Test Bank - Chapter 4 Process Costing

Chapter 4 Systems Design: Process Costing

True/False 1. T Easy

The following journal entry would be made in a processing costing system when units that have been completed with respect to the work done in Processing Department Z are transferred from Processing Department Z to Processing Department Y: Work in Process, Department Y ......... XXX Work in Process, Department Z .....

2. F Easy

XXX

The following journal entry would be made in a processing costing system when units that have been completed with respect to the work done in the final processing department are transferred to the finished goods warehouse: Finished Goods ........................ XXX Materials .........................

XXX

3. T Hard

Appendix) The "Quantity schedule" and the "Costs to be accounted for" sections of the production report are the same for the weightedaverage method and the FIFO method of process costing.

4. F Easy

In process costing, the same equivalent units figure is used for both materials and conversion costs.

5. F Hard

(Appendix) The cost per equivalent unit for conversion costs will always be the same under both the FIFO and the weighted-average methods if there is no ending work in process inventory.

6. T Medium

(Appendix) The cost per equivalent unit for conversion costs will always be the same under both the FIFO and the weighted-average methods if there is no beginning work in process inventory.

7. F Medium

When assigning costs to partially completed units in the ending work in process inventory, it is not necessary to consider the percentage completion of the units under the weighted-average method.

Managerial Accounting, 9/e

89

8. T Medium

When computing the cost per equivalent unit, it is not necessary to consider the percentage completion of the units in beginning inventory under the weighted-average method.

9. T Easy

(Appendix) Under the FIFO process costing method, the equivalent units of production in the production report relate only to work done during the current period.

10. F Medium

(Appendix) The cost per equivalent unit under the FIFO method of process costing is equal to the cost of beginning work in process inventory plus the costs added during the period, all divided by the equivalent units of production for the period.

11. F Medium

The weighted-average method of process costing can only be used if materials are added at the beginning of the production process.

12. T Medium

A manufacturer of blank CDs would ordinarily use process costing rather than job-order costing.

13. T Easy

In order to use process costing, the output of a processing department must be homogeneous.

14. T Easy

In process costing, costs are accumulated in processing departments, rather than by job.

15. F Easy

If all units go through all processing departments then the processing departments are arranged in a parallel, rather than sequential, fashion.

Multiple Choice 16. C Hard

(Appendix) All of the following are correct in referring to a production report except: a. The quantity schedule deals with whole units. b. The total "Costs to be accounted for" must equal the total cost of the units completed and transferred out plus the cost of the ending work in process inventory. c. The equivalent units in the ending work in process inventory will be different if the weighted-average method is used than it is if the FIFO method is used. d. The total of the "Units to be accounted for" will equal the total of the "Units accounted for".


90

17. D Hard CPA adapted

Assuming that there was no beginning work in process inventory, and the ending work in process inventory is 50% complete with respect to conversion costs, the number of equivalent units of production with respect to conversion costs under the weighted-average method would be: a. the same as the units completed. b. the same as the units started during the period. c. less than the units completed. d. less than the units started during the period.

18. B Hard

(Appendix) All production costs have been steadily rising in the Donner Company for several periods. The company maintains large work in process inventories. Donner Company's cost per equivalent unit computed using the FIFO method would be: a. the same as that computed under the weighted-average method. b. higher than that computed under the weighted-average method. c. lower than that computed under the weighted-average method. d. could be the lower than, the same as, or higher than that computed under the weighted-average method.

19. C Medium

(Appendix) If a company uses two different unit cost figures to cost transfers from one department to another under a process costing system, then it is reasonable to assume that: a. there was no beginning work in process inventory. b. processing centers are arranged in a sequential pattern. c. the FIFO cost method is being used. d. the weighted-average cost method is being used.

20. A Easy

Process costing would be appropriate for each of the following except: a. custom furniture. b. oil refining. c. grain milling. d. newsprint production.

21. B Hard

An operation costing system is: a. identical to a process costing system except that actual manufacturing overhead costs are traced to units of product. b. the same as a process costing system except that direct materials costs are accounted for in the same way as in job order costing. c. the same as a job order system except that direct materials costs are accounted for in the same way as in process costing. d. identical to a job order costing system except that actual manufacturing overhead costs are traced to units of product.


91

22. D Medium CMA adapted

Lucas Company uses the weighted-average method in its process costing system. The company adds materials at the beginning of the process in the Forming Department, which is the first of two stages in its production process. Information concerning operations in the Forming Department in October follows: Units Work in process on October 1 ............ 6,000 Units started during October ............ 50,000 Units completed and transferred to the next Department during October ... 44,000

Materials Cost P 3,000 P25,560

What was the materials cost of work in process at October 31? a. P3,060 b. P5,520 c. P6,000 d. P6,120 23. A Medium

David Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 20,000 units that were 80% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was P123,200. An additional 65,000 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 10% complete with respect to conversion costs. A total of P389,250 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. P7.547 b. P7.700 c. P4.634 d. P5.988


92

24. A Medium

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

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

Units 24,000 86,000 19,000

Percentage complete 40% 20%

According to the company's records, the conversion cost in beginning work in process inventory was P68,064 at the beginning of June. Additional conversion costs of P585,324 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. P6.892 b. P6.806 c. P5.575 d. P7.090 25. C Hard CPA adapted

Glo Co., a manufacturer of combs, uses the weighted-average method in its process costing system. The company sold 125,000 units during the month of April. There is only one processing department. The following additional information is provided: Inventory at April 1: Work in process ................ None Finished goods ................. 37,500 units Inventory at April 30: Work in process (75% complete as to conversion costs)....... 8,000 units Finished goods ................. 30,000 units What were the equivalent units of production for conversion costs for April? a. 126,500 b. 125,500 c. 123,500 d. 117,500


93

26. D Hard

The Morgan Company uses the weighted-average method in its process costing system. For a particular department, the company had 54,000 equivalent units of production with respect to conversion costs in March. There were 7,500 units in the department's beginning work in process inventory, two thirds complete with respect to conversion costs. During March, 52,500 units were started and 50,000 were completed and transferred out of the department. The ending work in process inventory in the department: a. consisted of 5,000 units. b. consisted of 2,500 units. c. was 65% complete with respect to conversion costs. d. was 40% complete with respect to conversion costs.

27. B Medium

The following data were taken from the accounting records of the Hazel Corporation which uses the weighted-average method in its process costing system: Beginning work in process inventory (100% complete as to materials; 70% complete as to conversion) ............. 30,000 units Started in process during the period .......... 90,000 units Ending work in process inventory (100% complete as to materials; 60% complete as to conversion) ............. 20,000 units The equivalent units of production for conversion costs was: a. 102,000 units. b. 112,000 units. c. 111,000 units. d. 100,000 units.

28. B Medium

Baker Company uses the weighted-average method in its process costing system. The Assembly Department started the month with 8,000 units in its beginning work in process inventory that were 90% 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. There were 11,000 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 of production for conversion costs in the Assembly Department for the month? a. 94,700 b. 101,900 c. 98,000 d. 92,000


94

29. C Medium

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

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

Units 6,300 65,600 4,600


What were the equivalent units of production for conversion costs in the Painting Department for April? a. 67,300 b. 68,820 c. 70,520 d. 63,900 30. C Medium

Sarver Company uses the weighted-average method in its process costing 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 ............ Ending work in process inventory ......

