Process Costing - youcancallmefrance
True/False Questions
1. In a process costing system, the costs of one processing department become 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 units of production will be the same under the weighted-average 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-average method, the equivalent units used to compute the unit costs of ending inventories relate only to work done during the current period.
Ans: False AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Hard
4. In order to equitably allocate costs in a process costing system, 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 system, units transferred to the next processing 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-average process costing system when all materials are 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 BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Hard
7. In calculating cost per equivalent unit under the weighted-average 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 units of production for a department using the FIFO 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 method of cost allocation is more accurate than the direct 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 method and the direct method of cost 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 the costs of service departments are 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 work in process inventory plus the units started into 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, direct labor cost combined with 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 is employed in industries that produce basically homogeneous products such as bricks, flour, or cement but would not be appropriate for assembly-type 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 is used where many different products are 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 related to job-order costing and process costing are true?
A) Under both costing methods, manufacturing overhead costs are included in the computation of unit product costs.
B) Under both costing methods, the journal entry to record the completion of production will involve crediting a work in process account.
C) Under both costing methods, the journal entry to record the cost of goods sold will involve crediting the finished goods account.
D) All of the above are true.
Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Hard
17. The completion of goods is recorded as a decrease in the work in process inventory account when using:
| |Job-order costing |Process costing |
|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, a separate work in process account is kept for each:
A) individual order.
B) equivalent unit.
C) processing department.
D) cost category (i.e., materials, conversion cost).
Ans: C AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy
19. The weighted-average method of process costing differs from the FIFO method of process costing in that the weighted-average method:
A) does not consider the degree of completion of beginning work in process inventory when computing equivalent units of production.
B) considers ending work in process inventory to be fully complete.
C) will always yield a higher cost per equivalent unit.
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 to compute equivalent units for conversion costs under the weighted-average method of process costing?
| |Percentage completion of beginning work in |Percentage completion of ending work in |
| |process |process |
|A) |Yes |Yes |
|B) |No |Yes |
|C) |Yes |No |
|D) |No |No |
Ans: B AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy
21. Malcolm Company uses a weighted-average process costing system. All 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 in ending work in process and the units started.
B) units in beginning work in process and the units started.
C) units in ending work in process and the units started and completed.
D) units in beginning work in process and the units started and completed.
Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Hard
22. In the computation of costs per equivalent unit, the weighted-average method of process costing considers:
A) costs incurred during the current period only.
B) costs incurred during the current period plus cost of ending work in process inventory.
C) costs incurred during the current period plus cost of beginning work in process inventory.
D) costs incurred during the current period less cost of beginning work in 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 are needed to compute the cost per equivalent unit for materials under the weighted-average method of process costing?
| |Material cost assigned to beginning work in process |Material cost added to production during the current |
| |last period |period |
|A) |Yes |Yes |
|B) |No |Yes |
|C) |Yes |No |
|D) |No |No |
Ans: A AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium
24. Under which of the following conditions will the FIFO method of process costing result in the same amount of cost being transferred to the next department as the weighted-average method?
A) When the beginning and ending inventories are each fifty percent complete.
B) When there is no beginning inventory.
C) When there is no ending inventory.
D) When units in the beginning inventory are all completed and transferred at 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 units of production using the FIF0 method of process costing, work for the period must be broken down into parts:
A) completed during the period and units in ending inventory.
B) completed from beginning inventory, started and completed during the month, and units in ending inventory.
C) started during the period and units transferred out during the period.
D) processed during the period and units completed during the 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 of allocating service departments take into account all of the effects of interdepartmental services?
| |Direct |Step-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 are correct when referring to process costing except:
A) Process costing would be appropriate for a jeweler who makes custom jewelry to order.
B) A process costing system has the same basic purposes as a job-order costing system.
C) Units produced are indistinguishable from each other.
D) Costs are accumulated by department.
Ans: A AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 10 Level: Medium
28. For which of the following would it be best to use an operation costing system?
A) home remodeling
B) automobile production
C) cement used for roadways
D) trash bags used for yard waste
Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 10 Level: Medium
29. Health Beverage Company uses a process costing system to 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:
| | |Mixing |Bottling |
| |Cases of cola in work in process, January 1 |10,000 |3,000 |
| |Cases of cola completed/transferred out during January |77,000 |? |
| |Cases of cola in work in process, January 31 |4,000 |8,000 |
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 in process, beginning |3,000 |
| |+ Units started into production during the month |77,000 |
| |− Work in process, ending | 8,000 |
| |= Units completed and transferred out during the month |72,000 |
30. The Assembly Department started the month with 83,000 units in its 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 in process, beginning |83,000 |
| |+ Units started into production during the month |334,000 |
| |− Work in process, ending | 34,000 |
| |=Units completed and transferred out during the month |383,000 |
31. Colby Company has a process costing system in which the 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:
| | |Units |Materials Costs |
| |Work in process at March 1 |22,000 |$11,000 |
| |Units started during March |90,000 |$46,120 |
| |Units completed and transferred to next department during March |97,000 | |
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 in process, beginning |22,000 |
| |+ Units started into production during the month |90,000 |
| |− Units completed and transferred out during the month |97,000 |
| |= Work in process, ending |15,000 |
| |Equivalent units of production | |
| | |Materials |
| |Transferred to next department |97,000 |
| |Ending work in process (materials: 15,000 units × 100% complete) | 15,000 |
| |Equivalent units of production |112,000 |
| | | |
| |Cost per Equivalent Unit | |
| | |Materials |
| |Cost of beginning work in process |$11,000 |
| |Cost added during the period | 46,120 |
| |Total cost (a) |$57,120 |
| | | |
| |Equivalent units of production (b) |112,000 |
| |Cost per equivalent unit, (a) ÷ (b) |$0.51 |
| | | |
| | |Materials |
| |Ending work in process inventory: | |
| |Equivalent units of production (materials: 15,000 units × 100% complete; |15,000 |
| |conversion: 15,000 units × % complete) | |
| |Cost per equivalent unit |$0.51 |
| |Cost of ending work in process inventory |$7,650 |
32. Barnett Company uses the weighted-average method in its process costing 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:
| | |Materials |Conversion |
| |Work in process 5/1 |$13,800 |$3,740 |
| |Costs added during 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 units of production | | | |
| | |Materials |Conversion | |
| |Transferred to next department |12,000 |12,000 | |
| |Ending work in process (materials: 6,000 units × 100% complete; | 6,000 | 3,000 | |
| |conversion: 6,000 units × 50% complete) | | | |
| |Equivalent units of production |18,000 |15,000 | |
| | | | | |
| |Cost per Equivalent Unit | | | |
| | |Materials |Conversion |Total |
| |Cost of beginning work in process |$13,800 |$ 3,740 | |
| |Cost added during the period | 42,000 | 26,260 | |
| |Total cost (a) |$55,800 |$30,000 | |
| | | | | |
| |Equivalent units of production (b) |18,000 |15,000 | |
| |Cost per equivalent unit, (a) ÷ (b) |$3.10 |$2.00 |$5.10 |
33. Maurice 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 of its production process. Information concerning the materials used in the Forming Department in April follows:
| | |Units |Materials Costs |
| |Work in process at April 1 |12,000 |$6,000 |
| |Units started during April |100,000 |$51,120 |
| |Units completed and transferred to next department during April |88,000 | |
What was the materials cost of the work in process at April 30?
A) $6,120
B) $11,040
C) $12,000
D) $12,240
Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3 Level: Medium Source: CPA, adapted
Solution:
| |To solve for ending work in process: | |
| |+ Work in process, beginning |12,000 |
| |+ Units started into production during the month |100,000 |
| |− Units completed and transferred out during the month | 88,000 |
| |= Work in process, ending | 24,000 |
| |Equivalent units of production | |
| | |Materials |
| |Transferred to next department |88,000 |
| |Ending work in process (materials: 24,000 units × 100% complete) | 24,000 |
| |Equivalent units of production |112,000 |
| | | |
| |Cost per Equivalent Unit | |
| | |Materials |
| |Cost of beginning work in process |$ 6,000 |
| |Cost added during the period | 51,120 |
| |Total cost (a) |$57,120 |
| | | |
| |Equivalent units of production (b) |112,000 |
| |Cost per equivalent unit, (a) ÷ (b) |$0.51 |
| | | |
| | |Materials |
| |Ending work in process inventory: | |
| |Equivalent units of production (materials: 24,000 units × 100% complete) |24,000 |
| |Cost per equivalent unit |$0.51 |
| |Cost of ending work in process inventory |$12,240 |
34. Destry Company uses the weighted-average method in its 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) $4.811
Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3 Level: Medium
Solution:
| |To solve for units transferred: | |
| |+ Work in process, beginning |10,000 |
| |+ Units started into production during the month |60,000 |
| |− Work in process, ending |19,000 |
| |= Units completed and transferred out during the month |51,000 |
| |Equivalent units of production | |
| | |Conversion |
| |Transferred to next department |51,000 |
| |Ending work in process (conversion: 19,000 units × 70% complete) |13,300 |
| |Equivalent units of production |64,300 |
| | | |
| |Cost per Equivalent Unit | |
| | |Conversion |
| |Cost of beginning work in process |$ 19,200 |
| |Cost added during the period | 380,060 |
| |Total cost (a) |$399,260 |
| | | |
| |Equivalent units of production (b) |64,300 |
| |Cost per equivalent unit, (a) ÷ (b) |$6.209 |
35. Limber 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:
| | |Units |Percent Complete with |
| | | |Respect to Conversion |
| |Beginning work in process inventory |18,000 |80% |
| |Started into production during June |81,000 | |
| |Ending work in process inventory |17,000 |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 in process, beginning |18,000 |
| |+ Units started into production during the month |81,000 |
| |− Work in process, ending |17,000 |
| |= Units completed and transferred out during the month |82,000 |
| |Equivalent units of production | |
| | |Conversion |
| |Transferred to next department |82,000 |
| |Ending work in process |13,600 |
| |(conversion: 17,000 units × 80% complete) | |
| |Equivalent units of production |95,600 |
| | | |
| |Cost per Equivalent Unit | |
| | |Conversion |
| |Cost of beginning work in process |$15,264 |
| |Cost added during the period | 68,208 |
| |Total cost (a) |$83,472 |
| | | |
| |Equivalent units of production (b) |95,600 |
| |Cost per equivalent unit, (a) ÷ (b) |$0.873 |
36. Roy Company manufactures a product in Departments A and B. Materials are added 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:
| | |Transferred In |Materials |Conversion |
| |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:
| | |Materials |Conversion |
| |Transferred to next department |12,000 |12,000 |
| |Ending work in process: | | |
| |Materials: 8,000 units × 100% complete | 8,000 | |
| |Conversion: 8,000 units × 75% complete | | 6,000 |
| |Equivalent units of production |20,000 |18,000 |
| | |Transferred In |Materials |Conversion |Total |
| |Work in process, beginning |$12,000 |$2,500 |$1,000 | |
| |Cost added during the month | 29,000 | 5,500 | 5,000 | |
| |Total cost (a) |$41,000 |$8,000 |$6,000 | |
| |Equivalent units (above) (b) |20,000 |20,000 |18,000 | |
| |Cost per equivalent unit |$2.05 |$0.40 |$0.33 |$2.78 |
| |(a) ÷ (b) | | | | |
37. Hammoudi 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 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) $3.667
Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3 Level: Medium
Solution:
