor work k in in pro proce cess ss (1,5 (1,500 00 unit unitss × 70% 70% com compl plet ete) e).. .... ..... ..... .. 1,05 1,050 0 Equi Equiva vale lent nt uni units ts of of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ... 7,45 7,450 0

105. The cost per equivalent equivalent unit unit for materials for the month month in the first processing processing department is closest to: A) $12.72 B) $13.92 C) $13.39 D) $12.24 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium Solution:

+ + − =


700 700 7,20 7,200 0 6,40 6,400 0 1,50 1,500 0


Materials Tran Transf sfer erre red d to next next dep depar artm tmen ent. t... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ..... .. 6,40 6,400 0 Endin nding g wor work k in in pro proce cess ss (1,5 (1,500 00 unit unitss × 80% 80% comp comple lete te). )... ..... ...... ... 1,20 1,200 0 Equi Equiva vale lent nt uni units ts of of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ... 7,60 7,600 0 Cost per Equivalent Unit

Materials Cost Cost of beginnin beginning g work in process. process........ ............. ............. .............. ............. ............. ....... $ 9,100 9,100 Cost Cost added added during during the period... period......... ............. .............. .............. ........................ ................... .. 96,700 96,700 Total Total cost cost (a)....... (a).............. .............. ............. ............. .............. .............. ............... .......................... .................. $105,800 $105,800 Equi Equiva vale lent nt unit unitss of of pro produ duct ctio ion n (b) (b).. ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ... Cost Cost per per equiv equivale alent nt unit, unit, (a) ÷ (b).. (b)..... ...... ....... ....... ....... ....... ...... ....... ........ ......... ......... ....

7,60 7,600 0 $13.9 $13.92 2

106. The total cost transferred transferred from the first processing processing department department to the next processing department during the month is closest to: A) $291,900 B) $307,318 C) $248,966 D) $277,400 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium Solution:

+ + − =


700 700 7,20 7,200 0 6,40 6,400 0 1,50 1,500 0



Materials Materials Conversion Conversion 6,400 6,400 1,200 7,600

1,050 7,450




7,450 $24.98

Mate Materi rial alss Conv Conver ersi sion on Total otal Units transferred out: Units transferred to the next department................. Cost per equivalent unit.......................................... Cost of units transferred out............ ............ ............ ........ ......

6,400 $13.92 $89,095

6,400 $24.98 $159,871 $2 $248,966

Use the following to answer questions 107-109: Escoffier Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 500 units. The costs and percentage completion of these units in beginning inventory were:

Materials costs................... Conversion costs................

Cost Percent Complete $11,40 0 80% $2,200 10%

A total of 5,000 units were started and 4,400 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month: $112,20 Materials costs................... 0 $178,40 Conversion Conversion costs................ costs.............. .. 0 The ending inventory was 85% complete with respect to materials and 25% complete with respect to conversion costs. Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places. 107. What are the equivalent equivalent units for conversion conversion costs for the month in the first processing processing department? A) 5,500 B) 4,675 C) 4,400 D) 275 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Solution: Equivalent Equivalent units of production production

Conversion

Tran Transf sfer erre red d to next next depa depart rtme ment nt.. .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ...... ..... Ending wor work in proc rocess (1,1 (1,100 00 units its × 25% comp mpllete ete)..... )....... .. Equi Equiva vale lent nt unit unitss of of prod produc ucti tion on.. ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... .....

4,40 4,400 0 275 275 4,67 4,675 5

108. The cost per equivalent equivalent unit unit for materials for the month month in the first processing processing department is closest to: A) $22.47 B) $23.17 C) $21.03 D) $20.40 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium Solution: Equivalent Equivalent units of production production

Materials Tran Transf sfer erre red d to next next depa depart rtme ment nt.. .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... 4,40 4,400 0 Ending wor work in proc rocess (1,1 (1,100 00 units its × 85% comp mpllete ete).... 935 Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. ..... ..... .... .... ..... ..... .... ..... ...... ...... ...... ...... ...... ...... ...... ... 5,33 5,335 5 Cost per Equivalent Unit

Materials Cost Cost of beginni beginning ng work in process. process........ ............. ............... ...................... ............. $ 11,400 11,400 Cost Cost added added during during the period. period....... ............. .............. ............. ............. .............. ........... .... 112,200 112,200 Total Total cost cost (a)....... (a).............. .............. .............. ............. ............. .............. ............. ............. ................ ......... $123,600 $123,600 Equi Equiva vale lent nt unit unitss of of pro produ duct ctio ion n (b) (b)... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ... Cost Cost per per equ equiv ival alen entt unit unit,, (a) ÷ (b) (b).. .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ...... .....

5,33 5,335 5 $23. $23.17 17

109. The total cost transferred transferred from the first processing processing department department to the next processing department during the month is closest to: A) $304,200 B) $290,600 C) $271,916 D) $339,895 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium Solution: Equivalent Equivalent units of productio production n



275 4,675


Cost of beginning work in process.......................... Cost added during the period... ............. ......... ...... ....... ...... .... .... ..... Tota otal cost (a).. a).... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Equivalent units of production (b).......................... Cost per equivalent unit, (a) ÷ (b)........................... Units transferred out: Units transferred to the next department................. Cost per equivalent unit.......................................... Cost of uni units tran ransfe sferre rred out. out... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ....

Materials Materials Conversion Conversion $ 11,400 $ 2,200 112,200 178,400 $12 $123,60 ,600 $18 $180,60 ,600 5,335 4,675 $23.17 $38.63 Mate Materi rial alss Conv Conver ersi sion on Total otal 4,400 4,400 $23.17 $38.63 $10 $101,93 ,938 $16 $169,97 ,976 $2 $271,9 1,915

Use the following to answer questions 110-111: Fuchs Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 300 units. The costs and percentage completion of these units in beginning inventory were:


Cost $4,80 0 $6,20 0




$208,00 0 $280,30 0

The ending inventory was 85% complete with respect to materials and 15% complete with respect to conversion costs. Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.

110. The total cost transferred transferred from the first processing processing department department to the next processing department during the month is closest to: A) $477,250 B) $527,782 C) $499,300 D) $488,300 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3,4 Level: Medium Solution: Equivalent Equivalent units of production production

Transferred to next department............................. Ending work in process (materials: 900 units × 85% complete; conversion: 900 units × 15% complete) Equivalent units of production..............................


135 8,635


Cost of beginning work in process........................ Cost added during the period........... ............ ............. ...... ... Total cost (a) (a).... ...... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Equivalent units of production (b)......................... Cost per equivalent unit, (a) ÷ (b).........................


8,635 $33.18

Cost of Ending Work in Process Inventory and Units Transferred Out

Mate Materi rial alss Conv Conver ersi sion on Total otal Units transferred out: Units transferred to the next department............... Cost per equivalent unit......................................... Cost of units tran ransfe sferre rred out... t..... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ....

8,500 8,500 $22.97 $33.18 $19 $195,22 ,229 $28 $282,02 ,021 $477,2 7,250

111. The cost of ending ending work in process process inventory in the the first processing processing department department according to the company's cost system is closest to: A) $50,532 B) $7,580 C) $22,050 D) $42,952 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3,4 Level: Medium Solution: Equivalent Equivalent units of production production

Transferred to next department............................... Ending work in process (materials: 900 units × 85% complete; conversion: 900 units × 15% complete)................ Equivalent units of production................................


135 8,635


Cost of beginning work in process.......................... Cost added during the period........... ........... ....... ...... .... .... ........ .... Total cost (a).......... ............. ............ ............ ........ ...... .... .... ........ ...... .... .... Equivalent units of production (b).......................... Cost per equivalent unit, (a) ÷ (b)...........................

Materials Conversion Conversion $ 4,800 $ 6,200 208,00 ,000 280,30 ,300 $212,800 $286,50 ,500 9,265 $22.97

8,635 $33.18


Mate Materi rial alss Conv Conver ersi sion on Tota Totall Ending work in process inventory: Equivalent units of production (materials: 900 units × 85% complete; conversion: 900 units × 15% complete) Cost per equivalent unit.......................................... Cost of ending work in process inventory....... ...... .... .... ....

765 $22.97 $17,571

135 $33.18 $4,479 $22,050

Use the following to answer questions 112-117: Guerin Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 300 units. The costs and percentage completion of these units in beginning inventory were:


Cost $4,40 0 $2,20 0



Materials costs................... Conv Conver ersi sion on cost costs. s... ..... ...... ...... ...... .....

$120,00 0 $92, $92,50 500 0

The ending inventory was 80% complete with respect to materials and 55% complete with respect to conversion costs. Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places. 112. How many units are in ending ending work in process process inventory inventory in the first processing processing department at the end of the month? A) 5,100 B) 300 C) 900 D) 600 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy Solution:

+ + − =


300 300 5,40 5,400 0 4,80 4,800 0 900 900

113. What are the equivalent equivalent units for for materials for the the month in the first processing processing department? A) 4,800 B) 5,700 C) 720 D) 5,520 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Solution:

+ + − =


300 300 5,40 5,400 0 4,80 4,800 0 900 900


Materials Tran Transf sfer erre red d to next next dep depar artm tmen ent. t... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ..... .. 4,80 4,800 0 Endin nding g work work in proc proces esss (900 (900 unit unitss × 80% 80% comp comple lete te). )... .... .... .... ..... ... 720 720 Equi Equiva vale lent nt uni units ts of of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ... 5,52 5,520 0

114. What are the equivalent equivalent units for conversion conversion costs for the month in the first processing processing department? A) 4,800 B) 5,295 C) 495 D) 5,700 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Solution:

+ + − =


300 300 5,40 5,400 0 4,80 4,800 0 900 900


Conversion Tran Transf sfer erre red d to to nex nextt dep depar artm tmen ent. t... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... 4,80 4,800 0 Endi nding wor work in proc rocess (90 (900 uni units × 55% 55% comple plete).... 495 Equi Equiva vale lent nt unit unitss of of pro produ duct ctio ion. n... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ... 5,29 5,295 5

115. The cost per equivalent equivalent unit unit for materials for the month month in the first processing processing department is closest to: A) $21.05 B) $21.82 C) $22.54 D) $21.74 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium Solution:

+ + − =


300 300 5,40 5,400 0 4,80 4,800 0 900 900


Materials Tran Transf sfer erre red d to next next dep depar artm tmen ent. t... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ..... .. 4,80 4,800 0 Endin nding g work work in proc proces esss (900 (900 unit unitss × 80% 80% comp comple lete te). )... .... .... .... ..... ... 720 720 Equi Equiva vale lent nt uni units ts of of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ... 5,52 5,520 0 Cost per Equivalent Unit

Materials Cost Cost of beginnin beginning g work in process. process........ ............. ............. .............. ............. ............. ....... $ 4,400 4,400 Cost Cost added added during during the period period.... ....... ...... ....... ....... ....... ....... ...... ....... ......... .......... .......... ........ ... 120,00 120,000 0 Total Total cost cost (a)....... (a).............. .............. ............. ............. .............. .............. ............... .......................... .................. $124,400 $124,400 Equi Equiva vale lent nt unit unitss of of pro produ duct ctio ion n (b) (b).. ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ... Cost Cost per per equiv equivale alent nt unit, unit, (a) ÷ (b).. (b)..... ...... ....... ....... ....... ....... ...... ....... ........ ......... ......... ....

5,52 5,520 0 $22.5 $22.54 4

116. The cost per equivalent equivalent unit for conversion conversion costs for the first department department for the month is closest to: A) $16.61 B) $17.89 C) $18.78 D) $17.47 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium Solution:

+ + − =


300 300 5,40 5,400 0 4,80 4,800 0 900 900


Conversion Tran Transf sfer erre red d to next next depa depart rtme ment nt.. .... ..... ..... .... .... ..... ..... .... .... .... ..... ...... ...... ...... ..... 4,80 4,800 0 Ending work in process (materials: 900 units × 80% comp mpllete; te; con conversio rsion n: 900 units its × 55% comp mpllete). te)... .... 495 Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ... 5,29 5,295 5 Cost per Equivalent Unit

Conversion Cost Cost of beginn beginnin ing g work work in proce process. ss.... ....... ....... ...... ....... ....... ...... ....... ....... ..... $ 2,200 2,200 Cost Cost adde added d durin during g the peri period od... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ..... 92,5 92,500 00 Tota Totall cost cost (a). (a).... ...... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ........ .......... ......... ......... ....... .. $94,70 $94,700 0 Equiv quival alen entt unit unitss of prod produc ucti tion on (b) (b).. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Cost Cost per per equ equiv ival alen entt unit unit,, (a) (a) ÷ (b) (b).. .... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... .....

5,29 5,295 5 $17. $17.88 88

117. The cost of ending ending work in process process inventory in the the first processing processing department department according to the company's cost system is closest to: A) $25,079 B) $36,379 C) $20,008 D) $29,103 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium Solution:

+ + − =


300 300 5,40 5,400 0 4,80 4,800 0 900 900


Transferred to next department............................ Ending work in process (materials: 900 units × 80% complete; conversion: 900 units × 55% complete) Equivalent units of production.............................

Materials Conversion Conversion 4,800 4,800

720 5,520

495 5,295


Cost of beginning work in process....................... Cost added during the period............................... Total cost (a).......... ............. ............ ............. ...... .... .... ........ ...... .... .... .. Equivalent units of production (b)....................... Cost per equivalent unit, (a) ÷ (b)........................

Materials Conversion Conversion $ 4,400 $ 2,200 120,000 92,500 $124,400 $94,700

5,520 $22.54

5,295 $17.88

Materials Conversion Conversion

Units transferred out: Units transferred to the next department.............. Cost per equivalent unit....................................... Cost of units transferred out.......... ............ ............. ....... ....

4,800 $22.54 $108,174

Total

4,800 $17.88 $85,847 $194,021

118. The cost of ending ending work in process process inventory in the the first processing processing department department according to the company’s cost system is closest to: A) $25,079 B) $36,379 C) $20,008 D) $29,103 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium Solution: To solve for ending work in process: + Work in pr process, beg beginning..... ............ ............ ....... ...... ........ ...... .... .... ........ ...... .. + Unit Unitss star tarted int into prod roduct uction dur during ing the month.. th.... .... .... .... .... .... .... .... − Units completed and transferred out during the month..... = Work ork in proce ocess, endin ding.... ...... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Equivalent Equivalent units of production production Transferred to next department............................... Ending work in process (materials: 900 units × 80% complete; conversion: 900 units × 55% complete)................ Equivalent units of production................................

300 5,4 5,400 4,800 900 Materials Conversion 4,800 4,800

720 5,520

495 5,295


Cost of beginning work in process.......................... Cost added during the period.................................. Total cost (a) (a).... ...... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Equivalent units of production (b).......................... Cost per equivalent unit, (a) ÷ (b)...........................

Materials Conversion $ 4,400 $ 2,200 120,000 92,500 $124,40 ,400 $94 $94,700 ,700

5,520 $22.54

5,295 $17.88

Cost of Ending Work in Process Inventory and Units Transferred Out Materials Conversion Conversion Total

Ending work in process inventory: Equivalent units of production (materials: 900 units × 80% complete; conversion: 900 units × 55% complete) Cost per equivalent unit..........................................

720 $22.54

495 $17.88

Cost of ending work in process inventory....... ...... .... .... ....

$16,226

$8,853 $25,079

Use the following to answer questions 119-124: Hall Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Beginning work in process inventory: Unit Unitss in begi beginn nnin ing g work work in proc proces esss inve invent ntor ory. y... .... .... .... .... .... .... .... .... .... .... Materi Material alss costs costs... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ......... .......... .......... ....... Conv Convers ersio ion n costs costs... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ... Perc Percen entt com compl plet etee with with resp respec ectt to to mat mater eria ials ls.. .... .... .... .... .... .... .... .... .... .... .... .... .. Perc Percen entt com compl plet etee wit with h res respe pect ct to conv conver ersi sion on.. .... .... .... .... .... .... .... .... ..... ..... .. Unit Unitss star starte ted d int into o pro produ duct ctio ion n dur durin ing g the the mo mont nth. h.... ..... .... .... .... ..... ...... ...... ..... .. Unit Unitss tra trans nsfe ferr rred ed to the the nex nextt dep depar artm tmen entt dur durin ing g the the mo mont nth.. h..... ... Materials costs costs added during the month.................................. month.............................. .... Conversion Conversion costs added during the month............................... Ending work in process inventory: Unit Unitss in in end endin ing g wor work k in in pro proce cess ss inve invent ntor ory. y... .... ..... ..... .... .... .... ..... ...... ...... ..... .. Perc Percen entt com compl plet etee with with resp respec ectt to to mat mater eria ials ls.. .... .... .... .... .... .... .... .... .... .... .... .... .. Perc Percen entt com compl plet etee wit with h res respe pect ct to conv conver ersi sion on.. .... .... .... .... .... .... .... .... ..... ..... ..

500 500 $7,70 $7,700 0 $2,90 $2,900 0 75% 75% 25% 25% 6,70 6,700 0 5,90 5,900 0 $108,60 0 $121,00 0 1,30 1,300 0 65% 65% 40% 40%

Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places. 119. What are the equivalent equivalent units for for materials for the the month in the first processing processing department? A) 845 B) 6,745 C) 7,200 D) 5,900 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Solution: Equivalent Equivalent units of production production

Materials Tran Transfe sferre rred d to next next dep depart artmen ment.. t...... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ...... ... 5,900 5,900

Endi Ending ng work work in proc proces esss (1,3 (1,300 00 unit unitss × 65% 65% com compl plet ete) e).. .... .... .... ..... ...... ..... Equi Equival valent ent units units of produc producti tion. on..... ....... ...... ....... ....... ...... ....... ......... .......... .......... .......... .......... ....... ..

845 845 6,745 6,745

120. What are the equivalent equivalent units for conversion conversion costs for the month in the first processing processing department? A) 5,900 B) 6,420 C) 7,200 D) 520 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Solution: Equivalent Equivalent units of productio production n Conversion Tran Transfe sferre rred d to next next depar departme tment. nt.... ....... ....... ...... ....... ....... ...... ....... ....... ....... ........ ......... ......... ......... ..... 5,900 5,900 Endin nding g wor work k in in pro proce cess ss (1,3 (1,300 00 unit unitss × 40% 40% com compl plet ete) e).. .... .... .... .... .... ..... ..... 520 520 Equi Equiva valen lentt units units of produc producti tion. on.... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ...... ........ .......... ........ ... 6,420 6,420 121. The cost per equivalent equivalent unit unit for materials for the month month in the first processing processing department is closest to: A) $15.08 B) $16.15 C) $16.10 D) $17.24 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium Solution: Equivalent Equivalent units of production production

Materials Tran Transf sfer erre red d to next next depar departm tmen ent. t... ..... ..... .... .... ..... ..... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... 5,90 5,900 0 Endi Ending ng work work in proc proces esss (1,3 (1,300 00 unit unitss × 65% 65% comp comple lete te).. )...... ........ .... 845 845 Equi Equiva vale lent nt units units of produ product ctio ion. n... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ... 6,74 6,745 5 Cost per Equivalent Unit

Materials Cost Cost of beginni beginning ng work in process. process........ ............. ............. ................. ..................... ........... $ 7,700 7,700 Cost Cost added added during during the the period period...... ............. .............. ............. ............. .............. .............. ........... .... 108,600 108,600 Total Total cost cost (a)....... (a).............. .............. .............. ............. ............. .............. ............. ............. .............. ............... ........ $116,300 $116,300

Equi Equiva vale lent nt units units of produ product ctio ion n (b). (b)... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .. Cost Cost per per equ equiv ivale alent nt unit, unit, (a) ÷ (b). (b).... ....... ....... ...... ....... ......... ......... ......... .......... .......... .......

6,74 6,745 5 $17.2 $17.24 4

122. The cost per equivalent equivalent unit for conversion conversion costs for the first department department for the month is closest to: A) $20.27 B) $19.30 C) $18.85 D) $17.21 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium Solution: Equivalent Equivalent units of productio production n

Trans ransfe ferr rred ed to next next depa depart rtme ment nt.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Ending work in process (1,300 units × 40% complete).... ...... ........ ...... Equiv quival alen entt unit unitss of prod produc ucti tion on.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ..

Conversion 5,90 5,900 0 520 6,42 6,420 0


Cost Cost of begi beginn nnin ing g work work in proc proces ess. s... .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... .... Cost Cost add added ed dur durin ing g the the peri period od... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ...... ...... ...... ... Tota Totall cost cost (a)... (a)...... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ......... .......... ......... ......... .......

Conversion $ 2,90 2,900 0 121, 121,00 000 0 $123,9 $123,900 00

Equiv quival alen entt unit unitss of prod produc ucti tion on (b). (b)... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Cost Cost per per equ equiv ival alen entt unit unit,, (a) (a) ÷ (b) (b).. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ....

6,42 6,420 0 $19. $19.30 30

123. The total cost transferred transferred from the first processing processing department department to the next processing department during the month is closest to: A) $240,200 B) $263,095 C) $215,592 D) $229,600 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium Solution: Equivalent Equivalent units of productio production n



520 6,420




6,420 $19.30

Mate Materi rial alss Conv Conver ersi sion on Total otal Units transferred out: Units transferred to the next department................. Cost per equivalent unit.......................................... Cost of uni units tran ransfe sferre rred out. out... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ....

5,900 5,900 $17.24 $19.30 $10 $101,73 ,730 $11 $113,86 ,864 $2 $215,5 5,595

124. The cost of ending ending work in process process inventory in the the first processing processing department department according to the company's cost system is closest to: A) $47,503 B) $19,001 C) $24,604 D) $30,877 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium Solution: Equivalent Equivalent units of production production

Transferred to next department............................... Ending work in process (materials: 1,300 units × 65% complete; conversion: 1,300 units × 40% complete)............. Equivalent units of production................................


520 6,420


Cost of beginning work in process.......................... Cost added during the period.................................. Total cost (a)........................................................... Equivalent units of production (b).......................... Cost per equivalent unit, (a) ÷ (b)...........................

Materials Conversion Conversion $ 7,700 $ 2,900 108,600 121,000 $116,300 $123,900 6,745 $17.24

6,420 $19.30

Material Materialss Convers Conversion ion Total Total Ending work in process inventory: Equivalent units of production (materials: 1,300 units × 65% complete; conversion: 1,300 units × 40% complete)

845

520

Use the following to answer questions 125-126: Kumari Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Beginning work in process inventory: Unit Unitss in begi beginn nnin ing g work work in proc proces esss inve invent ntor ory. y... .... .... .... .... .... .... .... .... .... .... Materi Material alss costs costs... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ......... .......... .......... ....... Conv Convers ersio ion n costs costs... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ... Perc Percen entt com compl plet etee with with resp respec ectt to to mat mater eria ials ls.. .... .... .... .... .... .... .... .... .... .... .... .... .. Perc Percen entt com compl plet etee wit with h res respe pect ct to conv conver ersi sion on.. .... .... .... .... .... .... .... .... ..... ..... .. Unit Unitss star starte ted d int into o pro produ duct ctio ion n dur durin ing g the the mo mont nth. h.... ..... .... .... .... ..... ...... ...... ..... .. Unit Unitss tra trans nsfe ferr rred ed to the the nex nextt dep depar artm tmen entt dur durin ing g the the mo mont nth.. h..... ... Materials costs costs added during the month.................................. month.............................. .... Conversion Conversion costs added during the month............................... Ending work in process inventory: Unit Unitss in endi ending ng work work in proc proces esss inv inven ento tory ry.. .... .... .... .... .... .... .... .... .... .... .... .... .... Perc Percen entt com compl plet etee with with resp respec ectt to to mat mater eria ials ls.. .... .... .... .... .... .... .... .... .... .... .... .... .. Perc Percen entt com compl plet etee wit with h res respe pect ct to conv conver ersi sion on.. .... .... .... .... .... .... .... .... ..... ..... ..

200 200 $2,90 $2,900 0 $6,40 $6,400 0 85% 85% 70% 70% 7,80 7,800 0 7,40 7,400 0 $128,00 0 $332,60 0 600 600 60% 60% 35% 35%

Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.

125. The total cost transferred transferred from the first processing processing department department to the next processing department during the month is closest to: A) $491,328 B) $469,900 C) $460,600 D) $454,478 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3,4 Level: Medium Solution: Equivalent Equivalent units of production production

Materials Materials Conversion Conversion Transf Transferr erred ed to next next depa departm rtment ent... ....... ....... ...... ....... ....... ...... ....... ........ .... 7,400 7,400 7,400 7,400 Ending work in process (materials: 600 units × 60% complete; conversion: 600 units × 35% compl complete ete).. )...... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ....... ...... 360 210 Equiv Equivale alent nt units units of produc producti tion. on..... ......... .......... .......... ......... ......... ....... .. 7,760 7,760 7,610 7,610 Cost per Equivalent Unit

Materials Materials Conversion Conversion Cost of beginning beginning work in process......................... process................... ...... $ 2,900 $ 6,400 Cost added during the period.................................. 128,000 332,600 Total cost (a)................................................... ........ $130,900 $339,000 Equiv Equivale alent nt units units of produc producti tion on (b)... (b)....... ....... ....... ....... ....... ......... ..... Cost Cost per equivale equivalent nt unit, unit, (a) ÷ (b)....... (b).............. .............. ............. ......

