1. Mitch Corporation's production production cycle begins in the Boiling Department. Department. The following information information is available for August !nits "or# or# in proce process ss$$ Augu August st 1 %&( %&( compl complet ete) e).. .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ..... ...... ...... ...... ...... ...... ...... ...... ...... ...... ..... .. *$ *$ +tarte +tarted d in Augus August.. t..... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ....... ...... ,*$ ,*$ "or# "or# in proces process$ s$ Augus Augustt - %( %( comple complete) te)... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ....... ........ ........ ........ ........ .... ,&$ ,&$ Materials are added at the beginning of the process in the Boiling Department. !sing the average cost method$ what are the e/uivalent units of production for the month of August0
A. B. C. D. 3.
Materials ,&&$ ,$ ,2$ -&$ ,*$
Conversion ,&&$ ,2$ ,$ ,&$ ,&$
+!4456T789 CA:C!:AT758 Materials ; *$ < ,*$ ; ,2$ Conversion Conversion ; %,2$ = ,&$) < .%,&$) ; ,$
,. Moi Company has the following following information information for >uly !nits started Beginning "or# in 4rocess %-&( complete) 8ormal spoilage %discrete) Abnormal spoilage 3nding "or# in 4rocess %( complete) Transferred out Beginning "or# in 4rocess Costs Material Conversion
1$ ,$ -$& &$ 1*$& ?$
units units units units units units
41&$ 1$
All materials are added at the start of the production process. Moi Company inspects goods at & percent completion as to conversion. "hat are e/uivalent units of production for material$ assuming @7@50 a. 1$ b. ?$& c. ?&$ d. 1,$ e. 1,$& +!445T789 CA:C!:AT758 Materials @7@5 Beginning "or# in 4rocess < !nits +tarted and Completed
= $
( 1(
= $
< 8ormal +poilage==Discrete
-$&
1(
-$&
< Abnormal +poilage
&$
1(
&$
1*$&
1(
1*$&
< 3nding "or# in 4rocess 3/uivalent !nits of 4roduction
-. 3len Co.
1$
Beginning inventory %-( complete as to Material B and ( complete for conversion) +tarted this cycle 3nding inventory %&( complete as to Material B and 2( complete for conversion)
units
,$ &
units units
Beginning inventory costs Material A Material B Conversion
41*$, &$?& &$*
Current 4eriod costs Material A Material B Conversion
4*$ $ ?2$1
Material A is added at the start of production$ while Material B is added uniformly throughout the process. Assuming a @7@5 method of process costing$ compute 3!4 units for Materials A and B. a. ,$ and ,$,2$ respectively b. ,$ and ,$*&$ respectively c. ,$ and ,$,*$ respectively d. ,$*& and ,$22$ respectively +!4456T789 CA:C!:AT758 @7@5
Material A
Material B
*?
1&
1&
Beginning "or# in 4rocess !nits +tarted and Completed 3nding "or# in 4rocess 3!4 Materials
&
,&
,
,,*
*. "hen added materials in subse/uent departments result in an increase of the units produced$ the unit transferred=in costs will A. be reclassified as new materials B. be increased to provide for the additional units C. be accounted for under the @7@5 costing method D. be decreased as they are spread over more units 3. remain unchanged
&. A characteristic of a process costing system is that A. costs are accumulated by order B. it is used by a company manufacturing custom machinery C. standard costs are not applicable D. it re/uires a lot more detailed accounting than does a ob order system 3. wor# in process inventory is restated in terms of completed units