Units 7,100 61,000 4,600


The Fitting Department's production report indicates that the cost per equivalent unit for conversion cost for March was P8.24. How much conversion cost was assigned to the units transferred out of the Fitting Department during March? a. P482,287.20 b. P502,640.00 c. P523,240.00 d. P561,144.00


95

31. B Medium

The Nichols Company uses the weighted-average method in its process costing system. The company recorded 29,500 equivalent units of production for conversion costs for November in a particular department. There were 6,000 units in the ending work in process inventory on November 30, 75% complete with respect to conversion costs. The November 1 work in process inventory consisted of 8,000 units, 50% complete with respect to conversion costs. A total of 25,000 units were completed and transferred out of the department during the month. The number of units started during November in the department was: a. 24,500 units. b. 23,000 units. c. 27,000 units. d. 21,000 units.

32. B Easy

The Assembly Department started the month with 35,000 units in its beginning work in process inventory. An additional units 472,000 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. 507,000 b. 473,000 c. 471,000 d. 541,000

33. A Medium CPA adapted

Huffer Company uses the weighted-average method in its process costing system. The following information pertains to Processing Department D for the month of May:

Beginning work in process .... Started in May ............... Units completed .............. Ending work in process .......

Number of units 30,000 80,000 85,000 25,000

Cost of materials P11,000 P36,000

All materials are added at the beginning of the process. The cost per equivalent unit for materials is closest to: a. P0.43. b. P0.45. c. P0.55. d. P0.59.


96

34. D Medium

Harker Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 16,000 units in its beginning work in process inventory that were 40% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was P29,440. An additional 59,000 units were started into production during the month and 61,000 units were completed in the Welding Department and transferred to the next processing department. There were 14,000 units in the ending work in process inventory of the Welding Department that were 10% complete with respect to conversion costs. A total of P246,400 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. P4.176 b. P4.600 c. P3.375 d. P4.421

35. A Medium

Paxton Company uses the weighted-average method in its process 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 .......... Completed and transferred to the next department during January .......... Ending work in process inventory ......

Units 2,700

Percentage complete 80%

57,000 50,300 9,400

20%

The accounting records indicate that the conversion cost that had been assigned to beginning work in process inventory was P10,973 and a total of P268,107 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. P5.348 b. P4.038 c. P5.080 d. P4.704


97

36. D Easy

The Richmond Company uses the weighted-average method in its process costing system. The company has only a single processing department. The company's ending work in process inventory on August 31 consisted of 18,000 units. The units in the ending work in process inventory were 100% complete with respect to materials and 60% complete with respect to labor and overhead. If the cost per equivalent unit for August was P2.75 for materials and P4.25 for labor and overhead, the total cost assigned to the ending work in process inventory was: a. P126,000. b. P 75,600. c. P 80,100. d. P 95,400.

37. D Hard CPA adapted

(Appendix) On November 1, Yankee Company had 20,000 units of work in process in Department No. 1 that were 100% complete with respect to material costs and 20% complete with respect to conversion costs. During November, 160,000 units were started in Department No. 1 and 170,000 units were completed and transferred to Department No. 2. The work in process on November 30, was 100% complete with respect to material costs and 40% complete with respect to conversion costs. By what amount would the equivalent units of production for conversion costs for the month of November differ if the FIFO method were used instead of the weighted-average method? a. 20,000 decrease. b. 16,000 decrease. c. 8,000 decrease. d. 4,000 decrease.

38. D Easy

Fabian Company uses the weighted-average method in its process costing system. The Assembly Department started the month with 9,000 units in its beginning work in process inventory that were 70% complete with respect to conversion costs. An additional 90,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. During the month 87,000 units were completed in the Assembly Department and transferred to the next processing department. There were 12,000 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 of production for conversion costs in the Assembly Department for the month? a. 93,000 b. 83,100 c. 87,000 d. 89,400


98

39. C Easy

Narver Company uses the weighted-average method in its process costing system. Operating data for the Lubricating Department for the month of October appear below:

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

Units 6,600


40,100 37,100 9,600

80%

What were the equivalent units of production for conversion costs in the Lubricating Department for October? a. 43,100 b. 37,100 c. 44,780 d. 47,780 40. B Hard

Black Company uses the weighted-average method in its process costing system. The company's ending work in process inventory consists of 5,000 units, 80% complete with respect to materials and 50% complete with respect to labor and overhead. If the total Peso value of the inventory is P60,000 and the cost per equivalent unit for labor and overhead is P8.00, the cost per equivalent unit for materials must be: a. P5.00. b. P10.00. c. P8.00. d. P4.00.


99

41. B Hard

Department 2 is the second of three sequential processes. All materials are added at the beginning of processing in Department 2. During October, Department 2 reported the following data: Number of Units Units started ............. 60,000 Completed and transferred 50,000 Work in process, October 1 26,000 Work in process, October 31 36,000 Costs for October: Transferred In Work in process, October 1 ...... P45,000 Added during the month ...... P81,000

Conversion Costs Percentage Completed 60% 20%

Materials

Conversion Costs

P 25,000

P 54,000

P115,000

P315,000

The company uses the weighted-average method in its process costing system. The cost per equivalent unit on the production report for conversion costs would have been to the nearest cent: a. P5.51. b. P6.45. c. P6.30. d. P7.38. 42. B Medium

Overland, Inc., uses the weighted-average method in its process costing system. The company’s work in process inventory on April 30 consists of 25,000 units. The units in the ending inventory are 100% complete with respect to materials and 75% complete with respect to conversion costs. If the cost per equivalent unit is P3.00 for materials and P5.50 for conversion costs, the total cost in the April 30 work in process inventory is: a. P212,500. b. P178,125. c. P159,375. d. P109,375.


100

43. D Medium

Valley Manufacturing Company’s beginning work in process inventory consisted of 10,000 units, 100% complete with respect to materials cost and 40% complete with respect to conversion costs. The total cost in the beginning inventory was P30,000. During the month, 50,000 units were transferred out. The equivalent unit cost was computed to be P2.00 for materials and P3.70 for conversion costs under the weightedaverage method. Given this information, the total cost of the units completed and transferred out was: a. P255,000. b. P270,000. c. P240,000. d. P285,000.

44. A Medium CPA adapted

Ogden Company uses the weighted-average method in its process costing system. Information for the month of January concerning Department A, the first stage of the company’s production process, follows: Materials Conversion Cost Work in process, beginning ...... P 8,000 P 6,000 Current added during January .... P40,000 P32,000 Equivalent units of production .. 100,000 95,000 Cost per equivalent unit ........ P 0.48 P 0.40 Units completed and transferred to the next department ........ 90,000 units Work in process, ending ......... 10,000 units Materials are added at the beginning of the process. The ending work in process is 50% complete with respect to conversion costs. What cost would be recorded for the ending work in process inventory? a. b. c. d.

45. B Easy

P6,800 P8,800 P3,400 P4,400

Trapp Company uses the weighted-average method in its process costing system. The beginning work in process inventory in its Painting Department consisted of 3,000 units that were 70% complete with respect to materials and 60% complete with respect to conversion costs. The cost of the beginning work in process inventory in the department was recorded as P10,000. During the period, 9,000 units were completed and transferred on to the next department. The costs per equivalent unit for the period were P2.00 for material and P3.00 for conversion costs. The cost of units transferred out during the month was: a. P39,600. b. P45,000. c. P45,400. d. P35,400.