7,760 7,760 $16.87 $16.87

7,610 7,610 $44.55 $44.55

Material Materialss Conversi Conversion on Total Total Units transferred out: Units Units transf transferr erred ed to the the next next depar departme tment. nt...... ............... .......... 7,400 7,400 7,400 7,400 Cost Cost per equivale equivalent nt unit....... unit.............. .............. ............. ..................... ............... $16.87 $16.87 $44.55 $44.55 Cost of units transferred transferred out............................ out.................... ............... ....... $124,827 $329,645 $454,473 $454,473

126. The cost of ending ending work in process process inventory in the the first processing processing department department according to the company's cost system is closest to: A) $15,428 B) $36,850 C) $22,110 D) $12,897 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3,4 Level: Medium Solution: Equivalent Equivalent units of productio production n

Materials Conversion Conversion Tran Transf sfer erre red d to next next depa depart rtme ment nt.. ..... ...... ...... ...... ...... ...... ...... ...... ...... ... 7,40 7,400 0 7,40 7,400 0 Ending work in process (materials: 600 units × 60% complete; conversion: 600 units × 35% comp comple lete te). ).... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... .. 360 360 210 210 Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... ..... ...... ...... ...... ...... ...... ...... ...... ..... .. 7,76 7,760 0 7,61 7,610 0 Cost per Equivalent Unit

Materials Conversion Conversion Cost Cost of beginnin beginning g work in process. process........ ....................... ................ $ 2,900 2,900 $ 6,400 6,400 Cost Cost added added during during the period... period......... ............. .............. .............. .......... ... 128,000 128,000 332,600 332,600 Total cost (a)........................................................ .. $130,900 $339,000 Equi Equiva valen lentt units units of produc producti tion on (b).... (b)....... ...... ....... ....... ...... ....... ...... Cost Cost per per equiv equivale alent nt unit, unit, (a) ÷ (b)... (b)........ .......... .......... .......... ....... ..

7,760 7,760 $16.8 $16.87 7

7,610 7,610 $44.5 $44.55 5

Mat Materia rialsCon lsConversio rsion n Ending work in process inventory:........................ Equivalent units of production (materials: 600 units × 60% complete; conversion: 600 units × 35% 35% comp comple lete te). )... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Cost Cost per per equiv equivale alent nt unit.. unit..... ...... ....... ....... ...... ....... ....... ...... ....... ........ ......... ..... Cost Cost of ending ending work work in proce process ss invent inventor ory.. y....... .......... .......

360 360 $16.8 $16.87 7 $6,07 $6,073 3

Total

210 210 $44.5 $44.55 5 $9,35 $9,355 5 $15, $15,42 428 8

Use the following to answer questions 127-129: Loxham Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Beginning work in process inventory: Uni Units in be beginn inning work work in pro proccess in invent entory.. ry.... .... .... .... .... .... .... .... .... .. Materi Material alss costs costs... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ..... .. Conv Convers ersio ion n costs costs... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ........ .......... .......... ......... ....... ... Perc Percen entt comp comple lete te wit with h resp respec ectt to mat mater eria ials ls.. .... .... .... .... .... .... .... .... .... .... .... .... Perc Percen entt com compl plet etee with with resp respec ectt to to con conve vers rsio ion. n... .... .... .... .... .... .... .... .... .... .... Unit Unitss sta start rted ed into into prod produc ucti tion on duri during ng the the mon month th... ...... ...... ...... ...... ....... ...... .. Unit Unitss tran transf sfer erre red d to the the next next dep depar artm tmen entt duri during ng the the mon month th.. .. . Materials costs added during the month................................. Conversion Conversion costs added during during the month......................... month................. ............ .... Ending work in process inventory: Unit Unitss in endi ending ng work work in proc proces esss inv inven ento tory ry... ...... ...... ...... ...... ...... ...... ...... ..... Perc Percen entt comp comple lete te wit with h resp respec ectt to mat mater eria ials ls.. .... .... .... .... .... .... .... .... .... .... .... .... Perc Percen entt com compl plet etee with with resp respec ectt to to con conve vers rsio ion. n... .... .... .... .... .... .... .... .... .... ....

400 400 $6,90 $6,900 0 $2,50 $2,500 0 80% 80% 15% 15% 6,00 6,000 0 5,40 5,400 0 $112,50 0 $210,30 0 1,00 1,000 0 80% 80% 30% 30%

Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places. 127. What are the equivalent equivalent units for for materials for the the month in the first processing processing department? A) 800 B) 6,400 C) 5,400 D) 6,200 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium

Solution: Equivalent Equivalent units of productio production n

Tran Transf sfer erre red d to next next depa depart rtme ment nt.. .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... Ending work in process (materials: 1,000 units × 80% comp mple lete te;; co conversi ersio on: 1,0 1,00 00 uni units × 30% 30% co comple plete)... )..... .. Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...

Materials 5,40 5,400 0 800 6,20 6,200 0

128. The cost per equivalent equivalent unit for conversion conversion costs for the first department department for the month is closest to: A) $39.20 B) $37.33 C) $33.25 D) $36.89 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium Solution: Equivalent Equivalent units of productio production n

Conversion Tran Transf sfer erre red d to next next depa depart rtme ment nt.. .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... 5,40 5,400 0 Endi nding wor work in proc rocess (1,0 (1,00 00 units its × 30% comp mpllete).... te).... 300 Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ... 5,70 5,700 0 Cost per Equivalent Unit

Conversion Cost Cost of beginn beginnin ing g work work in proce process. ss.... ....... ....... ...... ....... ........ ......... .......... ......... .... $ 2,500 2,500 Cost Cost added added during during the period... period......... ............. .............. .............. ............. .............. .......... 210,300 210,300 Total Total cost cost (a)....... (a).............. .............. ............. ............. .............. .............. ............. ............. ................ ......... $212,800 $212,800 Equi Equiva vale lent nt unit unitss of of pro produ duct ctio ion n (b) (b).. ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ... Cost Cost per per equ equiv ival alen entt unit unit,, (a) ÷ (b) (b).. .... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... ..

5,70 5,700 0 $37. $37.33 33

129. The cost of ending ending work in process process inventory in the the first processing processing department department according to the company's cost system is closest to: A) $16,977 B) $56,591 C) $45,273 D) $26,606 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium Solution: Equivalent Equivalent units of productio production n

Materials Conversion Conversion Tran Transfe sferre rred d to next next depar departme tment. nt.... ........ .......... .......... .......... .......... ........ ... 5,400 5,400 5,400 5,400 Ending work in process (materials: 1,000 units × 80% complete; conversion: 1,000 units × 30% compl complete ete).. )...... ....... ...... ....... ....... ....... ....... ...... ....... ........ ......... .......... .......... .......... ......... ...... 800 300 Equi Equiva valen lentt units units of produc producti tion. on.... ....... ........ ........ ......... .......... .......... ....... .. 6,200 6,200 5,700 5,700 Cost per Equivalent Unit

Materials Conversion Conversion Cost Cost of beginnin beginning g work in process. process........ .................... ................... ...... $ 6,900 6,900 $ 2,500 2,500 Cost added during the period.................................... 112,500 210,300 Total Total cost cost (a).... (a)........... ............. ............. .............. ............. ............. .............. ................. .......... $119,400 $119,400 $212,800 $212,800 Equi Equiva valen lentt units units of produc producti tion on (b).... (b)....... ...... ....... ....... ...... ....... ........ .... Cost Cost per per equiv equivale alent nt unit, unit, (a) ÷ (b).. (b)....... .......... .......... .......... .......... .......

6,200 6,200 $19.2 $19.26 6

5,700 5,700 $37.3 $37.33 3

Mat Materia rialsCon lsConversio rsion n Ending work in process inventory: Equivalent units of production (materials: 1,000 units × 80% complete; conversion: 1,000 units × 30% 30% comp comple lete te). )... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ... 800 800 Cost Cost per equivale equivalent nt unit....... unit.............. ............. ............. .............. ................. .......... $19.26 $19.26 Cost Cost of ending ending work in process process inventor inventory...... y................ .......... $15,406 $15,406

Total

300 300 $37.33 $37.33 $11,200 $11,200 $26,60 $26,606 6

Use the following to answer questions 130-132: Doz Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 600 units. The costs and percentage completion of these units in beginning inventory were:

Materials co costs................... Conversion Conversion costs................ costs.............. ..

Cost Percent Complete $3,700 60% $11,90 0 45%

A total of 5,000 units were started and 4,200 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month: Mate Materi rial alss cost costs. s.... ...... ...... ...... ...... ...... ... Conversion Conversion costs................ costs.............. ..

$39, $39,00 000 0 $166,10 0

The ending inventory was 75% complete with respect to materials and 35% complete with respect to conversion costs. Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places. 130. How many units are in ending ending work in process process inventory inventory in the first processing processing department at the end of the month? A) 900 B) 800 C) 1,400 D) 4,400 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy Solution:

+ + − =

To solve for ending work in process: Work Work in proc proces ess, s, begi beginn nnin ing. g... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Unit Unitss star starte ted d int into o pro produ duct ctio ion n dur durin ing g the the mo mont nth. h.... ...... ...... ...... ...... ..... Unit Unitss com compl plet eted ed and and tra trans nsfe ferr rred ed out out dur durin ing g the the mo mont nth..... h..... Work Work in in pro proce cess ss,, endi ending ng... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... ..

600 600 5,00 5,000 0 4,20 4,200 0 1,40 1,400 0

131. What are the equivalent equivalent units for conversion conversion costs for the month in the first processing processing department? A) 5,600 B) 4,690 C) 4,200 D) 490 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Solution:

+ + − =


600 600 5,00 5,000 0 4,20 4,200 0 1,40 1,400 0

Equivalent Equivalent units of productio production n Conversion Tran Transf sfer erre red d to next next depa depart rtme ment nt.. .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ..... .. 4,20 4,200 0 Endi nding wor work in proc rocess (1,4 (1,40 00 units its × 35% comp mpllete). te)..... ...... .. 490 Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ..... .. 4,69 4,690 0

132. The cost per equivalent equivalent unit unit for materials for the month month in the first processing processing department is closest to: A) $7.43 B) $6.96 C) $8.13 D) $7.63 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium Solution:

+ + − =


600 600 5,00 5,000 0 4,20 4,200 0 1,40 1,400 0

Equivalent units units of production production Materials Tran Transf sfer erre red d to next next depa depart rtme ment nt.. .... .... ..... ..... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... 4,20 4,200 0 Endi Ending ng work work in proc proces esss (1,4 (1,400 00 unit unitss × 75% 75% comp comple lete te).... ).... 1,05 1,050 0 Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ... 5,25 5,250 0 Cost per Equivalent Unit Materials Cost Cost of of begin beginnin ning g work work in proce process. ss.... ...... ....... ....... ...... ....... ........ ......... .......... ....... $ 3,700 3,700 Cost Cost add added ed during during the the peri period od.... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ........ .... 39,00 39,000 0 Total Total cost cost (a).. (a)..... ...... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ....... ........ .... $42,7 $42,700 00

Equi Equiva vale lent nt unit unitss of of pro produ duct ctio ion n (b) (b).. ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ...... ... Cost Cost per per equi equiva vale lent nt unit unit,, (a) (a) ÷ (b). (b)... .... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... .....

5,25 5,250 0 $8.1 $8.13 3

Use the following to answer questions 133-134: L.A. Company uses the weighted-average method in its process costing system. The following information for the assembly department was obtained from the accounting records for September (all materials are added at the beginning of the process):

Work in process inventory, Sept. 1...... Trans Transfer ferred red in durin during g the mo month nth..... .......... ..... Work in process inventory, Sept. 30....

Number of Units 40,000 100,0 100,000 00 20,000

Beginning work in process inventory. . Cost ad added during th the month...............

Transferred In $80,000 $251,000

Labor and Overhead Percent Complete 25% 50%

Materials $37,600 $122,400

Labor and Overhead $5,000 $66,500

133. The equivalent equivalent units for material material for the month month are: A) 100,000 units B) 120,000 units C) 140,000 units D) 160,000 units Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium

Solution:

+ + − =

To solve for units transferred: Work Work in proce process ss,, begi beginn nnin ing. g... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ... Units Units starte started d into into produ producti ction on durin during g the the month month.... ....... ....... ........ ...... Work Work in proce process, ss, endi ending ng.... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ........ .......... ......... .... Units Units comple completed ted and and transf transferr erred ed out during during the the month.... month....

40,0 40,000 00 100,00 100,000 0 20,00 20,000 0 120,00 120,000 0

Equivalent Equivalent units of productio production n Materials Tran Transfe sferre rred d to next next depa departm rtment ent... ....... ....... ...... ....... ......... .......... .......... .......... .......... ....... .. 120,00 120,000 0 Endi Ending ng work work in proc proces esss (20 (20,0 ,000 00 unit unitss × 100 100% % com compl plet ete) e).. . . 20,0 20,000 00 Equi Equiva valen lentt units units of produc producti tion. on.... ....... ....... ....... ....... ...... ........ .......... .......... ......... ......... ..... 140,00 140,000 0

134. The cost per equivalent equivalent unit unit for labor and overhead overhead for the month month is: A) $0.50 B) $0.125 C) $0.52 D) $0.55 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium Solution:

+ + − =

To solve for units transferred: Work Work in proce process ss,, begi beginn nnin ing. g... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ... Units Units starte started d into into produ producti ction on durin during g the the month month.... ....... ....... ........ ...... Work Work in proce process, ss, endi ending ng.... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ........ .......... ......... .... Units Units comple completed ted and and transf transferr erred ed out during during the the month.... month....

40,0 40,000 00 100,00 100,000 0 20,00 20,000 0 120,00 120,000 0


Tran Transf sfer erre red d to next next depa depart rtme ment nt.. .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ...... ...... ...... ..... Endi nding wor work k in proc rocess (20 (20,000 ,000 units its × 50% co comp mpllete ete)... )..... .... .. Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ...

Labor and Overhead 120, 120,00 000 0 10,0 0,000 130, 130,00 000 0


Cost Cost of begi beginn nnin ing g wor work k in in pro proce cess ss.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Cost Cost adde added d dur durin ing g the the peri period od.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Tota Totall cost cost (a). (a)... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ...... ...... ...... ...... .....

Labor and Overhead $ 5,0 5,000 00 66,5 66,500 00 $71, $71,50 500 0

Equiv quival alen entt units units of prod produc ucti tion on (b). (b)... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Cost pe per equ equiivalen lent uni unitt, (a) (a) ÷ (b (b)... )..... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ....

130, 130,00 000 0 $0.5 $0.55 5

Use the following to answer questions 135-136: Iyer Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Beginning work in process inventory: Unit Unitss in begi beginn nnin ing g work work in proc proces esss inve invent ntor ory. y... .... .... .... .... .... .... .... .... .... .... .. Material Materialss costs.... costs........... .............. .............. ............. ............. .............. ............. ............. .............. .............. ....... Conv Convers ersio ion n cos costs. ts.... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ......... .......... .......... .......... ..... Perc Percen entt comp comple lete te with with resp respec ectt to mate materi rial als.. s.... .... .... ..... ..... .... .... ..... ...... ...... ..... .. Perc Percen entt comp comple lete te wit with h resp respec ectt to con conve vers rsio ion. n... .... .... .... .... .... .... .... .... .... .... .... .. Unit Unitss sta start rted ed into into prod produc ucti tion on duri during ng the the mon month th... ...... ...... ...... ...... ...... ...... ...... ... Unit Unitss tra trans nsfe ferr rred ed to the the next next depa depart rtme ment nt duri during ng the the mon month th...... ...... Materials costs added during the month.................................... Conversion Conversion costs added during during the month............................ month................... ............. .... Ending work in process inventory: Unit Unitss in in end endin ing g wor work k in in pro proce cess ss inve invent ntor ory. y... ..... ...... ...... ...... ...... ...... ...... ...... ..... Perc Percen entt comp comple lete te with with resp respec ectt to mate materi rial als.. s.... .... .... ..... ..... .... .... ..... ...... ...... ..... .. Perc Percen entt comp comple lete te wit with h resp respec ectt to con conve vers rsio ion. n... .... .... .... .... .... .... .... .... .... .... .... ..

800 800 $13,900 $13,900 $7,20 $7,200 0 85% 85% 20% 20% 7,20 7,200 0 6,10 6,100 0 $115,70 0 $240,60 0 1,90 1,900 0 75% 75% 10% 10%


135. What are the equivalent equivalent units for conversion conversion costs for the month in the first processing processing department? A) 8,000 B) 6,290 C) 6,100 D) 190 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Solution: Equivalent Equivalent units of productio production n

Conversion Tran Transf sfer erre red d to next next depar departm tmen ent. t... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... 6,10 6,100 0 Endin nding g work work in proc proces esss (1,9 (1,900 00 unit unitss × 10% 10% comp comple lete te). )... .... .... ..... ...... ...... ...... ... 190 190 Equi Equiva vale lent nt units units of produ product ctio ion. n... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ..... 6,29 6,290 0 136. The cost per equivalent equivalent unit unit for materials for the month month in the first processing processing department is closest to: A) $16.20 B) $17.22 C) $14.46 D) $15.38 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium Solution: Equivalent Equivalent units of productio production n

Tran Transf sfer erre red d to next next depa depart rtme ment nt.. .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... Endin nding g work work in proc proces esss (1,9 (1,900 00 unit unitss × 75% 75% comp comple lete te).... ).... Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...

Materials 6,10 6,100 0 1,42 1,425 5 7,52 7,525 5


Cost Cost of begi beginni nning ng work work in proce process. ss.... ....... ....... ...... ....... ........ ......... .......... ......... .... Cost Cost added added during during the period... period......... ............. .............. .............. ............. .............. .......... Total Total cost cost (a)....... (a).............. .............. ............. ............. .............. .............. ............. ............. ................ .........

Materials $ 13,900 13,900 115,700 115,700 $129,60 $129,600 0

Equi Equiva vale lent nt unit unitss of of pro produ duct ctio ion n (b) (b).. ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ... Cost Cost per per equ equiv ival alen entt unit unit,, (a) ÷ (b) (b).. .... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... ..

7,52 7,525 5 $17. $17.22 22

Use the following to answer questions 137-138: Jones Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Beginning work in process inventory: Unit Unitss in begi beginn nnin ing g work work in proc proces esss inve invent ntor ory. y... .... .... .... .... .... .... .... .... .... .... Materi Material alss costs costs... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ......... .......... .......... ....... Convers Conversion ion costs... costs.......... ............. ............. .............. .............. ............. ............. .............. ................. .......... Perc Percen entt com compl plet etee with with resp respec ectt to to mat mater eria ials ls.. .... .... .... .... .... .... .... .... .... .... .... .... .. Perc Percen entt com compl plet etee wit with h res respe pect ct to conv conver ersi sion on.. .... .... .... .... .... .... .... .... ..... ..... .. Unit Unitss star starte ted d int into o pro produ duct ctio ion n dur durin ing g the the mo mont nth. h.... ..... .... .... .... ..... ...... ...... ..... .. Unit Unitss tra trans nsfe ferr rred ed to the the nex nextt dep depar artm tmen entt dur durin ing g the the mo mont nth.. h..... ... Mater Material ialss costs costs added added during during the month. month.... ....... ....... ...... ....... ......... .......... .......... ....... Conversion Conversion costs added during the month............................... Ending work in process inventory: Unit Unitss in in end endin ing g wor work k in in pro proce cess ss inve invent ntor ory. y... .... ..... ..... .... .... .... ..... ...... ...... ..... .. Perc Percen entt com compl plet etee with with resp respec ectt to to mat mater eria ials ls.. .... .... .... .... .... .... .... .... .... .... .... .... .. Perc Percen entt com compl plet etee wit with h res respe pect ct to conv conver ersi sion on.. .... .... .... .... .... .... .... .... ..... ..... ..

500 500 $8,50 $8,500 0 $14,700 $14,700 85% 85% 55% 55% 5,30 5,300 0 4,40 4,400 0 $79,1 $79,100 00 $210,70 0 1,40 1,400 0 50% 50% 30% 30%


137. The cost per equivalent equivalent unit unit for materials for the month month in the first processing processing department is closest to: A) $15.51 B) $13.64 C) $15.10 D) $17.18 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3 Level: Medium

Solution: Equivalent Equivalent units of productio production n Tran Transf sfer erre red d to next next depa depart rtme ment nt.. .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... Endi nding wor work in proc rocess (1,4 (1,40 00 units its × 50% comp mpllete).... te).... Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...

Materials 4,40 4,400 0 700 5,10 5,100 0


Cost Cost of beginn beginnin ing g work work in proce process. ss.... ....... ....... ...... ....... ........ ......... .......... ......... .... Cost Cost adde added d duri during ng the period period.... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ........ .... Tota Totall cost cost (a)... (a)...... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ........ ....... ..

Materials $ 8,500 8,500 79,10 79,100 0 $87,6 $87,600 00

Equi Equiva vale lent nt unit unitss of of pro produ duct ctio ion n (b) (b).. ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ... Cost Cost per per equ equiv ival alen entt unit unit,, (a) ÷ (b) (b).. .... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... ..

5,10 5,100 0 $17. $17.18 18

138. The cost per equivalent equivalent unit for conversion conversion costs for the first department department for the month is closest to: A) $43.71 B) $49.10 C) $46.76 D) $38.86 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3 Level: Medium Solution: Equivalent Equivalent units of productio production n

Conversion Tran Transf sfer erre red d to next next depa depart rtme ment nt.. .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... 4,40 4,400 0 Endi nding wor work in proc rocess (1,4 (1,40 00 units its × 30% comp mpllete).... te).... 420 Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ... 4,82 4,820 0 Cost per Equivalent Unit

Conversion Cost Cost of beginnin beginning g work in process. process........ ............. .............. ...................... .............. $ 14,700 14,700 Cost Cost added added during during the period... period......... ............. .............. .............. ............. .............. .......... 210,700 210,700 Total Total cost cost (a)....... (a).............. .............. ............. ............. .............. .............. ............. ............. ................ ......... $225,400 $225,400 Equi Equiva vale lent nt unit unitss of of pro produ duct ctio ion n (b) (b).. ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...

4,82 4,820 0

Cost Cost per per equ equiv ival alen entt unit unit,, (a) ÷ (b) (b).. .... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... ..

$46. $46.76 76

Use the following to answer questions 139-142: (Appendix 4A) The following data relate to the Mixing Department of Dillard Company for a recent month:

Beginning Beginning work in process inventory..... inventory.... . Units started into production.................. Units completed and transferred out....... Ending work in process inventory..........

Units 10,00 0 50,00 0 51,00 0 9,000

Percent Complete with Respect to Processing 65%

30%

All materials are added at the beginning of the mixing process. 139. Assuming that Dillard Dillard Company Company uses the FIFO method, method, the equivalent equivalent units for materials would be: A) 47,200 B) 50,000 C) 51,000 D) 59,000 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium Solution: Equivalent Equivalent Units of Production Production

To complete beginning work in process (10,000 units × 0%).... Units started and completed during the period (50,000 units starte started d − 9,000 9,000 units units in endi ending ng inve invento ntory) ry)... ...... ....... ........ ......... .......... .......... ....... Endi Ending ng work work in proc proces esss (9,0 (9,000 00 unit unitss × 100% 100% comp comple lete te)... )........... ........ Equi Equiva valen lentt units units of produc producti tion. on.... ....... ....... ....... ....... ...... ....... ....... ........ .......... .......... .......... ........ ...

Materials 0 41,00 41,000 0 9,00 9,000 0 50,00 50,000 0

140. Assuming that Dillard Dillard Company Company uses the FIFO method, method, the equivalent equivalent units for processing would be: A) 47,200 B) 50,200 C) 51,000 D) 60,000 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium Solution: Equivalent Equivalent Units of Production Production

Conversion To com compl plet etee beg begin inni ning ng work work in proc proces esss (10 (10,0 ,000 00 unit unitss × 35% 35%). )... 3,50 3,500 0 Units started and completed during the period (50,000 units star starte ted d − 9,00 9,000 0 units units in end endin ing g inven invento tory ry). )... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ... 41,0 41,000 00 Endi Ending ng work work in proc proces esss (9,0 (9,000 00 unit unitss × 30% 30% com compl plet ete) e).... ......... ......... .... 2,70 2,700 0 Equi Equiva valen lentt units units of produc producti tion. on.... ....... ....... ....... ....... ...... ....... ....... ........ .......... .......... .......... ........ ... 47,20 47,200 0 141. Assuming that Dillard Dillard Company uses the weighted-avera weighted-average ge method, the equivalent equivalent units for materials would be: A) 50,000 B) 51,000 C) 53,700 D) 60,000 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Solution: Equivalent Equivalent units of productio production n

Tran Transfe sferre rred d to nex nextt depa departm rtment ent... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ...... ... Endi Ending ng work work in proc proces esss (9, (9,00 000 0 uni units ts × 100 100% % com compl plet ete) e)... ..... Equi Equiva valen lentt units units of produc producti tion. on.... ....... ....... ....... ......... .......... .......... ......... ......... ......... ....

Materials 51,00 51,000 0 9,00 9,000 0 60,00 60,000 0

142. Assuming that Dillard Dillard Company uses the weighted-avera weighted-average ge method, the equivalent equivalent units for processing would be: A) 53,700 B) 51,000 C) 50,200 D) 47,200 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Solution: Equivalent Equivalent units of productio production n

Conversion Tran Transf sfer erre red d to next next depar departm tmen ent. t... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ... 51,0 51,000 00 Endin nding g wor work k in in pro proce cess ss (9,0 (9,000 00 unit unitss × 30% 30% com compl plet ete) e).. .. .. 2,70 2,700 0 Equi Equiva vale lent nt units units of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ... 53,7 53,700 00 Use the following to answer questions 143-146: (Appendix 4A) Activities in the Sargent Company's Assembly Department for the month of March follow:

Work-in-process inventory, March 1...... Started into production during March.... Work-in-process inventory, March 31....