| |Equivalent units of production | |
| | |Conversion |
| |Transferred to next department |45,000 |
| |Ending work in process |16,800 |
| |(conversion: 24,000 units × 70% complete) | |
| |Equivalent units of production |61,800 |
| | | |
| |Cost per Equivalent Unit | |
| | |Conversion |
| |Cost of beginning work in process |$ 61,920 |
| |Cost added during the period | 194,340 |
| |Total cost (a) |$256,260 |
| | | |
| |Equivalent units of production (b) |61,800 |
| |Cost per equivalent unit, (a) ÷ (b) |$4.147 |
38. Paquet 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.
| | |Units |Percent Complete with |
| | | |Respect to Conversion |
| |Beginning work in process inventory |7,700 |40% |
| |Transferred in from the prior | | |
| |department during January |56,000 | |
| |Completed and transferred to the next | | |
| |department during January |58,400 | |
| |Ending work in process inventory |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) $6.202
Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3 Level: Medium
Solution:
| |Units transferred out |58,400 |
| |Add: equivalent units in the ending inventory (5300 × 90% complete) | 4,770 |
| |Equivalent units of production |63,170 |
| | | |
| |Cost in the beginning inventory |$ 16,940 |
| |Cost added during the month | 347,320 |
| |Total cost |$364,260 |
$364,260 ÷ 63,170 units = $5.766 per unit
39. Jimmy Company uses the weighted-average method in its process 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: | |
| |Materials: 9,000 units × 100% complete |9,000 |
| |Conversion: 9,000 units × 70% complete |6,300 |
| |Ending work in process: |Materials |Conversion |Total |
| |Equivalent units of production |9,000 |6,300 | |
| |Cost per equivalent unit |$3.75 |$1.25 | |
| |Cost of ending work in process |$33,750 |$7,875 |$41,625 |
40. Lawton Company produces canned tomato soup in a single processing 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 in process |None |
| |Finished goods |75,000 |
| |Inventory at January 31: | |
| |Work in process (conversion 75% complete) |16,000 |
| |Finished goods |60,000 |
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 |250,000 |
| |+ Ending finished goods inventory |60,000 |
| |− Beginning finished goods inventory | 75,000 |
| |= Units transferred out |235,000 |
| |Units transferred out |235,000 |
| |Ending work in process (16,000 units × 75% complete) | 12,000 |
| |Equivalent units of production |247,000 |
41. Jersey Company has a process costing system in which it uses the 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:
| |Units transferred out |40,000 |* |
| |Ending work in process (10,000 units × 75% complete) | 7,500 | |
| |Equivalent units for conversion costs |47,500 | |
* Solve backwards: 47,500 − 7,500 = 40,000
| |Units in beginning inventory |15,000 | |
| |+ Units started |35,000 |* |
| |− Units in ending inventory |10,000 | |
| |= Units transferred out |40,000 | |
* Solve backwards: Units started = 40,000 −15,000 + 10,000 = 35,000
42. Boswal Company uses the weighted-average 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 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 in process, beginning |6,000 |
| |+ Units started into production during the month |52,000 |
| |− Work in process, ending |18,000 |
| |= Units completed and transferred out during the month |40,000 |
| | |Conversion |
| |Transferred to next department |40,000 |
| |Ending work in process (18,000 units × 20% complete) | 3,600 |
| |Equivalent units of production |43,600 |
43. Jolly Company uses the weighted-average method in its process costing system. Operating data for the Painting Department for the month of April appear below:
| | |Units |Percent Complete |
| | | |with Respect to |
| | | |Conversion |
| |Beginning work in process inventory |4,700 |90% |
| |Transferred in from the prior department during April |59,700 | |
| |Ending work in process inventory |7,300 |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:
| |Units in beginning inventory |4,700 |
| |+ Units started into production |59,700 |
| |− Units in ending inventory | 7,300 |
| |= Units transferred out |57,100 |
| |Equivalent units transferred out |57,100 |
| |Add: Equivalent units in the ending work in process inventory (7,300 units × 80% | 5,840 |
| |complete) | |
| |Equivalent units for conversion costs |62,940 |
44. Parks Company uses the weighted-average method in its process 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:
| |Equivalent units transferred out |30,000 |
| |Add: Equivalent units in the ending work in process inventory (6,500 units × 40% | 2,600 |
| |complete) | |
| |Equivalent units for conversion costs |32,600 |
45. Bart Co. adds materials at the beginning of the process in 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:
| | |Units |
| |Work in process, April 1 (conversion 60% complete) |3,000 |
| |Started in April |25,000 |
| |Completed |20,000 |
| |Work in process, April 30 (conversion 75% complete) |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:
| |Equivalent units transferred out |20,000 |
| |Add: Equivalent units in the ending work in process inventory (8,000 units × 75% | 6,000 |
| |complete) | |
| |Equivalent units for conversion costs |26,000 |
46. Fatas Corporation 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 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:
| |Equivalent units transferred out |102,000 |
| |Add: Equivalent units in the ending work in process inventory (1,000 units × 20% | 200 |
| |complete) | |
| |Equivalent units for conversion costs |102,200 |
47. Natiello Corporation uses the weighted-average method in its process costing system. Operating data for the Lubricating Department for the month of October appear below:
| | |Units |Percent Complete with |
| | | |Respect to Conversion |
| |Beginning work in process inventory |9,100 |20% |
| |Transferred in from the prior department during October |38,500 | |
| |Completed and transferred to the next department during October |41,000 | |
| |Ending work in process inventory |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:
| | |Units in beginning inventory |9,100 |
| |+ |Units started into production |38,500 |
| |− |Units in ending inventory | 6,600 |
| |= |Units transferred out |41,000 |
| |Equivalent units transferred out |41,000 |
| |Add: Equivalent units in the ending work in process inventory (6,600 units × | 4,620 |
| |70% complete) | |
| |Equivalent units for conversion costs |45,620 |
48. Kew Company uses the weighted-average method in its process costing 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 in process, ending |4,000 |
| |+ Units completed and transferred out during the month |10,000 |
| |− Work in process, beginning | 3,000 |
| |= Units started into production during the month |11,000 |
49. Pelican Corporation uses a weighted-average process costing system to collect costs related to production. The following selected information relates to production for March:
| |Units completed and transferred out |5,000 |
| |Units in work in process, March 31 |800 |
| |Equivalent units, materials |5,800 |
| |Equivalent units, conversion costs |5,200 |
| | |Materials |Conversion |
| |Costs in work in process on March 1 |$ 2,900 |$ 4,680 |
| |Costs added to production during March | 71,050 | 131,040 |
| |Total cost |$73,950 |$135,720 |
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:
| | | |Materials |Conversion |Total |
| | |Total cost |$73,950 |$135,720 | |
| |÷ |Equivalent units | 5,800 | 5,200 | |
| |= |Cost per equivalent unit |$12.75 |$26.10 | |
| |× |Ending inventory | | | |
| | |Materials: 800 units × $12.75 |$10,200 | | |
| | |Conversion costs: *200 units × $26.10 | |$5,220 |$15,420 |
| |Units in work in process, March 31 |800 |
| |Less: Uncompleted as to conversion (5,800 total − 5,200 equivalent units) |600 |
| |Equivalent units in ending work in process: conversion |200 |
50. Kwan Manufacturing Company uses a process costing system. All materials at Kwan are added at the beginning of the production process. For the month of October, equivalent units for materials were 40,000 under the weighted-average method and 36,000 under the FIFO method. Kwan's costs for October were as follows:
| |Cost in beginning work in process (October 1) |$ 25,200 |
| |Cost added to production during October | 262,800 |
| |Total cost |$288,000 |
What are Kwan’s equivalent costs per equivalent unit for October for materials under both process costing methods?
| |Weighted-Average |FIFO |
|A) |$6.57 |$8.00 |
|B) |$6.57 |$7.30 |
|C) |$7.20 |$8.00 |
|D) |$7.20 |$7.30 |
Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 3,6 Level: Medium
Solution:
| | |Weighted-Average |FIFO |
| |Total cost |$288,000 |$262,800 |
| |÷ Equivalent units |40,000 |36,000 |
| |Cost per equivalent unit |$7.20 |$7.30 |
51. Safia Corporation 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.
| | |Units |Percent Complete with |
| | | |Respect to Conversion |
| |Beginning work in process inventory |3,300 |40% |
| |Transferred in from the prior department during March |67,000 | |
| |Ending work in process inventory |5,600 |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 |3,300 |
| |+ |Units transferred in |67,000 |
| |− |Units in ending inventory | 5,600 |
| |= |Units transferred out |64,700 |
| |× |Cost per equivalent unit |$4.70 |
| | | |$304,090 |
52. The following data were taken from the accounting records of the Mixing Department of Kappa Company which uses the weighted-average method in its process costing system:
| |Beginning work in process inventory: | |
| |Cost |$19,000 |
| |Units |30,000 units |
| |Percentage completion with respect to materials |100% |
| |Percentage completion with respect to conversion |60% |
| |Units completed and transferred out |82,000 units |
| |Cost per equivalent unit: | |
| |Material |$1.50 |
| |Conversion |$0.75 |
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) = $184,500
53. Wit Company uses the weighted-average method in its process costing system. Information for the month of May concerning Department A, the first stage of the company's production process follows:
| | |Materials |Conversion |
| |Work in process, beginning |$ 4,000 |$ 3,000 |
| |Current costs added | 20,000 | 16,000 |
| |Total costs |$24,000 |$19,000 |
| |Equivalent units |100,000 |95,000 |
| |Costs per equivalent unit |$0.24 |$0.20 |
| |Goods completed |90,000 units | |
| |Work in process, ending |10,000 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 |Ending work in process |
|A) |$39,600 |$3,400 |
|B) |$39,600 |$4,400 |
|C) |$43,000 |$0 |
|D) |$44,000 |$3,400 |
Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium Source: CPA, adapted
Solution:
| | |Materials |Conversion |
| |Transferred to next department |90,000 |90,000 |
| |Ending work in process: | | |
| |Materials: 10,000 units × 100% complete | 10,000 | |
| |Conversion: 10,000 units × 50% complete | | 5,000 |
| |Equivalent units of production |100,000 |95,000 |
| | |Materials |Conversion |
| |Work in process, beginning |$ 4,000 |$ 3,000 |
| |Cost added during the month | 20,000 | 16,000 |
| |Total cost (a) |$24,000 |$19,000 |
| |Equivalent units (above) (b) |100,000 |95,000 |
| |Cost per equivalent unit (a) ÷ (b) |$0.24 |$0.20 |
| | |Materials |Conversion |Total |
| |Units transferred out |90,000 |90,000 | |
| |Cost per equivalent unit |$0.24 |$0.20 | |
| |Cost transferred out |$21,600 |$18,000 |$39,600 |
| | |Materials |Conversion |Total |
| |Equivalent units of production: ending work in process |10,000 |5,000 | |
| |Cost per equivalent unit |$0.24 |$0.20 | |
| |Cost of ending work in process |$2,400 |$1,000 |$3,400 |
54. Lap Company uses the weighted-average method in its process 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-average method in its process 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:
| |Ending work in process: Conversion costs (4,000 × 40%) × $3 |$ 4,800 |
| |Transferred in costs (4,000 × $5) | 20,000 |
| |Total cost: Work in process, March 31 |$24,800 |
56. The following information was provided by Fystro Corporation for the month of March. Fystro uses the weighted-average method in its process costing system.
| |Total cost transferred out during March |$74,000 |
| |Cost in Work in Process, March 1 |$12,000 |
| |Cost in Work in Process, March 31 |$5,000 |
How much cost did Fystro add to production during March?
A) $57,000
B) $62,000
C) $67,000
D) $81,000
Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium
Solution:
| |Work in process, ending |$ 5,000 |
| |+ Cost transferred out during the month |74,000 |
| |− Work in process, beginning | 12,000 |
| |= Cost added to production during the month |$67,000 |
57. Rangan Corporation 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.
| | |Units |Percent Complete with |
| | | |Respect to Conversion |
| |Beginning work in process inventory |2,100 |50% |
| |Transferred in from the prior department during January |76,000 | |
| |Completed and transferred to the next department during January|74,200 | |
| |Ending work in process inventory |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 |2,730 |
| | |× $3.91 |
| |Conversion costs in ending work in process inventory |$10,674.30 |
58. Merckley Company has a process costing system and uses the 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:
| | |Units |Conversion Cost |
| |Work in process inventory on May 1 |25,000 |$22,000 |
| |Units started into production, and costs incurred during the month |135,000 |$143,000 |
| |Units completed and transferred to finished goods during the month |100,000 | |
| |Work in process inventory on May 31 |60,000 | |
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 of Production | |
| | |Conversion |
| |To complete beginning work in process (conversion: 25,000 units × 20% complete) |5,000 |
| |Units started and completed during the period (135,000 units started − 60,000 |75,000 |
| |units in ending inventory) | |
| |Ending work in process (60,000 units × 50% complete) | 30,000 |
| |Equivalent units of production |110,000 |
| | | |
| |Cost per Equivalent Unit | |
| | |Conversion |
| |Cost added during the period (a) |$143,000 |
| |Equivalent units of production (b) |110,000 |
| |Cost per equivalent unit (a) ÷ (b) |$1.30 |
| | | |
| |Costs of Ending Work in Process Inventory and Units Transferred Out |
| | |Conversion |
| |Ending work in process inventory: | |
| |Equivalent units of production |30,000 |
| |Cost per equivalent unit |$1.30 |
| |Cost of ending work in process inventory |$39,000 |
59. Doofus Music Company manufactures air guitars and uses a FIFO process costing system to collect costs related to its production. Doofus only accounts for conversion costs because the only direct material, air, has no cost. The following information relates to September production:
| | |Number of units |Percent complete with respect to |
| | | |conversion costs |
| |Work in process, September 1 |20,000 |20% |
| |Units started into production |90,000 | |
| |Work in process, September 30 |8,000 |75% |
| |Conversion cost in work in process on September 1 |$ 263,120 |
| |Conversion cost added to production during September | 5,262,400 |
| |Total cost |$5,525,520 |
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 Units of Production | | | |
| | |Materials |Conversion | |
| |To complete beginning work in process (materials: 20,000 units |20,000 |16,000 | |
| |× 100% complete; conversion: 20,000 units × 80% complete) | | | |
| |Units started and completed during the period (90,000 units |82,000 |82,000 | |
| |started − 8,000 units in ending inventory) | | | |
| |Ending work in process (materials: 8,000 units × 0% complete; | 0 | 6,000 | |
| |conversion: 8,000 units × 75% complete) | | | |
| |Equivalent units of production |102,000 |104,000 | |
| | | | | |
| |Cost per Equivalent Unit | | | |
| | |Materials |Conversion | |
| |Cost added during the period (a) |$0 |$5,262,400 | |
| |Equivalent units of production (b) |102,000 |104,000 | |
| |Cost per equivalent unit (a) ÷ (b) |$0.00 |$50.60 | |
| | | | | |
| |Costs of Ending Work in Process Inventory and Units Transferred| | | |
| |Out | | | |
| | |Materials |Conversion |Total |
| |Ending work in process inventory: | | | |
| |Equivalent units of production |0 |6,000 | |
| |Cost per equivalent unit |$0.00 |$50.60 | |
| |Cost of ending work in process inventory |$0 |$303,600 |$303,600 |
60. Edwin Company uses the FIFO method in its process costing 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 Units of Production | |
| | |Conversion |
| |To complete beginning work in process (22,000 units × 80% complete) |17,600 |
| |Units started and completed during the period (96,000 units started − 20,000 units in ending|76,000 |
| |inventory) | |
| |Ending work in process (20,000 units × 90% complete) | 18,000 |
| |Equivalent units of production |111,600 |
| | | |
| |Cost per Equivalent Unit | |
| | |Conversion |
| |Cost added during the period (a) |$585,900 |
| |Equivalent units of production (b) |111,600 |
| |Cost per equivalent unit (a) ÷ (b) |$5.250 |
61. Makridakis Corporation uses the FIFO method in its process costing system. Operating data for the Casting Department for the month of September appear below:
| | |Units |Percent Complete with |
| | | |Respect to Conversion |
| |Beginning work in process inventory |17,000 |10% |
| |Transferred in from the prior department during September |50,000 | |
| |Ending work in process inventory |17,000 |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 Units of Production | |
| | |Conversion |
| |To complete beginning work in process (17,000 units × 90% complete) |15,300 |
| |Units started and completed during the period (50,000 units started − 17,000 units|33,000 |
| |in ending inventory) | |
| |Ending work in process (17,000 units × 40% complete) | 6,800 |
| |Equivalent units of production |55,100 |
| | | |
| |Cost per Equivalent Unit | |
| | |Conversion |
| |Cost added during the period (a) |$117,914 |
| |Equivalent units of production (b) |55,100 |
| |Cost per equivalent unit (a) ÷ (b) |$2.140 |
62. Krumbly Company uses the FIFO method in its process costing 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) $9,000
Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5,6 Level: Medium
Solution:
| |Cost from beginning inventory |$ 3,600 |
| |Cost to finish beginning inventory: (1 − 40%) = 60% × 2,000 = 1,200 EU × $8 cost | 9,600 |
| |per EU | |
| |Total cost of units from beginning inventory |$13,200 |
63. Inka Corporation uses the FIFO method in its process 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 Units of Production | |
| | |Conversion |
| |To complete beginning work in process (13,000 units × 80% complete) |10,400 |
| |Units started and completed during the period (97,000 units started − 13,000 units in ending inventory) |84,000 |
| |Ending work in process (13,000 units × 30% complete) | 3,900 |
| |Equivalent units of production |98,300 |
| | | |
| |Cost per Equivalent Unit | |
| | |Conversion |
| |Cost added during the period (a) |$136,637 |
| |Equivalent units of production (b) |98,300 |
| |Cost per equivalent unit (a) ÷ (b) |$1.390 |
64. Qvr Corporation uses the FIFO method in its process costing system. Operating data for the Cutting Department for the month of March appear below:
| | |Units |Percent Complete with Respect|
| | | |to Conversion |
| |Beginning work in process inventory |2,500 |60% |
| |Transferred in from the prior department during March |45,000 | |
| |Completed and transferred to the next department during March |40,500 | |
| |Ending work in process inventory |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 Units of Production | |
| | |Conversion |
| |To complete beginning work in process (2,500 units × 40% complete) |1,000 |
| |Units started and completed during the period (45,000 units started − 7,000 units in ending |38,000 |
| |inventory) | |
| |Ending work in process (7,000 units × 70% complete) | 4,900 |
| |Equivalent units of production |43,900 |
| | | |
| |Cost per Equivalent Unit | |
| | |Conversion |
| |Cost added during the period (a) |$99,477 |
| |Equivalent units of production (b) |43,900 |
| |Cost per equivalent unit (a) ÷ (b) |$2.266 |
65. Marston Company uses the FIFO method in its process costing system. The 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% complete) |6,000 |
|Units started and completed during the period (? units started − 10,000 units in ending inventory) |? |
|Ending work in process (10,000 units × 75% complete) | 7,500 |
|Equivalent units of production |37,500 |
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 uses the FIFO method in its process 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 in process, beginning |7,000 |
|+ |Units started into production during the month |60,000 |
|− |Work in process, ending |19,000 |
|= |Units completed and transferred out during the month |48,000 |
| |Equivalent Units of Production | |
| | |Conversion |
| |To complete beginning work in process (7,000 units × 60% complete) |4,200 |
| |Units started and completed during the period (60,000 units started − 19,000 units in |41,000 |
| |ending inventory) | |
| |Ending work in process (19,000 units × 90% complete) |17,100 |
| |Equivalent units of production |62,300 |
67. Kavadias Corporation uses the FIFO method in its process costing system. Operating data for the Enameling Department for the month of May appear below:
| | |Units |Percent Complete with Respect to |
| | | |Conversion |
| |Beginning work in process inventory |7,400 |80% |
| |Transferred in from the prior | | |
| |department during May |75,200 | |
| |Ending work in process inventory |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 in process, beginning |7,400 |
|+ |Units started into production during the month |75,200 |
|− |Work in process, ending | 3,000 |
|= |Units completed and transferred out during the month |79,600 |
| |Equivalent Units of Production | |
| | |Conversion |
| |To complete beginning work in process (7,400 units × 20% complete) |1,480 |
| |Units started and completed during the period (75,200 units started − 3,000 units in ending |72,200 |
| |inventory) | |
| |Ending work in process (3,000 units × 90% complete) | 2,700 |
| |Equivalent units of production |76,380 |
68. Kale Company uses the FIFO method in its process costing 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 in process, ending |2,000 |
|+ |Units completed and transferred out during the month |10,000 |
|− |Work in process, beginning | 3,000 |
|= |Units started into production during the month | 9,000 |
| |Equivalent Units of Production | |
| | |Conversion |
| |To complete beginning work in process (3,000 units × 10% complete) |300 |
| |Units started and completed during the period (9,000 units started − 2,000 units in ending |7,000 |
| |inventory) | |
| |Ending work in process (2,000 units × 60% complete) |1,200 |
| |Equivalent units of production |8,500 |
69. Billings Company uses the FIFO method in its process costing 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) 38,000 units, and 36,800 units
B) 38,000 units, and 38,000 units
C) 48,000 units, and 44,800 units
D) 48,000 units, and 48,000 units
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 in process, ending |8,000 |
|+ |Units completed and transferred out during the month |40,000 |
|− |Work in process, beginning |10,000 |
|= |Units started into production during the month |38,000 |
| |Equivalent Units of Production | | |
| | |Materials |Conversion |
| |To complete beginning work in process (materials: 10,000 units × 0% complete; |0 |2,000 |
| |conversion: 10,000 units × 20% complete) | | |
| |Units started and completed during the period (38,000 units started − 8,000 units |30,000 |30,000 |
| |in ending inventory) | | |
| |Ending work in process (materials: 8,000 units × 100% complete; conversion: 8,000 | 8,000 | 4,800 |
| |units × 60% complete) | | |
| |Equivalent units of production |38,000 |36,800 |
70. Gadroy Corporation uses the FIFO method in its process costing 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 Units of Production | |
| | |Conversion |
| |To complete beginning work in process (13,000 units × 20% complete) |2,600 |
| |Units started and completed during the period (52,000 units started − 10,000 units in |42,000 |
| |ending inventory) | |
| |Ending work in process (10,000 units × 70% complete) | 7,000 |
| |Equivalent units of production |51,600 |
71. Outiniki Company uses the FIFO method in its process costing system. Operating data for the Brazing Department for the month of November appear below:
| | |Units |Percent Complete with |
| | | |Respect to Conversion |
| |Beginning work in process inventory |3,400 |30% |
| |Transferred in from the prior department during November |54,100 | |
| |Completed and transferred to the next department during November |52,600 | |
| |Ending work in process inventory |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 Units of Production | |
| | |Conversion |
| |To complete beginning work in process (3,400 units × 70% complete) |2,380 |
| |Units started and completed during the period (54,100 units started − 4,900 units in ending |49,200 |
| |inventory) | |
| |Ending work in process (4,900 units × 70% complete) | 3,430 |
| |Equivalent units of production |55,010 |
72. Steven Company uses the FIFO method in its process costing system. The following data were taken from the accounting records of a particular department for last month:
| |Beginning work in process inventory: (10,000 units; materials 100% complete, conversion 60%|$17,500 |
| |complete) | |
| |Units completed and transferred out during the month |60,000 units |
| |Cost per equivalent unit: | |
| |Material |$2.50 |
| |Conversion |$2.00 |
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 work in process* |10,000 |0 |4,000 | |
|From started and completed during month |50,000 |50,000 |50,000 | |
|Total EU this period |60,000 |50,000 |54,000 | |
|Cost per 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| | | |$250,500 |
|during current month | | | | |
*(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 uses the FIFO method in its process costing system. Operating data for the Curing Department for the month of March appear below:
| | |Units |Percent Complete with Respect |
| | | |to Conversion |
| |Beginning work in process inventory |7,900 |20% |
| |Transferred in from the prior department during March |40,000 | |
| |Completed and transferred to the next department during March |43,900 | |
| |Ending work in process inventory |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 Units of Production | | | |
| |Materials |Conversion | |
|To complete beginning work in process (materials: 7,900 units × 100% |7,900 |6,320 | |
|complete; conversion: 7,900 units × 80% complete) | | | |
|Units started and completed during the period (40,000 units started − |36,000 |36,000 | |
|4,000 units in ending inventory) | | | |
|Ending work in process (materials: 4,000 units × % complete; | 0 | 2,400 | |
|conversion: 4,000 units × 60% complete) | | | |
|Equivalent units of production |43,900 |44,720 | |
| | | | |
|Cost per Equivalent Unit | | | |
| |Materials |Conversion | |
|Cost added during the period (a) |$0 |$330,928 |$330,928 |
|Equivalent units of production (b) |43,900 |44,720 | |
|Cost per equivalent unit (a) ÷ (b) |$0.00 |$7.40 | |
| | | | |
|Costs of Ending Work in Process Inventory and Units Transferred Out | | | |
| |Materials |Conversion |Total |
|Ending work in process inventory: | | | |
|Equivalent units of production |0 |2,400 | |
|Cost per equivalent unit |$0.00 |$7.40 | |
|Cost of ending work in process inventory |$0 |$17,760 |$17,760 |
| | | | |
|Units transferred out: | | | |
|Cost in beginning inventory |$0 |$11,850 |$ 11,850 |
|Cost to complete the units in beginning inventory: | | | |
|Equivalent units of production required to complete the beginning |7,900 |6,320 | |
|inventory | | | |
|Cost per equivalent unit |$0.00 |$7.40 | |
|Cost to complete the units in beginning inventory |$0 |$46,768 |46,768 |
|Cost of units started and completed this period: | | | |
|Units started and completed this period |36,000 |36,000 | |
|Cost per equivalent unit |$0.00 |$7.40 | |
|Cost of units started and completed this period |$0 |$266,400 | 266,400 |
|Cost of units transferred out | | |$325,018 |
74. Koehl Corporation uses the direct method to allocate service department costs to operating departments. The company has two service departments, Administrative and Facilities, and two operating departments, Assembly and Wholesaling.
| | |Service Department | |Operating Department |
| | |Administrative |Facilities | |Assembly |Wholesaling |
| |Departmental costs |$19,440 |$71,340 | |$185,580 |$392,950 |
| |Employee hours |4,000 |2,000 | |22,000 |14,000 |
| |Space occupied |3,000 |1,000 | |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 |Operating Department | |
| |Admin-istrative |Facil-ities |Assem-bly |Whole-saling |Total |
|Departmental costs before |$19,440 |$71,340 |$185,580 |$392,950 |$669,310 |
|allocation | | | | | |
|Allocation: | | | | | |
|Administrative costs (22/36, |(19,440) | |11,880 |7,560 | |
|14/36) * | | | | | |
|Facilities costs (39/41, 2/41)** | |(71,340) |67,860 |3,480 | |
|Total cost after allocation |$ 0 |$ 0 |$265,320 |$403,990 |$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 uses the direct method to allocate service department costs to operating departments. The clinic has two service departments, Personnel and Support, and two operating departments, Prenatal and Pediatrics.
| | |Service Department | |Operating Department |
| | |Personnel |Support | |Prenatal |Pediatrics |
| |Departmental costs |$29,200 |$55,040 | |$242,050 |$423,200 |
| |Employee hours |5,000 |1,000 | |26,000 |14,000 |
| |Space occupied |3,000 |2,000 | |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:
| |Service Department |Operating Department | |
| |Personnel |Support |Prenatal |Pediatrics |Total |
|Departmental costs before |$29,200 |$55,040 |$242,050 |$423,200 |$749,490 |
|allocation | | | | | |
|Allocation: | | | | | |
|Personnel costs (26/40, |(29,200) | |18,980 |10,220 | |
|14/40)* | | | | | |
|Support costs (35/43, 8/43)** | |(55,040) | 44,800 | 10,240 | |
|Total cost after allocation |$ 0 |$ 0 |$305,830 |$443,660 |$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 uses the direct method to allocate service department costs to operating departments. The company has two service departments, Data Processing and Personnel, and two operating departments, Assembly and Finishing.
| | |Service Department | |Operating Department |
| | |Data Processing |Personnel | |Assembly |Finishing |
| |Departmental costs |$26,488 |$18,630 | |$188,980 |$506,980 |
| |Computer workstations |37 |12 | |45 |41 |
| |Employees |35 |11 | |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:
| |Service Department |Operating Department | |
| |Data Processing |Personnel |Assembly |Finishing |Total |
|Departmental costs before allocation |$26,488 |$18,630 |$188,980 |$506,960 |$741,078 |
|Allocation: | | | | | |
|Data processing costs (45/86, 41/86)* |(26,488) | |13,860 |12,628 | |
|Personnel costs (46/81, 35/81)** | |(18,630) | 10,580 | 8,050 | |
|Total cost after allocation |$ 0 |$ 0 |$213,420 |$527,638 |$741,078 |
* 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
77. The direct method is used by Marrero Publishing, Inc., to allocate service department costs to operating departments. The company has two service departments, Information Technology and Personnel, and two operating departments, Prepress and Printing.
| | |Service Department | |Operating Department |
| | |Information |Personnel | |Prepress |Printing |
| | |Technology | | | | |
| |Departmental costs |$27,412 |$27,008 | |$376,940 |$530,110 |
| |Computer workstations |28 |19 | |51 |38 |
| |Employees |27 |14 | |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 |Operating Department | |
| |Information Technology |Personnel |Prepress |Printing |Total |
|Departmental costs before allocation |$27,412 |$27,008 |$376,940 |$530,110 |$961,470 |
|Allocation: | | | | | |
|Information technology costs (51/89, |(27,412) | |15,708 |11,704 | |
|38/89)* | | | | | |
|Personnel costs (98/128, 30/128)** | |(27,008) | 20,678 | 6,330 | |
|Total cost after allocation |$ 0 |$ 0 |$413,326 |$548,144 |$961,470 |
* 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
78. Kolinski Surgical Hospital uses the direct method to allocate service department costs to operating departments. The hospital has two service departments, Telecommunications and Administration, and two operating departments, Surgery and Recovery.
| | |Service Department | |Operating Department |
| | |Telecomm-unications|Adminis-tration | |Surgery |Recovery |
| |Departmental 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 |Operating Department | |
| |Telecom-munications |Adminis-tration |Surgery |Recovery |Total |
|Departmental costs before |$26,344 |$27,472 |$282,750 |$599,690 |$936,256 |
|allocation | | | | | |
|Allocation: | | | | | |
|Telecommunication costs (40/74,|(26,344) | |14,240 |12,104 | |
|34/74) * | | | | | |
|Administration costs (74/101, | |(27,472) | 20,128 | 7,344 | |
|27/101)** | | | | | |
|Total cost after allocation |$ 0 |$ 0 |$317,118 |$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 uses the step-down method to allocate service department costs to operating departments. The company has two service departments, General Management and Physical Plant, and two operating departments, Sales and After-Sales. Data concerning those departments follow:
| | |Service Department | |Operating Department |
| | |General Management |Physical Plant | |Sales |After-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 | |Operating Department | | |
| |General Mgmt |Physical Plant | |Sales |
| | |Administration |Physical Plant | |Assembly |Testing |
| |Departmental 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 | |Operating Department | | |
| |Admini-stration |Physical Plant | |Assembly |
| | |Personnel |IT | |Family 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 | |Operating Department | | |
| |Personnel |IT | |Family Medicine |
| | |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 | |Operating Department | | |
| |Admini-strat|IT |
| |ion | |
|+ Units started into production |82,000 |* |
|− Units completed and transferred |79,000 | |
|= Ending work in process inventory |7,000 | |
* 4000 + Units started into production − 79,000 = 7,000
Units started into production = 82,000
84. What account would Kota debit to record the transfer of dolls out of the Molding Department?
A) Work in Process–Hairification
B) Finished Goods
C) Manufacturing Overhead
D) Work in Process–Molding
Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy
85. What are the Molding Department's equivalent units related to 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:
| | |Materials |
| |Transferred to next department |79,000 |
| |Ending work in process: | |
| |Materials: 7,000 dolls × 100% | 7,000 |
| |Equivalent units of production |86,000 |
86. What are the Molding Department's equivalent units related to 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:
| | |Conversion |
| |Transferred to next department |79,000 |
| |Ending work in process: | |
| |Conversion: 7,000 dolls × 25% | 1,750 |
| |Equivalent units of production |80,750 |
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: | |
| |Units in process |40,000 |
| |Percent complete with respect to materials |70% |
| |Percent complete with respect to conversion |60% |
| |Costs in the beginning inventory: | |
| |Materials cost |$8,600 |
| |Conversion cost |$4,800 |
| |Units started into production during the month |750,000 |
| |Units completed and transferred out during the month |? |
| |Costs added to production during the month: | |
| |Materials cost |$223,000 |
| |Conversion cost |$149,000 |
| |Work in process, ending: | |
| |Units in process |30,000 |
| |Percent complete with respect to materials |40% |
| |Percent complete with respect to conversion |30% |
87. How many units were completed and transferred to the next 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 in process, beginning |40,000 |
|+ |Units started into production during the month |750,000 |
|− |Work in process, ending | 30,000 |
|= |Units completed and transferred out during the month |760,000 |
88. What was the cost per equivalent unit for materials during the month?
A) $0.30
B) $0.25
C) $0.20
D) $0.15
Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium
Solution:
| |To solve for units transferred: | |
|+ |Work in process, beginning |40,000 |
|+ |Units started into production during the month |750,000 |
|− |Work in process, ending | 30,000 |
|= |Units completed and transferred out during the month |760,000 |
|Equivalent units of production | |
| |Materials |
|Transferred to next department |760,000 |
|Ending work in process (30,000 units × 40% complete) | 12,000 |
|Equivalent units of production |772,000 |
| | |
|Cost per Equivalent Unit | |
| |Materials |
|Cost of beginning work in process |$ 8,600 |
|Cost added during the period | 223,000 |
|Total cost (a) |$231,600 |
| | |
|Equivalent units of production (b) |772,000 |
|Cost per equivalent unit, (a) ÷ (b) |$0.30 |
89. How much cost, in total, was assigned to the ending work in process inventory?
A) $2,600
B) $4,300
C) $15,000
D) $5,400
Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium
Solution:
| |To solve for units transferred: | |
|+ |Work in process, beginning |40,000 |
|+ |Units started into production during the month |750,000 |
|− |Work in process, ending | 30,000 |
|= |Units completed and transferred out during the month |760,000 |
|Equivalent units of production | | | |
| |Materials |Conversion | |
|Transferred to next department |760,000 |760,000 | |
|Ending work in process (materials: 30,000 units × 40% complete; conversion: 30,000 units × | 12,000 | 9,000 | |
|30% complete) | | | |
|Equivalent units of production |772,000 |769,000 | |
| | | | |
|Cost per Equivalent Unit | | | |
| |Materials |Conversion | |
|Cost of beginning work in process |$ 8,600 |$ 4,800 | |
|Cost added during the period | 223,000 | 149,000 | |
|Total cost (a) |$231,600 |$153,800 | |
| | | | |
|Equivalent units of production (b) |772,000 |769,000 | |
|Cost per equivalent unit, (a) ÷ (b) |$0.30 |$0.20 | |
| | | | |
| |Materials |Conversion |Total |
|Ending work in process inventory: | | | |
|Equivalent units of production (materials: 30,000 units × 40% complete; conversion: 30,000 |12,000 |9,000 | |
|units × 30% complete) | | | |
|Cost per equivalent unit |$0.30 |$0.20 | |
|Cost of ending work in process inventory |$3,600 |$1,800 |$5,400 |
Use the following to answer questions 90-91:
Onitsha Corporation uses a weighted-average process costing system to collect costs related to production. The following selected information relates to production for June:
| |Units started into production |25,000 | |
| |Units completed and transferred out |20,000 | |
| |Equivalent units, materials |28,000 | |
| |Equivalent units, conversion costs |26,000 | |
| | | | |
| | |Materials |Conversion |
| |Costs in work in process on June 1 |$ 6,720 |$ 9,100 |
| |Costs added to production during June | 57,120 | 88,400 |
| |Total cost |$63,840 |$97,500 |
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 completed units were in work in process 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:
| |Beginning work in process inventory |3,000 |* |
|+ |Units started into production |25,000 | |
|= |Equivalent units |28,000 | |
| | | | |
|* |Beginning work in process inventory + 25,000 = 28,000 | | |
| |Beginning work in process inventory = 3,000 | | |
91. What total amount of cost should be assigned to the units completed and transferred out during June?
A) $102,510
B) $108,800
C) $120,600
D) $136,000
Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3,4 Level: Hard
Solution:
| | |Materials |Conversion |
| |Work in process, beginning |$ 6,720 |$ 9,100 |
| |Cost added during the month | 57,120 | 88,400 |
| |Total cost (a) |$63,840 |$97,500 |
| |Equivalent units (above) (b) |28,000 |26,000 |
| |Cost per equivalent unit (a) ÷ (b) |$2.28 |$3.75 |
| | |Materials |Conversion |Total |
| |Units transferred out |20,000 |20,000 | |
| |Cost per equivalent unit |$2.28 |$3.75 | |
| |Cost transferred out |$45,600 |$75,000 |$120,600 |
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:
| | |Cost |Percent Complete |
| |Materials costs |$3,100 |70% |
| |Conversion costs |$2,900 |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 |$110,500 |
| |Conversion costs |$153,900 |
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 units for conversion costs for the month in the first 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 in process, beginning |300 |
|+ |Units started into production during the month |8,500 |
|− |Units completed and transferred out during the month |8,100 |
|= |Work in process, ending | 700 |
|Equivalent units of production | |
| |Conversion |
|Transferred to next department |8,100 |
|Ending work in process (materials: 700 units × 90% complete; conversion: 700 units × | 385 |
|55% complete) | |
|Equivalent units of production |8,485 |
93. The cost per equivalent unit for materials for the month in the first processing department is closest to:
A) $12.91
B) $12.66
C) $12.56
D) $13.01
Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium
Solution:
| |To solve for ending work in process: | |
|+ |Work in process, beginning |300 |
|+ |Units started into production during the month |8,500 |
|− |Units completed and transferred out during the month |8,100 |
|= |Work in process, ending | 700 |
| |Equivalent units of production | |
| | |Materials |
| |Transferred to next department |8,100 |
| |Ending work in process (materials: 700 units × 90% complete; conversion: 700 units| 630 |
| |× 55% complete) | |
| |Equivalent units of production |8,730 |
| | | |
| |Cost per Equivalent Unit | |
| | |Materials |
| |Cost of beginning work in process |$ 3,100 |
| |Cost added during the period | 110,500 |
| |Total cost (a) |$113,600 |
| | | |
| |Equivalent units of production (b) |8,730 |
| |Cost per equivalent unit, (a) ÷ (b) |$13.01 |
94. The cost per equivalent unit for conversion costs for the first department for the month is closest to:
A) $17.82
B) $19.40
C) $18.14
D) $18.48
Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium
Solution:
| |To solve for ending work in process: | |
|+ |Work in process, beginning |300 |
|+ |Units started into production during the month |8,500 |
|− |Units completed and transferred out during the month |8,100 |
|= |Work in process, ending | 700 |
|Equivalent units of production | |
| |Conversion |
|Transferred to next department |8,100 |
|Ending work in process (700 units × 55% complete) | 385 |
|Equivalent units of production |8,485 |
| | |
|Cost per Equivalent Unit | |
| |Conversion |
|Cost of beginning work in process |$ 2,900 |
|Cost added during the period | 153,900 |
|Total cost (a) |$156,800 |
| | |
|Equivalent units of production (b) |8,485 |
|Cost per equivalent unit, (a) ÷ (b) |$18.48 |
95. The total cost transferred from the first processing department to the next processing department during the month is closest to:
A) $264,400
B) $277,138
C) $270,400
D) $255,093
Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium
Solution:
| |To solve for ending work in process: | |
|+ |Work in process, beginning |300 |
|+ |Units started into production during the month |8,500 |
|− |Units completed and transferred out during the month |8,100 |
|= |Work in process, ending | 700 |
|Equivalent units of production | | | |
| |Materials |Conversion | |
|Transferred to next department |8,100 |8,100 | |
|Ending work in process (materials: 700 units × 90% complete; conversion: 700 units × 55% | 630 | 385 | |
|complete) | | | |
|Equivalent units of production |8,730 |8,485 | |
| | | | |
|Cost per Equivalent Unit | | | |
| |Materials |Conversion | |
|Cost of beginning work in process |$ 3,100 |$ 2,900 | |
|Cost added during the period | 110,500 | 153,900 | |
|Total cost (a) |$113,600 |$156,800 | |
| | | | |
|Equivalent units of production (b) |8,730 |8,485 | |
|Cost per equivalent unit, (a) ÷ (b) |$13.01 |$18.48 | |
| | | | |
| |Materials |Conversion |Total |
|Units transferred out: | | | |
|Units transferred to the next department |8,100 |8,100 | |
|Cost per equivalent unit |$13.01 |$18.48 | |
|Cost of units transferred out |$105,402 |$149,685 |$255,087 |
96. The cost of ending work in process inventory in the first processing 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:
| |To solve for ending work in process: | |
|+ |Work in process, beginning |300 |
|+ |Units started into production during the month |8,500 |
|− |Units completed and transferred out during the month |8,100 |
|= |Work in process, ending | 700 |
|Equivalent units of production | | | |
| |Materials |Conversion | |
|Transferred to next department |8,100 |8,100 | |
|Ending work in process (materials: 700 units × 90% complete; conversion: 700 units × 55% |630 |385 | |
|complete) | | | |
|Equivalent units of production |8,730 |8,485 | |
| | | | |
|Cost per Equivalent Unit | | | |
| |Materials |Conversion | |
|Cost of beginning work in process |$3,100 |$2,900 | |
|Cost added during the period |110,500 |153,900 | |
|Total cost (a) |$113,600 |$156,800 | |
| | | | |
|Equivalent units of production (b) |8,730 |8,485 | |
|Cost per equivalent unit, (a) ÷ (b) |$13.01 |$18.48 | |
| | | | |
| |Materials |Conversion |Total |
|Ending work in process inventory: | | | |
|Equivalent units of production (materials: 700 units × 90% complete; conversion: 700 units |630 |385 | |
|× 55% complete) | | | |
|Cost per equivalent unit |$13.01 |$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:
| | |Cost |Percent Complete |
| |Materials costs |$15,700 |85% |
| |Conversion costs |$4,800 |45% |
A total of 8,000 units were started and 7,100 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 |$166,500 |
| |Conversion costs |$96,300 |
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 work in process inventory in the first 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 in process, beginning |700 |
|+ |Units started into production during the month |8,000 |
|− |Units completed and transferred out during the month |7,100 |
|= |Work in process, ending |1,600 |
98. What are the equivalent units for conversion costs for the month in the first 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 in process, beginning |700 |
|+ |Units started into production during the month |8,000 |
|− |Units completed and transferred out during the month |7,100 |
|= |Work in process, ending |1,600 |
|Equivalent units of production | |
| |Conversion |
|Transferred to next department |7,100 |
|Ending work in process (1,600 units × 15% complete) | 240 |
|Equivalent units of production |7,340 |
99. The cost per equivalent unit for materials for the month in the first processing department is closest to:
A) $21.95
B) $20.94
C) $19.14
D) $20.06
Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium
Solution:
| |To solve for ending work in process: | |
|+ |Work in process, beginning |700 |
|+ |Units started into production during the month |8,000 |
|− |Units completed and transferred out during the month |7,100 |
|= |Work in process, ending |1,600 |
|Equivalent units of production | |
| |Materials |
|Transferred to next department |7,100 |
|Ending work in process (1,600 units × 75% complete) |1,200 |
|Equivalent units of production |8,300 |
| | |
|Cost per Equivalent Unit | |
| |Materials |
|Cost of beginning work in process |$ 15,700 |
|Cost added during the period | 166,500 |
|Total cost (a) |$182,200 |
| | |
|Equivalent units of production (b) |8,300 |
|Cost per equivalent unit, (a) ÷ (b) |$21.95 |
100. The cost per equivalent unit for conversion costs for the first department for the month is closest to:
A) $13.12
B) $11.62
C) $14.46
D) $13.77
Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium
Solution:
| |To solve for ending work in process: | |
|+ |Work in process, beginning |700 |
|+ |Units started into production during the month |8,000 |
|− |Units completed and transferred out during the month |7,100 |
|= |Work in process, ending |1,600 |
|Equivalent units of production | |
| |Conversion |
|Transferred to next department |7,100 |
|Ending work in process (1,600 units × 15% complete) | 240 |
|Equivalent units of production |7,340 |
| | |
|Cost per Equivalent Unit | |
| |Conversion |
|Cost of beginning work in process |$ 4,800 |
|Cost added during the period | 96,300 |
|Total cost (a) |$101,100 |
| | |
|Equivalent units of production (b) |7,340 |
|Cost per equivalent unit, (a) ÷ (b) |$13.774 |
101. The total cost transferred from the first processing department to the next processing department during the month is closest to:
A) $310,816
B) $262,800
C) $283,300
D) $253,655
Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium
Solution:
| |To solve for ending work in process: | |
|+ |Work in process, beginning |700 |
|+ |Units started into production during the month |8,000 |
|− |Units completed and transferred out during the month |7,100 |
|= |Work in process, ending |1,600 |
|Equivalent units of production | | | |
| |Materials |Conversion | |
|Transferred to next department |7,100 |7,100 | |
|Ending work in process (materials: 1,600 units × 75% complete; conversion: 1,600 units × |1,200 | 240 | |
|15% complete) | | | |
|Equivalent units of production |8,300 |7,340 | |
| | | | |
|Cost per Equivalent Unit | | | |
| |Materials |Conversion | |
|Cost of beginning work in process |$ 15,700 |$ 4,800 | |
|Cost added during the period | 166,500 | 96,300 | |
|Total cost (a) |$182,200 |$101,100 | |
| | | | |
|Equivalent units of production (b) |8,300 |7,340 | |
|Cost per equivalent unit, (a) ÷ (b) |$21.952 |$13.774 | |
| | | | |
| |Materials |Conversion |Total |
|Units transferred out: | | | |
|Units transferred to the next department |7,100 |7,100 | |
|Cost per equivalent unit |$21.95 |$13.77 | |
|Cost of units transferred out |$155,858 |$97,794 |$253,652 |
102. The cost of ending work in process inventory in the first processing department according to the company's cost system is closest to:
A) $57,162
B) $42,871
C) $29,648
D) $8,574
Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium
Solution:
| |To solve for ending work in process: | |
|+ |Work in process, beginning |700 |
|+ |Units started into production during the month |8,000 |
|− |Units completed and transferred out during the month |7,100 |
|= |Work in process, ending |1,600 |
|Equivalent units of production | | | |
| |Materials |Conversion | |
|Transferred to next department |7,100 |7,100 | |
|Ending work in process (materials: 1,600 units × 75% complete; conversion: 1,600 units × |1,200 | 240 | |
|15% complete) | | | |
|Equivalent units of production |8,300 |7,340 | |
| | | | |
|Cost per Equivalent Unit | | | |
| |Materials |Conversion | |
|Cost of beginning work in process |$ 15,700 |$ 4,800 | |
|Cost added during the period | 166,500 | 96,300 | |
|Total cost (a) |$182,200 |$101,100 | |
| | | | |
|Equivalent units of production (b) |8,300 |7,340 | |
|Cost per equivalent unit, (a) ÷ (b) |$21.952 |$13.774 | |
| | | | |
| |Materials |Conversion |Total |
|Ending work in process inventory: | | | |
|Equivalent units of production (materials: 1,600 units × 75% complete; conversion: 1,600 |1,200 |240 | |
|units × 15% complete) | | | |
|Cost per equivalent unit |$21.95 |$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 Complete |
| |Materials costs |$9,100 |80% |
| |Conversion costs |$5,400 |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:
| |Materials costs |$96,700 |
| |Conversion costs |$180,700 |
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 work in process inventory in the first 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 in process, beginning |700 |
|+ |Units started into production during the month |7,200 |
|− |Units completed and transferred out during the month |6,400 |
|= |Work in process, ending |1,500 |
104. What are the equivalent units for conversion costs for the month in the first 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:
| |To solve for ending work in process: | |
|+ |Work in process, beginning |700 |
|+ |Units started into production during the month |7,200 |
|− |Units completed and transferred out during the month |6,400 |
|= |Work in process, ending |1,500 |
|Equivalent units of production | |
| |Conversion |
|Transferred to next department |6,400 |
|Ending work in process (1,500 units × 70% complete) |1,050 |
|Equivalent units of production |7,450 |
105. The cost per equivalent unit for materials for the month in the first processing department is closest to:
A) $12.72
B) $13.92
C) $13.39
D) $12.24
Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium
Solution:
| |To solve for ending work in process: | |
|+ |Work in process, beginning |700 |
|+ |Units started into production during the month |7,200 |