101

46. B Hard

Strap Company uses the weighted-average method in its process costing system. The company has only one processing department. The ending work in process inventory consists of 10,000 units, 60% complete with respect to materials. The total Peso value of this inventory is P38,000. The costs per equivalent unit are P5.00 for materials and P4.00 for conversion costs for the period. With respect to conversion costs, the ending work in process inventory is: a. 10% complete. b. 20% complete. c. 38% complete. d. 30% complete.

47. A Easy

Rariton Company uses the weighted-average method in its process 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 .......... Completed and transferred to the next department during January .......... Ending work in process inventory ......

Units 4,800


78,000 80,900 1,900

40%

The Molding Department's production report indicates that the cost per equivalent unit for conversion cost for January was P5.37. How much conversion cost was assigned to the ending work in process inventory in the Molding Department for January? a. P4,081.20 b. P10,203.00 c. P10,310.40 d. P6,121.80 48. D Medium

(Appendix) Ebis Company uses the FIFO method in its process costing system. The first processing department, the Welding Department, started the month with 13,000 units in its beginning work in process inventory that were 10% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was P12,610. An additional 89,000 units were started into production during the month. There were 22,000 units in the ending work in process inventory of the Welding Department that were 30% complete with respect to conversion costs. A total of P806,085 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 on the department's production report? (Round off to three decimal places.) a. P8.026 b. P9.700 c. P9.057 d. P9.450

49. C Medium

(Appendix) Marten Company uses the FIFO method in its process costing system. Operating data for the Casting Department for the month of September appear below:

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


Units 19,000


74,000

102

Ending work in process inventory ......

17,000

90%

According to the company's records, the conversion cost in beginning work in process inventory was P83,600 at the beginning of September. Additional conversion costs of P427,682 were incurred in the department during the month. What would be the cost per equivalent unit for conversion costs for September on the Casting Department's production report? (Round off to three decimal places.) a. P5.498 b. P5.779 c. P5.620 d. P5.500


103

50. C Hard

(Appendix) Herston Company uses the FIFO method in its process costing system. The beginning work in process inventory in a particular department consisted of 6,000 units, two-thirds complete with respect to conversion costs. During the month, 42,000 units were started and 40,000 units were completed and transferred out of the department. The company had 40,000 equivalent units of production for conversion costs. The ending work in process inventory in the department consisted of: a. 8,000 units, 25% complete with respect to conversion costs. b. 0 units. c. 8,000 units, 50% complete with respect to conversion costs. d. 4,000 units, 100% complete with respect to conversion costs.

51. B Medium

(Appendix) Carson Company uses the FIFO method in its process costing system. The Assembly Department started the month with 6,000 units in its beginning work in process inventory that were 20% complete with respect to conversion costs. An additional 74,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 8,000 units in the ending work in process inventory of the Assembly Department that were 60% complete with respect to conversion costs. What were the equivalent units of production for conversion costs in the Assembly Department for the month? a. 72,000 b. 75,600 c. 76,000 d. 76,800

52. A Medium

(Appendix) Karmen Company uses the FIFO method in its process costing system. Operating data for the Enameling Department for the month of May appear below:

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

Units 2,400 87,000 8,600


What were the equivalent units of production for conversion costs in the Enameling Department for May? a. 85,000 b. 85,960 c. 93,200 d. 80,800


104

53. A Medium

(Appendix) Creer Company uses the FIFO method in its process costing system. Department A had 20,000 units in process at the beginning of January, that were 40% complete with respect to conversion costs. All materials are added at the beginning of the process in Department A. The January 1 work in process inventory in Department A contained P10,000 in materials cost and P11,600 in conversion cost. During January, materials costs were P0.50 per equivalent unit and conversion costs were P1.50 per equivalent unit. All of the units in the beginning work in process inventory were completed and transferred out during the month. What was the total cost attached to these units when they were transferred to the next department? a. P39,600. b. P33,600. c. P45,600. d. P37,600.

54. C Medium

(Appendix) Mukluk Company uses the FIFO method in its process costing system. The conversion cost for the month of April is P5.00 per equivalent unit and the material cost is P2.90 per equivalent unit. At the beginning of the month, 1,000 units were in process that were 100% complete with respect to materials and 30% complete with respect to conversion, with a total cost at that point of P2,400. If these units are fully complete by the end of the month, their total cost will be: a. P3,500. b. P3,900. c. P5,900. d. P8,000.

55. A Medium

(Appendix) Index Company uses the FIFO method in its process costing system. The first processing department, the Forming Department, started the month with 17,000 units in its beginning work in process inventory that were 10% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was P9,010. An additional 76,000 units were started into production during the month and 83,000 units were completed and transferred to the next processing department. There were 10,000 units in the ending work in process inventory of the Forming Department that were 70% complete with respect to conversion costs. A total of P445,915 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 on the Forming Department's production report? (Round off to three decimal places.) a. P5.050 b. P5.300 c. P5.867 d. P5.150


105

56. A Medium

(Appendix) Qart Company uses the FIFO method in its process costing system. Operating 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 4,500


74,000 74,500 4,000

60%

According to the company's records, the conversion cost in beginning work in process inventory was P1,656 at the beginning of March. Additional conversion costs of P129,960 were incurred in the department during the month. What would be the cost per equivalent unit for conversion costs for March on the Cutting Department's production report? (Round off to three decimal places.) a. P1.710 b. P1.677 c. P1.756 d. P1.840 57. B Medium

(Appendix) Roger Company uses the FIFO method in its process costing system. The following data are taken from the accounting records of a particular department for June: Beginning work in process inventory: Cost ................................ P17,500 Units ............................... 20,000 units Percentage completion: Materials ........................ 100% Conversion ....................... 60% Units completed and transferred out .... Cost per equivalent unit: Material ............................ Conversion ..........................

75,000 units P1.75 P0.50

The cost of the 75,000 units transferred out of the department during June is: a. P151,250. b. P145,250. c. P131,500. d. P168,750.


106

58. A Medium

(Appendix) Winkle Company uses the FIFO method in its process costing system. At the beginning of March, the work in process inventory in the Blending Processing Center consisted of 5,000 units, 90% complete with respect to conversion costs. At the end of the month, the work in process 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 month, the equivalent units of production for conversion costs were: a. 6,700 units. b. 11,700 units. c. 10,300 units. d. 13,000 units.

59. B Easy CPA adapted

(Appendix) Winder Company uses the FIFO method in its process costing system. Department One is the first stage of the company's production process. The following information pertains to conversion costs for April for Department One: Units Work in process, beginning (40% complete) ............. 40,000 Started in April ...................................... 320,000 Completed in April and transferred to Department Two .. 340,000 Work in process, ending (60% complete) ................ 20,000 The equivalent units of production for conversion costs are: a. 320,000. b. 336,000. c. 352,000. d. 360,000.