Units Materials 7,000 70% 66,00 0 5,000 45%

Percent Complete with Respect to Labor & Overhead 35%

30%

143. The equivalent equivalent units for materials for March, using using the weighted-average weighted-average method, method, would be: A) 66,000 B) 68,000 C) 70,250 D) 71,000 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Solution:

+ + − =

To solve for units transferred: Work Work in in pro proce cess ss,, begi beginn nnin ing. g... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ...... ...... ...... ...... ...... ..... .. Unit Unitss start started ed into into prod produc ucti tion on duri during ng the the month month... ...... ...... ...... ...... ..... .. Work Work in proc proces ess, s, endi ending ng... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... .. Unit Unitss com compl plet eted ed and and tra trans nsfe ferr rred ed out out dur durin ing g the the mo mont nth..... h.....

7,00 7,000 0 66,0 66,000 00 5,00 5,000 0 68,0 68,000 00


Tran Transfe sferre rred d to next next depar departme tment. nt.... ....... ....... ...... ....... ....... ...... ....... ....... ....... ......... .......... ....... Endi Ending ng work work in proc proces esss (5,0 (5,000 00 unit unitss × 45% 45% com compl plet ete) e)... ....... ...... .. Equi Equiva valen lentt units units of produc producti tion. on.... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ....... ......... .....

Materials 68,00 68,000 0 2,25 2,250 0 70,25 70,250 0

144. The equivalent equivalent units for labor and overhead overhead for March, using the weighted-average weighted-average method, would be: A) 69,500 B) 68,000 C) 67,500 D) 71,000 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Solution:

+ + − =


7,00 7,000 0 66,0 66,000 00 5,00 5,000 0 68,0 68,000 00


Labor and Overhead Tran Transf sfer erre red d to next next depa depart rtme ment nt.. .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... 68,0 68,000 00 Endin nding g wor work k in in pro proce cess ss (5,0 (5,000 00 unit unitss × 30% 30% com compl plet ete) e).. .. .. 1,50 1,500 0 Equi Equiva valen lentt units units of produc producti tion. on.... ....... ....... ....... ....... ....... ......... .......... .......... .......... ..... 69,50 69,500 0

145. The equivalent equivalent units for materials materials for March using using the FIFO method, method, would be: A) 68,000 B) 65,350 C) 71,000 D) 67,000 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium Solution:

+ + − =


7,00 7,000 0 66,0 66,000 00 5,00 5,000 0 68,0 68,000 00


To comp comple lete te begi beginn nnin ing g wor work k in in proc proces esss (7, (7,00 000 0 unit unitss × 30%) 30%)... ...... ........ ..... Units started and completed during the period (66,000 units started − 5,000 5,000 units units in endin ending g inven invento tory) ry)... ...... ....... ....... ...... ....... ....... ....... ......... .......... .......... ......... ....... ... Endi Ending ng wor work k in proc proces esss (5,0 (5,000 00 uni units ts × 45% 45% comp comple lete te).. ).... .... ..... ...... ...... ...... ...... ... Equi Equiva valen lentt units units of prod product uctio ion.. n...... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ......... .......

Materials 2,10 2,100 0 61,00 61,000 0 2,25 2,250 0 65,35 65,350 0

146. The equivalent equivalent units for labor labor and overhead overhead for March using using the FIFO method, method, would be: A) 62,950 B) 65,050 C) 66,000 D) 67,050 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium Solution:

+ + − =


7,00 7,000 0 66,0 66,000 00 5,00 5,000 0 68,0 68,000 00


To comp comple lete te begi beginn nnin ing g wor work k in in proc proces esss (7, (7,00 000 0 unit unitss × 65%) 65%).... ........ .... Units started and completed during the period (66,000 units starte started d − 5,000 5,000 units units in endi ending ng inv invent entory ory).. )..... ....... ....... ...... ....... ....... ...... ....... ....... ...... ... Endi Ending ng work work in proc proces esss (5, (5,00 000 0 uni units ts × 30% 30% comp comple lete te).. ).... ..... ...... ...... ...... ..... .. Equi Equiva valen lentt units units of prod product uctio ion.. n...... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ....... ......... .......

Labor and Overhead 4,55 4,550 0 61,00 61,000 0 1,50 1,500 0 67,05 67,050 0

Use the following to answer questions 147-148: Bronson Company has a process costing system and uses the weighted-average method. The company had 6,000 units in work in process on January 1 that were 60% complete with respect to conversion costs. During January 20,000 units were completed. On January 31, 8,000 units remained in work in process that were 40% complete with respect to conversion costs. Materials are added at the beginning of the process.

147. The equivalent equivalent units for January January for conversion conversion costs were: were: A) 19,600 B) 22,400 C) 23,200 D) 25,600 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Source: CPA, adapted Solution: Equivalent Equivalent units of productio production n

Conversion Tran Transf sfer erre red d to next next depar departm tmen ent. t... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ... 20,0 20,000 00 Endin nding g wor work k in in pro proce cess ss (8,0 (8,000 00 unit unitss × 40% 40% com compl plet ete) e).. .. .. 3,20 3,200 0 Equi Equiva vale lent nt units units of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ... 23,2 23,200 00 148. How many units units were started started into production production during during January? January? A) 18,000 B) 19,600 C) 20,000 D) 22,000 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Source: CPA, adapted Solution:

+ + − =

To solve for units started into production: Work Work in proc proces ess, s, endi ending ng... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ...... ...... ...... ..... Unit Unitss comp comple lete ted d and and tran transf sfer erre red d out out duri during ng the the mo mont nth.... h.... Work Work in in pro proce cess ss,, begi beginn nnin ing. g... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ... Unit Unitss sta start rted ed into into prod produc ucti tion on duri during ng the the mont month. h... .... .... .... ..... ...... .....

8,00 8,000 0 20,0 20,000 00 6,00 6,000 0 22,0 22,000 00

Use the following to answer questions 149-150: The following information relates to the Blending Department of Kedakai Products Company for the month of May. Kedakai uses a weighted-average process costing system. Work in process, beginning (May 1): Units Units in proce process ss... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ......... .......... .......... .......... ........ ... Perc Percen entt comp comple lete te wit with h resp respec ectt to mat mater eria ials ls... ...... ...... ...... ....... ...... .. Perc Percen entt comp comple lete te wit with h resp respec ectt to con conve vers rsio ion. n... ..... ...... ...... ...... ... Units completed and transferred transferred out during May............ May.......... .. Work in process, ending (May 31): Units Units in proce process ss... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ......... .......... .......... .......... ........ ... Perc Percen entt comp comple lete te wit with h resp respec ectt to mat mater eria ials ls... ...... ...... ...... ....... ...... .. Perc Percen entt comp comple lete te wit with h resp respec ectt to con conve vers rsio ion. n... ..... ...... ...... ...... ...

30,00 30,000 0 100% 100% 10% 10% 290,00 0 17,00 17,000 0 100% 100% 80% 80%

149. What are the Blending Blending Department's Department's equivalent equivalent units related related to materials materials for May? A) 260,000 B) 277,000 C) 290,000 D) 307,000 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Solution: Equivalent Equivalent units of productio production n

Tran Transfe sferre rred d to nex nextt depa departm rtment ent... ....... ....... ...... ........ .......... .......... ......... ......... ......... .... Endi Ending ng work work in proc proces esss (17 (17,0 ,000 00 unit unitss × 100% 100% comp comple lete te)) Equi Equiva valen lentt units units of prod product uctio ion.. n...... ....... ...... ....... ....... ........ .......... .......... .......... ........ ...

Materials 290,0 290,000 00 17,0 17,000 00 307,0 307,000 00

150. What are the Blending Blending Department's equivalent equivalent units related related to conversion costs for May? A) 266,400 B) 290,400 C) 293,400 D) 303,600 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium Solution: Equivalent Equivalent units of productio production n

Conversion Tran Transfe sferre rred d to next next dep depar artme tment. nt.... ....... ....... ...... ........ .......... .......... .......... .......... ....... .. 290,00 290,000 0 Endi Ending ng work work in proc proces esss (17 (17,0 ,000 00 unit unitss × 80% 80% com compl plet ete) e).. . 13,6 13,600 00 Equi Equiva valen lentt units units of prod product uctio ion.. n...... ....... ...... ....... ....... ........ .......... .......... .......... ........ ... 303,60 303,600 0 Use the following to answer questions 151-152: Bettie Corporation uses a weighted-average process costing system to collect costs related to production. The following selected information relates to production for October: Mate Materi rial alss Conv Conver ersi sion on Units completed and transferred out........... .......... ....... .... 50,000 50,000 Equivalent un units: wo work in in pr process, Oc October 31 31...... 10,000 4,000 Total equivalent units... ............ ............. ...... ........ ...... .... .... ........ ...... .... .. 60,000 54,000 Mate Materi rial alss Conv Conver ersi sion on Costs in work in proc rocess on Octo Octob ber 1.... ...... .... .... .... .... .... .... .. $ 9,00 ,000 $ 5,4 5,400 Costs Costs added added to product production ion during during October... October............ ......... 243,000 243,000 513,000 513,000 Tota Totall cost cost... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ... $252 $252,0 ,000 00 $518 $518,4 ,400 00 All materials at Bettie are added at the beginning of the production process.

151. What total amount amount of cost should be assigned assigned to the units units completed completed and transferred transferred out during October? A) $642,000 B) $677,500 C) $690,000 D) $691,900 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3,4 Level: Medium Solution:

Tota Totall cost cost.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Equi Equiva vale lent nt unit units. s... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Cost per eq equivalent un unit............................. × # of units completed and transferred out Total cost of units completed and tran transf sfer erre red d out. out... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ....

Materials Conversion $252 $252,0 ,000 00 $518 $518,4 ,400 00 ÷ 60,0 60,000 00 ÷ 54,0 54,000 00 $4.20 $9.60 50,000 50,000 $210 $210,0 ,000 00

$480 $480,0 ,000 00

Total

$690,00 0

152. What total amount amount of cost should be assigned assigned to the units units in work in process process on October 31? A) $78,500 B) $80,400 C) $135,500 D) $138,000 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3,4 Level: Medium Solution: Materials Conversion Tota Totall cost cost.. .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ..... .. $252 $252,0 ,000 00 $518 $518,4 ,400 00 Equi Equiva vale lent nt uni units ts.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ÷ 60,0 60,000 00 ÷ 54,0 54,000 00 Cost pe per eq equivalent un unit............................ $4.20 $9.60 × # of equivalent units in ending work in process................................................... 10,000 4,000 Total cost of ending work in process........ $42,000 $38,400

Total

$80,40 0

Use the following to answer questions 153-154: (Appendix 4A) Owens Company uses a process costing system. For March, the beginning work in process inventory consisted of 60,000 units that were 60% complete with respect to processing. The ending work in process inventory for the month consisted of units that were 20% complete with respect to processing. A summary of unit and cost data for the month follows:

Work in process inventory on March 1. . . . . Units started into production and costs incurred during during the month...................... month.................... .. Units completed and transferred out..........

Units Processing Cost 60,000 $35,000 190,00 0 $700,000 200,00 0

153. Assuming that Owens Owens Company uses uses the weighted-average weighted-average method, method, which of the following is closest to the cost per equivalent unit for processing cost for March? A) $4.08 B) $3.87 C) $3.68 D) $3.50 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium Solution:

+ + − =

To solve for ending work in process: Work Work in proce process, ss, begi beginni nning. ng.... ....... ....... ...... ....... ....... ....... ......... .......... .......... .......... ....... .. 60,00 60,000 0 Units Units start started ed into into produ producti ction on durin during g the mon month th..... .......... .......... ....... .. 190,00 190,000 0 Units Units comp complet leted ed and and transf transferr erred ed out out during during the the month month.. .. ... .. . 200,00 200,000 0 Work Work in in proc process ess,, endi ending ng.... ....... ...... ....... ....... ....... ....... ........ ......... ......... .......... .......... ......... .... 50,00 50,000 0


Processing Cost Tran Transfe sferre rred d to next next depar departme tment. nt.... ....... ....... ...... ....... ....... ...... ....... ....... ....... ......... .......... ....... 200,0 200,000 00 Endi Ending ng work work in proc proces esss (50 (50,0 ,000 00 unit unitss × 20% 20% com compl plet ete) e).... ....... ... Equi Equiva valen lentt units units of product productio ion.. n...... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ........ ........ ...

10,0 10,000 00 210,0 210,000 00


Conversion Cost Cost of beginnin beginning g work in process. process........ ............. ............. .............. ............. ............. ....... $ 35,000 35,000 Cost Cost added added during during the period period.... ....... ...... ....... ....... ....... ....... ...... ....... ......... .......... .......... ........ ... 700,0 700,000 00 Total Total cost cost (a)....... (a).............. .............. ............. ............. .............. .............. ............... .......................... .................. $735,000 $735,000 Equi Equiva valen lentt units units of prod product uctio ion n (b).... (b)....... ...... ....... ....... ...... ....... ......... .......... .......... ....... .. Cost Cost per per equ equiv ival alen entt uni unit, t, (a) (a) ÷ (b). (b)... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ...... ...... ...... ...... ...

210,0 210,000 00 $3.5 $3.50 0

154. Assuming that Owens Owens Company uses uses the FIFO method, method, which of the following following is closest to the cost per equivalent unit for processing cost for March? A) $3.23 B) $3.98 C) $4.02 D) $4.22 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 6 Level: Hard

Solution:

+ + − =

To solve for ending work in process: Work Work in proce process, ss, begi beginni nning. ng.... ....... ....... ...... ....... ....... ....... ......... .......... .......... .......... ....... .. 60,00 60,000 0 Units Units start started ed into into produ producti ction on durin during g the mon month th..... .......... .......... ....... .. 190,00 190,000 0 Units Units comp complet leted ed and and transf transferr erred ed out out during during the the month month.. .. ... .. . 200,00 200,000 0 Work Work in in proc process ess,, endi ending ng.... ....... ...... ....... ....... ....... ....... ........ ......... ......... .......... .......... ......... .... 50,00 50,000 0


Processing Cost To complete beginning work in process (60,000 units × 40%).. 40%)...... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ...... ........ .......... .......... .......... ......... .... Units started and completed during the period (190,000 units units star starte ted d − 50,00 50,000 0 unit unitss in endi ending ng inv invent entory ory).. )..... ........ .......... .....

140,0 140,000 00

Endi Ending ng wor work k in pro proce cess ss (50 (50,0 ,000 00 uni units ts × 20% 20% com compl plet ete) e).... ....... ... Equi Equiva valen lentt units units of product productio ion.. n...... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ........ ........ ...

10,0 10,000 00 174,0 174,000 00

24,00 24,000 0


Conversion Cost Cost added added during during the the period period (a)........ (a)............... .............. ............. ............. ................ ......... $700,000 $700,000 Equi Equiva valen lentt units units of prod product uctio ion n (b).... (b)....... ...... ....... ....... ...... ....... ......... .......... .......... ....... .. 174,0 174,000 00 Cost Cost per per equ equiv ival alen entt uni unitt (a) (a) ÷ (b) (b)... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ..... $4.0 $4.02 2 Use the following to answer questions 155-156: The following information relates to the Assembly Department of Jataca Corporation for the month of November. Jataca uses a weighted-average process costing system. All materials at Jataca are added at the beginning of the production process.

Work in process, November 1... ... . Unit Unitss star starte ted d into into prod produc ucti tion on... ....... ...... .. Work in process, November 30. . . . .

Number of Units 4,000 317, 317,00 000 0 10,000

Percent Complete with Respect to Conversion 40% 90%

On November 1, the work in process inventory account contained $6,400 of material cost and $4,400 of conversion cost. Cost per equivalent unit for November was $1.50 for materials and $2.80 for conversion costs.

155. What total amount amount of cost should be assigned assigned to the units units transferred transferred out during during November? A) $1,337,300 B) $1,348,100 C) $1,369,500 D) $1,380,300 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium Solution:

+ + − =

To solve for units transferred: Work Work in in proc proces ess, s, beg begin inni ning ng.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Unit Unitss star starte ted d into into pro produ duct ctio ion n duri during ng the the mon month th... ...... ...... ........ ....... .. Work Work in proc proces ess, s, endin ending. g... ..... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ..... Unit Unitss comp comple lete ted d and and tran transf sfer erre red d out out duri during ng the the mon month th... ..... ..

4,00 4,000 0 317, 317,00 000 0 10,0 10,000 00 311, 311,00 000 0


Materials Materials Conversion Conversion Transfe Transferred rred to next next departme department.... nt........... ................. ................. ....... 311,000 311,000 311,000 311,000 Ending work in process (materials: 10,000 units × 100% complete; conversion: 10,000 units × 90% complete complete)..... )............ ............. ............. .............. .............. ............. ........... ..... 10,000 10,000 9,000 9,000 Equiva Equivalent lent units units of producti production... on.......... .............. .................. ............. 321,000 321,000 320,000 320,000 Cost Cost per per equiv equivale alent nt unit unit (give (given). n)..... ....... ...... ....... ....... ...... ........ .......

$1.50 $1.50

$2.80 $2.80

Materials Materials Conversion Conversion Units transferred out: Units Units transfer transferred red to the next departm department. ent........ ............. ...... 311,000 311,000 311,000 311,000 Cost Cost per per equiv equivale alent nt unit.. unit..... ...... ....... ....... ....... ......... .......... .......... ......... ...... $1.50 $1.50 $2.80 $2.80 Cost of units transferred transferred out................................. $466,500 $870,800 $1,337,300 $1,337,300

156. What total amount amount of cost should be assigned assigned to the units units in work in process process on November 30? A) $17,800 B) $38,700 C) $40,200 D) $43,000 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium Solution:

+ + − =

To solve for units transferred: Work Work in in proc proces ess, s, beg begin inni ning ng.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Unit Unitss star starte ted d into into pro produ duct ctio ion n duri during ng the the mon month th... ...... ...... ........ ....... .. Work Work in proc proces ess, s, endin ending. g... ..... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ..... Unit Unitss comp comple lete ted d and and tran transf sfer erre red d out out duri during ng the the mon month th... ..... ..

4,00 4,000 0 317, 317,00 000 0 10,0 10,000 00 311, 311,00 000 0


Materials Conversion Conversion Transfe Transferred rred to next next departme department.... nt........... .............. ............. .......... .... 311,000 311,000 311,000 311,000 Ending work in process (materials: 10,000 units × 100% complete; conversion: 10,000 units × 90% complete complete)..... )............ ............. ............. .......................... ........................ ..... 10,000 10,000 9,000 9,000 Equiva Equivalent lent units units of producti production.......... on............................ .................. 321,000 321,000 320,000 320,000 Cost Cost per per equi equiva vale lent nt unit unit (giv (given en). ).... ...... ...... ...... ...... ...... ...... ...... .....

$1.5 $1.50 0

$2.8 $2.80 0


Materials Conversion Conversion Ending work in process inventory: Equivalent units of production (materials: 10,000 units × 100% complete; conversion: 10,00 10,000 0 units units × 90% compl complete ete).. )...... ......... .......... ......... ......... ..... 10,00 10,000 0 Cost Cost per per equiv equivale alent nt unit.. unit..... ...... ....... ....... ...... ....... ....... ....... ......... .......... ..... $1.50 $1.50 Cost Cost of ending ending work in process process inventor inventory........... y........... $15,000 $15,000

9,000 9,000 $2.80 $2.80 $25,200 $25,200 $40,2 $40,200 00

Use the following to answer questions 157-162: (Appendix 4A) Moureaux Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Beginning work in process inventory: Uni Units in beginn inning work work in proc rocess invent entory.. ry.... .... .... .... .... .... Materi Material alss costs costs... ....... ....... ...... ....... ....... ...... ....... ....... ....... ......... .......... .......... ......... ......... ........ ... Conv Convers ersio ion n costs costs... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ....... ......... .......... ......... .... Perc Percen entt comp comple lete te with with resp respec ectt to mate materi rial als. s... .... .... .... .... .... .... .... .... Perc Percen entt comp comple lete te with with resp respec ectt to conv conver ersi sion on.. .... .... .... .... .... .... .... Unit Unitss star starte ted d int into o pro produ duct ctio ion n dur durin ing g the the mo mont nth. h... .... .... ..... ...... ..... Units transferred to the next department during the mont mo nth. h... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ... Mater Material ialss cost costss adde added d duri during ng the month. month..... ......... .......... .......... .......... ..... Conversion Conversion costs added during the month...................... month................ ...... Ending work in process inventory: Unit Unitss in in end endin ing g wor work k in in pro proce cess ss inve invent ntor ory. y... .... .... .... .... .... .... ..... ... Perc Percen entt comp comple lete te with with resp respec ectt to mate materi rial als. s... .... .... .... .... .... .... .... .... Perc Percen entt comp comple lete te with with resp respec ectt to conv conver ersi sion on.. .... .... .... .... .... .... ....

600 $7,80 $7,800 0 $10,70 $10,700 0 65% 65% 50% 50% 5,70 5,700 0 5,00 5,000 0 $92,40 $92,400 0 $160,00 0 1,30 1,300 0 70% 70% 40% 40%


157. What are the equivalent equivalent units for for materials for the the month in the first processing processing department? A) 910 B) 5,520 C) 6,300 D) 4,400 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 5 Level: Medium Solution: Equivalent Equivalent Units of Production Production

To com comp plet lete be beginn inning wor work in in pr process (600 un units its × 35%).. %).... .... .... Units started and completed during the period (5,700 units star starte ted d − 1,30 1,300 0 unit unitss in in end endin ing g inv inven ento tory ry). )... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ... Endin nding g work work in proc proces esss (1,3 (1,300 00 unit unitss × 70% 70% comp comple lete te). ).... ...... ...... ...... ... Equi Equiva vale lent nt uni units ts of of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...

Materials 210 4,40 4,400 0 910 910 5,52 5,520 0

158. What are the equivalent equivalent units for conversion conversion costs for the month in the first processing processing department? A) 520 B) 6,300 C) 4,400 D) 5,220 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 5 Level: Medium Solution: Equivalent Equivalent Units of Production Production

Conversion To com comp plet lete be beginn inning wor work in in pro process (600 un units its × 50%).. %).... .... .... .. 300 Units started and completed during the period (5,700 units star starte ted d − 1,3 1,300 00 unit unitss in in end endin ing g inv inven ento tory ry). )... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ..... 4,40 4,400 0 Endin nding g work work in proc proces esss (1,3 (1,300 00 unit unitss × 40% 40% comp comple lete te). )... .... .... .... .... .... .... .. 520 520 Equi Equiva vale lent nt units units of produ product ctio ion. n... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ... 5,22 5,220 0

159. The cost per equivalent equivalent unit unit for materials for the month month in the first processing processing department is closest to: A) $20.00 B) $14.67 C) $16.74 D) $18.48 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Medium Solution: Equivalent Equivalent Units of Production Production

To com comp plet lete be beginn inning wor work in in pr process (600 un units its × 35%).. %).... .... .... Units started and completed during the period (5,700 units star starte ted d − 1,30 1,300 0 unit unitss in in end endin ing g inv inven ento tory ry). )... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ... Endin nding g work work in proc proces esss (1,3 (1,300 00 unit unitss × 70% 70% comp comple lete te). ).... ...... ...... ...... ... Equi Equiva vale lent nt uni units ts of of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...

Materials 210 4,40 4,400 0 910 910 5,52 5,520 0


Cost Cost adde added d during during the peri period od (a).. (a)...... ....... ....... ....... ...... ....... ....... ....... ......... .......... .......... ........ ... Equi Equiva vale lent nt unit unitss of prod produc ucti tion on (b). (b).... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ...... ..... Cost Cost per per equiv equivale alent nt unit unit (a) (a) ÷ (b).. (b)..... ...... ....... ....... ...... ....... ......... .......... .......... .......... .......... .....

Materials $92,4 $92,400 00 5,52 5,520 0 $16.74 $16.74

160. The cost per equivalent equivalent unit for conversion conversion costs for the first department department for the month is closest to: A) $30.65 B) $32.18 C) $32.00 D) $35.67 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Medium Solution: Equivalent Equivalent Units of Production Production

Conversion To com comp plet lete be beginn inning wor work in in pr process (600 un units its × 50%).. %).... .... .... 300 Units started and completed during the period (5,700 units star starte ted d − 1,30 1,300 0 unit unitss in in end endin ing g inv inven ento tory ry). )... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ... 4,40 4,400 0 Endin nding g work work in proc proces esss (1,3 (1,300 00 unit unitss × 40% 40% comp comple lete te). ).... ...... ...... ...... ... 520 520 Equi Equiva vale lent nt uni units ts of of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ... 5,22 5,220 0 Cost per Equivalent Unit

Conversion Cost Cost adde added d durin during g the the period period (a)........ (a)............... .............. ............. .......................... .................... $160,000 $160,000 Equi Equiva vale lent nt unit unitss of prod produc ucti tion on (b). (b).... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ...... ..... 5,22 5,220 0 Cost Cost per per equiv equivale alent nt unit unit (a) (a) ÷ (b).. (b)..... ...... ....... ....... ...... ....... ......... .......... .......... .......... .......... ..... $30.65 $30.65

161. The total cost transferred transferred from the first processing processing department department to the next processing department during the month is closest to: A) $270,900 B) $252,400 C) $239,726 D) $298,557 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 7 Level: Medium Solution: Equivalent Equivalent Units of Production Production

Materials Conversion Conversion To complete beginning work in process (materials: 600 units × 35% complete; conve nversion sion:: 600 units × 50% comp mpllete).. e)..... ...... ..... Units started and completed during the period (5,700 units started − 1,300 units in ending inven inventor tory). y).... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ........ ........ ... Ending work in process (materials: 1,300 units × 70% complete; conversion: 1,300 units × 40% 40% comp comple lete te). )... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ... Equi Equiva valen lentt units units of produc producti tion. on.... ........ .......... .......... .......... ........ ...