|− |Units completed and transferred out during the month |6,400 |
|= |Work in process, ending |1,500 |
|Equivalent units of production | |
| |Materials |
|Transferred to next department |6,400 |
|Ending work in process (1,500 units × 80% complete) |1,200 |
|Equivalent units of production |7,600 |
| | |
|Cost per Equivalent Unit | |
| |Materials |
|Cost of beginning work in process |$ 9,100 |
|Cost added during the period | 96,700 |
|Total cost (a) |$105,800 |
| | |
|Equivalent units of production (b) |7,600 |
|Cost per equivalent unit, (a) ÷ (b) |$13.92 |
106. The total cost transferred from the first processing department to the next processing department during the month is closest to:
A) $291,900
B) $307,318
C) $248,966
D) $277,400
Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium
Solution:
| |To solve for ending work in process: | |
|+ |Work in process, beginning |700 |
|+ |Units started into production during the month |7,200 |
|− |Units completed and transferred out during the month |6,400 |
|= |Work in process, ending |1,500 |
|Equivalent units of production | | | |
| |Materials |Conversion | |
|Transferred to next department |6,400 |6,400 | |
|Ending work in process (materials: 1,500 units × 80% complete; conversion: 1,500 units × |1,200 |1,050 | |
|70% complete) | | | |
|Equivalent units of production |7,600 |7,450 | |
| | | | |
|Cost per Equivalent Unit | | | |
| |Materials |Conversion | |
|Cost of beginning work in process |$ 9,100 |$ 5,400 | |
|Cost added during the period | 96,700 | 180,700 | |
|Total cost (a) |$105,800 |$186,100 | |
| | | | |
|Equivalent units of production (b) |7,600 |7,450 | |
|Cost per equivalent unit, (a) ÷ (b) |$13.92 |$24.98 | |
| | | | |
| |Materials |Conversion |Total |
|Units transferred out: | | | |
|Units transferred to the next department |6,400 |6,400 | |
|Cost per equivalent unit |$13.92 |$24.98 | |
|Cost of units transferred out |$89,095 |$159,871 |$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:
| | |Cost |Percent Complete |
| |Materials costs |$11,400 |80% |
| |Conversion costs |$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:
| |Materials costs |$112,200 |
| |Conversion costs |$178,400 |
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 units for conversion costs for the month in the first 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 units of production | |
| |Conversion |
|Transferred to next department |4,400 |
|Ending work in process (1,100 units × 25% complete) | 275 |
|Equivalent units of production |4,675 |
108. The cost per equivalent unit for materials for the month in the first processing department is closest to:
A) $22.47
B) $23.17
C) $21.03
D) $20.40
Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium
Solution:
|Equivalent units of production | |
| |Materials |
|Transferred to next department |4,400 |
|Ending work in process (1,100 units × 85% complete) | 935 |
|Equivalent units of production |5,335 |
| | |
|Cost per Equivalent Unit | |
| |Materials |
|Cost of beginning work in process |$ 11,400 |
|Cost added during the period | 112,200 |
|Total cost (a) |$123,600 |
| | |
|Equivalent units of production (b) |5,335 |
|Cost per equivalent unit, (a) ÷ (b) |$23.17 |
109. The total cost transferred from the first processing department to the next processing department during the month is closest to:
A) $304,200
B) $290,600
C) $271,916
D) $339,895
Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium
Solution:
|Equivalent units of production | | | |
| |Materials |Conversion | |
|Transferred to next department |4,400 |4,400 | |
|Ending work in process (materials: 1,100 units × 85% complete; conversion: 1,100 units × | 935 | 275 | |
|25% complete) | | | |
|Equivalent units of production |5,335 |4,675 | |
| | | | |
|Cost per Equivalent Unit | | | |
| |Materials |Conversion | |
|Cost of beginning work in process |$ 11,400 |$ 2,200 | |
|Cost added during the period | 112,200 | 178,400 | |
|Total cost (a) |$123,600 |$180,600 | |
| | | | |
|Equivalent units of production (b) |5,335 |4,675 | |
|Cost per equivalent unit, (a) ÷ (b) |$23.17 |$38.63 | |
| |Materials |Conversion |Total |
|Units transferred out: | | | |
|Units transferred to the next department |4,400 |4,400 | |
|Cost per equivalent unit |$23.17 |$38.63 | |
|Cost of units transferred out |$101,938 |$169,976 |$271,915 |
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 |Percent Complete |
| |Materials costs |$4,800 |65% |
| |Conversion costs |$6,200 |60% |
A total of 9,100 units were started and 8,500 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 |$208,000 |
| |Conversion costs |$280,300 |
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 from the first processing department to the next processing department during the month is closest to:
A) $477,250
B) $527,782
C) $499,300
D) $488,300
Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3,4 Level: Medium
Solution:
|Equivalent units of production | | | |
| |Materials |Conversion | |
|Transferred to next department |8,500 |8,500 | |
|Ending work in process (materials: 900 units × 85% complete; conversion: 900 units × 15% | 765 | 135 | |
|complete) | | | |
|Equivalent units of production |9,265 |8,635 | |
| | | | |
|Cost per Equivalent Unit | | | |
| |Materials |Conversion | |
|Cost of beginning work in process |$ 4,800 |$ 6,200 | |
|Cost added during the period | 208,000 | 280,300 | |
|Total cost (a) |$212,800 |$286,500 | |
| | | | |
|Equivalent units of production (b) |9,265 |8,635 | |
|Cost per equivalent unit, (a) ÷ (b) |$22.97 |$33.18 | |
| | | | |
|Cost of Ending Work in Process Inventory and Units Transferred Out | | | |
| |Materials |Conversion |Total |
|Units transferred out: | | | |
|Units transferred to the next department |8,500 |8,500 | |
|Cost per equivalent unit |$22.97 |$33.18 | |
|Cost of units transferred out |$195,229 |$282,021 |$477,250 |
111. The cost of ending work in process inventory in the first processing department according to the company's cost system is closest to:
A) $50,532
B) $7,580
C) $22,050
D) $42,952
Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3,4 Level: Medium
Solution:
|Equivalent units of production | | | |
| |Materials |Conversion | |
|Transferred to next department |8,500 |8,500 | |
|Ending work in process (materials: 900 units × 85% complete; conversion: 900 units × 15% | 765 | 135 | |
|complete) | | | |
|Equivalent units of production |9,265 |8,635 | |
| | | | |
|Cost per Equivalent Unit | | | |
| |Materials |Conversion | |
|Cost of beginning work in process |$ 4,800 |$ 6,200 | |
|Cost added during the period | 208,000 | 280,300 | |
|Total cost (a) |$212,800 |$286,500 | |
| | | | |
|Equivalent units of production (b) |9,265 |8,635 | |
|Cost per equivalent unit, (a) ÷ (b) |$22.97 |$33.18 | |
| | | | |
|Cost of Ending Work in Process Inventory and Units Transferred Out | | | |
| |Materials |Conversion |Total |
|Ending work in process inventory: | | | |
|Equivalent units of production (materials: 900 units × 85% complete; conversion: 900 units |765 |135 | |
|× 15% complete) | | | |
|Cost per equivalent unit |$22.97 |$33.18 | |
|Cost of ending work in process inventory |$17,571 |$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 |Percent Complete |
| |Materials costs |$4,400 |55% |
| |Conversion costs |$2,200 |35% |
A total of 5,400 units were started and 4,800 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 |$120,000 |
| |Conversion costs |$92,500 |
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 work in process inventory in the first 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:
| |To solve for ending work in process: | |
|+ |Work in process, beginning |300 |
|+ |Units started into production during the month |5,400 |
|− |Units completed and transferred out during the month |4,800 |
|= |Work in process, ending | 900 |
113. What are the equivalent units for materials for the month in the first 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:
| |To solve for ending work in process: | |
|+ |Work in process, beginning |300 |
|+ |Units started into production during the month |5,400 |
|− |Units completed and transferred out during the month |4,800 |
|= |Work in process, ending | 900 |
|Equivalent units of production | |
| |Materials |
|Transferred to next department |4,800 |
|Ending work in process (900 units × 80% complete) | 720 |
|Equivalent units of production |5,520 |
114. What are the equivalent units for conversion costs for the month in the first 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:
| |To solve for ending work in process: | |
|+ |Work in process, beginning |300 |
|+ |Units started into production during the month |5,400 |
|− |Units completed and transferred out during the month |4,800 |
|= |Work in process, ending | 900 |
|Equivalent units of production | |
| |Conversion |
|Transferred to next department |4,800 |
|Ending work in process (900 units × 55% complete) | 495 |
|Equivalent units of production |5,295 |
115. The cost per equivalent unit for materials for the month in the first processing department is closest to:
A) $21.05
B) $21.82
C) $22.54
D) $21.74
Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium
Solution:
| |To solve for ending work in process: | |
|+ |Work in process, beginning |300 |
|+ |Units started into production during the month |5,400 |
|− |Units completed and transferred out during the month |4,800 |
|= |Work in process, ending | 900 |
|Equivalent units of production | |
| |Materials |
|Transferred to next department |4,800 |
|Ending work in process (900 units × 80% complete) | 720 |
|Equivalent units of production |5,520 |
| | |
|Cost per Equivalent Unit | |
| |Materials |
|Cost of beginning work in process |$ 4,400 |
|Cost added during the period | 120,000 |
|Total cost (a) |$124,400 |
| | |
|Equivalent units of production (b) |5,520 |
|Cost per equivalent unit, (a) ÷ (b) |$22.54 |
116. The cost per equivalent unit for conversion costs for the first department for the month is closest to:
A) $16.61
B) $17.89
C) $18.78
D) $17.47
Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium
Solution:
| |To solve for ending work in process: | |
|+ |Work in process, beginning |300 |
|+ |Units started into production during the month |5,400 |
|− |Units completed and transferred out during the month |4,800 |
|= |Work in process, ending | 900 |
|Equivalent units of production | |
| |Conversion |
|Transferred to next department |4,800 |
|Ending work in process (materials: 900 units × 80% complete; conversion: 900 | 495 |
|units × 55% complete) | |
|Equivalent units of production |5,295 |
| | |
|Cost per Equivalent Unit | |
| |Conversion |
|Cost of beginning work in process |$ 2,200 |
|Cost added during the period | 92,500 |
|Total cost (a) |$94,700 |
| | |
|Equivalent units of production (b) |5,295 |
|Cost per equivalent unit, (a) ÷ (b) |$17.88 |
117. The cost of ending work in process inventory in the first processing department according to the company's cost system is closest to:
A) $25,079
B) $36,379
C) $20,008
D) $29,103
Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium
Solution:
| |To solve for ending work in process: | |
|+ |Work in process, beginning |300 |
|+ |Units started into production during the month |5,400 |
|− |Units completed and transferred out during the month |4,800 |
|= |Work in process, ending | 900 |
|Equivalent units of production | | | |
| |Materials |Conversion | |
|Transferred to next department |4,800 |4,800 | |
|Ending work in process (materials: 900 units × 80% complete; conversion: 900 units × 55% | 720 | 495 | |
|complete) | | | |
|Equivalent units of production |5,520 |5,295 | |
| | | | |
|Cost per Equivalent Unit | | | |
| |Materials |Conversion | |
|Cost of beginning work in process |$ 4,400 |$ 2,200 | |
|Cost added during the period | 120,000 | 92,500 | |
|Total cost (a) |$124,400 |$94,700 | |
| | | | |
|Equivalent units of production (b) |5,520 |5,295 | |
|Cost per equivalent unit, (a) ÷ (b) |$22.54 |$17.88 | |
| | | | |
| |Materials |Conversion |Total |
|Units transferred out: | | | |
|Units transferred to the next department |4,800 |4,800 | |
|Cost per equivalent unit |$22.54 |$17.88 | |
|Cost of units transferred out |$108,174 |$85,847 |$194,021 |
118. The cost of ending work in process inventory in the first processing department according to the company’s cost system is closest to:
A) $25,079
B) $36,379
C) $20,008
D) $29,103
Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium
Solution:
| |To solve for ending work in process: | |
|+ |Work in process, beginning |300 |
|+ |Units started into production during the month |5,400 |
|− |Units completed and transferred out during the month |4,800 |
|= |Work in process, ending | 900 |
|Equivalent units of production | | | |
| |Materials |Conversion | |
|Transferred to next department |4,800 |4,800 | |
|Ending work in process (materials: 900 units × 80% complete; conversion: 900 units × 55% | 720 | 495 | |
|complete) | | | |
|Equivalent units of production |5,520 |5,295 | |
| | | | |
|Cost per Equivalent Unit | | | |
| |Materials |Conversion | |
|Cost of beginning work in process |$ 4,400 |$ 2,200 | |
|Cost added during the period | 120,000 | 92,500 | |
|Total cost (a) |$124,400 |$94,700 | |
| | | | |
|Equivalent units of production (b) |5,520 |5,295 | |
|Cost per equivalent unit, (a) ÷ (b) |$22.54 |$17.88 | |
| | | | |
|Cost of Ending Work in Process Inventory and Units Transferred Out | | | |
| |Materials |Conversion |Total |
|Ending work in process inventory: | | | |
|Equivalent units of production (materials: 900 units × 80% complete; conversion: 900 units |720 |495 | |
|× 55% complete) | | | |
|Cost per equivalent unit |$22.54 |$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: | |
| |Units in beginning work in process inventory |500 |
| |Materials costs |$7,700 |
| |Conversion costs |$2,900 |
| |Percent complete with respect to materials |75% |
| |Percent complete with respect to conversion |25% |
| |Units started into production during the month |6,700 |
| |Units transferred to the next department during the month |5,900 |
| |Materials costs added during the month |$108,600 |
| |Conversion costs added during the month |$121,000 |
| |Ending work in process inventory: | |
| |Units in ending work in process inventory |1,300 |
| |Percent complete with respect to materials |65% |
| |Percent complete with respect to conversion |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 units for materials for the month in the first 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 units of production | |
| |Materials |
|Transferred to next department |5,900 |
|Ending work in process (1,300 units × 65% complete) | 845 |
|Equivalent units of production |6,745 |
120. What are the equivalent units for conversion costs for the month in the first 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 units of production | |
| |Conversion |
|Transferred to next department |5,900 |
|Ending work in process (1,300 units × 40% complete) | 520 |
|Equivalent units of production |6,420 |
121. The cost per equivalent unit for materials for the month in the first processing department is closest to:
A) $15.08
B) $16.15
C) $16.10
D) $17.24
Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium
Solution:
|Equivalent units of production | |
| |Materials |
|Transferred to next department |5,900 |
|Ending work in process (1,300 units × 65% complete) | 845 |
|Equivalent units of production |6,745 |
| | |
|Cost per Equivalent Unit | |
| |Materials |
|Cost of beginning work in process |$ 7,700 |
|Cost added during the period | 108,600 |
|Total cost (a) |$116,300 |
| | |
|Equivalent units of production (b) |6,745 |
|Cost per equivalent unit, (a) ÷ (b) |$17.24 |
122. The cost per equivalent unit for conversion costs for the first department for the month is closest to:
A) $20.27
B) $19.30
C) $18.85
D) $17.21
Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium
Solution:
|Equivalent units of production | |
| |Conversion |
|Transferred to next department |5,900 |
|Ending work in process (1,300 units × 40% complete) | 520 |
|Equivalent units of production |6,420 |
| | |
|Cost per Equivalent Unit | |
| |Conversion |
|Cost of beginning work in process |$ 2,900 |
|Cost added during the period | 121,000 |
|Total cost (a) |$123,900 |
| | |
|Equivalent units of production (b) |6,420 |
|Cost per equivalent unit, (a) ÷ (b) |$19.30 |
123. The total cost transferred from the first processing department to the next processing department during the month is closest to:
A) $240,200