60. D Medium

(Appendix) Garson Company uses the FIFO method in its process costing system. The Grinding Department started the month with 18,000 units in its beginning work in process inventory that were 10% complete with respect to conversion costs. An additional 98,000 units were transferred in from the prior department during the month to begin processing in the Grinding Department. During the month 115,000 units were completed in the Grinding Department and transferred to the next processing department. There were 1,000 units in the ending work in process inventory of the Grinding Department that were 20% complete with respect to conversion costs. What were the equivalent units of production for conversion costs in the Grinding Department for the month? a. 81,000 b. 115,200 c. 115,000 d. 113,400


107

61. D Medium

(Appendix) Oxyrom Company uses the FIFO method in its process costing system. Operating data for the Brazing Department for the month of November appear below:

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

Units 3,800


46,700 43,200 7,300

80%

What were the equivalent units of production for conversion costs in the Brazing Department for November? a. 49,040 b. 50,200 c. 43,200 d. 48,280 62. C Medium

(Appendix) Tarten Company uses the FIFO method in its process costing system. Operating data for the Curing 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 9,000


57,000 65,000 1,000

70%

According to the company's records, the conversion cost in beginning work in process inventory was P7,470 at the beginning of March. The cost per equivalent unit for conversion costs for March was P8.20. How much conversion cost would be assigned to the units completed and transferred out of the department during March? a. P525,530 b. P592,040 c. P533,090 d. P533,000


108

Reference: 4-1 A sporting goods manufacturer buys wood as a direct material for baseball bats. The Forming Department processes the baseball bats, and the bats are then transferred to the Finishing Department where a sealant is applied. There was no beginning work in process inventory in the Forming Department in May. The Forming Department began manufacturing 10,000 Casey Slugger baseball bats during May. Costs for the Forming Department for the month of May were as follows: Direct materials ........ Conversion costs ........

P33,000 P17,000

A total of 8,000 bats were completed and transferred to the Finishing Department during May. The ending work in process inventory was 100% complete with respect to direct materials and 25% complete with respect to conversion costs. The company uses the weighted-average method of process costing. 63. D Medium CMA adapted Refer To: 4-1

The cost of the units transferred to the Finishing Department during May was: a. P50,000. b. P40,000. c. P53,000. d. P42,400.

64. A Medium CMA adapted Refer To: 4-1

The cost of the work in process inventory in the Finishing Department at the end of May was: a. P7,600. b. P10,000. c. P2,500. d. P4,000.

Reference: 4-2 Adam 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 ... Transferred in during the month ...... Work in process inventory, Sept. 30 ..

Number of Units 60,000 105,000 40,000

Transferred In Beginning work in process inventory ............ Cost added during the month .....

P 60,000 P115,500

Labor and Overhead Percent Completed 15% 20%

Materials

Labor & Overhead

P30,000 P63,000

P 16,000 P320,000

65. A Medium Refer To: 4-2

The "Total cost to be accounted for" section of the production report for the month will show an amount equal to: a. P604,500. b. P498,500. c. P429,000. d. P106,000.

66. D Medium Refer To: 4-2

The equivalent units of production for material for the month is: a. 105,000. b. 145,000. c. 122,000. d. 165,000.


109

Reference: 4-3 Madsen Company uses the weighted-average method in its process costing system. During October, the Mixing Department transferred out 40,000 units. The October 31 work in process inventory in the Mixing Department consisted of 4,000 equivalent units of material and 5,000 equivalent units of labor and overhead. The cost per equivalent unit was P2.50 for materials and P6.25 for labor and overhead. 67. A Medium Refer To: 4-3

The total cost of the October 31 work in process inventory was: a. P41,250. b. P35,000. c. P43,750. d. P78,750.

68. B Medium Refer To: 4-3

The "Total cost to account for" section of the production report for October will show an amount equal to: a. P110,000. b. P391,250. c. P350,000. d. P428,750.

Reference: 4-4 (Appendix) The activity in Nolan Company's Blending Department for the month of April is given below: Number of Units Work in process inventory, April 1 ....... Started into process during the month ......... Work in process inventory, April 30 ......

8,000

Labor and Overhead Percent Complete 50%

50,000 10,000

70%

All materials are added at the beginning of processing in the Blending Department. 69. A Medium Refer To: 4-4

(Appendix) The equivalent units of production for material for the month, using the FIFO method, are: a. 50,000 units. b. 58,000 units. c. 54,000 units. d. 60,000 units.


(Appendix) The equivalent units of production for labor and overhead for the month, using the FIFO method, are: a. 47,000 units. b. 51,000 units. c. 5,000 units. d. 54,000 units.

71. C Medium Refer To: 4-4

The equivalent units of production for material for the month, using the weighted-average method, are: a. 48,000 units. b. 50,000 units. c. 58,000 units. d. 52,000 units.

72. D Medium Refer To:

The equivalent units of production for labor and overhead for the month, using the weighted-average method, are: a. 50,000 units. b. 51,000 units.


110

4-4

c. 47,000 units. d. 55,000 units.

Reference: 4-5 Activities in the Challenger Company’s Assembly Department for the month of follow: Number Percent Complete Units Materials Conversion Work in process inventory, March 1 5,000 65% 30% Started into production during March 65,000 Work in process inventory, March 3 3,000 35% 25%

March

73. C Medium Refer to: 4-5

The equivalent units of production for materials for March, using the weighted-average method, would be: a. 65,000. b. 67,000. c. 68,050. d. 70,000.

74. A Hard Refer to: 4-5

(Appendix) The equivalent units of production for conversion for March using the FIFO method, would be: a. 66,250. b. 67,000. c. 64,250. d. 67,750.


111

Reference: 4-6 The following data relate to the Blending Department of Tru-Color Paint Company for a recent month:

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

Number of Units 9,000 45,000 46,000 8,000

Percent Complete Conversion Costs 60% 25%

All materials are added prior to the beginning of work in the Blending Department. 75. B Hard Refer to: 4-6

(Appendix) Assuming that Tru-Color Paint Company uses the FIFO method, the equivalent units of production for materials would be: a. 42,600. b. 45,000. c. 53,000. d. 46,000.


(Appendix) Assuming Tru-Color Paint Company uses the FIFO method, the equivalent units of production for conversion costs would be: a. 42,600. b. 44,400. c. 46,000. d. 54,000.


Assuming that Tru-Color Paint Company uses the weighted-average method, the equivalent units of production for materials would be: a. 48,000. b. 46,000. c. 54,000. d. 45,000.

78. D Medium Refer to: 4-6

Assuming that Tru-Color Paint Company uses the weighted-average method, the equivalent units of production for conversion costs would be: a. 44,400. b. 42,600. c. 46,000. d. 48,000.


112

Reference: 4-7 The information below was obtained from the records of the first processing department of Christine Corporation for the month of July. The company uses the weighted-average method in its process costing system.

Work in process inventory, July 1 ....... Started during the month ................ Completed during the month .............. Work in process inventory, July 31 ......

Units 20,000 70,000 80,000 ?

Labor and Overhead Percent Completed 40% 25%

All materials are added at the beginning of the manufacturing process. 79. B Medium Refer To: 4-7


80. D Medium Refer To: 4-7

The equivalent units of production for labor and overhead for the month is: a. 70,000. b. 90,000. c. 80,000. d. 82,500.

Reference: 4-8 The information below was obtained from the records of the first processing department of Moore Company for the month of May. The company uses the weightedaverage method in its process costing system.

Work in process, May 1 ............ Units started ..................... Completed and transferred out ..... Work in process, May 31 ...........

Units 10,000 64,000 60,000 14,000

Labor and Overhead Percentage Complete 40% 70%

All materials are added at the beginning of the process. 81. B Medium Refer To: 4-8

The equivalent units of production for materials for the month of May were: a. 60,000 units. b. 74,000 units. c. 64,000 units. d. 69,800 units.


The equivalent units of production for labor and overhead for the month of May were: a. 60,000 units. b. 69,800 units. c. 65,800 units. d. 73,800 units.