210

300

4,400 4,400

4,400 4,400

910 910 5,520 5,520

520 520 5,220 5,220


Materials Co C onversion Cost Cost added added during during the period period (a)................ (a)........................ ........ $92,400 $92,400 $160,00 $160,000 0 Equi Equiva valen lentt units units of produc producti tion on (b).... (b)....... ...... ....... ....... ....... ...... 5,520 5,520 5,220 5,220 Cost Cost per per equiv equivale alent nt unit unit (a) (a) ÷ (b)... (b)........ .......... .......... .......... ..... $16.7 $16.74 4 $30.6 $30.65 5

Total

$47.3 $47.39 9

Units transferred out: Cost Cost in beginni beginning ng invento inventory... ry............ ............................ ................... $7,800 $7,800 $10,700 $10,700 Cost to complete the units in beginning inventory: Equivalent units of production required to comp comple lete te the the begi beginn nnin ing g inve invent ntor ory y.... ...... .... .... .... .... .... .... .... 210 210 300 300 Cost Cost per equivale equivalent nt unit....... unit.............. ............. ............. .................. ........... $16.74 $16.74 $30.65 $30.65 Cost to complete the units in beginning inventor inventory..... y............ ............. ............. .............. .............. ......................... .................. $3,515 $3,515 $9,195 $9,195 Cost of units started and completed this period: Unit Unitss star starte ted d and and comp comple lete ted d this this peri period od... ........ ......... ...... 4,40 4,400 0 4,40 4,400 0 Cost Cost per equivale equivalent nt unit....... unit.............. ............. ............. .................. ........... $16.74 $16.74 $30.65 $30.65 Cost Cost of units units started started and complete completed d this period. period. $73,652 $73,652 $134,86 $134,866 6 Cost of units transferred out...............................

$ 18,500 18,500

12,710 12,710

208,518 208,518 $239,728

162. The cost of ending ending work in process process inventory in the the first processing processing department department according to the company's cost system is closest to: A) $61,607 B) $24,643 C) $31,171 D) $43,125 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 7 Level: Medium Solution: Equivalent Equivalent Units of Production Production

Materials Materials Conversion Conversion To complete beginning work in process (materials: 600 units its × 35%; conve nversio sion: 600 units its × 50%). %). Units started and completed during the period (5,700 units started − 1,300 units in ending inven inventor tory). y).... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ........ ......... .......... ....... Ending work in process (materials: 1,300 units × 70% complete; conversion: 1,300 units × 40% compl complete ete).. )...... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ...... Equi Equiva valen lentt units units of produc producti tion. on..... ......... .......... .......... .......... .......... .......

210

300

4,400 4,400

4,400 4,400

910 910 5,520 5,520

520 520 5,220 5,220


Materials Materials Conversion Conversion Cost Cost added added during during the period period (a).................. (a)............................ .......... $92,400 $92,400 $160,00 $160,000 0 Equi Equiva valen lentt units units of produc producti tion on (b).... (b)....... ...... ....... ....... ....... ......... ..... 5,520 5,520 5,220 5,220 Cost Cost per equivale equivalent nt unit (a) ÷ (b)....... (b).............. .............. .............. ....... $16.74 $16.74 $30.65 $30.65 Costs of Ending Work in Process Inventory and Units Transferred Out

Materials Materials Conversion Conversion Ending work in process inventory: inventory: Equiv quival alen entt unit unitss of prod produc ucti tion on.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... 910 910 Cost Cost per equivale equivalent nt unit....... unit.............. ............. ............. ...................... ............... $16.74 $16.74 Cost Cost of ending ending work in process process inventor inventory.............. y.............. $15,233 $15,233

520 520 $30.65 $30.65 $15,939 $15,939 $31,1 $31,171 71

Use the following to answer questions 163-165: (Appendix 4A) Prochino Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Beginning work in process inventory: Unit Unitss in begi beginn nnin ing g work work in proc proces esss inve invent ntor ory. y... .... .... .... .... .... .... .... .... .... .... Materi Material alss costs costs... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ......... .......... .......... ....... Conv Convers ersio ion n costs costs... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ... Perc Percen entt com compl plet etee with with resp respec ectt to to mat mater eria ials ls.. .... .... .... .... .... .... .... .... .... .... .... .... .. Perc Percen entt com compl plet etee wit with h res respe pect ct to conv conver ersi sion on.. .... .... .... .... .... .... .... .... ..... ..... .. Unit Unitss star starte ted d int into o pro produ duct ctio ion n dur durin ing g the the mo mont nth. h.... ..... .... .... .... ..... ...... ...... ..... .. Unit Unitss tra trans nsfe ferr rred ed to the the nex nextt dep depar artm tmen entt dur durin ing g the the mo mont nth.. h..... ... Materials costs costs added during the month.................................. month.............................. .... Conversion Conversion costs added during the month............................... Ending work in process inventory: Unit Unitss in in end endin ing g wor work k in in pro proce cess ss inve invent ntor ory. y... .... ..... ..... .... .... .... ..... ...... ...... ..... .. Perc Percen entt com compl plet etee with with resp respec ectt to to mat mater eria ials ls.. .... .... .... .... .... .... .... .... .... .... .... .... .. Perc Percen entt com compl plet etee wit with h res respe pect ct to conv conver ersi sion on.. .... .... .... .... .... .... .... .... ..... ..... ..

900 900 $9,50 $9,500 0 $4,10 $4,100 0 75% 75% 25% 25% 9,80 9,800 0 8,60 8,600 0 $112,90 0 $143,00 0 2,10 2,100 0 80% 80% 45% 45%


163. What are the equivalent equivalent units for for materials for the the month in the first processing processing department? A) 1,680 B) 9,605 C) 10,700 D) 7,700 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 5 Level: Medium Solution: Equivalent Equivalent Units of Production Production

Materials To complete beginning work in process (900 units × 25% comp comple lete te). ).... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ...... ..... .. Units started and completed during the period (9,800 units star starte ted d − 2,1 2,100 00 unit unitss in in end endin ing g inv inven ento tory ry). )... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ... Endin nding g work work in pro proce cess ss (2, (2,10 100 0 unit unitss × 80% 80% comp comple lete te). ).... ...... ...... ...... ... Equi Equiva vale lent nt units units of produ product ctio ion. n... ..... ..... .... .... ..... ..... .... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ..... ..

225 225 7,70 7,700 0 1,68 1,680 0 9,60 9,605 5

164. The cost per equivalent equivalent unit for conversion conversion costs for the first department department for the month is closest to: A) $18.22 B) $16.63 C) $15.34 D) $16.11 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Medium Solution: Equivalent Equivalent Units of Production Production

Conversion To complete beginning work in process (900 units × 75% comp comple lete te). )... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Units started and completed during the period (9,800 units star starte ted d − 2,10 2,100 0 unit unitss in endi ending ng inve invent ntor ory) y).. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Ending work in process (2,100 units × 45% complete).... ...... .... .... .... .... .... .. Equiv quival alen entt uni units ts of prod produc ucti tion on.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ..

675 675 7,70 7,700 0 945 9,32 9,320 0


Cost Cost adde added d during during the period period (a).. (a)...... ....... ....... ....... ...... ....... ....... ...... ....... ......... .......... .......... ........ ... Equiv quival alen entt unit unitss of prod produc ucti tion on (b) (b).. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Cost Cost per per equ equiv ival alen entt unit unit (a) (a) ÷ (b). (b)... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ....

Conversion $143,0 $143,000 00 9,32 9,320 0 $15. $15.34 34

165. The total cost transferred transferred from the first processing processing department department to the next processing department during the month is closest to: A) $255,900 B) $269,500 C) $235,249 D) $289,938 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Medium Solution: Equivalent Equivalent Units of Production Production Mater Material ialss Conv Convers ersion ion To complete beginning work in process (materials: 900 units × 25% complete; conversion: 900 units × 75% complete).... ...... .... .. Units started and completed during the period (9,800 units started − 2,100 units in ending inve invent ntor ory) y).. .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ..... .. Ending work in process (materials: 2,100 units × 80% complete; conversion: 2,100 units × 45% 45% comp comple lete te). )... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ..... Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... ..... ...... ..... ..

225

675

7,70 7,700 0

7,70 7,700 0

1,68 1,680 0 9,60 9,605 5

945 945 9,32 9,320 0


Materials Conversion Cost Cost added added during during the period period (a)........ (a)............... ............... ........ $112,90 $112,900 0 $143,00 $143,000 0 Equi Equiva vale lent nt unit unitss of prod produc ucti tion on (b). (b).... ...... ...... ...... ...... ...... ..... 9,60 9,605 5 9,32 9,320 0 Cost Cost per per equiv equivale alent nt unit unit (a) (a) ÷ (b).. (b)..... ...... ....... ......... .......... ..... $11.75 $11.75 $15.3 $15.34 4

Total

$27.10 $27.10

Units transferred out: Cost Cost in begin beginnin ning g inven invento tory. ry.... ...... ....... ....... ...... ....... ........ ......... ..... $9,50 $9,500 0 Cost to complete the units in beginning inventory: Equivalent units of production required to comp mple lete te the the beginn inning inv invento ntory.. ry.... .... .... .... .... .... .... .... 225 Cost Cost per per equiv equivale alent nt unit.. unit..... ...... ....... ........ ......... .......... ......... ......... ....... $11.75 $11.75 Cost to complete the units in beginning inven inventor tory.. y..... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ....... .... $2,64 $2,645 5

13,00 13,001 1

$4,10 $4,100 0 $ 13,60 13,600 0

675 $15.3 $15.34 4 $10,3 $10,357 57

Cost of units started and completed this period: Unit Unitss star starte ted d and and comp comple lete ted d this this peri period od.. .... ..... ...... ..... .. Cost Cost per per equiv equivale alent nt unit.. unit..... ...... ....... ........ ......... .......... ......... ......... ....... Cost Cost of units units starte started d and and comple complete ted d this this period period Cost of units transferred out..............................

7,70 7,700 0 $11.75 $11.75 $90,5 $90,508 08

7,70 7,700 0 $15.3 $15.34 4 $118 $118,14 ,144 4 208,65 208,652 2 $235,253

Use the following to answer questions 166-167: (Appendix 4A) Malmedy Company uses the FIFO method in its process costing system. The following data pertain to operations in the first processing department for a recent month: Work in process, beginning: Uni Units in proce ocess.... ...... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Perc Percen entt com compl plet etee wit with h res respe pect ct to mate materi rial als. s... .... .... .... .... .... .... .... .... .... .... .. Perc Percen entt com compl plet etee wit with h resp respec ectt to to con conve vers rsio ion. n... .... .... .... .... .... ..... ...... ..... Costs in the beginning inventory: Materi Material alss cost. cost..... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ....... .... Conv Convers ersio ion n cost. cost.... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ......... .......... .......... .......... ..... Units Units starte started d into into produ producti ction on during during the the month. month..... ....... ....... ......... ........ ... Unit Unitss comp comple lete ted d and and tran transf sfer erre red d out out duri during ng the the mon month th...... ........ .. Costs added to production during the month: Material Materialss cost....... cost............. ............. .............. .............. ............. ............. .............. .............. ............... ........ Conversion cost................................................................. Work in process, ending: Unit Unitss in proce process ss.. .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...... ... Perc Percen entt com compl plet etee wit with h res respe pect ct to mate materi rial als. s... .... .... .... .... .... .... .... .... .... .... .. Perc Percen entt com compl plet etee wit with h resp respec ectt to to con conve vers rsio ion. n... .... .... .... .... .... ..... ...... .....

? 75% 75% 50% 50% $2,30 $2,300 0 $3,60 $3,600 0 25,20 25,200 0 24,0 24,000 00 $98,750 $98,750 $220,50 0 2,00 2,000 0 80% 80% 45% 45%

166. How many units were in the the beginning work work in process inventory? inventory? A) 600 units B) 1,000 units C) 800 units D) 1,400 units Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 5 Level: Medium Solution: + Work Work in in pro proce cess ss,, endi ending ng... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... .. + Unit Unitss com compl plet eted ed and and tra trans nsfe ferr rred ed out out dur durin ing g the the mo mont nth..... h.....

2,00 2,000 0 24,0 24,000 00

− Unit Unitss start started ed into into prod produc ucti tion on duri during ng the the month month... ...... ...... ...... ...... ..... .. = Work Work in proc proces ess, s, begi beginn nnin ing. g... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ...... ...... ...... ...... ...... ..... ..

25,2 25,200 00 800 800

167. What was the cost per equivalen equivalentt unit for materials materials during the month? month? A) $3.95 B) $4.50 C) $2.00 D) $5.00 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Hard Solution: To com omp plet lete be beginni nning wor work in proc rocess (80 (800 uni units × 25% 25%)... )...... ..... Units started and completed during the period (25,200 units start started ed − 2,000 2,000 units units in endin ending g inven inventor tory) y).... ....... ....... ....... ...... ....... ....... ....... ....... ... Endi Ending ng work work in proc proces esss (2, (2,00 000 0 uni units ts × 80% 80% comp comple lete te).. )..... ...... ...... ...... ... Equiv Equival alent ent units units of produ producti ction. on.... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ........ ......... .......... .....

200 23,20 23,200 0 1,60 1,600 0 25,00 25,000 0

Cost per Equivalent Unit Cost Cost added added during during the the period period (a)... (a)....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ........ ......... .... Equiv Equival alent ent units units of produ producti ction on (b)... (b)...... ....... ....... ....... ....... ...... ........ .......... .......... ......... ........ .... Cost Cost per per equ equiv ival alen entt unit unit (a) (a) ÷ (b). (b)... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ...... ...... ...... ...... .....

$98,7 $98,750 50 25,00 25,000 0 $3.9 $3.95 5

Use the following to answer questions 168-169: (Appendix 4A) Quochang Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Beginning work in process inventory: Uni Units in beginn inning work work in pro proccess in invent entory.. ry.... .... .... .... .... .... .. Materi Material alss costs costs... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ........ .......... .......... ..... Conv Convers ersio ion n costs costs... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ........ ....... Perc Percen entt comp comple lete te with with resp respec ectt to mate materi rial als. s... .... .... .... .... .... ..... ..... .. Perc Percen entt comp comple lete te with with resp respec ectt to conv conver ersi sion on.. .... ..... ...... ...... ..... .. Unit Unitss sta start rted ed into into prod produc ucti tion on duri during ng the the mo mont nth. h.... ..... ..... ...... ...... ... Materials costs costs added during the month.......................... month........................ .. Conversion Conversion costs added during the month....................... Ending work in process inventory: Uni Units in ending ing wo work in pr proce ocess inv inveentory. ory... .... .... .... .... .... .... .... .... .. Perc Percen entt comp comple lete te with with resp respec ectt to mate materi rial als. s... .... .... .... .... .... ..... ..... .. Perc Percen entt comp comple lete te with with resp respec ectt to conv conver ersi sion on.. .... ..... ...... ...... ..... ..

400 $6,90 $6,900 0 $6,90 $6,900 0 60% 60% 35% 35% 5,70 5,700 0 $142,80 0 $242,80 0 900 70% 70% 45% 45%


168. How many units were started started AND completed completed during the month month in the first processing processing department? A) 5,200 B) 4,800 C) 6,100 D) 5,700 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 5 Level: Medium Solution:

+ + − =

To solve for units transferred: Work Work in proc proces ess, s, begi beginn nnin ing. g... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Unit Unitss star starte ted d int into o pro produ duct ctio ion n dur durin ing g the the mo mont nth. h.... ...... ...... ...... ...... ..... Work Work in proc proces ess, s, endi ending ng... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... .. Unit Unitss com compl plet eted ed and and tra trans nsfe ferr rred ed out out dur durin ing g the the mo mont nth..... h.....

400 400 5,70 5,700 0 900 900 5,20 5,200 0

Since there were 400 units in beginning work in process, these were not started AND completed, so the 400 should be subtracted from the total units completed and transferred out during the month (5,200 – 400 = 4,800) to arrive at the total units which were both started and completed during the month.

169. The cost per equivalent equivalent unit for conversion conversion costs for the first department department for the month is closest to: A) $46.69 B) $46.65 C) $44.43 D) $49.29 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Medium Solution: Conversion To complete beginning work in process (400 units × 65% comp comple lete te). )... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ..... .. Units started and completed during the period (5,700 units star starte ted d − 900 900 uni units ts in endi ending ng inve invent ntor ory) y).. ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ..... Endi Ending ng work work in proc proces esss (900 (900 unit unitss × 45% 45% comp comple lete te). )... .... .... .... .... .... .... .... .. Equi Equiva vale lent nt unit unitss of produ product ctio ion. n... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... .....

260 260 4,80 4,800 0 405 405 5,46 5,465 5


Conversion Cost Cost added added during during the the period period (a)........ (a)............... ............. ............. .............. ............. .............. ........ $242,80 $242,800 0 Equi Equiva vale lent nt uni units ts of of prod produc ucti tion on (b) (b).. .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ..... 5,46 5,465 5 Cost Cost per per equiv equival alent ent unit unit (a) (a) ÷ (b)... (b)....... ....... ...... ....... ....... ....... ....... ...... ....... ......... ......... ......... ..... $44.43 $44.43

Use the following to answer questions 170-171: (Appendix 4A) Noguti Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Beginning work in process inventory: Uni Units in beginn inning work work in pro proccess in invent entory.. ry.... .... .... .... .... .... .. Materi Material alss costs costs... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ........ .......... .......... ..... Conv Convers ersio ion n costs costs... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ........ ....... Perc Percen entt comp comple lete te with with resp respec ectt to mate materi rial als. s... .... .... .... .... .... ..... ..... .. Perc Percen entt comp comple lete te with with resp respec ectt to conv conver ersi sion on.. .... ..... ...... ...... ..... .. Unit Unitss sta start rted ed into into prod produc ucti tion on duri during ng the the mo mont nth. h.... ..... ..... ...... ...... ... Units transferred to the next department during the mont mo nth. h... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...... ... Mater Material ialss costs costs added added duri during ng the the month. month.... ....... ........ ......... .......... ......... .... Conversion costs added during the month Ending work in process inventory:............................ inventory:.................................. ...... Uni Units in ending ing wo work in pr proce ocess inv inveentory. ory... .... .... .... .... .... .... .... .... .. Perc Percen entt comp comple lete te with with resp respec ectt to mate materi rial als. s... .... .... .... .... .... ..... ..... .. Perc Percen entt comp comple lete te with with resp respec ectt to conv conver ersi sion on.. .... ..... ...... ...... ..... ..

200 $1,80 $1,800 0 $2,10 $2,100 0 70% 70% 40% 40% 7,30 7,300 0 7,00 7,000 0 $82,70 $82,700 0 $174,60 0 500 50% 50% 45% 45%


170. What are the equivalent equivalent units for for materials for the the month in the first processing processing department? A) 250 B) 7,500 C) 7,110 D) 6,800 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 5 Level: Medium Solution: Equivalent Equivalent Units of Production Production

Materials To complete beginning work in process (200 units × 30% complete) Units started and completed during the period (7,300 units star starte ted d − 500 500 unit unitss in in endi ending ng inve invent ntor ory) y)... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ..... Endin nding g work work in proc proces esss (500 (500 unit unitss × 50% 50% comp comple lete te). )... ..... ...... ...... ...... ..... Equi Equiva vale lent nt uni units ts of of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...

60 6,80 6,800 0 250 250 7,11 7,110 0

171. The cost per equivalent equivalent unit for conversion conversion costs for the first department department for the month is closest to: A) $26.25 B) $25.66 C) $24.44 D) $24.94 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Medium Solution: Equivalent Equivalent Units of Production Production

Conversion To complete beginning work in process (200 units × 60% comp comple lete te). ).... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ..... Units started and completed during the period (7,300 units star starte ted d − 500 500 unit unitss in in end endin ing g inve invent ntor ory) y)... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ...... ... Endin nding g work work in proc proces esss (500 (500 unit unitss × 45% 45% comp comple lete te). )... .... .... .... .... .... .... .... .... Equi Equiva vale lent nt units units of produ product ctio ion. n... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...

120 120 6,80 6,800 0 225 225 7,14 7,145 5


Conversion Cost Cost added added during during the peri period od (a)...... (a)............. ............. ............. .............. ............. ............... ........... .. $174,600 $174,600 Equi Equiva vale lent nt uni units ts of of prod produc ucti tion on (b) (b).. ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ... 7,14 7,145 5 Cost Cost per per equi equiva valen lentt unit unit (a) (a) ÷ (b).. (b)..... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ......... ......... ...... $24.44 $24.44

Use the following to answer questions 172-173: (Appendix 4A) Outinki Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Beginning work in process inventory: Uni Units in beginn inning work work in pro proccess in invent entory.. ry.... .... .... .... .... .... .. Materi Material alss costs costs... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ........ .......... .......... ..... Conv Convers ersio ion n costs costs... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ........ ....... Perc Percen entt comp comple lete te with with resp respec ectt to mate materi rial als. s... .... .... .... .... .... ..... ..... .. Perc Percen entt comp comple lete te with with resp respec ectt to conv conver ersi sion on.. .... ..... ...... ...... ..... .. Unit Unitss sta start rted ed into into prod produc ucti tion on duri during ng the the mo mont nth. h.... ..... ..... ...... ...... ... Units transferred to the next department during the mont mo nth. h... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...... ... Mater Material ialss costs costs added added duri during ng the the month. month.... ....... ........ ......... .......... ......... .... Conversion Conversion costs added during the month....................... Ending work in process inventory: Unit Unitss in endi ending ng work work in proc proces esss inve invent ntor ory. y... .... ..... ..... ..... ...... ...... ... Perc Percen entt comp comple lete te with with resp respec ectt to mate materi rial als. s... .... .... .... .... .... ..... ..... .. Perc Percen entt comp comple lete te with with resp respec ectt to conv conver ersi sion on.. .... ..... ...... ...... ..... ..

700 $8,60 $8,600 0 $8,80 $8,800 0 75% 75% 45% 45% 7,80 7,800 0 6,80 6,800 0 $97,60 $97,600 0 $172,90 0 1,70 1,700 0 90% 90% 25% 25%


172. What are the equivalent equivalent units for conversion conversion costs for the month in the first processing processing department? A) 6,910 B) 425 C) 8,500 D) 6,100 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 5 Level: Medium Solution: Equivalent Equivalent Units of Production Production

Conversion To complete beginning work in process (700 units × 55% comp comple lete te). ).... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ..... Units started and completed during the period (7,800 units star starte ted d − 1,70 1,700 0 uni units ts in endi ending ng inve invent ntor ory) y).. .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ... Endin nding g work work in proc proces esss (1,7 (1,700 00 unit unitss × 25% 25% comp comple lete te). )... ..... ...... ...... ...... ..... Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ..... ..

385 385 6,10 6,100 0 425 425 6,91 6,910 0

173. The cost per equivalent equivalent unit unit for materials for the month month in the first processing processing department is closest to: A) $14.35 B) $12.51 C) $16.38 D) $11.48 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Medium Solution: Equivalent Equivalent Units of Production Production

Materials To complete beginning work in process (700 units × 25% comp comple lete te). ).... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ..... .. Units started and completed during the period (7,800 units started − 1,70 1,700 0 uni units ts in endi ending ng inve invent ntor ory) y).. .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ..... Endi Ending ng work work in proc proces esss (1,7 (1,700 00 unit unitss × 90% 90% com compl plet ete) e)... ...... ...... ...... ...... ...... ... Equi Equiva vale lent nt unit unitss of prod produc ucti tion on.. .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ...... ...... ...

175 175 6,10 6,100 0 1,53 1,530 0 7,80 7,805 5


Cost Cost added added during during the period period (a).... (a)....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ........ ....... Equi Equiva vale lent nt unit unitss of prod produc ucti tion on (b). (b).... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ..... .. Cost Cost per per equi equiva valen lentt unit unit (a) (a) ÷ (b).. (b)..... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ........ ......... ......... ....

Materials $97,60 $97,600 0 7,80 7,805 5 $12.5 $12.50 0

Use the following to answer questions 174-175: (Appendix 4A) Sumptuous Beer Company manufactures beer in two departments, Fermenting and Bottling. In the Fermenting Department, ingredients are placed in a large vat and fermented for three days. The beer is then transferred over to Bottling where it is further purified and bottled. Sumptuous uses a FIFO process cost system to collect costs in both departments. On May 1, the Fermenting Department had 32,000 gallons (units) in process. These gallons were 100% complete with respect to materials (ingredients) and 80% complete with respect to conversion cost. During May, Fermenting started an additional 460,000 gallons into production. On May 31, Fermenting had 18,000 gallons in work in process. These gallons were 100% complete with respect to materials and 60% complete with respect to conversion cost.