B) $263,095
C) $215,592
D) $229,600
Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium
Solution:
|Equivalent units of production | | | |
| |Materials |Conversion | |
|Transferred to next department |5,900 |5,900 | |
|Ending work in process (materials: 1,300 units × 65% complete; conversion: 1,300 units × | 845 | 520 | |
|40% complete) | | | |
|Equivalent units of production |6,745 |6,420 | |
| | | | |
|Cost per Equivalent Unit | | | |
| |Materials |Conversion | |
|Cost of beginning work in process |$ 7,700 |$ 2,900 | |
|Cost added during the period | 108,600 | 121,000 | |
|Total cost (a) |$116,300 |$123,900 | |
| | | | |
|Equivalent units of production (b) |6,745 |6,420 | |
|Cost per equivalent unit, (a) ÷ (b) |$17.24 |$19.30 | |
| | | | |
| |Materials |Conversion |Total |
|Units transferred out: | | | |
|Units transferred to the next department |5,900 |5,900 | |
|Cost per equivalent unit |$17.24 |$19.30 | |
|Cost of units transferred out |$101,730 |$113,864 |$215,595 |
124. The cost of ending work in process inventory in the first processing department according to the company's cost system is closest to:
A) $47,503
B) $19,001
C) $24,604
D) $30,877
Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium
Solution:
|Equivalent units of production | | | |
| |Materials |Conversion | |
|Transferred to next department |5,900 |5,900 | |
|Ending work in process (materials: 1,300 units × 65% complete; conversion: 1,300 units × 40% | 845 | 520 | |
|complete) | | | |
|Equivalent units of production |6,745 |6,420 | |
| | | | |
|Cost per Equivalent Unit | | | |
| |Materials |Conversion | |
|Cost of beginning work in process |$ 7,700 |$ 2,900 | |
|Cost added during the period | 108,600 | 121,000 | |
|Total cost (a) |$116,300 |$123,900 | |
| | | | |
|Equivalent units of production (b) |6,745 |6,420 | |
|Cost per equivalent unit, (a) ÷ (b) |$17.24 |$19.30 | |
| | | | |
| |Materials |Conversion |Total |
|Ending work in process inventory: | | | |
|Equivalent units of production (materials: 1,300 units × 65% complete; conversion: 1,300 units |845 |520 | |
|× 40% complete) | | | |
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: | |
| |Units in beginning work in process inventory |200 |
| |Materials costs |$2,900 |
| |Conversion costs |$6,400 |
| |Percent complete with respect to materials |85% |
| |Percent complete with respect to conversion |70% |
| |Units started into production during the month |7,800 |
| |Units transferred to the next department during the month |7,400 |
| |Materials costs added during the month |$128,000 |
| |Conversion costs added during the month |$332,600 |
| |Ending work in process inventory: | |
| |Units in ending work in process inventory |600 |
| |Percent complete with respect to materials |60% |
| |Percent complete with respect to conversion |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 from the first processing department to the next processing department during the month is closest to:
A) $491,328
B) $469,900
C) $460,600
D) $454,478
Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3,4 Level: Medium
Solution:
| |Equivalent units of production | | | |
| | |Materials |Conversion | |
| |Transferred to next department |7,400 |7,400 | |
| |Ending work in process (materials: 600 units × 60% complete; conversion:| 360 | 210 | |
| |600 units × 35% complete) | | | |
| |Equivalent units of production |7,760 |7,610 | |
| | | | | |
| |Cost per Equivalent Unit | | | |
| | |Materials |Conversion | |
| |Cost of beginning work in process |$ 2,900 |$ 6,400 | |
| |Cost added during the period | 128,000 | 332,600 | |
| |Total cost (a) |$130,900 |$339,000 | |
| | | | | |
| |Equivalent units of production (b) |7,760 |7,610 | |
| |Cost per equivalent unit, (a) ÷ (b) |$16.87 |$44.55 | |
| | | | | |
| | |Materials |Conversion |Total |
| |Units transferred out: | | | |
| |Units transferred to the next department |7,400 |7,400 | |
| |Cost per equivalent unit |$16.87 |$44.55 | |
| |Cost of units transferred out |$124,827 |$329,645 |$454,473 |
126. The cost of ending work in process inventory in the first processing department according to the company's cost system is closest to:
A) $15,428
B) $36,850
C) $22,110
D) $12,897
Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3,4 Level: Medium
Solution:
|Equivalent units of production | | | |
| |Materials |Conversion | |
|Transferred to next department |7,400 |7,400 | |
|Ending work in process (materials: 600 units × 60% complete; conversion:| 360 | 210 | |
|600 units × 35% complete) | | | |
|Equivalent units of production |7,760 |7,610 | |
| | | | |
|Cost per Equivalent Unit | | | |
| |Materials |Conversion | |
|Cost of beginning work in process |$ 2,900 |$ 6,400 | |
|Cost added during the period | 128,000 | 332,600 | |
|Total cost (a) |$130,900 |$339,000 | |
| | | | |
|Equivalent units of production (b) |7,760 |7,610 | |
|Cost per equivalent unit, (a) ÷ (b) |$16.87 |$44.55 | |
| | | | |
| |Materials |Conversion |Total |
|Ending work in process inventory: | | | |
|Equivalent units of production (materials: 600 units × 60% complete; |360 |210 | |
|conversion: 600 units × 35% complete) | | | |
|Cost per equivalent unit |$16.87 |$44.55 | |
|Cost of ending work in process inventory |$6,073 |$9,355 |$15,428 |
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: | |
| |Units in beginning work in process inventory |400 |
| |Materials costs |$6,900 |
| |Conversion costs |$2,500 |
| |Percent complete with respect to materials |80% |
| |Percent complete with respect to conversion |15% |
| |Units started into production during the month |6,000 |
| |Units transferred to the next department during the month |5,400 |
| |Materials costs added during the month |$112,500 |
| |Conversion costs added during the month |$210,300 |
| |Ending work in process inventory: | |
| |Units in ending work in process inventory |1,000 |
| |Percent complete with respect to materials |80% |
| |Percent complete with respect to conversion |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 units for materials for the month in the first 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 units of production | |
| |Materials |
|Transferred to next department |5,400 |
|Ending work in process (materials: 1,000 units × 80% complete; conversion: 1,000 | 800 |
|units × 30% complete) | |
|Equivalent units of production |6,200 |
128. The cost per equivalent unit for conversion costs for the first department for the month is closest to:
A) $39.20
B) $37.33
C) $33.25
D) $36.89
Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium
Solution:
|Equivalent units of production | |
| |Conversion |
|Transferred to next department |5,400 |
|Ending work in process (1,000 units × 30% complete) | 300 |
|Equivalent units of production |5,700 |
| | |
|Cost per Equivalent Unit | |
| |Conversion |
|Cost of beginning work in process |$ 2,500 |
|Cost added during the period | 210,300 |
|Total cost (a) |$212,800 |
| | |
|Equivalent units of production (b) |5,700 |
|Cost per equivalent unit, (a) ÷ (b) |$37.33 |
129. The cost of ending work in process inventory in the first processing department according to the company's cost system is closest to:
A) $16,977
B) $56,591
C) $45,273
D) $26,606
Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium
Solution:
|Equivalent units of production | | | |
| |Materials |Conversion | |
|Transferred to next department |5,400 |5,400 | |
|Ending work in process (materials: 1,000 units × 80% complete; conversion:| 800 | 300 | |
|1,000 units × 30% complete) | | | |
|Equivalent units of production |6,200 |5,700 | |
| | | | |
|Cost per Equivalent Unit | | | |
| |Materials |Conversion | |
|Cost of beginning work in process |$ 6,900 |$ 2,500 | |
|Cost added during the period | 112,500 | 210,300 | |
|Total cost (a) |$119,400 |$212,800 | |
| | | | |
|Equivalent units of production (b) |6,200 |5,700 | |
|Cost per equivalent unit, (a) ÷ (b) |$19.26 |$37.33 | |
| | | | |
| |Materials |Conversion |Total |
|Ending work in process inventory: | | | |
|Equivalent units of production (materials: 1,000 units × 80% complete; |800 |300 | |
|conversion: 1,000 units × 30% complete) | | | |
|Cost per equivalent unit |$19.26 |$37.33 | |
|Cost of ending work in process inventory |$15,406 |$11,200 |$26,606 |
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:
| | |Cost |Percent Complete |
| |Materials costs |$3,700 |60% |
| |Conversion costs |$11,900 |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:
| |Materials costs |$39,000 |
| |Conversion costs |$166,100 |
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 work in process inventory in the first 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 in process, beginning |600 |
|+ |Units started into production during the month |5,000 |
|− |Units completed and transferred out during the month |4,200 |
|= |Work in process, ending |1,400 |
131. What are the equivalent units for conversion costs for the month in the first 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:
| |To solve for ending work in process: | |
|+ |Work in process, beginning |600 |
|+ |Units started into production during the month |5,000 |
|− |Units completed and transferred out during the month |4,200 |
|= |Work in process, ending |1,400 |
|Equivalent units of production | |
| |Conversion |
|Transferred to next department |4,200 |
|Ending work in process (1,400 units × 35% complete) | 490 |
|Equivalent units of production |4,690 |
132. The cost per equivalent unit for materials for the month in the first processing department is closest to:
A) $7.43
B) $6.96
C) $8.13
D) $7.63
Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium
Solution:
| |To solve for ending work in process: | |
|+ |Work in process, beginning |600 |
|+ |Units started into production during the month |5,000 |
|− |Units completed and transferred out during the month |4,200 |
|= |Work in process, ending |1,400 |
|Equivalent units of production | |
| |Materials |
|Transferred to next department |4,200 |
|Ending work in process (1,400 units × 75% complete) |1,050 |
|Equivalent units of production |5,250 |
| | |
|Cost per Equivalent Unit | |
| |Materials |
|Cost of beginning work in process |$ 3,700 |
|Cost added during the period | 39,000 |
|Total cost (a) |$42,700 |
| | |
|Equivalent units of production (b) |5,250 |
|Cost per equivalent unit, (a) ÷ (b) |$8.13 |
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):
| | |Number of Units|Labor and Overhead Percent |
| | | |Complete |
| |Work in process inventory, Sept. 1 |40,000 |25% |
| |Transferred in during the month |100,000 | |
| |Work in process inventory, Sept. 30 |20,000 |50% |
| | | | | |
| | |Transferred In |Materials |Labor and Overhead|
| |Beginning work in process inventory |$80,000 |$37,600 |$5,000 |
| |Cost added during the month |$251,000 |$122,400 |$66,500 |
133. The equivalent units for material for the 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 in process, beginning |40,000 |
|+ |Units started into production during the month |100,000 |
|− |Work in process, ending | 20,000 |
|= |Units completed and transferred out during the month |120,000 |
|Equivalent units of production | |
| |Materials |
|Transferred to next department |120,000 |
|Ending work in process (20,000 units × 100% complete) | 20,000 |
|Equivalent units of production |140,000 |
134. The cost per equivalent unit for labor and overhead for the month is:
A) $0.50
B) $0.125
C) $0.52
D) $0.55
Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium
Solution:
| |To solve for units transferred: | |
|+ |Work in process, beginning |40,000 |
|+ |Units started into production during the month |100,000 |
|− |Work in process, ending | 20,000 |
|= |Units completed and transferred out during the month |120,000 |
|Equivalent units of production | |
| |Labor and Overhead |
|Transferred to next department |120,000 |
|Ending work in process (20,000 units × 50% complete) | 10,000 |
|Equivalent units of production |130,000 |
| | |
|Cost per Equivalent Unit | |
| |Labor and Overhead |
|Cost of beginning work in process |$ 5,000 |
|Cost added during the period | 66,500 |
|Total cost (a) |$71,500 |
| | |
|Equivalent units of production (b) |130,000 |
|Cost per equivalent unit, (a) ÷ (b) |$0.55 |
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: | |
| |Units in beginning work in process inventory |800 |
| |Materials costs |$13,900 |
| |Conversion costs |$7,200 |
| |Percent complete with respect to materials |85% |
| |Percent complete with respect to conversion |20% |
| |Units started into production during the month |7,200 |
| |Units transferred to the next department during the month |6,100 |
| |Materials costs added during the month |$115,700 |
| |Conversion costs added during the month |$240,600 |
| |Ending work in process inventory: | |
| |Units in ending work in process inventory |1,900 |
| |Percent complete with respect to materials |75% |
| |Percent complete with respect to conversion |10% |
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.
135. What are the equivalent units for conversion costs for the month in the first 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 units of production | |
| |Conversion |
|Transferred to next department |6,100 |
|Ending work in process (1,900 units × 10% complete) | 190 |
|Equivalent units of production |6,290 |
136. The cost per equivalent unit for materials for the month in the first processing department is closest to:
A) $16.20
B) $17.22
C) $14.46
D) $15.38
Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium
Solution:
|Equivalent units of production | |
| |Materials |
|Transferred to next department |6,100 |
|Ending work in process (1,900 units × 75% complete) |1,425 |
|Equivalent units of production |7,525 |
| | |
|Cost per Equivalent Unit | |
| |Materials |
|Cost of beginning work in process |$ 13,900 |
|Cost added during the period | 115,700 |
|Total cost (a) |$129,600 |
| | |
|Equivalent units of production (b) |7,525 |
|Cost per equivalent unit, (a) ÷ (b) |$17.22 |
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: | |
| |Units in beginning work in process inventory |500 |
| |Materials costs |$8,500 |
| |Conversion costs |$14,700 |
| |Percent complete with respect to materials |85% |
| |Percent complete with respect to conversion |55% |
| |Units started into production during the month |5,300 |
| |Units transferred to the next department during the month |4,400 |
| |Materials costs added during the month |$79,100 |
| |Conversion costs added during the month |$210,700 |
| |Ending work in process inventory: | |
| |Units in ending work in process inventory |1,400 |
| |Percent complete with respect to materials |50% |
| |Percent complete with respect to conversion |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.
137. The cost per equivalent unit for materials for the month in the first processing department is closest to:
A) $15.51
B) $13.64
C) $15.10
D) $17.18
Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3 Level: Medium
Solution:
|Equivalent units of production | |
| |Materials |
|Transferred to next department |4,400 |
|Ending work in process (1,400 units × 50% complete) | 700 |
|Equivalent units of production |5,100 |
| | |
|Cost per Equivalent Unit | |
| |Materials |
|Cost of beginning work in process |$ 8,500 |
|Cost added during the period | 79,100 |
|Total cost (a) |$87,600 |
| | |
|Equivalent units of production (b) |5,100 |
|Cost per equivalent unit, (a) ÷ (b) |$17.18 |
138. The cost per equivalent unit for conversion costs for the first department for the month is closest to:
A) $43.71
B) $49.10
C) $46.76
D) $38.86
Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3 Level: Medium
Solution:
|Equivalent units of production | |
| |Conversion |
|Transferred to next department |4,400 |
|Ending work in process (1,400 units × 30% complete) | 420 |
|Equivalent units of production |4,820 |
| | |
|Cost per Equivalent Unit | |
| |Conversion |
|Cost of beginning work in process |$ 14,700 |
|Cost added during the period | 210,700 |
|Total cost (a) |$225,400 |
| | |
|Equivalent units of production (b) |4,820 |
|Cost per equivalent unit, (a) ÷ (b) |$46.76 |
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:
| | |Units |Percent Complete with Respect to |
| | | |Processing |
| |Beginning work in process inventory |10,000 |65% |
| |Units started into production |50,000 | |
| |Units completed and transferred out |51,000 | |
| |Ending work in process inventory |9,000 |30% |
All materials are added at the beginning of the mixing process.