Reference: 4-9 Information about units processed and processing costs incurred during a recent month in the Refining Department of a manufacturing company follow: Number of Units


Percent Completion Conversion Costs

113

Beginning work in process inventory .... 11,000 Units started into production .......... 120,000 Units completed and transferred out .... 114,000 Ending work in process inventory ....... 17,000

35% 30%

The beginning work in process inventory included P11,000 of conversion cost. During the month, the Department incurred an additional P290,000 in conversion costs. 83. A Medium Refer to: 4-9

Assuming that the company uses the weighted-average cost method, what are the equivalent units of production for conversion costs for the Blending Department for the month? a. 119,100 b. 120,000 c. 114,000 d. 131,000

84. B Medium Refer to: 4-9

Assuming that the company uses the weighted-average cost method, what is the cost per equivalent unit for conversion costs for the month in the Blending Department to the nearest cent? a. P2.55 b. P2.53 c. P2.50 d. P2.44


(Appendix) Assuming that the company uses the FIFO method, what are the equivalent units of production for conversion costs for the Blending Department for the month? a. 119,100 b. 111,950 c. 115,250 d. 114,000


114


(Appendix) Assuming that the company uses the FIFO method, what is the cost per equivalent unit for conversion costs for the month in the Blending Department to the nearest cent? a. P2.52 b. P2.54 c. P2.44 d. P2.59

Reference: 4-10 (Appendix) Kimbeth Manufacturing makes Dust Density Sensors (DDS), a safety device for the mining industry. The company uses a process costing system and has only a single processing department. The following information pertains to operations for the month of May: Units Beginning work in process inventory ..... 16,000 Started into production during May ...... 100,000 Completed during May .................... 92,000 Ending work in process inventory ........ 24,000 The beginning work in process inventory was 60% complete with respect to materials and 20% complete with respect to conversion costs. The ending work in process inventory was 90% complete with respect to materials and 40% complete with respect to conversion costs. The costs were as follows: Beginning work in process inventory .... Costs incurred during May ..............

Materials P54,560 P468,000

Conversion P35,560 P574,040

87. B Medium Type: CMA adapted Refer To: 4-10

(Appendix) Using the FIFO method, the equivalent units of production for May for materials are: a. 82,400 units. b. 104,000 units. c. 107,200 units. d. 108,000 units.

88. D Medium CMA adapted Refer To: 4-10

(Appendix) Using the FIFO method, the equivalent units of production for May for conversion costs are: a. 85,600 units. b. 88,800 units. c. 95,200 units. d. 98,400 units.

89. B Medium CMA adapted Refer To: 4-10

(Appendix) Using the FIFO method, the cost per equivalent unit of materials for May is closest to: a. P4.12. b. P4.50. c. P4.60. d. P4.80.


115

90. B Medium CMA adapted Refer To: 4-10

(Appendix) Using the FIFO method, the cost per equivalent unit of conversion cost for May is closest to: a. P5.65. b. P5.83. c. P6.00. d. P6.20.


(Appendix) Using the FIFO method, the total cost of units in the ending work in process inventory is closest to: a. P153,200. b. P154,800. c. P155,300. d. P157,000.

92. C Medium CMA adapted Refer To: 4-10

Using the weighted-average method, the cost per equivalent unit of materials for May is closest to: a. P4.12. b. P4.50. c. P4.60. d. P5.03.

93. C Medium CMA adapted Refer To: 4-10

Using the weighted-average method, the cost per equivalent unit of conversion cost for May is closest to: a. P5.65. b. P5.83. c. P6.00. d. P6.41.


Using the weighted-average method, the total cost of the units in ending work in process inventory is closest to: a. P156,960. b. P86,400. c. P153,960. d. P154,800.

Reference: 4-11 Reid Company uses a process costing system in which units go through several departments. In the Cutting Department for June, units in the beginning work in process inventory were 80% complete with respect to conversion costs. Units in the ending work in process inventory were 25% complete with respect to conversion costs. Other data for the department for June are as follows: Units Conversion Cost Work in process inventory on June 1 .......... 15,000 P 50,200 Units started into production ................ 145,000 Conversion costs incurred during June ........ P175,700 Units completed and transferred to the next department during June .................. 130,000


116

95. B Hard Refer to: 4-11

(Appendix) Assuming that the company uses the FIFO cost method, what is the cost per equivalent unit for conversion costs for June to the nearest whole cent? a. P1.80 b. P1.40 c. P1.64 d. P1.35


Assuming that the company uses the weighted-average method, what is the cost per equivalent unit for conversion costs for June to the nearest whole cent? a. P1.64 b. P1.56 c. P1.74 d. P1.48

Reference: 4-12 Cherrington Company uses a process costing system. For May, the month just completed, the beginning work in process inventory consisted of 50,000 units which were 60% complete with respect to conversion costs. The ending inventory for the month was 20% complete with respect to conversion costs. A summary of cost data for the month follows: Units Work in process inventory, May 1 ......... 50,000 Units started into production ............ 180,000 Conversion costs incurred during May ..... Units completed and transferred out during the month ...................... 190,000

Conversion Costs P 30,000 P 690,000

97. C Hard Refer to: 4-12

Assuming that Cherrington Company uses the weighted-average method, what is the cost per equivalent unit for conversion costs for May to the nearest whole cent? a. P4.19 b. P4.00 c. P3.64 d. P3.83

98. D Hard Refer to: 4-12

(Appendix) Assuming that Cherrington Company uses the FIFO method, what is the cost per equivalent unit for conversion costs for May to the nearest cent? a. P4.31 b. P3.49 c. P4.29 d. P4.11


117

Reference: 4-13 Nando Company uses the weighted-average method in its process costing system. Department J is the second of three sequential processes at the company. During October, Department J collected the following data:

Work in process, October 1 ....... Units started .................... Completed and transferred ........ Work in process, October 31 ......

Units 8,000 25,000 20,000 13,000

Costs for October: Transferred In Work in process, October 1 .... P33,000 Added during the month ........ P59,400

Labor and Overhead Percentage Complete 60% 20% Materials P16,500 P82,500

Labor and Overhead P 31,200 P194,800

All materials are added at the beginning of the process. 99. B Medium Refer To: 4-13

The total cost assigned to units transferred out during October was: a. P264,600. b. P316,000. c. P342,000. d. P358,400.


The total cost assigned to ending work in process inventory was: a. P75,400. b. P101,400. c. P152,800. d. P59,000.

Reference: 4-14 (Appendix) The following information was obtained from the records of the first processing department of Keith Manufacturing Company for the month of February. The company uses the FIFO method in its process costing system. Units Work in process inventory, Feb. 1 ....... 15,000 Started in assembly during the month .... 60,000 Work in process inventory, Feb. 28 ...... 20,000

Labor and Overhead Percent Complete 30% 20%

All materials are added at the beginning of the manufacturing process.


118



102. A Medium Refer To: 4-14

The equivalent units of production for labor and overhead for the month is: a. 54,500. b. 59,000. c. 95,000. d. 60,000.

Essay 103. Hard

Able Inc. uses the weighted-average method in its process costing system. The following data concern the operations of the company's first processing department for a recent month. Work in process, beginning: Units in process ................................ Stage of completion with respect to materials ... Stage of completion with respect to conversion .. Costs in the beginning inventory: Materials cost ................................ Conversion cost ...............................

P342 P2,394

Units started into production during the month .... Units completed and transferred out ...............

21,000 20,700

Costs added to production during the month: Materials cost .................................. Conversion cost .................................

P44,136 P546,750

Work in Units Stage Stage

process, ending: in process ................................ of completion with respect to materials ... of completion with respect to conversion ..

300 60% 30%

600 80% 30%

Required: Prepare a production report for the department using the weightedaverage method.