174. What are the Fermenting Fermenting Department's equivalent equivalent units (gallons) (gallons) of production production related to materials for May? A) 442,000 B) 460,000 C) 474,000 D) 492,000 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 5 Level: Hard Solution: Equivalent Equivalent Units of Production Production

Materials To complete beginning work in process (32,000 units × 0% comp comple lete te). )... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Units started and completed during the period (460,000 units starte started d − 18,000 18,000 unit unitss in ending ending inve invent ntory ory).. )..... ....... ....... ....... ......... .......... .......... ........ ... Endi Ending ng work work in proce process ss (18,00 (18,000 0 units units × 100% 100% comple complete te).......... )............... ..... Equi Equiva valen lentt units units of produc producti tion. on.... ....... ....... ....... ....... ...... ....... ....... ...... ....... ......... .......... .......... .......... ....... ..

0 442,0 442,000 00 18,00 18,000 0 460,0 460,000 00

175. What are the Fermenting Fermenting Department's equivalent equivalent units (gallons) (gallons) of production production related to conversion costs for May? A) 459,200 B) 474,800 C) 477,200 D) 478,400 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 5 Level: Hard Solution: Equivalent Equivalent Units of Production Production

Conversion To complete beginning work in process (32,000 units × 20% comp comple lete te). ).... ..... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ..... .. Units started and completed during the period (460,000 units starte started d − 18,00 18,000 0 units units in endin ending g invent inventory ory).. )..... ....... ....... ....... ....... ...... ....... ....... ....... .... Endi Ending ng work work in in proc process ess (18,00 (18,000 0 unit unitss × 60% 60% comp complet lete). e)..... ......... .......... ....... Equi Equiva valen lentt units units of produc producti tion. on.... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ........ ........ ...

6,40 6,400 0 442,0 442,000 00 10,80 10,800 0 459,2 459,200 00

Use the following to answer questions 176-177: (Appendix 4A) Lahania Corporation uses a FIFO process costing system to collect costs related to production. The following selected information relates to production for April: Equivalent units: Materials Conversion Units in process, April 1........................................ 0 2,500 Units st started an and co completed du during Ap April.............. 32,000 32,000 Units Units in proce process, ss, April April 31.... 31....... ....... ....... ...... ....... ........ ......... .......... ........ ... 8,000 8,000 1,500 1,500 Total equivalent units... ............ ............. ...... ........ ...... .... .... ........ ...... .... .. 40,000 36,000 Mate Materi rial alss Conv Conver ersi sion on Cost Costss in in wor work k in in pro proce cess ss on Apri Aprill 1.. 1.... .... .... .... .... ..... ...... ...... ..... $ 50, 50,40 400 0 $126 $126,0 ,000 00 Costs Costs added added to product production ion during during April.............. April................ .. 169,600 169,600 529,200 529,200 Tota Totall cost cost... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ... $220 $220,0 ,000 00 $655 $655,2 ,200 00 All materials at Lahania are added at the beginning of the production process. Conversion costs are incurred uniformly over the production process. During April, Lahania completed 44,000 units.

176. What total amount amount of cost should be assigned assigned to the units units completed completed and transferred transferred out during April? A) $642,830 B) $819,230 C) $833,360 D) $1,009,760 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6,7 Level: Hard Solution: Equivalent Equivalent Units of Production Production

MaterialsConversion To comp comple lete te begi beginn nnin ing g work work in proc proces ess. s... .... .... .... .... .... .... .... .... .... .... .... .... .... .. 0 2,50 2,500 0 Units Units started started and complet completed ed during during the period... period................... ................ 32,000 32,000 Ending Ending work in process. process........ .............. ............. ................... ................................. .................... 8,000 8,000 Equiva Equivalent lent units units of product production. ion........ .............. ............. ............. .............. ............. ......... ... 40,000 40,000

32,000 32,000 1,500 1,500 36,000 36,000


MaterialsConversion Cost added during the period (a)............................. (a)..................... ................ ........... ... $169,600 $529,200 Equiva Equivalent lent units units of product production ion (b)....... (b).............. ............. ................. .................. ....... 40,000 40,000 36,000 36,000 Cost Cost per equival equivalent ent unit (a) ÷ (b)....... (b).............. .............. ............. ............... ............. .... $4.24 $4.24 $14.70 $14.70 Units transferred out: Cost in beginning beginning inventory............................................... inventory................................................. $50,400 $126,000 Cost to complete the units in beginning inventory: Equivalent units of production required to complete the begi beginn nnin ing g inve invent ntor ory. y... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... 0 2,50 2,500 0 Cost Cost per equival equivalent ent unit...... unit............. .............. ............. ............. ................. ..................... ........... $4.24 $4.24 $14.70 $14.70 Cost Cost to comp comple lete te the the unit unitss in begi beginn nnin ing g inve invent ntor ory. y... .... ..... ...... ..... .. $0 $36, $36,75 750 0 Cost of units started and completed this period: Units Units started started and complet completed ed this period... period.......... ............. ............. .............. ....... 32,000 32,000 32,000 32,000 Cost Cost per equival equivalent ent unit...... unit............. .............. ............. ............. ................. ..................... ........... $4.24 $4.24 $14.70 $14.70 Cost of units units started started and complete completed d this period.................. $135,680 $470,400 Cost Cost of of units units transfer transferred red out........ out.............. ................... ................................. .................... $186,08 $186,080 0 $633,150 $633,150 Total cost of units transferred out = $186,080 + $633,150 =$819,230.

177. What total amount amount of cost should be assigned assigned to the units units in work in process process on April 30? A) $55,970 B) $71,300 C) $151,520 D) $179,930 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6,7 Level: Medium Solution: Equivalent Units of Production: MaterialsConversion To comp mpllete begin ginning ing work in pro process.. ss.... .... .... .... .... .... .... .... .... 0 2,500 ,500 Units Units started started and complet completed ed during during the period... period......... ...... Endi Ending ng work work in proce process. ss..... ....... ...... ....... ....... ...... ....... ......... .......... .......... ......... .... Equiva Equivalent lent units units of product production. ion........ ....................... ......................... .........

32,000 32,000 8,000 8,000 40,000 40,000

32,000 32,000 1,500 1,500 36,000 36,000

Cost per Equivalent Unit: Mater terial ialsCon sConversi rsion Total Cost added during the period (a)............................ (a).................... .......... .. $169,600 $529,200 Equiva Equivalent lent units units of product production ion (b)....... (b).............. ............. .............. ........ 40,000 40,000 36,000 36,000 Cost Cost per per equi equival valen entt unit unit (a) ÷ (b).. (b)....... .......... .......... .......... .......... ....... .. $4.24 $4.24 $14.7 $14.70 0 $18.9 $18.94 4 Costs of Ending Work in Process Inventory and Units Transferred Out: MaterialsConversion Ending work in process inventory: Equi Equiva valen lentt units units of produc producti tion. on.... ....... ........ ........ ......... .......... .......... ....... .. 8,000 8,000 1,500 1,500 Cost Cost per per equi equival valen entt unit.. unit..... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ......... ..... $4.24 $4.24 $14.7 $14.70 0 Cost Cost of ending ending work in process process invento inventory.... ry................ ............ $33,920 $33,920 $22,050 $22,050 $55,970 $55,970

Use the following to answer questions 178-179: (Appendix 4A) The following information relates to the Cutting Department of Kittina Corporation for the month of February. Kittina uses a FIFO process costing system. All materials at Kittina are added at the beginning of the production process.

Work in process, February 1.......... Uni Units sta started ted into prod roductio tion... n...... ...... ... Work in process, February 28........

Number of units 18,000 160,00 ,000 7,000

Percentage complete with respect to conversion 10% 40%

On February 1, the work in process inventory account contained $55,620 of material cost and $123,120 of conversion cost. Cost per equivalent unit for February was $3.10 for materials and $7.50 for conversion costs.

178. What total amount amount of cost should be assigned assigned to the units units completed completed and transferred transferred out during February? A) $1,743,300 B) $1,812,600 C) $1,814,040 D) $1,922,040 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 7 Level: Hard Solution: Equivalent Equivalent Units of Production Production

Materials Materials Conversion Conversion To complete beginning work in process (materials: 18,000 units × 0% complete; conversion: 18,000 units × 90% complete)... )..... .... 0 Units started and completed during the period (160,000 units started − 7,000 units in ending inventor inventory)... y).......... .............. ............. ............. ................... ........................... ............... 153,000 153,000 Ending work in process (materials: 7,000 units × 100% complete; conversion: 7,000 units × 40% complete complete)..... )............ ............. ............. .............. .............. ............. ........... ..... 7,000 7,000 Equiva Equivalent lent units units of producti production... on.......... .............. .................. ............. 160,000 160,000

16,200

153,000 153,000

2,800 2,800 172,000 172,000


Materials Materials Conversion Conversion Cost added added during during the period period (a).......................... (a).......................... $496,000$1,290,000 Equiva Equivalent lent units units of producti production on (b).............. (b)....................... ......... 160,000 160,000 172,000 172,000 Cost Cost per per equiv equivale alent nt unit unit (a) (a) ÷ (b).. (b)..... ...... ....... ........ ......... ......... .... $3.10 $3.10 $7.50 $7.50

$10.6 $10.60 0

Units transferred out: Cost Cost in beginni beginning ng invento inventory... ry.......... ............. ............. ................. .......... $55,620 $55,620 $123,12 $123,120 0 $ 178,740 Cost to complete the units in beginning inventory: Equivalent units of production required to complete the beginning inventory.... ....... ...... ........ ...... .... .... 0 16,200 Cost Cost per per equiv equivale alent nt unit.. unit..... ...... ....... ....... ....... ......... .......... .......... ......... ...... $3.10 $3.10 $7.50 $7.50 Cost to complete the units in beginning inve invent ntor ory. y... .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ... $0 $121 $121,5 ,500 00 121, 121,50 500 0

Cost of units started and completed this period: Units Units started started and complet completed ed this period.. period.......... ............. ..... 153,000 153,000 153,000 153,000 Cost Cost per per equiv equivale alent nt unit.. unit..... ...... ....... ....... ....... ......... .......... .......... ......... ...... $3.10 $3.10 $7.50 $7.50 Cost of units started and completed completed this this period.. period.. . $474,300$1,147,500 1,621,800 Cost of units transferred out................................. $1,922,040 179. What total amount amount of cost should be assigned assigned to the units units in work in process process on February 28? A) $29,680 B) $42,700 C) $44,520 D) $53,200 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 7 Level: Hard Solution: Equivalent Equivalent Units of Production Production

Materials Conversion Conversion To complete beginning work in process (materials: 18,000 units × 0% complete; conversion: 18,000 units × 90% 90% comp comple lete te). )... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... 0 Units started and completed during the period (160,000 units units started started − 7,000 7,000 units units in ending ending inventor inventory)............ y)............ 153,000 153,000 Ending work in process (materials: 7,000 units × 100% complete complete;; convers conversion ion:: 7,000 7,000 units units × 40% complet complete)..... e)..... 7,000 7,000 Equiva Equivalent lent units units of producti production... on.......... .............. ...................... ......................... .......... 160,000 160,000

16,2 16,200 00 153,000 153,000 2,800 2,800 172,000 172,000


Materials Conversion Conversion Cost added during the period period (a)................................... (a)........................... ............ .... $496,000$1,290,000 Equiva Equivalent lent units units of producti production on (b)........ (b)............... .............. ............. .............. .......... 160,000 160,000 172,000 172,000 Cost Cost per per equiv equivale alent nt unit unit (a) (a) ÷ (b).. (b)..... ...... ....... ......... .......... .......... .......... .......... ....... $3.10 $3.10 $7.50 $7.50 Mat Materia rialsCon lsConversio rsion n Ending work in process inventory: inventory: Equi Equiva valen lentt units units of produc producti tion. on.... ....... ....... ....... ....... ....... ......... .......... .......... .......... ..... 7,000 7,000 Cost Cost per per equiv equivale alent nt unit.. unit..... ...... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ........ .... $3.10 $3.10 Cost Cost of ending ending work in process process inventor inventory...... y............ ................... ............. $21,700 $21,700

Total

2,800 2,800 $7.50 $7.50 $21,000 $21,000 $42,70 $42,700 0

Use the following to answer questions 180-181: (Appendix 4B) Zorn Company has a Custodial Services department which services the company's Maintenance department and its two operating departments. Costs of the Custodial Services department are allocated to other departments on the basis of square feet of space occupied. The amount of space occupied by each department is given below: Custod todial Se Service ices.... ...... .... .... .... .... 500 500 squ square fe feet Maint Mainten enanc ance.. e..... ....... ....... ...... ....... ........ .... 2,000 2,000 square square feet feet Operat Operatin ing g Depar Departme tment nt 1.. 1.. .. 10,00 10,000 0 squa square re fee feett Oper Operat atin ing g Dep Depar artm tmen entt 2.. 2.. .. 8,00 8,000 0 squa square re feet feet Budgeted costs in the Custodial Services department total $36,000. 180. If Zorn Company uses the step-down step-down method and allocates allocates the Custodial Custodial Services costs first, the amount of this cost allocated to the Maintenance department would be closest to: A) $3,512 B) $3,600 C) $9,000 D) $0 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 9 Level: Medium Solution: Department: Square Feet Pe Percent Maint intenan nance... e..... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. 2,00 ,000 10% Ope Operatin ting Depa Deparrtmen ment 1.... ...... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... 10,00 ,000 50% Oper Operat atin ing g Depa Depart rtme ment nt 2... 2..... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ..... .. 8,00 8,000 0 40% 40% Total otal squa square re feet feet.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... 20,0 20,000 00 100% 100% Tota Totall Cust Custod odia iall Serv Servic ices es cos costs ts... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ..... .. × % to to Ma Mainte ntenance nce.... ...... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Cust Custod odia iall Serv Servic ices es cost costss allo alloca cate ted d to Main Mainte tena nanc nce. e..... ........ ....

$36, $36,00 000 0 10% $3,6 $3,600 00

181. The amount of Custodial Custodial Services department department cost allocated allocated to Operating Department Department 2 under the direct method would be closest to: A) $14,400 B) $14,049 C) $16,000 D) $9,000 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Medium Solution: Department: Square Feet Percent Operating Dep Department 1.. 1.............................. 10,000 56% Oper Operat atin ing g Depa Depart rtme ment nt 2... 2..... .... .... .... .... .... .... .... .... .... .... .... .... .... 8,00 8,000 0 44% 44% Tota otal square fee feet... t..... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... 18,00 ,000 100% Tota Totall Cust Custod odia iall Serv Servic ices es cost costs. s.... ...... ...... ...... ...... ....... .... × % to Operating Department 2.................. Custodial Services costs allocated to Oper Operat atin ing g Depa Depart rtme ment nt 2... 2..... .... .... .... .... .... .... .... .... .... .... ....

$36, $36,00 000 0 44% $16, $16,00 000 0

Use the following to answer questions 182-183: (Appendix 4B) Kahuna Financial Services Corporation has two service departments and two operating departments. Selected information on the four departments for last year are as follows:

CPU Hours Service departments: Data Processing.............. Cafeteria......................... Operating departments: Investments..................... Loans..............................

– 1,000 15,000 9,000

Number of Employees 15 – 114 171

Kahuna allocates Data Processing cost first on the basis of CPU hours. Kahuna then allocates Cafeteria cost on the basis of the number of employees. Operating costs in Data Processing for last year were $870,000. Operating costs in Cafeteria for last year were $200,000. No distinction is made between variable and fixed costs.

182. If service department department costs are are allocated using using the direct method, method, how much service service cost will be allocated from Data Processing to Investments? A) $435,000 B) $522,000 C) $528,000 D) $543,750 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Medium Solution: Service Department Data Proc Proces essi sing ng Cafe Cafete teri riaa Departmental costs befor beforee alloc allocati ation on..... ..... Allocation: Data processing costs (15/24, 9/24)*......... Cafeteria costs (114/285, 171/285)**............. Total costs after allocation............... allocation.................

Operating Department Investments Loans

$870, $870,00 000 0 $200,0 $200,000 00

(870,000)

(200,000) $

0 $

Total $1,07 $1,070,0 0,000 00

$543,750 $326,250

0

80,000 120,000

0

0 $623,750 $446,250 $1,070,000 $1,070,000

*Data processing costs are allocated on the basis of CPU hours: 15 + 9 = 24. **Cafeteria costs are allocated on the basis of the number of employees: 114 + 171 = 285.

183. If service department department costs are are allocated using using the step-down step-down method, how much much service cost will be allocated from Data Processing to Loans? A) $313,200 B) $316,800 C) $326,250 D) $330,000 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 9 Level: Medium Solution: Service Department Data Processi Processing ng Cafeter Cafeteria ia

Operating Department Investments Loans

Total

Departmental costs before before allocati allocation... on............. .......... $870,00 $870,000 0 $200,00 $200,000 0 $1,070,0 $1,070,000 00 Allocation: Data processing costs (1/25 (1/25,, 15/25 15/25,, 9/25) 9/25)*.. *....... ....... (870,0 (870,000) 00) 34,80 34,800 0 $522,0 $522,000 00 $313, $313,20 200 0 0 Cafeteria costs (114/285, 171/285)**..................... (234,800) 93,920 140,880 0 Total costs after allocation................... allocation........................ ..... $ 0$ 0 $615,920 $454,080 $1,070,000 *Data processing costs are allocated on the basis of CPU hours: 15 + 9 + 1 = 25. **Cafeteria costs are allocated on the basis of the number of employees: 114 + 171 = 285. Use the following to answer questions 184-185: (Appendix 4B) Greek Corporation has two service departments (Sigma and Delta) that provide service to each other and to two operating departments (Chi and Omega). Sigma provides 25% of its service to Delta, 15% of its service to Chi, and 60% of its service to Omega. Delta provides 8% of its service to Sigma, 69% of its service to Chi, and 23% of its service to Omega. Operating costs in Sigma are $90,000. Operating costs in Delta are $50,000. Cost allocations are made starting with Sigma. No distinction is made between variable and fixed costs.

184. If service department department costs are are allocated using using the direct method, method, what is the total total amount of service cost that will be allocated to Omega? A) $84,500 B) $70,675 C) $72,125 D) $73,075 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Medium Solution: Service Department Sigma Delta Departmental costs before allocation Allocation: Sigma costs (15/75, 60/75)* Delta costs (69/92, 23/92)** Tota Totall cost costss after after alloc allocati ation on

Operating Department Chi Omega

$90,000 $50,000 (90,000) $

Total $140,000

$18,000 $72,000 0 (50,000) 37,500 12,500 0 0 $ 0 $55,50 $55,500 0 $84,5 $84,500 00 $140,0 $140,000 00

*Sigma department costs allocation: 15% + 60% = 75%. **Delta department costs allocation: 69% + 23% = 92%.

185. If service department department costs are allocated allocated using the step-down method, method, what is the total amount of service cost that will be allocated to Chi? A) $48,000 B) $67,875 C) $63,525 D) $64,125 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 9 Level: Medium Solution: Service Department Sigma Delta

Operating Department Chi Omega

Total

Departmental costs before allocati allocation... on.......... ............. ............. ................ ......... $90,000 $90,000 $50,000 $50,000 $140,000 $140,000 Allocation: Sigma costs (25%, 15%, 60%)* 60%)*... ....... ....... ...... ....... ....... ...... ....... ........ ......... ....... (90,00 (90,000) 0) 22,50 22,500 0 $13,5 $13,500 00 $54,00 $54,000 0 0 Delta costs (69/92, 23/92)**. . . (72,500) 54 5 4,375 18,125 0 Total costs after allocation.. allocation.... .... .. $ 0 $ 0 $67,875 $72,125 $140,000 *Sigma department costs allocation: 15% + 60% + 25% = 100%. **Delta department costs allocation: 69% + 23% = 92%. Use the following to answer questions 186-187: (Appendix 4B) Seidell Corporation has two service departments, Administrative and Facilities, and two operating departments, Assembly and Customer Solutions.

Departmental costs. .. .. Employee hours...... .. Space occupied...... ...

Service De Department Administrative Facilities $43,560 $54,720 4,000 2,000 1,000 2,000

Operating De Department Customer Assembly Solutions $561,960 $253,030 27,000 17,000 37,000 1,000

The company uses the direct method to allocate service department costs to operating departments. Administrative costs are allocated on the basis of employee hours and Facilities costs are allocated on the basis of space occupied.

186. The total amount amount of Administrative Administrative Department Department cost allocated allocated to the Assembly Department is closest to: A) $26,730 B) $25,568 C) $42,414 D) $23,522 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Easy Solution: Service Department

Operating Department Customer Admi Admin. n. Faci Facili liti ties es Asse Assemb mbly ly Solutions

Total

Departmental costs before allocation.......... allocation.................. .............. ........ $43,560 $54,720 $561,960 $253,030 $253,030 $913,270 Allocation: Admin. costs (27/44, 17/44)*............................. (43,560) 26,730 16,830 0 Facilities costs (37/38, 1/38)**............................. (54,720) 53,280 1,440 0 Total costs after allocation allocation $ 0 $ 0 $641,970 $271,300 $913,270 *Administration costs are allocated on the basis of employee hours: 27 + 17 = 44. **Facilities costs are allocated on the basis of space occupied: 37 + 1 = 38.

187. The total Customer Customer Solutions Solutions Department Department cost after the allocations allocations of service service department costs is closest to: A) $269,175 B) $254,470 C) $270,593 D) $271,300 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Easy Solution: Service Department

Operating Department Customer Admi Admin. n. Faci Facili liti ties es Asse Assemb mbly ly Solutions Departmental costs before allocation............. allocation..................... ............ .... $43,560 $54,720 $561,960 Allocation: Admin. costs (27/44, 17/44)*............................ (43,560) 26,730 Facilities costs (37/38, 1/38)**............................ (54,720) 53,280 Total costs after allocation. allocation. $ 0 $ 0 $641,970

Total

$253,030 $913,270

16,830

0

1,440 0 $271,300 $913,270

*Administrative costs are allocated on the basis of employee hours: 27 + 17 = 44. **Facilities costs are allocated on the basis of space occupied: 37 + 1 = 38.

Use the following to answer questions 188-189: (Appendix 4B) Maute Clinic has two service departments, Administrative and Support, and two operating departments, Adult Medicine and Pediatrics.

Departmental costs. . . Employee hours...... .. Space occupied...... ...

Service Department Administrative Support $23,600 $51,480 3,000 2,000 3,000 2,000

Operating Department Adult Medicine Pediatrics $259,690 $288,790 26,000 14,000 38,000 6,000

The clinic uses the direct method to allocate service department costs to operating departments. Administrative Department costs are allocated on the basis of employee hours and Support Department costs are allocated on the basis of space occupied in square feet.

188. The total amount amount of Administrative Administrative Department Department cost allocated allocated to the Adult Medicine Medicine Department is closest to: A) $13,636 B) $14,610 C) $20,382 D) $15,340 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Easy Solution: Service Department Admin. Support

Operating Department Adult Medicine Pediatrics

Total

Departmental costs before allocati allocation... on...................... ........................ ..... $23,600 $23,600 $51,480 $51,480 $259,690 $259,690 $288,790 $288,790 $623,560 $623,560 Allocation: Admin. costs (26/40, 14/40)*............................... (23,600) 15,340 8,260 0 Support costs (38/44, 6/44)**............................... (51,480) 44,460 7,020 0 Total costs after allocation. allocation. . $ 0 $ 0 $319,490 $304,070 $623,560 *Administration costs are allocated on the basis of employee hours: 26 + 14 = 40. **Support costs are allocated on the basis of space occupied: 38 + 6 = 44.

189. The total Pediatrics Pediatrics Department cost after after the allocations allocations of service department department costs is closest to: A) $302,436 B) $304,070 C) $304,136 D) $295,810 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Easy Solution: Service Department Admin. Support

Operating Department Adult Medicine Pediatrics

Total

Departmental costs before allocati allocation... on...................... ........................ ..... $23,600 $23,600 $51,480 $51,480 $259,690 $259,690 $288,790 $288,790 $623,560 $623,560 Allocation: Admin. costs (26/40, 14/40)*............................... (23,600) 15,340 8,260 0 Support costs (38/44, 6/44)**............................... (51,480) 44,460 7,020 0 Total costs after allocation. allocation. . $ 0 $ 0 $319,490 $304,070 $623,560 *Administration costs are allocated on the basis of employee hours: 26 + 14 = 40. **Support costs are allocated on the basis of space occupied: 38 + 6 = 44.

Use the following to answer questions 190-191: (Appendix 4B) Ockey Corporation uses the direct method to allocate service department costs to operating departments. The company has two service departments, Information Technology and Personnel, and two operating departments, Fabrication and Customization.

Departmental costs. .. .. Computer workstations.......... Employees................

Service Department Information Technolog logy Perso erson nnel $26,880 $21,525 37 34

18 13

Operating Department FabriCustomication zation $251,210 $447,000 43 73

37 32

Information Technology Department costs are allocated on the basis of computer workstations and Personnel Department costs are allocated on the basis of employees. 190. The total amount amount of Information Information Technology Technology Department Department cost allocated allocated to the two operating departments is closest to: A) $26,880 B) $15,929 C) $58,119 D) $21,943 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Easy Solution: All of the Information Technology Department cost will be allocated to the two operating departments.