139. Assuming that Dillard Company uses the FIFO method, the 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 Units of Production | |
| |Materials |
|To complete beginning work in process (10,000 units × 0%) |0 |
|Units started and completed during the period (50,000 units started − 9,000 units in ending|41,000 |
|inventory) | |
|Ending work in process (9,000 units × 100% complete) | 9,000 |
|Equivalent units of production |50,000 |
140. Assuming that Dillard Company uses the FIFO method, the 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 Units of Production | |
| |Conversion |
|To complete beginning work in process (10,000 units × 35%) |3,500 |
|Units started and completed during the period (50,000 units started − 9,000 units in ending|41,000 |
|inventory) | |
|Ending work in process (9,000 units × 30% complete) | 2,700 |
|Equivalent units of production |47,200 |
141. Assuming that Dillard Company uses the weighted-average method, the 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 units of production | |
| |Materials |
|Transferred to next department |51,000 |
|Ending work in process (9,000 units × 100% complete) | 9,000 |
|Equivalent units of production |60,000 |
142. Assuming that Dillard Company uses the weighted-average method, the 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 units of production | |
| |Conversion |
|Transferred to next department |51,000 |
|Ending work in process (9,000 units × 30% complete) | 2,700 |
|Equivalent units of production |53,700 |
Use the following to answer questions 143-146:
(Appendix 4A) Activities in the Sargent Company's Assembly Department for the month of March follow:
| | |Units |Materials |Percent Complete with |
| | | | |Respect to Labor & |
| | | | |Overhead |
| |Work-in-process inventory, March 1 |7,000 |70% |35% |
| |Started into production during March |66,000 | | |
| |Work-in-process inventory, March 31 |5,000 |45% |30% |
143. The equivalent units for materials for March, using the weighted-average 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 in process, beginning |7,000 |
|+ |Units started into production during the month |66,000 |
|− |Work in process, ending | 5,000 |
|= |Units completed and transferred out during the month |68,000 |
|Equivalent units of production | |
| |Materials |
|Transferred to next department |68,000 |
|Ending work in process (5,000 units × 45% complete) | 2,250 |
|Equivalent units of production |70,250 |
144. The equivalent units for labor and overhead for March, using the 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:
| |To solve for units transferred: | |
|+ |Work in process, beginning |7,000 |
|+ |Units started into production during the month |66,000 |
|− |Work in process, ending | 5,000 |
|= |Units completed and transferred out during the month |68,000 |
|Equivalent units of production | |
| |Labor and |
| |Overhead |
|Transferred to next department |68,000 |
|Ending work in process (5,000 units × 30% complete) | 1,500 |
|Equivalent units of production |69,500 |
145. The equivalent units for materials for March using the FIFO 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:
| |To solve for units transferred: | |
|+ |Work in process, beginning |7,000 |
|+ |Units started into production during the month |66,000 |
|− |Work in process, ending | 5,000 |
|= |Units completed and transferred out during the month |68,000 |
|Equivalent Units of Production | |
| |Materials |
|To complete beginning work in process (7,000 units × 30%) |2,100 |
|Units started and completed during the period (66,000 units started − 5,000 units in ending |61,000 |
|inventory) | |
|Ending work in process (5,000 units × 45% complete) | 2,250 |
|Equivalent units of production |65,350 |
146. The equivalent units for labor and overhead for March using the FIFO 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:
| |To solve for units transferred: | |
|+ |Work in process, beginning |7,000 |
|+ |Units started into production during the month |66,000 |
|− |Work in process, ending | 5,000 |
|= |Units completed and transferred out during the month |68,000 |
|Equivalent Units of Production | |
| |Labor and |
| |Overhead |
|To complete beginning work in process (7,000 units × 65%) |4,550 |
|Units started and completed during the period (66,000 units started − 5,000 units in ending |61,000 |
|inventory) | |
|Ending work in process (5,000 units × 30% complete) |1,500 |
|Equivalent units of production |67,050 |
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 units for January for conversion costs 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 units of production | |
| |Conversion |
|Transferred to next department |20,000 |
|Ending work in process (8,000 units × 40% complete) | 3,200 |
|Equivalent units of production |23,200 |
148. How many units were started into production during 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 in process, ending |8,000 |
|+ |Units completed and transferred out during the month |20,000 |
|− |Work in process, beginning | 6,000 |
|= |Units started into production during the month |22,000 |
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 in process |30,000 |
| |Percent complete with respect to materials |100% |
| |Percent complete with respect to conversion |10% |
| |Units completed and transferred out during May |290,000 |
| |Work in process, ending (May 31): | |
| |Units in process |17,000 |
| |Percent complete with respect to materials |100% |
| |Percent complete with respect to conversion |80% |
149. What are the Blending Department's equivalent units related to 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 units of production | |
| |Materials |
|Transferred to next department |290,000 |
|Ending work in process (17,000 units × 100% complete) | 17,000 |
|Equivalent units of production |307,000 |
150. What are the Blending Department's equivalent units 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 units of production | |
| |Conversion |
|Transferred to next department |290,000 |
|Ending work in process (17,000 units × 80% complete) | 13,600 |
|Equivalent units of production |303,600 |
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:
| | |Materials |Conversion |
| |Units completed and transferred out |50,000 |50,000 |
| |Equivalent units: work in process, October 31 |10,000 | 4,000 |
| |Total equivalent units |60,000 |54,000 |
| | | | |
| | |Materials |Conversion |
| |Costs in work in process on October 1 |$ 9,000 |$ 5,400 |
| |Costs added to production during October | 243,000 | 513,000 |
| |Total cost |$252,000 |$518,400 |
All materials at Bettie are added at the beginning of the production process.
151. What total amount of cost should be assigned to the units completed and 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:
| |Materials |Conversion |Total |
|Total cost |$252,000 |$518,400 | |
|Equivalent units |÷ 60,000 |÷ 54,000 | |
|Cost per equivalent unit |$4.20 |$9.60 | |
|× # of units completed and transferred out |50,000 |50,000 | |
|Total cost of units completed and transferred out |$210,000 |$480,000 |$690,000 |
152. What total amount of cost should be assigned to the units in work in 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 |Total |
|Total cost |$252,000 |$518,400 | |
|Equivalent units |÷ 60,000 |÷ 54,000 | |
|Cost per equivalent 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 |$80,400 |
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:
| | |Units |Processing Cost |
| |Work in process inventory on March 1 |60,000 |$35,000 |
| |Units started into production and costs incurred during the |190,000 |$700,000 |
| |month | | |
| |Units completed and transferred out |200,000 | |
153. Assuming that Owens Company uses the weighted-average 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) $3.50
Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium
Solution:
| |To solve for ending work in process: | |
|+ |Work in process, beginning |60,000 |
|+ |Units started into production during the month |190,000 |
|− |Units completed and transferred out during the month |200,000 |
|= |Work in process, ending | 50,000 |
|Equivalent units of production | |
| |Processing Cost |
|Transferred to next department |200,000 |
|Ending work in process (50,000 units × 20% complete) |10,000 |
|Equivalent units of production |210,000 |
| | |
|Cost per Equivalent Unit | |
| |Conversion |
|Cost of beginning work in process |$ 35,000 |
|Cost added during the period | 700,000 |
|Total cost (a) |$735,000 |
| | |
|Equivalent units of production (b) |210,000 |
|Cost per equivalent unit, (a) ÷ (b) |$3.50 |
154. Assuming that Owens Company uses the FIFO method, which of the 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 in process, beginning |60,000 |
|+ |Units started into production during the month |190,000 |
|− |Units completed and transferred out during the month |200,000 |
|= |Work in process, ending | 50,000 |
|Equivalent Units of Production | |
| |Processing Cost |
|To complete beginning work in process (60,000 units × 40%) |24,000 |
|Units started and completed during the period (190,000 units started − 50,000 units in|140,000 |
|ending inventory) | |
|Ending work in process (50,000 units × 20% complete) | 10,000 |
|Equivalent units of production |174,000 |
| | |
|Cost per Equivalent Unit | |
| |Conversion |
|Cost added during the period (a) |$700,000 |
|Equivalent units of production (b) |174,000 |
|Cost per equivalent unit (a) ÷ (b) |$4.02 |
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.
| | |Number of Units |Percent Complete with Respect |
| | | |to Conversion |
| |Work in process, November 1 |4,000 |40% |
| |Units started into production |317,000 | |
| |Work in process, November 30 |10,000 |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 of cost should be assigned to the units transferred out 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 in process, beginning |4,000 |
|+ |Units started into production during the month |317,000 |
|− |Work in process, ending | 10,000 |
|= |Units completed and transferred out during the month |311,000 |
|Equivalent units of production | | | |
| |Materials |Conversion | |
|Transferred to next department |311,000 |311,000 | |
|Ending work in process (materials: 10,000 units × 100% complete; | 10,000 | 9,000 | |
|conversion: 10,000 units × 90% complete) | | | |
|Equivalent units of production |321,000 |320,000 | |
| | | | |
|Cost per equivalent unit (given) |$1.50 |$2.80 | |
| | | | |
| |Materials |Conversion | |
| | | | |
|Units transferred out: | | | |
|Units transferred to the next department |311,000 |311,000 | |
|Cost per equivalent unit |$1.50 |$2.80 | |
|Cost of units transferred out |$466,500 |$870,800 |$1,337,300 |
156. What total amount of cost should be assigned to the units in work in 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 in process, beginning |4,000 |
|+ |Units started into production during the month |317,000 |
|− |Work in process, ending | 10,000 |
|= |Units completed and transferred out during the month |311,000 |
|Equivalent units of production | | | |
| |Materials |Conversion | |
|Transferred to next department |311,000 |311,000 | |
|Ending work in process (materials: 10,000 units × 100% complete; | 10,000 | 9,000 | |
|conversion: 10,000 units × 90% complete) | | | |
|Equivalent units of production |321,000 |320,000 | |
| | | | |
|Cost per equivalent unit (given) |$1.50 |$2.80 | |
| | | | |
|Cost of Ending Work in Process Inventory and Units Transferred Out | | | |
| |Materials |Conversion | |
|Ending work in process inventory: | | | |
|Equivalent units of production (materials: 10,000 units × 100% |10,000 |9,000 | |
|complete; conversion: 10,000 units × 90% complete) | | | |
|Cost per equivalent unit |$1.50 |$2.80 | |
|Cost of ending work in process inventory |$15,000 |$25,200 |$40,200 |
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: | |
| |Units in beginning work in process inventory |600 |
| |Materials costs |$7,800 |
| |Conversion costs |$10,700 |
| |Percent complete with respect to materials |65% |
| |Percent complete with respect to conversion |50% |
| |Units started into production during the month |5,700 |
| |Units transferred to the next department during the month |5,000 |
| |Materials costs added during the month |$92,400 |
| |Conversion costs added during the month |$160,000 |
| |Ending work in process inventory: | |
| |Units in ending work in process inventory |1,300 |
| |Percent complete with respect to materials |70% |
| |Percent complete with respect to conversion |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.
157. What are the equivalent units for materials for the month in the first 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 Units of Production | |
| |Materials |
|To complete beginning work in process (600 units × 35%) |210 |
|Units started and completed during the period (5,700 units started − 1,300 units in ending |4,400 |
|inventory) | |
|Ending work in process (1,300 units × 70% complete) | 910 |
|Equivalent units of production |5,520 |
158. What are the equivalent units for conversion costs for the month in the first 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 Units of Production | |
| |Conversion |
|To complete beginning work in process (600 units × 50%) |300 |
|Units started and completed during the period (5,700 units started − 1,300 units in ending |4,400 |
|inventory) | |
|Ending work in process (1,300 units × 40% complete) | 520 |
|Equivalent units of production |5,220 |
159. The cost per equivalent unit for materials for the month in the first 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 Units of Production | |
| |Materials |
|To complete beginning work in process (600 units × 35%) |210 |
|Units started and completed during the period (5,700 units started − 1,300 units in ending |4,400 |
|inventory) | |
|Ending work in process (1,300 units × 70% complete) | 910 |
|Equivalent units of production |5,520 |
| | |
|Cost per Equivalent Unit | |
| |Materials |
|Cost added during the period (a) |$92,400 |
|Equivalent units of production (b) |5,520 |
|Cost per equivalent unit (a) ÷ (b) |$16.74 |
160. The cost per equivalent unit for conversion costs for the first 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 Units of Production | |
| |Conversion |
|To complete beginning work in process (600 units × 50%) |300 |
|Units started and completed during the period (5,700 units started − 1,300 units in ending |4,400 |
|inventory) | |
|Ending work in process (1,300 units × 40% complete) | 520 |
|Equivalent units of production |5,220 |
| | |
|Cost per Equivalent Unit | |
| |Conversion |
|Cost added during the period (a) |$160,000 |
|Equivalent units of production (b) |5,220 |
|Cost per equivalent unit (a) ÷ (b) |$30.65 |
161. The total cost transferred from the first processing 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 Units of Production | | | |
| |Materials |Conversion | |
|To complete beginning work in process (materials: 600 units × 35% |210 |300 | |
|complete; conversion: 600 units × 50% complete) | | | |
|Units started and completed during the period (5,700 units started − |4,400 |4,400 | |
|1,300 units in ending inventory) | | | |
|Ending work in process (materials: 1,300 units × 70% complete; | 910 | 520 | |
|conversion: 1,300 units × 40% complete) | | | |
|Equivalent units of production |5,520 |5,220 | |
| | | | |
|Cost per Equivalent Unit | | | |
| |Materials |Conversion |Total |
|Cost added during the period (a) |$92,400 |$160,000 | |
|Equivalent units of production (b) |5,520 |5,220 | |
|Cost per equivalent unit (a) ÷ (b) |$16.74 |$30.65 |$47.39 |
| | | | |
|Units transferred out: | | | |
|Cost in beginning inventory |$7,800 |$10,700 |$ 18,500 |
|Cost to complete the units in beginning inventory: | | |
|Equivalent units of production required to complete the beginning |210 |300 | |
|inventory | | | |
|Cost per equivalent unit |$16.74 |$30.65 | |
|Cost to complete the units in beginning inventory |$3,515 |$9,195 |12,710 |
|Cost of units started and completed this period: | | | |
|Units started and completed this period |4,400 |4,400 | |
|Cost per equivalent unit |$16.74 |$30.65 | |
|Cost of units started and completed this period |$73,652 |$134,866 | 208,518 |
|Cost of units transferred out | | |$239,728 |
162. The cost of ending work in process inventory in the first processing 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 Units of Production | | | |
| |Materials |Conversion | |
|To complete beginning work in process (materials: 600 units × 35%; |210 |300 | |
|conversion: 600 units × 50%) | | | |
|Units started and completed during the period (5,700 units started − |4,400 |4,400 | |
|1,300 units in ending inventory) | | | |
|Ending work in process (materials: 1,300 units × 70% complete; | 910 | 520 | |
|conversion: 1,300 units × 40% complete) | | | |
|Equivalent units of production |5,520 |5,220 | |
| | | | |
|Cost per Equivalent Unit | | | |
| |Materials |Conversion | |
|Cost added during the period (a) |$92,400 |$160,000 | |
|Equivalent units of production (b) |5,520 |5,220 | |
|Cost per equivalent unit (a) ÷ (b) |$16.74 |$30.65 | |
| | | | |
|Costs of Ending Work in Process Inventory and Units Transferred Out | | | |
| |Materials |Conversion | |
|Ending work in process inventory: | | | |
|Equivalent units of production |910 |520 | |
|Cost per equivalent unit |$16.74 |$30.65 | |
|Cost of ending work in process inventory |$15,233 |$15,939 |$31,171 |
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: | |
| |Units in beginning work in process inventory |900 |
| |Materials costs |$9,500 |
| |Conversion costs |$4,100 |
| |Percent complete with respect to materials |75% |
| |Percent complete with respect to conversion |25% |
| |Units started into production during the month |9,800 |
| |Units transferred to the next department during the month |8,600 |
| |Materials costs added during the month |$112,900 |
| |Conversion costs added during the month |$143,000 |
| |Ending work in process inventory: | |
| |Units in ending work in process inventory |2,100 |
| |Percent complete with respect to materials |80% |
| |Percent complete with respect to conversion |45% |
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.