119

Answer: Weighted Average method: Quantity schedule and equivalent units Quantity Schedule Units to be accounted for: Work in process, beginning ..... Started into production ........ Total units ..................

300 21,000 21,300 Equivalent units Materials Conversion

Units accounted for as follows: Transferred to next department Work in process, ending ........ Total units .................

20,700 600 21,300

20,700 480 21,180

20,700 180 20,880

Costs per equivalent unit Total Cost Cost to be accounted for: Work in process, beginning.... P2,736 Cost added during the month...P590,886 Total cost (a) .............P593,622 Equivalent units (above) (b) ... Cost per EU, (a) ÷ (b) ......... Combined cost per EU ........... P28.400

Materials

Conversion

P342 P44,136 P44,478

P2,394 P546,750 P549,144

21,180 P2.100

20,880 P26.300

Cost reconciliation Total Cost Cost accounted for as follows: Transferred out ........ P587,880 Work in process, ending: Materials ............ P1,008 Conversion ........... P4,734 Total work in process, ending ................. P5,742 Total cost ............... P593,622


Equivalent Units (above) Materials Conversion 20,700

20,700

480 180

120

104. Hard

Barker Inc. uses the weighted-average method in its process costing system. The following data concern the operations of the company's first processing department for a recent month. Work in process, beginning: Units in process ................................ Stage of completion with respect to materials ... Stage of completion with respect to conversion .. Costs in the beginning inventory: Materials cost ................................ Conversion cost ...............................

P2,440 P4,928


15,000 15,600


P96,470 476,362



800 50% 20%

200 50% 90%

Required: Using the weighted-average method: a. Determine the equivalent units of production for materials and conversion costs. b. Determine the cost per equivalent unit for materials and conversion costs. c. Determine the cost of units transferred out of the department during the month. d. Determine the cost of ending work in process inventory in the department.


121

Answer: a. through d. The answers to all of the questions can be found filling out a production report as follows.

by

Quantity schedule and equivalent units Quantity Schedule Units to be accounted for: Work in process, beginning ..... 800 Started into production ........ 15,000 Total units ...................... 15,800 Equivalent units Materials Conversion d. Units accounted for as follows: Transferred to next department Work in process, ending ....... Total units .................

15,600 200 15,800

15,600 100 15,700

15,600 180 15,780

Costs per equivalent unit Total Cost Cost to be accounted for: Work in process, beginning .. P7,368 Cost added during the month . P572,832 Total cost (a) ............ P580,200 Equivalent units (above) (b) .. Cost per EU, (a) ÷ (b) ........ Combined cost per EU ..........

Materials

Conversion

P2,440 P96,470 P98,910

P4,928 P476,362 P481,290

15,700 P6.300

15,780 P30.500

P36.800

Cost reconciliation Total Cost Cost accounted for as follows: Transferred out ............. P574,080 Work in process, ending: Materials ................. P630 Conversion ................ P5,490 Total work in process, ending . P6,120 Total cost .................... P580,200


Equivalent Units (above) Materials Conversion 15,600

15,600

100 180

122

105. Medium

Harmon Company uses the weighted-average method in its process costing system. The Curing Department of Harmon Company reported the following information for the month of November.

Work in process, November 1 ..... Units started ................... Completed and transferred out ... Work in process, November 30 ....

Conversion Percentage Complete 80%

Units 10,000 28,000 30,000 8,000

30%

Costs for November: Materials Work in process, November 1 ..... P 34,500 Added during the month .......... P146,000

Conversion P 48,600 P194,400

All materials are added at the beginning of the process. Required: Compute the following items for the company's monthly production report using the weighted-average method: a. The equivalent units of production for materials. b. The cost per equivalent unit for conversion. c. The total cost assigned to units transferred out of the Curing Department during November. d. The cost assigned to work in process inventory as of November 30. Answer: a. Units transferred out ................ Add: Equivalent units in ending inventory (8,000 * 100%) ........ Equivalent units for materials ....... b. Units transferred out ................ Add: Equivalent units in ending inventory (8,000 * 30%) ......... Equivalent units for conversion ......

30,000 8,000 38,000 30,000 2,400 32,400

Total conversion costs ............... 243,000 (P48,600 + P194,400)/32,400 EUs = P7.50 per EU c. Materials cost per equivalent unit: (P34,500 + P146,000)/38,000 EUs = P4.75 per EU Costs transferred out: 30,000 units * (P7.50 + P4.75) = P367,500 d. Materials cost 8,000 units * P4.75 per EU .......... P38,000 Conversion 8,000 units * 30% complete * P7.50 per EU 18,000 Cost assigned to ending inventory .................. P56,000


123

106. Medium

Carver Inc. uses the weighted-average method in its process costing system. The following data concern the operations of the company's first processing department for a recent month. Work in Units Stage Stage

process, beginning: in process ................................ of completion with respect to materials ... of completion with respect to conversion ..

Units started into production during the month .... Work in Units Stage Stage


700 50% 40% 3,000 200 80% 40%

Required: Using the weighted-average method, determine the equivalent units of production for materials and conversion costs by compiling the "Quantity Schedule and Equivalent Units" portion of the production report. Answer: Quantity schedule and equivalent units Quantity Schedule Units to be accounted for: Work in process, beginning ..... 700 Started into production ........ 23,000 Total units .................. 23,700 Equivalent units Materials Conversion d. Units accounted for as follows: Transferred to next department . Work in process, ending ........ Total units ..................


23,500 200 23,700

23,500 160 23,660

23,500 80 23,580

124

107. Hard

(Appendix) The Smith Company manufactures a product that goes through two departments prior to completion. The following information is available on work in one of these departments, the Forming Department, during March:

Work in process, March 1 ........ Started into production ......... Completed and transferred out ... Work in process, March 31 .......

Percentage Completed Units Materials Conversion 70,000 5/7 3/7 460,000 450,000 80,000 7/8 5/8

Cost in the beginning work in process inventory and cost added during the month were as follows: Work in process, March 1 ......... Cost added during March ..........

Materials P 42,190 P440,810

Conversion P 38,000 P 394,000

The Forming Department is the first department in the production process; after forming has been completed, the units are transferred to the Finishing Department. Required: 1. Calculate the equivalent units and unit cost for materials and conversion costs assuming the company uses the weightedaverage method (round to the nearest tenth of a cent). 2. Calculate the equivalent units and unit cost for materials and conversion costs assuming the company uses the FIFO method (round to the nearest tenth of a cent). Answer: Equivalent units: Weighted-average: Units completed and transferred out...... Work in process, March 31: Materials: 80,000 x 7/8 = .............. Conversion: 80,000 x 5/8 = ............. Equivalent units.........................