191. The total Fabrication Fabrication Department Department cost after service department department allocations allocations is closest to: A) $270,110 B) $277,969 C) $280,623 D) $274,308 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Easy Solution: Operating Department

Service Department Info. Tech. Personnel Fabrication Custom. Departmental costs before allocation......................... allocation........................... $26,880 $21,525 Allocation: Info. Tech. costs (43/80, 37/80)*............................. (26,880) Personnel costs (73/105, 32/105)**......................... (21,525) Total costs after allocation allocation $ 0 $ 0

Total

$251,210 $447,000 $746,615

14,448

12,432

0

14 14,965 6,560 0 $280,623 $465,992 $746,615

*Information technology costs are allocated on the basis of number of computer workstations: 26 + 14 = 40. **Personnel costs are allocated on the basis of employees: 38 + 6 = 44.

Use the following to answer questions 192-193: (Appendix 4B) Romain Surgical Hospital uses the direct method to allocate service department costs to operating departments. The hospital has two service departments, Information Technology and Administration, and two operating departments, Surgery and Recovery.

Departmental co costs. .. .. Computer workstations.......... Employees................

Service De Department Information AdminiTechnology stration $25,956 $36,356 20 15

17 13

Operating De Department Surgery $563,640

Recovery $588,200

54 95

30 27

Information Technology Department costs are allocated on the basis of computer workstations and Administration Department costs are allocated on the basis of employees. 192. The total amount amount of Information Information Technology Technology Department Department cost allocated allocated to the two operating departments is closest to: A) $18,019 B) $109,015 C) $21,587 D) $25,956 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Easy Solution: All of the Information Technology Department cost will be allocated to the two operating departments.

193. The total Surgery Department Department cost after service service department department allocations is closest closest to: A) $598,249 B) $608,636 C) $602,727 D) $605,827 Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Easy Solution: Service Department Info. Tech. Admin.

Operating Department Surgery Recovery

Total

Departmental costs before allocation......................... allocation........................... $25,956 $36,356 $563,640 $588,200 $1,214,152 $1,214,152 Allocation: Info. Tech. costs (54/84, 30/84)*............................. (25,956) 16,686 9,270 0 Administration costs (95/122, 27/122)**........... (36,356) 28,310 8,046 0 Total costs after allocation allocation $ 0$ 0 $608,636 $605,516 $1,214,152 *Administration costs are allocated on the basis of computer workstations: 54 + 30 = 84. **Support costs are allocated on the basis of employees: 95 + 27 = 122.

Use the following to answer questions 194-195: (Appendix 4B) Strzelecki Corporation uses the step-down method to allocate service department costs to operating departments. The company has two service departments, Service Department A and Service Department B, and two operating departments, Operating Department X and Operating Department Y. Data concerning those departments follow: Service Department Service Service Department Department A B Departmental costs $37,800 $45,780 Allocation base A. . 5,000 1,000 Allocation base B... 5,000 2,000

Operating Department Operating Operating Department Department X Y $247,360 $304,330 29,000 15,000 39,000 3,000

Service Department A costs are allocated first on the basis of allocation base A and Service Department B costs are allocated second on the basis of allocation base B.

194. In the first step of the the allocation, allocation, the amount of Service Service Department Department A cost allocated allocated to the Operating Department X is closest to: A) $24,360 B) $21,924 C) $16,948 D) $24,914 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 9 Level: Easy Solution: Service Department Service Service Dept. A Dept. B Departmental costs before before allocati allocation... on............. .......... $37,800 $37,800 Allocation: Serv. Dept. A costs (1/45, 29/45, 15/45)*... ....... ...... ........ ...... .. (37,800) Serv. Dept. B costs (39/42, 3/42)**............... Total costs after allocation................... allocation........................ ..... $ 0

Operating Department Oper. Oper. Dept. X Dept.Y

Total

$45,780 $45,780 $247,36 $247,360 0 $304,330 $304,330 $635,270 $635,270

840

24,360

12,600

0

(46,620)

43,290

3,330

0

$

0 $315,010 $320,260 $635,270

*Service Department A costs are allocated on the basis of allocation base A: 1 + 29 + 15 = 45. **Service Department B costs are allocated on the basis of allocation base B: 39 + 3 = 42.

195. The total Operating Operating Department Department Y cost after allocations allocations is closest closest to: A) $320,486 B) $318,473 C) $320,260 D) $307,660 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 9 Level: Easy Solution: Service Department Service Service Dept. A Dept. B

Operating Department Oper. Oper. Dept. X Dept.Y

Total

Departmental costs before allocation.......... allocation.................. ................ .......... .. $37,800 $45,780 $247,360 $247,360 $304,330 $635,270 Allocation: Serv. Dept. A costs (1/45, 29/4 29/45, 5, 15/4 15/45) 5)* *.... ...... .... .... .... .... .... .... .... .... (37, (37,80 800) 0) 840 840 24,3 24,360 60 12,6 12,600 00 0 Serv. Dept. B costs (39/42, 3/42)**................................ (46,620) 43,290 3,330 0 Total costs after allocation. . . $ 0 $ 0 $315,010 $320,260 $635,270 *Service Department A costs are allocated on the basis of allocation base A: 1 + 29 + 15 = 45. **Service Department B costs are allocated on the basis of allocation base B: 39 + 3 = 42.

Use the following to answer questions 196-197: (Appendix 4B) Yamane Corporation, a manufacturer, uses the step-down method to allocate service department costs to operating departments. The company has two service departments, Administration and Facilities, and two operating departments, Assembly and Finishing. Data concerning those departments follow:

Departmental costs. . . Labor ho hours............... Space occupied...... ...

Service Department Administrative Facilities $22,620 $67,440 3,000 2,000 7,000 1,000

Operating Department Assembly $105,520 21,000 32,000

Finishing $427,780 16,000 3,000

Administration Department costs are allocated first on the basis of labor hours and Facilities Department costs are allocated second on the basis of space occupied.

196. In the first step of the the allocation, allocation, the amount of Administration Administration Department Department cost allocated to the Assembly Department is closest to: A) $4,476 B) $12,838 C) $11,310 D) $12,180 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 9 Level: Easy Solution: Service Operating Department Department Admin. Facilities Assembly Finishing

Total

Departmental costs before allocation............. allocation..................... .............. ...... $22,620 $67,440 $105,520 $427,780 $623,360 Allocation: Admin. costs (2/39, 21/39, 16/3 16/39) 9)*. *... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ... (22, (22,62 620) 0) 1,16 1,160 0 12,1 12,180 80 9,28 9,280 0 0 Facilities costs (32/35, 3/35)**............................... (68,600) 62,720 5,880 0 Total costs after allocation. . $ 0 $ 0 $180,420 $442,940 $623,360 *Administration costs are allocated on the basis of labor hours: 2 + 21 + 16 = 39. **Facilities costs are allocated on the basis of space occupied: 32 + 3 = 35.

197. The total Finishing Finishing Department Department cost after allocations allocations is closest closest to: A) $443,342 B) $433,660 C) $441,102 D) $442,940 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 9 Level: Easy Solution: Service Operating Department Department Admin. Facilities Assembly Finishing

Total

Departmental costs before allocati allocation... on............... ........................... ............... $22,620 $22,620 $67,440 $67,440 $105,520 $105,520 $427,780 $427,780 $623,360 $623,360 Allocation: Admin. costs (2/39, 21/39, 16/3 16/39) 9)*. *... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... ..... ..... (22, (22,62 620) 0) 1,16 1,160 0 12,1 12,180 80 9,28 9,280 0 0 Facilities costs (32/35, 3/35)**.................................. (68,600) 62,720 5,880 0 Total costs after allocation... allocation..... .. $ 0 $ 0 $180,420 $442,940 $623,360 *Administration costs are allocated on the basis of labor hours: 2 + 21 + 16 = 39. **Facilities costs are allocated on the basis of space occupied: 32 + 3 = 35.

Use the following to answer questions 198-199: (Appendix 4B) Muckenfuss Clinic uses the step-down method to allocate service department costs to operating departments. The clinic has two service departments, Personnel and Information Technology (IT), and two operating departments, Family Medicine and Geriatric Medicine. Data concerning those departments follow: Service Department

Departmental co costs. .. .. Employees................ PCs............................

Personnel $66,930 11 11

IT $11,678 27 27

Operating Department Family Geriatric Medicine Medicine $563,940 $82,310 104 160 85 87

Personnel costs are allocated first on the basis of employees and IT costs are allocated second on the basis of PCs.

198. In the first step of the the allocation, allocation, the amount of Personnel Personnel Department Department cost allocated allocated to the Family Medicine Department is closest to: A) $23,920 B) $58,405 C) $23,049 D) $26,366 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 9 Level: Easy Solution: Service Department Personnel

IT

Operating Department Family Geriatric Medicine Medicine

Total

Departmental costs before allocati allocation... on...................... ........................ ..... $66,930 $66,930 $11,678 $11,678 $563,940 $563,940 $82,310 $82,310 $724,858 $724,858 Allocation: Personnel costs (27/291, 104/ 104/29 291, 1, 160/ 160/29 291) 1)*. *.... ....... ....... ... (66, (66,93 930) 0) 6,21 6,210 0 23,9 23,920 20 36,8 36,800 00 0 IT costs (85/172, 87/172)** (17,888) 8,840 9,048 0 Total costs after allocation. allocation. . $ 0 $ 0 $596,700 $128,158 $724,858 *Personnel costs are allocated on the basis of employees: 27 + 104 + 160 = 291. **IT costs are allocated on the basis of number of PCs: 85 + 87 = 172.

199. The total Geriatric Geriatric Medicine Medicine Department cost cost after allocations allocations is closest to: to: A) $122,608 B) $128,781 C) $128,158 D) $91,358 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 9 Level: Easy Solution: Service Department Personnel

IT

Operating Department Family Geriatric Medicine Medicine

Total

Departmental costs before allocati allocation... on.......... ............. ................ .......... $66,930 $66,930 $11,678 $11,678 $563,940 $563,940 $82,310 $82,310 $724,858 $724,858 Allocation: Personnel costs (27/291, 104/ 104/29 291, 1, 160/ 160/29 291) 1)*. *... .... ..... ..... .. (66, (66,93 930) 0) 6,21 6,210 0 23,9 23,920 20 36,8 36,800 00 0 IT costs (85/172, 87/172)** .......................................... (17,888) 8,840 9,048 0 Total Total costs costs after after allocati allocation on $ 0 $ 0 $596,700 $596,700 $128,15 $128,158 8 $724,858 $724,858 *Personnel costs are allocated on the basis of employees: 27 + 104 + 160 = 291. **IT costs are allocated on the basis of number of PCs: 85 + 87 = 172.

Use the following to answer questions 200-201: (Appendix 4B) Blondell Legal Services, LLC, uses the step-down method to allocate service department costs to operating departments. The firm has two service departments, Personnel and Information Technology (IT), and two operating departments, Family Law and Corporate Law. Data concerning those departments follow: Service De Department

Departmental costs. . . Employees................ PCs............................

Personnel $85,284 11 12

IT $29,703 25 26

Operating De Department Family Corporate Law Law $883,360 $189,010 121 163 112 137

Personnel costs are allocated first on the basis of employees and IT costs are allocated second on the basis of PCs.

200. In the first step of the the allocation, allocation, the amount of Personnel Personnel Department Department cost allocated allocated to the Family Law Department is closest to: A) $32,248 B) $70,252 C) $36,336 D) $33,396 Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 9 Level: Easy Solution: Service Department Personnel

IT

Operating Department Family Corporate Law Law

Total

Departmental costs before allocati allocation... on.......... ............. ................ .......... $85,284 $85,284 $29,703 $29,703 $883 $883,360 ,360 $189,0 $189,010 10 $1,187,3 $1,187,357 57 Allocation: Personnel costs (25/309, 121/ 121/30 309, 9, 163/ 163/30 309) 9)*. *... .... ..... ..... .. (85, (85,28 284) 4) 6,90 6,900 0 33,3 33,396 96 44,9 44,988 88 0 IT costs (112/249, 137/249)**....................... (36,603) 16,464 20,139 0 Total costs after allocation allocation $ 0 $ 0 $933,220 $254,137 $1,187,357 *Personnel costs are allocated on the basis of employees: 25 + 121 + 163 = 309. **IT costs are allocated on the basis of number of PCs: 112 + 137 = 249.

201. The total Corporate Corporate Law Department Department cost after after allocations allocations is closest to: A) $254,137 B) $246,630 C) $254,301 D) $209,149 Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 9 Level: Easy Solution: Service Department Personnel

IT

Operating Department Family Corporate Law Law

Total

Departmental costs before allocati allocation... on.......... ............. ................ .......... $85,284 $85,284 $29,703 $29,703 $883,36 $883,360 0 $189,01 $189,010 0 $1,187,3 $1,187,357 57 Allocation: Personnel costs (25/309, 121/ 121/30 309, 9, 163/ 163/30 309) 9)*. *... .... ..... ..... .. (85, (85,28 284) 4) 6,90 6,900 0 33,3 33,396 96 44,9 44,988 88 0 IT costs (112/249, 137/249)**....................... (36,603) 16,464 20,139 0 Total Total costs costs after after allocati allocation on $ 0 $ 0 $933,22 $933,220 0 $254,13 $254,137 7 $1,187,3 $1,187,357 57 *Personnel costs are allocated on the basis of employees: 25 + 121 + 163 = 309. **IT costs are allocated on the basis of number of PCs: 112 + 137 = 249.

Essay Questions

202. Bayas Corporation Corporation uses processing processing costing. costing. A number of transactions that occurred occurred in November are listed below. (1) Raw materials materials that cost $39,800 $39,800 are withdrawn from from the storeroom for for use in the Mixing Department. All of these raw materials are classified as direct labor. (2) Direct labor costs costs of $16,100 are incurred, incurred, but not not yet paid, in the Mixing Mixing Department. (3) Manufacturing Manufacturing overhead overhead of $45,700 is applied in the Mixing Department Department using the department's predetermined overhead rate. (4) Units with a carrying cost of $87,600 $87,600 finish processing processing in the Mixing Department and are transferred to the Drying Department for further processing. (5) Units with a carrying cost of $111,300 $111,300 finish processing processing in the Drying Department, Department, the final step in the production process, and are transferred to the finished goods warehouse. (6) Finished goods goods with a carrying carrying cost of $98,200 $98,200 are sold. Required: Prepare journal entries for each of the transactions listed above. Ans: (1 ) (2 ) (3 ) (4 ) (5 )

Work in Process-Mixing Department Raw Materials

$39,800

Work in Process-Mixing Department Salaries and Wages Payable

$16,100

Work in Process-Mixing Department Manufacturing Overhead

$45,700

Work in Process-Drying Department Work in Process-Mixing Department

$87,600

Finished Goods

$39,800

$16,100

$45,700

$87,600 $111,30 0 $111,30 0

Work in Process-Drying Department (6 )

Cost of Goods Sold

$98,200

Finished Goods AACSB: Analytic AICPA BB: Critical Thinking LO: 1 Level: Easy

$98,200 AICPA FN: Reporting

203. During August, the following following transactions transactions were recorded at Goyer Corporation. Corporation. The company uses processing costing. (1) Raw materials materials that cost $24,500 $24,500 are withdrawn from from the storeroom for for use in the Assembly Department. All of these raw materials are classified as direct labor. (2) Direct labor costs costs of $29,000 are incurred, incurred, but not not yet paid, in the Assembly Assembly Department. (3) Manufacturing Manufacturing overhead overhead of $58,900 is applied in the Assembly Department Department using the department's predetermined overhead rate. (4) Units with a carrying carrying cost of $101,200 $101,200 finish processing processing in the Assembly Assembly Department and are transferred to the Painting Department for further processing. (5) Units with a carrying carrying cost of $106,100 $106,100 finish processing processing in the Painting Painting Department, the final step in the production process, and are transferred to the finished goods warehouse. (6) Finished goods goods with a carrying carrying cost of $95,100 $95,100 are sold. Required: Prepare journal entries for each of the transactions listed above. Ans: (1 ) (2 ) (3 ) (4 )

Work in Process-Assembly Department Raw Materials

$24,500

Work in Process-Assembly Department Salaries and Wages Payable

$29,000

Work in Process-Assembly Department Manufacturing Overhead

$58,900

Work Work in Proc Proces esss-Pa Pain inti ting ng Depa Depart rtme ment nt

$24,500

$29,000

$58,900 $101,20 0 $101,20 0

Work in Process-Assembly Department (5 )

Finished Goods

$106,10 0 $106,10 0

Work in Process-Painting Department (6 )

Cost of Goods Sold Finished Goods

$95,100 $95,100

AACSB: Analytic AICPA BB: Critical Thinking LO: 1 Level: Easy

AICPA FN: Reporting

204. Kamp Company uses the weighted-aver weighted-average age method in its process costing. costing. Information Information about units processed during a recent month in the Curing Department follow:

Beginning work in process inventory........ Units started into production..................... Units completed and transferred out.......... Ending wo work in in pr process in inventory.............

Units 10,000 150,00 0 140,00 0 20,000

Conversion Percent Completion 30%

40%

The beginning work in process inventory had $4,600 in conversion cost. During the month, the Department incurred an additional $210,000 in conversion cost. Required: a. b. c. d.

Determine the equivalent equivalent units of production production for conversion conversion for the the month. month. Determine the cost per equivalent equivalent unit unit of production production for conversion conversion for for the month. month. Determin Determinee the total total conversio conversion n cost transfe transferred rred out out during during the month. month. Determine the conversion conversion cost assigned assigned to the ending work in process inventory. inventory.

Ans: a. Unit Unitss tran transf sfer erre red d out. out... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ..... Add: Add: equi equiva vale lent nt unit unitss in the the endi ending ng inve invent ntor ory.. y....... ..... Equi Equival valent ent units units of produ product ction ion... ....... ....... ....... ....... ...... ........ .......... ....... b .

Cost Cost in the the begi beginn nnin ing g inve invent ntor ory. y... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Cost Cost adde added d during during the the month. month.... ...... ....... ........ ......... .......... .......... ........ ... Total cost................................................................ $214,600 ÷ 148,000 units = $1.45 per unit

140, 140,00 000 0 8,00 8,000 0 148,00 148,000 0

$ 4,60 4,600 0 210,00 210,000 0 $214,60 0

c. 140,000 units × $1.45 per unit = $203,000 d. 20,000 units × 40% × $1.45 per unit = $11,600 AACSB: Analytic AICPA BB: Critical Thinking LO: 2,3,4 Level: Medium

AICPA FN: Reporting

205. Timberline Timberline Associates uses the weighted-avera weighted-average ge method in its process costing costing system. The following data are for the first processing department for a recent month: Work in process, beginning: Unit Unitss in in pro proce cess ss.. .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...... ... Perce rcent com comp plet lete wit with re respe spect to to ma mater terials ials.. .... .... .... .... .... .... .. Perce rcent com comp plet lete wi with re respe spect to to co conversi ersio on... n..... ..... ..... .... Costs in the beginning inventory: Materi Material alss cost. cost..... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ....... ...... Conve Conversi rsion on cost. cost.... ....... ....... ...... ....... ....... ...... ....... ....... ....... ......... .......... .......... .......... ....... Unit Unitss star starte ted d into into pro produ duct ctio ion n duri during ng the the mon month th... ...... ...... ..... .. Units Units compl complete eted d and and transf transferr erred ed out... out...... ....... ....... ...... ....... ........ ........ .... Costs added to production during the month: Materi Material alss cost. cost..... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ....... ...... Conversion cost........................................................ Work in process, ending: Unit Unitss in in pro proce cess ss.. .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ...... ...... ...... ... Perce rcent com comp plet lete wit with re respe spect to to ma mater terials ials.. .... .... .... .... .... .... .. Perce rcent com comp plet lete wi with re respe spect to to co conversi ersio on... n..... ..... ..... ....

2,40 2,400 0 75% 50% $8,40 $8,400 0 $7,20 $7,200 0 20,8 20,800 00 22,20 22,200 0 $97,4 $97,400 00 $129,60 0 1,00 1,000 0 80% 60%

Required: a. b. c. d.

Determin Determinee the equivale equivalent nt units units of produ productio ction. n. Determin Determinee the costs costs per per equiva equivalent lent unit. unit. Determin Determinee the cost cost of endin ending g work in process process inventor inventory. y. Determin Determinee the cost of the the units transf transferre erred d to the next next departmen department. t.

Ans: a. Transferred to next department............ Ending work in process: Mater terial ials: 1,00 ,000 units × 80%.... ...... .... .... .... .. Conversion: 1,000 units × 60%... .... . Equivalent units of production.............

Materials Conversion 22,200 22,200 800 23,000

600 22,800

b.

Materials Conversion Wor Work in proc rocess, begi eginnin ning.... ...... .... .... .... .... .... .... $ 8,400 ,400 $ 7,20 ,200 Cost Cost added added durin during g the the month month... ........ .......... ....... .. 97,40 97,400 0 129,6 129,600 00 Tota Totall cost cost (a) (a).. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. $105 $105,8 ,800 00 $136 $136,8 ,800 00 Equivalent units (above) (b)................ 23,000 22,800 Cost per equivalent unit (a) ÷ (b)......... $4.60 $6.00

c.

Materials Conversion 22,200 22,200 $4.60 $6.00

Units transferred out............................ Cost per eq equivalent un unit....................... Cost Cost tra trans nsfe ferr rred ed out out.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. d. Equivalent units of production: ending work in process.................... Cost per eq equivalent un unit....................... Cost of ending work in process.... ..... ..

Total

$102 $102,1 ,120 20

$133 $133,2 ,200 00

$235,32 0

Materials

Conversion

Total

800 $4.60 $3,680

600 $6.00 $3,600

$7,280

AACSB: Analytic AICPA BB: Critical Thinking LO: 2,3,4 Level: Hard

AICPA FN: Reporting

206. Avignon Inc. uses uses the weighted-average weighted-average method method in its process process costing system. system. The following data concern the operations of the company's first processing department for a recent month. Work in process, beginning: Unit Unitss in proc proces ess. s... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Perce rcent com omp plet lete wi with respe spect to mater terials ials.. ..... ...... ... Perce rcent com omp plet lete wit with respe spect to conversi ersio on..... n..... Costs in the beginning inventory: Materi Material alss cost. cost..... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ...... .. Conv Conver ersi sion on cost cost.. .... ..... ..... .... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ..... .. Unit Unitss star starte ted d int into o pro produ duct ctio ion n dur durin ing g the the mo mont nth.. h..... ... Unit Unitss compl complet eted ed and and trans transfe ferr rred ed out. out... .... .... ..... ..... .... ..... ...... ..... .. Costs added to production during the month: Materi Material alss cost. cost..... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ...... .. Conversion cost.................................................. Work in process, ending: Unit Unitss in proc proces ess. s... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Perce rcent com omp plet lete wi with respe spect to mater terials ials.. ..... ...... ... Perce rcent com omp plet lete wit with respe spect to conversi ersio on..... n.....

900 900 80% 10% $6,76 $6,768 8 $3,1 $3,186 86 10,0 10,000 00 10,1 10,100 00 $97,1 $97,104 04 $356,94 0 800 800 90% 20%

Required: a. b. c. d.

Determin Determinee the equivale equivalent nt units units of produ productio ction. n. Determin Determinee the costs costs per per equiva equivalent lent unit. unit. Determin Determinee the cost cost of endin ending g work in process process inventor inventory. y. Determin Determinee the cost of the the units transf transferre erred d to the next next departmen department. t.

Ans: a. Units transferred to next department....... Ending work in process: Mat Materia rials: 800 units × 90% 90%.... ...... .... .... .... .... .... .... .. Conversion: 800 units × 20%............... Equivalent units of production............. b .

Materials Co Conversion 10,100 10,100 720 10,820

160 10,260

Materials Conversion Cost of beginning work in process.... ...... .... .... .. $ 6,768 $ 3,186 Cost Cost adde added d during during the mo month nth.... ............... .............. ... 97,10 97,104 4 356,94 356,940 0 Tota Totall cost cost.. .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ...... ...... ... $103 $103,8 ,872 72 $360 $360,1 ,126 26 Equivalent units....................................... 10,820 10,260 Cost per equivalent unit........................... $9.60 $35.10

c. Ending work in process: Materials Conversion Equivalent units of production................ 720 160 Cost per equivalent unit........................... $9.60 $35.10 Cost of ending work in process inventory.............................................. $6,912 $5,616

$12,528

d .

Total

Units co completed an and tr transferred ou out. . . . . . . Cost per equivalent unit........................... Cost of of un units tran ransfe sferre rred ou out... t..... .... .... .... .... .... .... .... ....

Materials Co C onversion 10,100 10,100 $9.60 $35.10 $96 $96,960 ,960

AACSB: Analytic AICPA BB: Critical Thinking LO: 2,3,4 Level: Medium

$354,5 54,51 10

Total

$451,47 0

AICPA FN: Reporting

207. Bansal Inc. uses uses the weighted-average weighted-average method method in its process process costing system. system. The following data concern the operations of the company's first processing department for a recent month. Work in process, beginning: Unit Unitss in proc proces ess. s... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Perce rcent com omp plet lete wi with respe spect to mater terials ials.. ..... ...... ... Perce rcent com omp plet lete wit with respe spect to conversi ersio on..... n..... Costs in the beginning inventory: Mate Materi rial alss cost cost.. ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ..... .. Conv Conver ersi sion on cost cost.. .... ..... ..... .... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ..... .. Unit Unitss star starte ted d int into o pro produ duct ctio ion n dur durin ing g the the mo mont nth.. h..... ... Unit Unitss compl complet eted ed and and trans transfe ferr rred ed out. out... .... .... ..... ..... .... ..... ...... ..... .. Costs added to production during the month: Materi Material alss cost. cost..... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ...... .. Conversion cost.................................................. Work in process, ending: Unit Unitss in proc proces ess. s... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Perce rcent com omp plet lete wi with respe spect to mater terials ials.. ..... ...... ... Perce rcent com omp plet lete wit with respe spect to conversi ersio on..... n.....

300 300 60% 60% $342 $342 $4,5 $4,518 18 22,0 22,000 00 21,8 21,800 00 $45,9 $45,963 63 $538,60 2 500 500 50% 20%

Required: Using the weighted-average method: a. Determine the equivalent equivalent units of production production for materials materials and and conversion conversion costs. costs. b. Determine the cost cost per equivalent equivalent unit for materials materials and and conversion conversion costs. c. Determine the cost cost of units units transferred transferred out of the department department during the month. month. d. Determine the cost cost of ending ending work in process inventory inventory in the the department. department.

Ans: Weighted-average method: a. Units transferred to next department....... Ending work in process: Mat Materia rials: ls: 500 500 units its × 50%... %..... .... .... .... .... .... .... .... Conversion: 500 units × 20%............... Equivalent units of production............. b .

Materials Co Conversion 21,800 21,800 250 250 22,050

100 21,900

Materials Conversion Cost of beginning work in process.......... .... $ 342 $ 4,518 Cost Cost adde added d duri during ng the the mo mont nth. h.... ....... ........ ........ ...... .. 45,9 45,963 63 538, 538,60 602 2 Tota Totall cost cost.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... $46, $46,30 305 5 $543 $543,1 ,120 20 Equivalent units....................................... 22,050 21,900 Cost per equivalent unit........................... $2.10 $24.80

c. Ending work in process: Equivalent units of production................ Cost per equivalent unit........................... Cost of ending work in process............... d . Units co completed an and tr transferred ou out. . . . . . . Cost per equivalent unit........................... Cost of of un units tran ransfe sferre rred ou out... t..... .... .... .... .... .... .... .... ....

Materials Conversion 250 100 $2.10 $24.80 $525 $2,480

Materials Co Conversion 21,800 21,800 $2.10 $24.80 $45 $45,780 ,780


$540,6 40,64 40

Total

$3,005

Total

$586,42 0

AICPA FN: Reporting

208. Whitney Company Company uses the weighted-average weighted-average method method in its process costing system. system. The following data were taken from the records of the first processing department for a recent month. Work in process, beginning: Unit Unitss in proce ocess.... ...... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Perce rcent com omp plet lete wi with respe spect to mater terials ials.. ..... ...... ... Perce rcent com omp plet lete wit with respe spect to conversi ersio on..... n..... Costs in the beginning inventory: Materi Material alss cost. cost..... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ...... .. Conv Conver ersi sion on cost cost.. .... ..... ..... .... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ..... .. Units st started in into pr production du during th the mo month.... ...... Costs added to production during the month: Materi Material alss cost. cost..... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ...... .. Conversion cost.................................................. Work in process, ending: Unit Unitss in proce ocess.... ...... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Perce rcent com omp plet lete wi with respe spect to mater terials ials.. ..... ...... ... Perce rcent com omp plet lete wit with respe spect to conversi ersio on..... n.....

10 60% 30% $1,20 $1,200 0 $3,0 $3,000 00 150 $42,4 $42,460 60 $137,40 0 20 40% 20%

Required: a. How many many units units were transfe transferred rred to to the next depart department ment during during the the month? month? b. What were were the equivalent equivalent units units of productio production n for materials materials and for for conversion conversion costs for the month? c. What were were the costs per per equivalent equivalent unit of of production production for for materials materials and for conversion costs for the month? d. What was the cost of the ending work work in process process inventory inventory in in the department department at at the end of the month?

Ans: Weighted-average method: a. Units in in be beginning in inventory...................... + Units started into production..... ...... .... .... .... .... .... .. − Un Units in in en ending in inventory..................... ...... = Uni Units tra transferred out out.... ......... ...... ....... ...... .... .... ........ ...... .. b .

Materials Conversion Transferred to next de department.................. 140 140 Work in pro process, ess, ending ing.... ...... .... .... .... .... .... .... .... .... .... .... .... .... 8 4 Equivalent units of production................... 148 144

c. Work in process, beginning... ...... ....... ...... .... .... ........ ...... .. Cost Cost added added durin during g the mo month nth..... .......... .......... .......... ....... Tota Totall cos costt (a) (a).. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Equivalent units (above) (b)....................... Cost per equivalent unit (a) ÷ (b)............... d .

10 150 20 140

Materials Conversion $ 1,200 $ 3,000 42,46 42,460 0 137,40 137,400 0 $43, $43,66 660 0 $140 $140,4 ,400 00 148 144 $295 $975

Materials Co Conversion Ending work in process equivalent units. . . 8 4 Cost pe per eq equivalent un unit............................. $295 $975 Cost of ending work in process..................


$2,360

$3,900

Total

$6,26 0

AICPA FN: Reporting

209. Mccabe Corporation Corporation uses the weighted-avera weighted-average ge method in its process costing. costing. The following data pertain to its Assembly Department for November. Percent Complete Units Materials Conversion Work in process, November 1................... 800 55% 10% Units started into production during 8,20 November............................................... 0 Units completed during November and 7,30 transferred to the next department......... 0 1,70 Work in process, November 30................. 0 75% 25% Required: Compute the equivalents units of production for both materials and conversion costs for the Assembly Department for November using the weighted-average method. Ans: Weighted-average method: Units transferred to the next department.... ... . . Work in process, November 30: 1,70 1,700 0 unit unitss × 75%. 75%... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. 1,700 units × 25%......................................... Equivalent units of production........................

Mate Materi rial alss Conve onvers rsio ion n 7,300 7,300


1,27 1,275 5 8,575

425 7,725

AICPA FN: Reporting

210. The following following data have been provided provided by Cutts Cutts Corporation, Corporation, which uses the the weighted-average method in its process costing. The data are for the company's Shaping Department for February.

Units Work in process, February 1.................... 300 Units started into production during 5,20 February................................................ 0 Units completed during February and 4,80 transferred transferred to the next department........ department...... .. 0 Work in process, February 28.................. 700

Percent Complete Materials Conversion 50% 10%

50%

40%

Required: Compute the equivalents units of production for both materials and conversion costs for the Shaping Department for February using the weighted-average method. Ans: Weighted-average method: Units transferred to the next department............... Work in process, February 28: 700 700 uni units ts × 50% 50%.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. 700 units × 40%.................................................. Equivalent units of production........................... AACSB: Analytic AICPA BB: Critical Thinking LO: 2 Level: Easy

Mate Materi rial alss Conv Conver ersi sion on 4,800 4,800 350 350 5,150

280 5,080

AICPA FN: Reporting

211. Camelin Inc. uses uses the weighted-average weighted-average method method in its process process costing system. system. The following data concern the operations of the company's first processing department for a recent month. Work in process, beginning: Unit Unitss in proce process ss.. .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ... Perc Percen entt comp comple lete te wit with h resp respec ectt to mat mater eria ials ls... ...... ...... ...... ....... ...... .. Perc Percen entt comp comple lete te wit with h resp respec ectt to conv conver ersi sion on... ....... ........ ........ .... Units started into production production during the month............... month.............. . Work in process, ending: Unit Unitss in proce process ss.. .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ... Perc Percen entt comp comple lete te wit with h resp respec ectt to mat mater eria ials ls... ...... ...... ...... ....... ...... .. Perc Percen entt comp comple lete te wit with h resp respec ectt to conv conver ersi sion on... ....... ........ ........ ....

600 600 60% 60% 70% 70% 20,00 0 800 800 80% 80% 50% 50%

Required: Using the weighted-average method, determine the equivalent units of production for materials and conversion costs. Ans: Weighted-average method: Transferred to next department.......... Work in process, ending: Mat Materia rials: 800 units × 80%.... ...... .... .... .... .... Conversion: 800 units × 50%.......... Equivalent un units of of pr production........

Mate Materi rial alss Conv Conver ersi sion on 19,800 19,800 640 20,440


400 20,200 AICPA FN: Reporting

212. Poirrier Corporation Corporation uses process process costing. The following following data pertain to its Assembly Assembly Department for May. Units in process, May 1: materials 75% complete, conve conversi rsion on 30% 30% comp comple lete. te..... ....... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ...... ... Units started into production production during May................ May......................... ........... .. Units completed completed and transferred to the next department.. department.. . . Units in process, May 31: materials 85% complete, conversion conversion 65% complete............................................... .

700 5,50 0 4,60 0 1,60 0

Required: Determine the equivalent units of production for the Assembly Department for May using the weighted-average method. Ans: Weighted-average method: Transferred to next department............ Work in process, ending: Mat Materia rials: 1,60 ,600 un units its × 85%.... ...... .... .... .... .. Conversion: 1,600 units × 65%... .... . Equivalent units of production.. .... .. .

Mate Materi rial alss Conv Conver ersi sion on 4,600 4,600 1,36 ,360 5,960


1,040 5,640 AICPA FN: Reporting

213. Greenham Corporation Corporation uses the weighted-avera weighted-average ge method in its process costing. costing. The following data pertain to its Materials Preparation Department for March. Units in process, March 1: materials 75% complete, conve conversi rsion on 60% 60% comp comple lete. te.... ...... ....... ....... ...... ....... ....... ...... ....... ......... ......... ......... ......... .... Units started into production during March......................... Units completed and transferred transferred to the next department..... . Units in process, March 31: materials 55% complete, conve conversi rsion on 10% 10% comp comple lete. te.... ...... ....... ....... ...... ....... ....... ...... ....... ......... ......... ......... ......... ....

400 400 6,80 0 6,30 0 900 900

Required: Determine the equivalent units of production for the Materials Preparation Department for March using the weighted-average method. Ans: Weighted-average method: Transferred to next department............ Work in process, ending: Mat Materia rials: 900 uni units × 55% 55%.... ...... .... .... .... .... .... Conversion: 900 units × 10%.......... . Equivalent units of production.. .... .. .

Mate Materi rial alss Conv Conver ersi sion on 6,300 6,300 495 6,795


90 6,390 AICPA FN: Reporting

214. Jahncke Inc. uses the weighted-aver weighted-average age method in its processing processing costing. The following data concern the company's Assembly Department for the month of April. Mate Materi rial alss Conve onvers rsio ion n Work in process, April 1.......... ............ ............. ........ ... $3,600 $1,902 Cost added to production in the Assembly Depa Depart rtme ment nt duri during ng Apri April. l... .... .... .... ..... ..... .... .... ..... ...... ...... ...... ... $103 $103,8 ,882 82 $278 $278,0 ,010 10 Equivalent units of production for April.... .... . 8,810 8,720 Required: Compute the costs per equivalent unit for the Assembly Department for April. Ans: Weighted-average method: Mate Materi rial alss Conv Conver ersi sion on Work Work in proc proces ess, s, Apri Aprill 1... 1..... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... $ 3,60 3,600 0 $ 1,90 1,902 2 Cost added during the month in the Assembly Departme Department... nt......... ............. .............. .............. ............. ............. .............. .............. ....... 103,882 103,882 278,010 278,010 Tota Totall cost cost.. .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ..... .. $107 $107,4 ,482 82 $279 $279,9 ,912 12 Equivalent un units of of pr production.............................. 8,810 8,720 Cost per per equ equivalent uni unit... ............ ............ .............. ...... .... .... ...... $12.20 $32.10 AACSB: Analytic AICPA BB: Critical Thinking LO: 3 Level: Easy

AICPA FN: Reporting

215. Holling Inc. uses uses the weighted-average weighted-average method method in its processing processing costing. costing. The following data concern the company's Mixing Department for the month of December. Mate Materi rial alss Conve onvers rsio ion n Wor Work in pro process, ss, Dec Decemb mbeer 1.... ...... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. $7,53 ,530 $8,528 ,528 Cost added to production in the Mixing Department duri during ng Dece Decemb mber er... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ...... ...... ..... .. $225 $225,9 ,900 00 $283 $283,6 ,632 32 Equivalent un units of of pr production fo for De December................. 9,300 8,800 Required: Compute the cost per equivalent unit for materials and conversion for the Mixing Department in December. Ans: Weighted-average method: Work Work in proc proces ess, s, Dece Decemb mber er 1... 1..... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Cost Cost added added during during the month month in the Mixing Mixing Departme Department nt Tota Totall cost cost.. .... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ... Equivalent uni units of of pr production........................................ Cost pe per equ equiivalen lent un unit.. it.... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... AACSB: Analytic AICPA BB: Critical Thinking LO: 3 Level: Easy

Mate Materi rial alss Conve onvers rsio ion n $ 7,53 7,530 0 $ 8,52 8,528 8 225,900 225,900 283,632 283,632 $233 $233,4 ,430 30 $292 $292,1 ,160 60 9,300 8,800 $25.10 .10 $33.20 .20

AICPA FN: Reporting

216. Hutchcroft Hutchcroft Corporation uses the weighted-ave weighted-average rage method in its processing processing costing. The following data concern the company's Assembly Department for the month of December. Mate Materi rial alss Conve onvers rsio ion n Cost pe per equ equiivalen lent un unit.. it.... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... $24.30 .30 $27.10 .10 Equivalent units in ending work in process..................... 630 225 During the month, 6,200 units were completed and transferred from the Assembly Department to the next department. Required: Determine the cost of ending work in process inventory and the cost of units transferred out of the department during December using the weighted-average method. Ans: Weighted-average method: Transferred to the next department: 6,200 units at $51.40 $51.40 per unit....................................... unit................................ ....... Work in process, December 31: Materi Material als, s, 630 630 EUs EUs at $24. $24.30 30 per per EU.. EU...... ....... ...... ....... ........ ......... ....... .. Conv Conver ersi sion on,, 225 225 EUs EUs at $27. $27.10 10 per per EU... EU...... ...... ...... ...... ...... ....... ...... Tota Totall work work in proc proces ess, s, Dece Decembe mberr 31.... 31........ ....... ...... ....... ......... .......... ..... AACSB: Analytic AICPA BB: Critical Thinking LO: 4 Level: Medium

$318,68 0 $15,30 $15,309 9 6,09 6,098 8 $21,40 $21,407 7

AICPA FN: Reporting

217. Lorona Inc. has provided provided the following data concerning concerning the Assembly Assembly Department for the month of June. The company uses the weighted-average method in its processing costing. Mate Materi rial alss Conv Conver ersi sion on Cost per equivalent unit... ............ ............ .............. ...... .... .... ...... $8.10 $28.50 Equivalent un units in ending wo work in pr process........... 1,330 1,235 During the month, 7,400 units were completed and transferred from the Assembly Department to the next department. Required: Determine the cost of ending work in process inventory and the cost of units transferred out of the department during June using the weighted-average method. Ans: Weighted-average method: Transferred to the next department: 7,400 units × $36.60 per unit........................... Work in process, June 30: Materi Material als, s, 1,33 1,330 0 EUs EUs at $8.10 $8.10 per per EU.. EU....... .......... ....... Conv Conver ersi sion on,, 1,2 1,235 35 EUs EUs at at $28 $28.5 .50 0 per per EU....... EU....... Tota Totall work work in proce process ss,, June June 30... 30...... ....... ......... .......... ......... .... AACSB: Analytic AICPA BB: Critical Thinking LO: 4 Level: Medium

$270,84 0 $10,7 $10,773 73 35,1 35,198 98 $45,9 $45,971 71 AICPA FN: Reporting

218. Dalsace Inc. uses uses the FIFO method in it itss process costing costing system. The following following data concern the operations of the company's first processing department for a recent month. Work in process, beginning: Unit Unitss in pro proce cess ss.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Perc Percen entt comp comple lete te with with resp respec ectt to mate materi rial als. s... .... .... .... .... .... ..... ..... .. Perc Percen entt comp comple lete te with with resp respec ectt to conv conver ersi sion on.. .... ..... ...... ...... ..... .. Costs in the beginning inventory: Materi Material alss cost. cost.... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ...... .. Conv Convers ersion ion cost. cost.... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ......... .......... .......... .......... ....... .. Units Units starte started d into into produ producti ction on during during the month. month..... ........ ......... ....... Units Units compl complete eted d and and transf transferr erred ed out... out...... ...... ....... ....... ....... ....... ...... ........ ....... Costs added to production during the month: Materials cost................................................................ Conversion cost............................................................ Work in process, ending: Unit Unitss in pro proce cess ss.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Perc Percen entt comp comple lete te with with resp respec ectt to mate materi rial als. s... .... .... .... .... .... ..... ..... .. Perc Percen entt comp comple lete te with with resp respec ectt to conv conver ersi sion on.. .... ..... ...... ...... ..... ..

400 400 60% 60% 40% 40% $1,94 $1,944 4 $4,51 $4,512 2 15,00 15,000 0 14,50 14,500 0 $119,05 3 $418,95 0 900 900 90% 90% 40% 40%

Required: Using the FIFO method: a. Determine the equivalent equivalent units of production production for materials materials and and conversion conversion costs. costs. b. Determine the cost cost per equivalent equivalent unit for materials materials and and conversion conversion costs. c. Determin Determinee the cost cost of endin ending g work in process process inventor inventory. y. d. Determine the cost cost of units units transferred transferred out of the department department during the month. month.

Ans: FIFO method: a. Materials Conversion To complete the beginning work in process: Mat Materia rials: ls: 400 units its × (100% 00% − 60%).. %).... .... .... .... .... .... .... .... .... .. 160 160 Conversion: 400 units × (100% − 40%)................ 240 Units st started an and co completed (1 (14,500 − 400)............. 14,100 14,100 Ending work in process: Mate Materi rial als: s: 900 900 unit unitss × 90%. 90%... .... .... .... ..... ..... .... .... ..... ..... ..... ...... ...... ...... ..... 810 810 Conversion: 900 units × 40%................................. 360 Equivalent un units of of pr production... ............ ............. ........ ...... .... .. 15,070 14,700 b .

Materials Conversion Cost Cost adde added d dur durin ing g the the mon month th.. .... .... .... ..... ..... .... ..... ...... ...... ...... ...... ...... ...... ... $119 $119,0 ,053 53 $418 $418,9 ,950 50 Equivalent uni units of pr production...... ............ ............ ....... ...... ....... ... 15,070 14,700 Cost per equivalent unit............ ............. .......... ...... .... .... ........ ...... .... .... .. $7.90 $28.50 .50

c.

Materials Conversion Ending work in process: Equivalent units of production.................................. Cost per equivalent unit............ ............. .......... ...... .... .... ........ ...... .... .... .. Cost of ending work in process..... ............ ............. ........ ...... .... ..

d .

810 $7.90 $6,399

360 $28.50 .50 $10,260

Materials Conversion Cost fr from th the beginning in inventory........................... $1,944 $4,512 Cost to complete the units in beginning inventory: Equivalent un units to to co complete.................................. 160 240 Cost per equivalent unit....... ............ .......... ....... ...... ........ ...... .... .... .... $7.90 $28.50 .50 Cost to complete.................................................... $1,264 $6,840 Cost of units started and completed: Units st started an and co completed....... ............ ............. ........ ...... .... .. 14,100 14,100 Cost per equivalent unit....... ............ .......... ....... ...... ........ ...... .... .... .... $7.90 $28.50 .50 Cost Cost of unit unitss star starte ted d and and comp comple lete ted. d... ..... ..... ..... ...... ...... ...... ...... ... $111 $111,3 ,390 90

$401 $401,8 ,850 50

Total cost of units transferred out............................. AACSB: Analytic AICPA BB: Critical Thinking Appendix: 4A LO: 5,6,7 Level: Hard

AICPA FN: Reporting

Total

$16,65 ,659

Total $6,456

$8,104

$513,24 0 $527,80 0

219. Engsbye Inc. Inc. uses the FIFO method method in its process costing costing system. system. The following data data concern the operations of the company's first processing department for a recent month. Work in process, beginning: Unit Unitss in pro proce cess ss.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Perc Percen entt comp comple lete te with with resp respec ectt to mate materi rial als. s... .... .... .... .... .... ..... ..... .. Perc Percen entt comp comple lete te with with resp respec ectt to conv conver ersi sion on.. .... ..... ...... ...... ..... .. Costs in the beginning inventory: Mate Materi rial alss cost cost.. .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ..... Conv Conver ersi sion on cost cost.. .... .... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ..... Units Units starte started d into into produ producti ction on during during the month. month..... ........ ......... ....... Units Units compl complete eted d and and transf transferr erred ed out... out...... ...... ....... ....... ....... ....... ...... ........ ....... Costs added to production during the month: Material Materialss cost....... cost............. ............. .............. .............. ............. ............. .............. ............. .......... .... Conversion cost............................................................ Work in process, ending: Unit Unitss in pro proce cess ss.. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. Perc Percen entt comp comple lete te with with resp respec ectt to mate materi rial als. s... .... .... .... .... .... ..... ..... .. Perc Percen entt comp comple lete te with with resp respec ectt to conv conver ersi sion on.. .... ..... ...... ...... ..... ..

200 200 80% 80% 10% 10% $800 $800 $406 $406 20,00 20,000 0 20,00 20,000 0 $96,000 $96,000 $413,64 8 200 200 80% 80% 50% 50%

Required: Using the FIFO method: a. Determine the equivalent equivalent units of production production for materials materials and and conversion conversion costs. costs. b. Determine the cost cost per equivalent equivalent unit for materials materials and and conversion conversion costs. c. Determin Determinee the cost cost of endin ending g work in process process inventor inventory. y. d. Determine the cost cost of units units transferred transferred out of the department department during the month. month.

Ans: FIFO method: a. Materials Conversion To complete the beginning work in process: Materials: 200 units × (100% − 80%)........ .... 40 Conversion: 200 units × (100% − 10%)...... 180 Units started and completed (20,000 − 200). . 19,800 19,800 Ending work in process: Mate Materi rial als: s: 200 200 unit unitss × 80%. 80%... .... .... .... .... .... .... .... .... .... ..... ..... 160 160 Conversion: 200 units × 50%...................... 100 Equivalent un units of of pr production....................... .... 20,000 20,080 b .

Materials Conversion Cost Cost adde added d duri during ng the the mo mont nth. h... .... .... .... .... .... .... .... .... .... .... .... .... $96, $96,00 000 0 $413 $413,6 ,648 48 Equivalent un units of of pr production....................... .... 20,000 20,080 Cost pe per eq equivalent un unit.................................. $4.80 $20.60

c. Ending work in process: Materials Conversion Equivalent units of production................ 160 100 Cost per equivalent unit.......................... $4.80 $20.60 Cost of ending work in process............... $768 $2,060 d . Cost from the beginning inventory.... ..... Cost to complete the units in beginning inventory: Equivalent units to complete................ Cost per equivalent unit....................... Cost to complete.................................. Cost of units started and completed: Units st started an and co completed................. Cost per equivalent unit....................... Cost of units its start arted and comp mplleted. ted.... .....

Materials Co Conversion $800 $406

40 $4.80 $192

180 $20.60 $3,708

19,800 $4.80

19,800 $20.60

$95,04 ,040

Total cost of units transferred out........... AACSB: Analytic AICPA BB: Critical Thinking Appendix: 4A LO: 5,6,7 Level: Hard

$40 $407,88 ,880

Total

$2,828

Total $1,206

$3,900

$502,92 0 $508,02 6

AICPA FN: Reporting

220. Lenning Corporation Corporation uses the FIFO FIFO method in its process costing. costing. The following data pertain to its Assembly Department for July.

Units Work in process, July 1............................. 300 6,10 Units started into production production during July. July. . 0 Units completed during July and 5,60 transferred to the next department......... 0 Work in process, July 31........................... 800

Percent Complete Materials Conversion 75% 10%

90%

85%

Required: Compute the equivalent units of production for both materials and conversion costs for the Assembly Department for July using the FIFO method. Ans: FIFO method: Mate Materi rial alss Conv Conver ersi sion on Work in process, July 1: 300 units × (100% − 75%)..................... 300 units × (100% − 10%)..................... Units started and completed in July........... Work in process, July 31: 800 un units × 90 90%.... ...... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. 800 units × 85%...................................... Equivalent units of production..................