Materials 450,000

Conversion 450,000

70,000 520,000

50,000 500,000

Unit costs: Materials: (P42,190 + P440,810)/520,000 = P0.929 Conversion: (P38,000 + P394,000)/500,000 = P0.864


125

Equivalent units: FIFO: Materials Work in process, March 1: Materials: 70,000 x 2/7 = .............. 20,000 Conversion:70,000 x 4/7 = ............... Started and completed during March ...... 380,000 Work in process, March 31: Materials: 80,000 x 7/8 = .............. 70,000 Conversion: 80,000 x 5/8 = ............. Equivalent units ........................ 470,000

Conversion 40,000 380,000 50,000 470,000

Unit costs: Materials: P440,810/470,000 = P0.938 Conversion: P394,000/470,000 = P0.838 108. Medium

Dita Company uses a process costing system. The following information relates to one month's activity in the company's Curing Department. Conversion Percentage Units Complete Beginning work in process inventory .. 10,000 20% Units started ........................ 21,000 Units completed and transferred out .. 26,000 Ending work in process inventory ..... 5,000 80% The conversion cost of the beginning inventory was P6,500. During the month, P112,000 in additional conversion cost was incurred. Required: a. (Appendix) Assume that the company uses the FIFO method. Compute: 1. The equivalent units of production for conversion for the month. 2. The cost per equivalent unit for conversion for the month. 3. The total cost transferred out during the month. 4. The cost assigned to the ending work in process inventory. b. Assume that the company uses the weighted-average cost method. Compute: 1. The equivalent units of production for conversion for the month. 2. The cost per equivalent unit for conversion for the month. 3. The total cost transferred out during the month. 4. The cost assigned to the ending work in process inventory.


126

Answer: a. 1. Units transferred out .............. Deduct: equivalent units in the beginning inventory ........ Add: equivalent units in the ending inventory ........... Equivalent units ..................

26,000 2,000 24,000 4,000 28,000

2. P112,000 ÷ 28,000 EUs = P4 per EU. 3. Beginning inventory: Cost in the beginning inventory .. P 6,500 Completion of the units in the beginning inventory: P4 x 1,000 x 80% ....... 32,000 Units started and completed during the period: P4 x 16,000 units .. 64,000 Total cost transferred out ....... P102,500 4. P4 per EU x 5,000 x 80% = P16,000 b. 1. Units transferred out .............. Add: equivalent units in the ending inventory ................ Equivalent units ..................

26,000 4,000 30,000

2. Cost in the opening inventory ...... P 6,500 Cost incurred during the period ... 112,000 Total cost ...................... P118,500 P118,500 ÷ 30,000 Eus = P3.95 per EU 3. 26,000 units x P3.95 per EU = P102,700 4. P3.95 per EU x 5,000 x 80% = P15,800


127

109. Hard

Production and cost data for the month of February for Process A of the Packer manufacturing Company follow: Production record: Units in process, February 1 (100% complete with respect to materials; 25% complete with respect to conversion cost) ........ New units started in process ............................ Units completed ......................................... Units in process, February 28 (100% complete with respect to materials; 1/3 complete with respect to conversion cost) ........ Cost record: Work in process inventory, February 1: Materials ............................... Conversion ............................... Costs for February: Materials issued ......................... Conversion ............................... Total cost to be accounted for .............

P600 100

2,000 8,000 7,000 3,000

P

700

2,560 1,500 P4,760

The company uses the weighted-average cost method in its process costing system. Required: 1. Calculate the equivalent units and unit costs for February materials and for conversion costs.

for

2. Determine the cost transferred to finished goods. 3. Determine the amount of cost that should be assigned to the ending work in process and finished goods inventories. Answer: 1. Equivalent units: Materials: Completed ......................................... 7,000 Work in process, Feb. 28 .......................... 3,000 Equivalent units .................................. 10,000 Conversion: Completed ......................................... 7,000 Work in process, Feb. 28 (3,000 x 1/3) ............ 1,000 Equivalent units .................................. 8,000 Material Unit costs: Cost from work in process, Feb. 1 ..... Cost recorded in February ............. Total cost ............................ Equivalent units ...................... Unit cost .............................


P

600 2,560 P 3,160 10,000 P 0.316

Conversion P

100 1,500 P1,600 8,000 P 0.20

128

2. and 3. Units completed and transferred—7,000 x P.516 ........ P3,612 Work in process inventory, February 28: Material cost: 3,000 units x 100% x P0.316 = .......... 948 Conversion cost: 3,000 units x 1/3 x P0.20 = .......... 200 Total cost accounted for .............................. P4,760 110. Hard

Miller Company manufactures a product for which materials are added at the beginning of the manufacturing process. A review of the company’s inventory and cost records for the most recently completed year revealed the following information: Units Work in process, Jan. 1 80% complete with respect to conversion costs ............... Units started into production .... Costs added during the year: Materials ...................... Conversion ..................... Units completed during the year ..

Costs _ Materials Conversion

100,000 P100,000 500,000

P157,500

P650,000 P997,500 450,000

The company uses the weighted-average cost method in its process costing system. The ending inventory is 50% complete with respect to conversion costs. Required: 1. Compute the equivalent units of production and the cost per equivalent units for materials and for conversion costs. 2. Determine the cost transferred to finished goods. 3. Determine the amount of cost that should be assigned to the ending work in process inventory.


129

Answer: Equivalent units: Units completed and transferred out ... Work in process, December 31: Materials: 150,000 x 1.00 = .......... Conversion: 150,000 x 0.50 = ......... Equivalent units ......................

Materials 450,000

Conversion 450,000

150,000 _______ 600,000

75,000 525,000

Unit costs: Materials Costs in beginning work in process .... P100,000 Costs added during the year ........... 650,000 Total ................................. P750,000 Equivalent units ...................... 600,000 Unit cost ............................. P 1.25 Costs to be accounted for: Work in process, beginning ............ Cost added by department .............. Total cost to be accounted for ........

Conversion P 157,500 997,500 P1,155,000 525,000 P 2.20 P

257,500 1,697,500 P1,905,000

Cost accounted for as follows: Transferred to finished goods: 450,000 x (P1.25 + P2.20) = ........... Work in process, ending: Materials—150,000 x P1.25 = .......... Conversion—75,000 x P2.20 = .......... Total costs accounted for .............

P1,552,500 187,500 165,000 P1,905,000

Ending work in process: Materials: ............................ Conversion ............................ Total .................................


P187,500 165,000 P352,500

130

111. Medium

The Hardy Company manufactures a product that goes through two departments prior to completion. The following information is available on work in one of these departments, the Molding Department, during the month of July:

Work in process, July 1 ..... Started into production ..... Completed ................... Work in process, July 31 ....

Percentage Completed Materials Conversion 3/5 2/5

Units 50,000 440,000 430,000 60,000

5/6

2/3

The Molding Department is the first department in the production process; after molding has been completed, the units are transferred to the Finishing Department. Required: Calculate the equivalent units for materials and conversion costs assuming the company uses the weighted-average method. Round to the nearest tenth of a cent. Answer: Equivalent units: Weighted-average: Units completed and transferred out Work in process, July 31: Materials: 60,000 x 5/6 = ........ Conversion: 60,000 x 2/3 = ....... Equivalent units ..................


Materials 430,000

Conversion 430,000

50,000 480,000

40,000 470,000

131

112. Medium

Sharp Company has a process costing system. The following data relate to the company's Mixing Department for a recent month:

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

Conversion Percentage of Completion 60%

Units 5,000 40,000 37,000 8,000

25%

All materials are added at the beginning of the Mixing process. Required: a. (Appendix) Compute the equivalent units of materials using the FIFO method. b. (Appendix) Compute the equivalent units of conversion using the FIFO method. c. Compute the equivalent units of production using the weighted-average method. d. Compute the equivalent units of production using the weighted-average method.

production for production for for materials for conversion

Answer: a. & b. Materials Units transferred out .................. 37,000 Deduct: equivalent units in beginning inventory ........................... 5,000 32,000 Add: equivalent units in ending inventory ........................... 8,000 Equivalent units of production ......... 40,000 c. & d. Units transferred out .................. Add: equivalent units in the ending inventory ........................... Equivalent units of production .........


Conversion 37,000 3,000 34,000 2,000 36,000

37,000

37,000

8,000 45,000

2,000 39,000

132

113. Hard

(Appendix) Darver Inc. uses the FIFO method in its process costing system. The following data concern the operations of the company's first processing department for a recent month. Work in process, beginning: Units in process .................................. Stage of completion with respect to materials ..... Stage of completion with respect to conversion .... Costs in the beginning inventory: Material cost ................................... Conversion cost..................................

P376 P2,376

Units started into production during the month....... Units completed and transferred out..................

21,000 20,400

100 80% 60%

Costs added to production during the month: Material cost ..................................... P93,645 Conversion cost.................................... P825,531 Work in Units Stage Stage

process, ending: in process .................................. of completion with respect to materials ..... of completion with respect to conversion ....

700 70% 50%

Required: Prepare a production report for the department using the FIFO method. Answer: Quantity Schedule and Equivalent Units Quantity Schedule Units to be accounted for: Work in process, beginning ..... Started into production ........ Total units ..................

100 21,000 21,100 Equivalent units Materials Conversion

d. Units accounted for as follows: Transferred out: From the beginning inventory... 100 Started and completed ......... 20,300 Work in process, ending ........ 700 Total units ................. 21,100


20 20,300 490 20,810

40 20,300 350 20,690

133

Costs per equivalent unit Total Cost

Materials

Conversion

P93,645

P825,531

20,810 P4.500

20,690 P39.900

Cost to be accounted for: Work in process, beginning... P2,752 Cost added during the month.. P919,176 Total cost (a)............. P921,928 Equivalent units (above) (b)... Cost per EU, (a) ÷(b).......... Combined cost per EU........... P44.400 Cost Reconciliation Total Cost Cost accounted for as follows: Transferred out: From the beginning inventory: Cost in the beginning inventory. P2,752 Cost to complete these units: Materials .................... P90 Conversion ................... P1,596 Total cost ................. P4,438 Units started and completed....... P901,320 Total cost transferred............ P905,758 Work in process, ending: Materials ...................... P2,205 Conversion ..................... P13,965 Total work in process, ending... P16,170 Total cost...................... P921,928


Equivalent Units (above) Materials Conversion

20 40 20,300

20,300

490 350

134

114. Hard

(Appendix) Easy Inc. uses the FIFO method in its process costing system. The following data concern the operations of the company's first processing department for a recent month. Work in process, beginning: Units in process ................................ Stage of completion with respect to materials ... Stage of completion with respect to conversion .. Costs in the beginning inventory: Materials cost ................................ Conversion cost ...............................

P594 P8,256


26,000 25,500


P79,732 P887,626



300 60% 80%

800 50% 40%

Required: Using the FIFO method: a. Determine the equivalent units of production for materials and conversion costs. b. Determine the cost per equivalent unit for materials and conversion costs. c. Determine the cost of units transferred out of the department during the month. d. Determine the cost of ending work in process inventory in the department. Answer: a. through d. can be answered by completing a production report follows:

as

Quantity Schedule and Equivalent Units Quantity Schedule Units to be accounted for: Work in process, beginning ..... 300 Started into production ........ 26,000 Total units .................. 26,300


135

Equivalent units Materials Conversion d. Units accounted for as follows: Transferred out: From the beginning inventory Started and completed ...... Work in process, ending ...... Total units ...............

300 25,200 800 26,300

120 25,200 400 25,720

60 25,200 320 25,580

Costs Per Equivalent Unit Total Cost Cost to be accounted for: Work in process, beginning ... P8,850 Cost added during the month .. P967,358 Total cost (a) ............. P976,208 Equivalent units (above) (b) ... Cost per EU, (a) ÷ (b) ......... Combined cost per EU ...........

Materials Conversion P79,732

P887,626

25,720 P3.100

25,580 P34.700

P37.800

Cost Reconciliation Total Cost Cost accounted for as follows: Transferred out: From the beginning inventory: Cost in the beginning inventory Cost to complete these units: Materials ...................

P8,850 P372

Conversion .................. P2,082 Total cost ................ P11,304 Units started and completed .... P952,560 Total cost transferred ......... P963,864 Work in process, ending: Materials ..................... P1,240 Conversion .................... P11,104 Total work in process, ending. P12,344 Total cost ..................... P976,208


Equivalent Units (above) Materials Conversion

120 60 25,200

25,200

400 320

136

115. Medium

(Appendix) Farwest Inc. uses the FIFO method in its process costing system. The following data concern the operations of the company's first processing department for a recent month. Work in Units Stage Stage

process, beginning: in process ................................ of completion with respect to materials ... of completion with respect to conversion ..

Units started into production during the month .... Work in Units Stage Stage


800 70% 50% 22,000 300 80% 70%

Required: Using the FIFO method, determine the equivalent units of production for materials and conversion costs by compiling the "Quantity Schedule and Equivalent Units" portion of the production report. Answer: Quantity Schedule and Equivalent Units Quantity Schedule Units to be accounted for: Work in process, beginning ..... 800 Started into production ........ 22,000 Total units .................. 22,800 Equivalent units Materials Conversion d. Units accounted for as follows: Transferred out: From the beginning inventory . Started and completed ........ Work in process, ending ........ Total units .................


800 21,700 300 22,800

240 21,700 240 22,180

400 21,700 210 22,310

137

116. Hard

(Appendix) Production and cost data for the month of February for Process A of the Packer Manufacturing Company were as follows: Production record: Units in process, February 1 (100% complete with respect to materials; 25% complete with respect to conversion cost) ........ New units started in process ............................ Units completed ......................................... Units in process, February 28 (100% complete with respect to materials; 1/3 complete with respect to conversion cost) ........ Cost record: Work in process inventory, February 1: Materials ............................ Conversion ............................ Costs for February: Materials issued ...................... Conversion ............................ Total cost to be accounted for ..........

P600 100

2,000 8,000 7,000 3,000

P

700

2,560 1,500 P4,760

The company uses the FIFO cost method in its process costing system. Required: 1. Calculate the equivalent units and unit costs for February materials and conversion costs.

for

2. Determine the cost transferred to finished goods. 3. Determine the amount of cost that should be assigned to the ending work in process and finished goods inventories.


138

Answer: 1. Equivalent units: Materials: Completion of work in process at February 1 ............ Units started and completed during the period .......... Units in process at February 28 ........................ Equivalent units .......................................

5,000 3,000 8,000

Conversion: Completion of work in process at February 1 (2,000 x 0.75) ....................................... Units started and completed during the period .......... Units in process at February 28 (3,000 x 1/3) .......... Equivalent units .......................................

1,500 5,000 1,000 7,500

Unit costs: Materials: P2,560/8,000 = .............................. Conversion: P1,500/7,500 = ............................. Total unit cost ........................................

P0.32 0.20 P0.52

2. and 3. From beginning work in process inventory (2,000 units): Cost from preceding period ............................. P 700 Materials added ........................................ -0Conversion: 2,000 units x 0.75 x P0.20 ................. 300 Completed cost of opening inventory .................... P1,000 From new production started in current month (5,000 units): 5,000 units x P0.52 .................. 2,600 Total cost of completed production ..................... P3,600 Work in process inventory, February 28: Material cost: 3,000 units x 100% x P0.32 ....... 960 Conversion cost: 3,000 units x 1/3 x P0.20 ...... 200 1,160 Total cost accounted for ............................... P4,760


139

Test Bank - Chapter 4 Process Costing

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