75 5,300

270 5,300

720 6,095

AACSB: Analytic AICPA BB: Critical Thinking Appendix: 4A LO: 5 Level: Medium

680 6,250

AICPA FN: Reporting

221. The following following data pertain pertain to the Milling Department Department of Malmberg Corporatio Corporation n for June. The company uses the FIFO method in its process costing. Percent Complete Units Materials Conversion Work in in process, Ju June 1............................. 800 80% 35% 9,40 Units started into production during June.. 0 Units completed during June and 8,30 transferred to the next department......... 0 1,90 Work in process, June 30........................... 0 75% 40% Required: Compute the equivalents units of production for both materials and conversion costs for the Milling Department for June using the FIFO method. Ans: FIFO method: Mate Materi rial alss Conv Conver ersi sion on Work in process, June 1: 800 un units × (1 (100% − 80%) 80%).. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... 800 units × (100% − 35%)........................................... Units started and completed in in June................................ Work in process, June 30: 1,90 1,900 0 unit unitss × 75%. 75%.... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... ..... ...... ... 1,900 units × 40%......................................................... Equivalent uni units of of pr production........................................ AACSB: Analytic AICPA BB: Critical Thinking Appendix: 4A LO: 5 Level: Medium

160 7,500

520 7,500

1,42 1,425 5 9,085

760 8,780

AICPA FN: Reporting

222. Fuchs Inc. uses the the FIFO method in its process process costing costing system. The following following data concern the operations of the company's first processing department for a recent month. Work in process, beginning: Unit Unitss in proc proces ess. s... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ..... .. Perc Percen entt comp comple lete te wit with h resp respec ectt to mat mater eria ials ls... ...... ...... ...... ....... ...... .. Perc Percen entt comp comple lete te wit with h resp respec ectt to conv conver ersi sion on... ....... ........ ........ .... Units started into production production during the month............... month.............. . Work in process, ending: Unit Unitss in proc proces ess. s... .... .... ..... ..... .... .... ..... ..... .... .... ..... ..... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ..... .. Perc Percen entt comp comple lete te wit with h resp respec ectt to mat mater eria ials ls... ...... ...... ...... ....... ...... .. Perc Percen entt comp comple lete te wit with h resp respec ectt to conv conver ersi sion on... ....... ........ ........ ....

800 800 70% 70% 10% 10% 14,00 0 800 800 60% 60% 40% 40%

Required: Using the FIFO method, determine the equivalent units of production for materials and conversion costs. Ans: FIFO method: Mate Materi rial alss Conv Conver ersi sion on To complete the beginning work in process: Materials: 80 800 units × (100% − 70%).... ...... .... .... .... .... .... .. Conversion: 800 units × (100% − 10%)............. Units st started an and completed (1 (14,000 − 800).......... Ending work in process: Mate Materi rial als: s: 800 800 unit unitss × 60%. 60%... ..... ..... .... .... ..... ..... .... .... .... ..... ..... .... ..... ... Conversion: 800 units × 40%............................. Equivalent units of production..... ...... .... .... ........ ...... ........ ...... .... .... .... AACSB: Analytic AICPA BB: Critical Thinking Appendix: 4A LO: 5 Level: Medium

240 13,200

720 13,200

480 480 13,920

320 14,240

AICPA FN: Reporting

223. Clarks Corporation Corporation uses the FIFO method method in its process costing. The following following data pertain to its Assembly Department for August. Units in process, August 1: materials 85% complete, conve conversi rsion on 20% 20% compl complete ete.... ....... ...... ....... ....... ....... ....... ...... ........ .......... ......... ....... ... Units started into production production during August........... August................ ........ ... Units completed and transferred to the next department. Units in process, August 31: materials 90% complete, conversion 60% complete............................................

700 9,40 0 8,30 0 1,80 0

Required: Determine the equivalent units of production for the Assembly Department for August using the FIFO method. Ans: FIFO method: Mate Materi rial alss Conv Conver ersi sion on To complete the beginning work in process: Materials: 700 units × (100% − 85%).... ...... .... .... .... .... Conversion: 700 units × (100% − 20%).......... Units started and completed (8,300 – 700)......... Ending work in process: Mate Materi rial als: s: 1,8 1,800 00 uni units ts × 90% 90%.. .... .... .... .... .... .... .... .... .... .... .... .... .... Conversion: 1,800 units × 60%....................... Equivalent units of production........................... AACSB: Analytic AICPA BB: Critical Thinking Appendix: 4A LO: 5 Level: Medium

105 7,600

560 7,600

1,62 1,620 0 9,325

1,080 9,240

AICPA FN: Reporting

224. The following data have have been provided by Corby Corby Corporation Corporation for the Circuit Prep Department. The company uses the FIFO method in its process costing. Units in process, May 1: materials 60% complete, conversion 45% 45% compl complete ete... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ...... ....... ....... ...... ....... ....... ...... ....... ....... ....... ....... ... Units started into production during May...................................... Units started and completed completed during May....................................... May................................... .... Units completed and transferred to the next department during May............................................................................................ Units in process, May 31: materials 80% complete, conversion 40% complete.............................................................................

500 500 8,90 0 7,80 0 8,30 0 1,10 0

Required: Determine the equivalent units of production for the Circuit Prep Department for May using the FIFO method. Ans: FIFO method: Mate Materi rial alss Conv Conver ersi sion on To complete the beginning work in process: Materials: 50 500 units × (100% − 60%).... ...... .... .... .... .... .... .. Conversion: 500 units × (100% − 45%)............. Units st started an and co completed.................................. Ending work in process: Mate Materi rial als: s: 1,10 1,100 0 unit unitss × 80%. 80%... .... .... .... .... .... .... .... .... .... .... .... .... .... .... Conversion: 1,100 units × 40%.......................... Equivalent un units of of pr production.............................. AACSB: Analytic AICPA BB: Critical Thinking Appendix: 4A LO: 5 Level: Medium

200 7,800

275 7,800

880 880 8,880

440 8,515

AICPA FN: Reporting

225. Zubris Corporation Corporation uses the FIFO method method in its processing costing. costing. The following data concern the company's Assembly Department for the month of July. Mate Materi rial alss Conv Conver ersi sion on Work in process, July 1............................. $4,761 $5,365 Cost added to production in the Assembly Dep Departme rtmen nt durin ring July.. ly.... .... .... .... .... .... .... .... .... .... .... .... .. $26,49 ,496 $34,04 ,040 Equivalent units of production for July. . . . . 2,070 1,850 Required: Compute the costs per equivalent unit for the Assembly Department for July using the FIFO method. Ans: FIFO method: Mate Materi rial alss Conv Conver ersi sion on Cost adde dded duri uring July. uly... .... .... .... .... .... .... .... .... .... .... .... .... .... .... $26,49 ,496 $34,04 ,040 Equivalent units of production.................. 2,070 1,850 Cost pe per eq equivalent un unit............................. $12.80 $18.40 AACSB: Analytic AICPA BB: Critical Thinking Appendix: 4A LO: 6 Level: Easy

AICPA FN: Reporting

226. Rauzman Corporation Corporation uses the FIFO method method in its processing costing. costing. The following data concern the company's Mixing Department for the month of August. Mate Materi rial alss Conv Conver ersi sion on Wor Work in in pro proccess, ss, Au August 1.... ...... .... .... .... .... .... .... .... .... .... .... .... .... .... .... $25,64 ,641 $15,30 ,300 Cost added to production in the Mixing Depa Depart rtme ment nt duri during ng Augu August st.. .... .... ..... ..... .... .... ..... ..... .... ..... ...... ..... .. $170 $170,9 ,940 40 $179 $179,7 ,775 75 Equivalent units of production for August..... .... 7,770 7,650 Required: Compute the cost per equivalent unit for materials and conversion for the Mixing Department for August using the FIFO method. Ans: FIFO method: Mate Materi rial alss Conv Conver ersi sion on Cost add addeed dur duriing the mo month.. th.... .... .... .... $170 170,940 ,940 $179 179,77 ,775 Equivalent units............................. 7,770 7,650 Cost per equivalent unit................. $22.00 $23.50 AACSB: Analytic AICPA BB: Critical Thinking Appendix: 4A LO: 6 Level: Easy

AICPA FN: Reporting

227. Crone Corporation Corporation uses uses the FIFO method in its processing processing costing costing system. system. The following data concern the company's Assembly Department for the month of October.

Cost in beginning beginning work in process inventory.... inventory....... ..... Units Units starte started d and and compl complet eted ed this this mo month nth........... ................ .....

$1,92 0 3,130 3,130

Mate Materi rial alss Conv Conver ersi sion on Cost per equivalent unit... ............ ............ .............. ...... .... .... ...... $9.50 $20.40 Equivalent units required to complete the units in beginning work in process inventory................. 360 140 Equivalent units in ending work in process inventory............................................................ 330 264 Required: Determine the cost of ending work in process inventory and the cost of units transferred out of the department during October using the FIFO method. Ans: FIFO method: Transferred to the next department: From the beginning work in process inventory: Cost Cost in begin beginni ning ng work work in in proc process ess invent inventory ory..... .......... ....... .. $ 1,920 1,920 Cost to complete these units: Mate Materi rial als, s, 360 360 EUs EUs at $9. $9.50 50 per per EU. EU... .... .... .... .... .... .... .... .... .... .... .. 3,42 3,420 0 Conv Convers ersion ion,, 140E 140EUs Us at $20.4 $20.40 0 per per EU..... EU.......... ........... ........ .. 2,856 2,856 Tota Totall cost cost from from begi beginn nnin ing g inve invent ntor ory. y... .... ..... ..... ..... ...... ...... ...... ...... ... 8,19 8,196 6 Units started and completed this month, 3,130 units at $29.90 $29.90 per unit...... unit............. .............. ............. ............. ................. ......................... ............... 93,587 93,587 $101,78 Total cost transferred transferred to the next department............... department......... ...... 3 Work in process, October 31: Mate Materi rial als, s, 330 330 EUs EUs at $9.5 $9.50 0 per per EU... EU..... .... ..... ..... .... .... ..... ..... ..... ...... ..... .. Conv Conver ersi sion on,, 264 264 EUs EUs at $20. $20.40 40 per per EU... EU...... ...... ...... ...... ...... ....... ...... Tota Totall work work in pro proce cess ss,, Octob October er 31. 31.... ...... ...... ...... ...... ...... ...... ...... ...... ...... ... AACSB: Analytic AICPA BB: Critical Thinking Appendix: 4A LO: 7 Level: Medium

$3,1 $3,135 35 5,38 5,386 6 $8,5 $8,521 21

AICPA FN: Reporting

228. The following following data has been provided provided by Glasco Glasco Inc., a company that that uses the FIFO method in its processing costing system. The data concern the company's Shaping Department for the month of June.

Cost in beginning beginning work in process inventory......... inventory................. .......... Units Units sta starte rted d and and compl complet eted ed this this mo month nth..... .......... .......... .......... ........... ......

$1,69 0 4,110 4,110

Mate Materi rial alss Conv Conver ersi sion on Cost pe per eq equivalent un unit... ............ ....... ...... ........ ...... .... .... ........ ...... .... .... $12.50 $45.70 Equivalent units required to complete the units in beginning work in process inventory...... ..... 460 260 Equivalent units in ending work in process inventory........................................................... 220 176 Required: Determine the cost of ending work in process inventory and the cost of the units transferred out of the department during June using the FIFO method. Ans: FIFO method: Transferred to the next department: From the beginning work in process inventory: $ Cost in beginning beginning work in process inventory. inventory. . Cost to complete these units: Mate aterial ials, at 460 EUs $12.5 2.50 per EU... U..... .... .... .... .. Conv Conver ersi sion on,, at at 260 260 EUs EUs $45. $45.70 70 per per EU... EU..... ..... ... Tota Totall cost cost fro from m begi beginn nnin ing g inve invent ntor ory. y... ..... ...... ...... ...... ... Units started and completed this month, 4,110 units units at at $58.2 $58.20 0 per per unit. unit.... ...... ....... ....... ....... ....... ...... ........ .......... ....... ..

1,69 0

5,7 5,750 11,8 11,882 82 19,3 19,322 22

Total cost transferred to the next department.....

239,2 239,202 02 $258,52 4

Work in process, June 30: Mate Materi rial als, s, 220 220 EUs EUs at at $12 $12.5 .50 0 per per EU... EU...... ...... ...... ...... ..... .. Conv Conver ersi sion on,, 176 176 EUs EUs at $45. $45.70 70 per per EU.. EU.... ..... ...... ...... ..... Tota Totall work work in proc proces ess, s, June June 30. 30.... ...... ...... ...... ...... ...... ...... ...... ..... ..

$ 2,75 2,750 0 8,04 8,043 3 $10, $10,79 793 3

AACSB: Analytic AICPA BB: Critical Thinking Appendix: 4A LO: 7 Level: Medium

AICPA FN: Reporting

229. Central Medical Medical Clinic has two service departments, departments, Building Building Services and Energy, Energy, and three operating departments, Pediatrics, Geriatrics, and Surgery. Central allocates the cost of Building Services on the basis of square feet and Energy on the basis of patient days. No distinction is made between variable and fixed costs. Budgeted operating data for the year just completed follow: Service Departments Building Services Energy Budgeted costs $10,00 befo before re allo alloca cati tion on.. $20, $20,00 000 0 0 Square feet.......... ... 1,000 4,000 Patient days............ 0 0

Operating Departments Pediatrics

Geriatrics

$90,000 6,000 5,500

$60,000 18,000 7,700

Surgery $100,00 0 12,000 8,800

Required: a. Prepare a schedule schedule to allocate service department department costs to operating operating departments departments by the direct method (round all dollar amounts to the nearest whole dollar). b. Prepare a schedule schedule to allocate service department department costs to operating operating departments departments by the step-down method, allocating Building Services first (round all amounts to the nearest whole dollar).

Ans: a. Direct Method:

Budgeted costs before al allocation Allocation of Building Services: Pediatrics: 6,000/36,000 × $20,000............ Geriatrics:18,000 /36,000 × $20,000............ Surgery: 12,000/36,000 × $20,000. .... . .. Allocation of Energy: Pediatrics: 5,500/22,000 × $10,000............ Geriatrics: 7,700/22,000 × $10,000............ Surgery: 8,800/22,000 × $10,000............ Costs after allocation............

Building Services

Energy

$20,000

$10,000

Pediatrics Geriatrics $90,000

$60,000

Surgery $100,00 0

(20,000)

3,333

10,000

6,667 (10,000)

2,500

3,500

$0

$0

$95,833

$73,500

4,000 $110,66 7

b. Step Method

Budgeted costs before allocation. Allocation of Building Services: Energy: 4,000/40,000 × $20,000............ Pediatrics: 6,000/40,000 × $20,000............ Geriatrics: 18,000/40,000 × $20,000. .... . .. Surgery: 12,000/40,000 × $20,000. .... . .. Allocation of Energy: Pediatrics: 5,500/22,000 × $12,000............ Geriatrics: 7,700/22,000 × $12,000............ Surgery: 8,800/22,000 × $12,000............ Costs after allocation............

Building Services

Energy

$20,000

$10,000

Pediatrics Geriatrics $90,000

$60,000

Surgery $100,00 0

(20,000)

2,000

3,000

9,000

6,000 (12,000)

3,000

4,200

$0

$0

$96,000

AACSB: Analytic AICPA BB: Critical Thinking Appendix: 4B LO: 8,9 Level: Medium

$73,200

4,800 $110,80 0

AICPA FN: Reporting

230. Cerce Corporation Corporation uses the direct direct method to allocate service service department costs to operating departments. The company has two service departments, Administrative and Facilities, and two operating departments, Assembly and Finishing.

Departmental costs... . Employee hours. . . .. . . . Space occupied– square feet..............

Service De Department Administrative Facilities $29,440 $46,740 5,000 2,000 2,000

2,000

Operating De Department Assembly Finishing $258,880 $320,280 29,000 17,000 30,000

8,000

Administrative Department costs are allocated on the basis of employee hours and Facilities Department costs are allocated on the basis of space occupied. Required: Allocate the service department costs to the operating departments using the direct method. Ans: Allocation rate for administrative costs = Cost to be allocated ÷ Allocation base = $29,440 ÷ (29,000 + 17,000) = $0.64 Allocation rate for facilities costs = Cost to be allocated ÷ Allocation base = $46,740 ÷ (30,000 + 8,000) = $1.23 Adm dmiinis nistrat trativ ivee Facil cilitie ties Assem ssemb bly Fini inishi shing Departmental costs.............. . $29,440 $46,740 $258,880 $320,280 Allocation: Administrative costs.......... (29,440) 18,560 10,880 Facilities costs................... (46,740) 36,900 9,840 Total costs after allocation. $ 0 $ 0 $314,340 $341,000 AACSB: Analytic AICPA BB: Critical Thinking Appendix: 4B LO: 8 Level: Easy

AICPA FN: Reporting

231. Sandven Corporation Corporation uses the direct direct method to allocate its two service service department costs to its two operating departments. Data concerning those departments follow: Service Service Operating Operating Department Department Department Department A B X Y Departmental costs. .. .. $34,300 $66,230 $161,710 $503,220 Allocation base A. . . . . 5,000 1,000 32,000 17,000 Allocation base B...... 8,000 2,000 32,000 5,000 Service Department A costs are allocated on the basis of allocation base A and Service Department B costs are allocated on the basis of allocation base B. Required: Allocate the service department costs to the operating departments using the direct method. Ans: Allocation rate for Service Department A costs = Cost to be allocated ÷ Allocation base = $34,300 ÷ (32,000 + 17,000) = $0.70 Allocation rate for Service Department B costs = Cost to be allocated ÷ Allocation base = $66,230 ÷ (32,000 + 5,000) = $1.79 Service Service Operating Operating Department Department Department Department A B X Y Departmental costs. . . . . . $34,300 $66,230 $161,710 $503,220 Service Department A. (34,300) 22,400 11,900 Service Department B. . (66,230) 57,280 8,950 Total costs after allocation.......... ...... ........ ...... $ 0 $ 0 $241,390 $524,07 ,070 AACSB: Analytic AICPA BB: Critical Thinking Appendix: 4B LO: 8 Level: Easy

AICPA FN: Reporting

232. The direct method is used by Kurpinski Kurpinski Clinic to allocate allocate its service departme department nt costs to its operating departments. Data concerning those departments follow: Operating Departments

Service Departments Information Technology Personnel Departmental co costs Computers.............. Employees.......... ...

$34,650 22 15

Pediatrics

$31,356 17 15

$566,960 44 75

Prenatal $688,22 0 46 42

Information Technology costs are allocated on the basis of computers and Personnel costs are allocated on the basis of employees. Required: Allocate the service department costs to the operating departments using the direct method. Ans: Allocation rate for Information Technology costs = Cost to be allocated ÷ Allocation base = $34,650 / (44 + 46) = $385.00 Allocation rate for Personnel costs = Cost to be allocated ÷ Allocation base = $31,356 / (75 + 42) = $268.00 Service Departments Information Technology Personnel Departmental costs. . Information Technology.......... Personnel................. Total costs after allocation.... ...... .... .... .... ....

$34,650

$31,356

(34,650)

0

Pediatrics $566,960 16,940

(31,356) $

Operating Departments

$

0

AACSB: Analytic AICPA BB: Critical Thinking Appendix: 4B LO: 8 Level: Easy

20,100 $604,000

Prenatal $688,22 0 17,710 11,25 6 $717,18 6

AICPA FN: Reporting

233. Mercik Consultancy Consultancy uses the direct direct method to allocate its service service department costs to its operating departments. The company has two service departments, Information Technology and Administration, and two operating departments, Corporate Practice and Government Practice. Data concerning those departments follow:

Departmental co costs Computers.............. Employees.......... ...

Service Departments Information AdminiTechnology stration $26,244 $21,696 39 14 32 10

Operating Departments Corporate Government Practice Practice $226,170 $477,980 51 30 70 26

Information Technology Department costs are allocated on the basis of computers and Administration Department costs are allocated on the basis of employees. Required: Allocate the service department costs to the operating departments using the direct method. Ans: Allocation rate for Information Technology costs = Cost to be allocated ÷ Allocation base = $26,244 / (51 + 30) = $324.00 Allocation rate for Administration costs = Cost to be allocated ÷ Allocation base = $21,696 / (70 + 26) = $226.00

Departmental costs Information Technology......... Administration..... .. Total costs after allocation............

Information Tech Techno nolo logy gy Admi Admini nist stra rati tion on $26,244 $21,696 (26,244) (21,696) $

0

$

AACSB: Analytic AICPA BB: Critical Thinking Appendix: 4B LO: 8 Level: Easy

0

Corporate Practice $226,170

Government Practice $477,980

16,524 15,820

9,720 5,876

$258,514

$493,576

AICPA FN: Reporting

234. Bazin Corporation Corporation has two service departments, departments, Service Service Department A and Service Service Department B, and two operating departments, Operating Department X and Operating Department Y. Service Service Operating Department Department Department A B X Departmental costs $31,280 $55,640 $161,490 Allocation base A. . 4,000 1,000 26,000 Allocation base B... 6,000 2,000 30,000

Operating Department Y $399,350 19,000 2,000

The company uses the step-down method to allocate service department costs to operating departments. Service Department A costs are allocated first on the basis of allocation base A and Service Department B costs are allocated second on the basis of allocation base B. Required: Allocate the service department costs to the operating departments using the stepdown method. Ans:

Departmental co costs............... Service Department A costs. Service Department B costs. . Total costs after allocation....

Service Department A $31,280 (31,280) $

0

Service Department B $55,640 680 (56,320) $ 0

Operating Department X $161,490 17,680 52,800 $231,970

Allocation rate for Service Department A costs = Cost to be allocated / Allocation base = $31,280 / (1,000 + 26,000 + 19,000) = $0.68 Allocation rate for Service Department B costs = Cost to be allocated / Allocation base = ($55,640 + $680) / (30,000 + 2,000) = $1.76 AACSB: Analytic AICPA BB: Critical Thinking Appendix: 4B LO: 9 Level: Easy

AICPA FN: Reporting

Operating Department Y $399,350 12,920 3,520 $415,790

235. Coakley Corporation Corporation uses the step-down step-down method to allocate allocate service department department costs to operating departments. The company has two service departments, Administration and Facilities, and two operating departments, Assembly and Finishing.

Service Department Administration Facilities Departmental costs. $22,260 $69,130 Employee time.... . . . 4,000 1,000 Space occupied....... 6,000 1,000

Operating Department Assembly Finishing $137,520 $900,750 25,000 16,000 34,000 9,000

Administration Department costs are allocated first on the basis of employee time and Facilities Department costs are allocated second on the basis of space occupied. Required: Allocate the service department costs to the operating departments using the stepdown method. Ans:

Departmental costs............... Administration co c osts............. Facilities costs....................... Tota Totall cost costss afte afterr allo alloca cati tion on.... ....

Administration Facilities Assembly Finishing $22,260 $69,130 $137,520 $900,750 (22,260) 530 13,250 8,480 (69,660) 55,080 14,580 $ 0 $ 0 $205 $205,8 ,850 50 $923 $923,8 ,810 10

Allocation rate for Administration Department costs = Cost to be allocated ÷ Allocation base = $22,260 ÷ (1,000 + 25,000 + 16,000) = $0.53 Allocation rate for Facilities Department costs = Cost to be allocated ÷ Allocation base = ($69,130 + $530) ÷ (34,000 + 9,000) = $1.62 AACSB: Analytic AICPA BB: Critical Thinking Appendix: 4B LO: 9 Level: Easy

AICPA FN: Reporting

236. Georgeson Emergency Emergency Care Hospital Hospital uses the step-down method method to allocate service service department costs to operating departments. The hospital has two service departments, Administration and Information Technology (IT), and two operating departments, Emergency Room and Intensive Care.

Departmental costs Employees.......... ... Computers..............

Service Department Administration IT $15,80 $13,340 5 4 5 4 4

Operating Department Emergency Intensive Room Care $597,700 142 65

$396,240 83 46

Administration Department costs are allocated first on the basis of employees and IT Department costs are allocated second on the basis of computers. Required: Allocate the service department costs to the operating departments using the stepdown method. Ans:

Departmental co costs........ Administration costs...... IT costs.......................... Total costs after alloc location. ion... .... .... .... .... .... .... .... .... ..

Administration $13,340 (13,340)

$

0

Emergency IT Room $15,805 $597,700 290 8,236 (16,095) 9,425

Intensive Care $396,240 4,814 6,670

$

$407,7 7,724

0

$61 $615,36 ,361

Allocation rate for Administration Department costs = Cost to be allocated ÷ Allocation base = $13,340 ÷ (5 + 142 + 83) = $58 Allocation rate for IT Department costs = Cost to be allocated ÷ Allocation base = ($15,805 + $290) ÷ (65 + 46) = $145 AACSB: Analytic AICPA BB: Critical Thinking Appendix: 4B LO: 9 Level: Easy

AICPA FN: Reporting

237. Lester Natal Clinic Clinic uses the step-down method method to allocate service department department costs to operating departments. The clinic has two service departments, Administration and Information Technology (IT), and two operating departments, Prenatal Care and Postnatal Care.

Departmental costs Employees.......... ... Computers..............

Ser Service ice Dep Departme tment Administration IT $22,50 $20,448 6 2 3 2 2

Ope Operat rating Dep Departme tment Prenatal Postnatal Care Care $570,720 131 45

$369,880 79 42

Administration Department costs are allocated first on the basis of employees and IT Department costs are allocated second on the basis of computers. Required: Allocate the service department costs to the operating departments using the stepdown method. Ans:

Departmental costs....... ..... Administration costs.......... IT costs.............................. Total costs after allocation.

Administration $20,448 (20,448) $0

IT $22,506 288 (22,794) $0

Prenatal Care $570,720 12,576 11,790 $595,086

Postnatal Care $369,880 7,584 11,004 $388,468

Allocation rate for Administration Department costs = Cost to be allocated ÷ Allocation base = $20,448 ÷ (3 + 131 + 79) = $96 Allocation rate for IT Department costs = Cost to be allocated ÷ Allocation base = ($22,506 + $288) ÷ (45 + 42) = $262 AACSB: Analytic AICPA BB: Critical Thinking Appendix: 4B LO: 9 Level: Easy

AICPA FN: Reporting

Ch4 Process Costing

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