163. What are the equivalent units for materials for the month in the first 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 Units of Production | |
| |Materials |
|To complete beginning work in process (900 units × 25% complete) |225 |
|Units started and completed during the period (9,800 units started − 2,100 units in ending |7,700 |
|inventory) | |
|Ending work in process (2,100 units × 80% complete) |1,680 |
|Equivalent units of production |9,605 |
164. The cost per equivalent unit for conversion costs for the first 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 Units of Production | |
| |Conversion |
|To complete beginning work in process (900 units × 75% complete) |675 |
|Units started and completed during the period (9,800 units started − 2,100 units in ending |7,700 |
|inventory) | |
|Ending work in process (2,100 units × 45% complete) | 945 |
|Equivalent units of production |9,320 |
| | |
|Cost per Equivalent Unit | |
| |Conversion |
|Cost added during the period (a) |$143,000 |
|Equivalent units of production (b) |9,320 |
|Cost per equivalent unit (a) ÷ (b) |$15.34 |
165. The total cost transferred from the first processing 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 Units of Production | | | |
| |Materials |Conversion | |
|To complete beginning work in process (materials: 900 units × 25% |225 |675 | |
|complete; conversion: 900 units × 75% complete) | | | |
|Units started and completed during the period (9,800 units started −|7,700 |7,700 | |
|2,100 units in ending inventory) | | | |
|Ending work in process (materials: 2,100 units × 80% complete; |1,680 | 945 | |
|conversion: 2,100 units × 45% complete) | | | |
|Equivalent units of production |9,605 |9,320 | |
| | | | |
|Cost per Equivalent Unit | | | |
| |Materials |Conversion |Total |
|Cost added during the period (a) |$112,900 |$143,000 | |
|Equivalent units of production (b) |9,605 |9,320 | |
|Cost per equivalent unit (a) ÷ (b) |$11.75 |$15.34 |$27.10 |
| | | | |
|Units transferred out: | | | |
|Cost in beginning inventory |$9,500 |$4,100 |$ 13,600 |
|Cost to complete the units in beginning inventory: | | |
|Equivalent units of production required to complete the beginning |225 |675 | |
|inventory | | | |
|Cost per equivalent unit |$11.75 |$15.34 | |
|Cost to complete the units in beginning inventory |$2,645 |$10,357 |13,001 |
|Cost of units started and completed this period: | | | |
|Units started and completed this period |7,700 |7,700 | |
|Cost per equivalent unit |$11.75 |$15.34 | |
|Cost of units started and completed this period |$90,508 |$118,144 | 208,652 |
|Cost of units transferred out | | |$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: | |
| |Units in process |? |
| |Percent complete with respect to materials |75% |
| |Percent complete with respect to conversion |50% |
| |Costs in the beginning inventory: | |
| |Materials cost |$2,300 |
| |Conversion cost |$3,600 |
| |Units started into production during the month |25,200 |
| |Units completed and transferred out during the month |24,000 |
| |Costs added to production during the month: | |
| |Materials cost |$98,750 |
| |Conversion cost |$220,500 |
| |Work in process, ending: | |
| |Units in process |2,000 |
| |Percent complete with respect to materials |80% |
| |Percent complete with respect to conversion |45% |
166. How many units were in the beginning work in process 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 in process, ending |2,000 |
|+ |Units completed and transferred out during the month |24,000 |
|− |Units started into production during the month |25,200 |
|= |Work in process, beginning | 800 |
167. What was the cost per equivalent unit for materials during the 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 complete beginning work in process (800 units × 25%) |200 |
| |Units started and completed during the period (25,200 units started − 2,000 units in ending|23,200 |
| |inventory) | |
| |Ending work in process (2,000 units × 80% complete) | 1,600 |
| |Equivalent units of production |25,000 |
| | | |
| |Cost per Equivalent Unit | |
| |Cost added during the period (a) |$98,750 |
| |Equivalent units of production (b) |25,000 |
| |Cost per equivalent unit (a) ÷ (b) |$3.95 |
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: | |
| |Units in beginning work in process inventory |400 |
| |Materials costs |$6,900 |
| |Conversion costs |$6,900 |
| |Percent complete with respect to materials |60% |
| |Percent complete with respect to conversion |35% |
| |Units started into production during the month |5,700 |
| |Materials costs added during the month |$142,800 |
| |Conversion costs added during the month |$242,800 |
| |Ending work in process inventory: | |
| |Units in ending work in process inventory |900 |
| |Percent complete with respect to materials |70% |
| |Percent complete with respect to conversion |45% |
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.
168. How many units were started AND completed during the month in the first 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 in process, beginning |400 |
|+ |Units started into production during the month |5,700 |
|− |Work in process, ending | 900 |
|= |Units completed and transferred out during the month |5,200 |
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 unit for conversion costs for the first 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% complete) |260 |
| |Units started and completed during the period (5,700 units started − 900 units in ending |4,800 |
| |inventory) | |
| |Ending work in process (900 units × 45% complete) | 405 |
| |Equivalent units of production |5,465 |
| | | |
| |Cost per Equivalent Unit | |
| | |Conversion |
| |Cost added during the period (a) |$242,800 |
| |Equivalent units of production (b) |5,465 |
| |Cost per equivalent unit (a) ÷ (b) |$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: | |
| |Units in beginning work in process inventory |200 |
| |Materials costs |$1,800 |
| |Conversion costs |$2,100 |
| |Percent complete with respect to materials |70% |
| |Percent complete with respect to conversion |40% |
| |Units started into production during the month |7,300 |
| |Units transferred to the next department during the month |7,000 |
| |Materials costs added during the month |$82,700 |
| |Conversion costs added during the month |$174,600 |
| |Ending work in process inventory: | |
| |Units in ending work in process inventory |500 |
| |Percent complete with respect to materials |50% |
| |Percent complete with respect to conversion |45% |
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.
170. What are the equivalent units for materials for the month in the first 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 Units of Production | |
| |Materials |
|To complete beginning work in process (200 units × 30% complete) |60 |
|Units started and completed during the period (7,300 units started − 500 units in ending |6,800 |
|inventory) | |
|Ending work in process (500 units × 50% complete) | 250 |
|Equivalent units of production |7,110 |
171. The cost per equivalent unit for conversion costs for the first 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 Units of Production | |
| |Conversion |
|To complete beginning work in process (200 units × 60% complete) |120 |
|Units started and completed during the period (7,300 units started − 500 units in ending |6,800 |
|inventory) | |
|Ending work in process (500 units × 45% complete) | 225 |
|Equivalent units of production |7,145 |
| | |
|Cost per Equivalent Unit | |
| |Conversion |
|Cost added during the period (a) |$174,600 |
|Equivalent units of production (b) |7,145 |
|Cost per equivalent unit (a) ÷ (b) |$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: | |
| |Units in beginning work in process inventory |700 |
| |Materials costs |$8,600 |
| |Conversion costs |$8,800 |
| |Percent complete with respect to materials |75% |
| |Percent complete with respect to conversion |45% |
| |Units started into production during the month |7,800 |
| |Units transferred to the next department during the month |6,800 |
| |Materials costs added during the month |$97,600 |
| |Conversion costs added during the month |$172,900 |
| |Ending work in process inventory: | |
| |Units in ending work in process inventory |1,700 |
| |Percent complete with respect to materials |90% |
| |Percent complete with respect to conversion |25% |
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.
172. What are the equivalent units for conversion costs for the month in the first 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 Units of Production | |
| |Conversion |
|To complete beginning work in process (700 units × 55% complete) |385 |
|Units started and completed during the period (7,800 units started − 1,700 units in ending |6,100 |
|inventory) | |
|Ending work in process (1,700 units × 25% complete) | 425 |
|Equivalent units of production |6,910 |
173. The cost per equivalent unit for materials for the month in the first 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 Units of Production | |
| |Materials |
|To complete beginning work in process (700 units × 25% complete) |175 |
|Units started and completed during the period (7,800 units started − 1,700 units in ending |6,100 |
|inventory) | |
|Ending work in process (1,700 units × 90% complete) |1,530 |
|Equivalent units of production |7,805 |
| | |
|Cost per Equivalent Unit | |
| |Materials |
|Cost added during the period (a) |$97,600 |
|Equivalent units of production (b) |7,805 |
|Cost per equivalent unit (a) ÷ (b) |$12.50 |
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 Department's equivalent units (gallons) of 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 Units of Production | |
| |Materials |
|To complete beginning work in process (32,000 units × 0% complete) |0 |
|Units started and completed during the period (460,000 units started − 18,000 units in ending |442,000 |
|inventory) | |
|Ending work in process (18,000 units × 100% complete) | 18,000 |
|Equivalent units of production |460,000 |
175. What are the Fermenting Department's equivalent units (gallons) of 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 Units of Production | |
| |Conversion |
|To complete beginning work in process (32,000 units × 20% complete) |6,400 |
|Units started and completed during the period (460,000 units started − 18,000 units in ending |442,000 |
|inventory) | |
|Ending work in process (18,000 units × 60% complete) | 10,800 |
|Equivalent units of production |459,200 |
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 started and completed during April |32,000 |32,000 |
| |Units in process, April 31 | 8,000 | 1,500 |
| |Total equivalent units |40,000 |36,000 |
| | | | |
| | |Materials |Conversion |
| |Costs in work in process on April 1 |$ 50,400 |$126,000 |
| |Costs added to production during April | 169,600 | 529,200 |
| |Total cost |$220,000 |$655,200 |
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 of cost should be assigned to the units completed and 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 Units of Production | | |
| |Materials |Conversion |
|To complete beginning work in process |0 |2,500 |
|Units started and completed during the period |32,000 |32,000 |
|Ending work in process | 8,000 | 1,500 |
|Equivalent units of production |40,000 |36,000 |
| | | |
|Cost per Equivalent Unit | | |
| |Materials |Conversion |
|Cost added during the period (a) |$169,600 |$529,200 |
|Equivalent units of production (b) |40,000 |36,000 |
|Cost per equivalent unit (a) ÷ (b) |$4.24 |$14.70 |
| | | |
|Units transferred out: | | |
|Cost in beginning inventory |$50,400 |$126,000 |
|Cost to complete the units in beginning inventory: | | |
|Equivalent units of production required to complete the beginning inventory |0 |2,500 |
|Cost per equivalent unit |$4.24 |$14.70 |
|Cost to complete the units in beginning inventory |$0 |$36,750 |
|Cost of units started and completed this period: | | |
|Units started and completed this period |32,000 |32,000 |
|Cost per equivalent unit |$4.24 |$14.70 |
|Cost of units started and completed this period |$135,680 |$470,400 |
|Cost of units transferred out |$186,080 |$633,150 |
Total cost of units transferred out = $186,080 + $633,150 =$819,230.
177. What total amount of cost should be assigned to the units in work in 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: | | | |
| |Materials |Conversion | |
|To complete beginning work in process |0 |2,500 | |
|Units started and completed during the period |32,000 |32,000 | |
|Ending work in process | 8,000 | 1,500 | |
|Equivalent units of production |40,000 |36,000 | |
| | | | |
|Cost per Equivalent Unit: | | | |
| |Materials |Conversion |Total |
|Cost added during the period (a) |$169,600 |$529,200 | |
|Equivalent units of production (b) |40,000 |36,000 | |
|Cost per equivalent unit (a) ÷ (b) |$4.24 |$14.70 |$18.94 |
| | | | |
|Costs of Ending Work in Process Inventory and Units Transferred Out: |
| |Materials |Conversion | |
|Ending work in process inventory: | | | |
|Equivalent units of production |8,000 |1,500 | |
|Cost per equivalent unit |$4.24 |$14.70 | |
|Cost of ending work in process inventory |$33,920 |$22,050 |$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.
| | |Number of units |Percentage complete with respect |
| | | |to conversion |
| |Work in process, February 1 |18,000 |10% |
| |Units started into production |160,000 | |
| |Work in process, February 28 |7,000 |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 of cost should be assigned to the units completed and 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 Units of Production | | | |
| |Materials |Conversion | |
|To complete beginning work in process (materials: 18,000 units × 0% |0 |16,200 | |
|complete; conversion: 18,000 units × 90% complete) | | | |
|Units started and completed during the period (160,000 units started −|153,000 |153,000 | |
|7,000 units in ending inventory) | | | |
|Ending work in process (materials: 7,000 units × 100% complete; | 7,000 | 2,800 | |
|conversion: 7,000 units × 40% complete) | | | |
|Equivalent units of production |160,000 |172,000 | |
| | | | |
|Cost per Equivalent Unit | | | |
| |Materials |Conversion | |
|Cost added during the period (a) |$496,000 |$1,290,000 | |
|Equivalent units of production (b) |160,000 |172,000 | |
|Cost per equivalent unit (a) ÷ (b) |$3.10 |$7.50 |$10.60 |
| | | | |
|Units transferred out: | | | |
|Cost in beginning inventory |$55,620 |$123,120 |$ 178,740 |
|Cost to complete the units in beginning inventory: | | |
|Equivalent units of production required to complete the beginning |0 |16,200 | |
|inventory | | | |
|Cost per equivalent unit |$3.10 |$7.50 | |
|Cost to complete the units in beginning inventory |$0 |$121,500 |121,500 |
|Cost of units started and completed this period: | | | |
|Units started and completed this period |153,000 |153,000 | |
|Cost per equivalent unit |$3.10 |$7.50 | |
|Cost of units started and completed this period |$474,300 |$1,147,500 | 1,621,800 |
|Cost of units transferred out | | |$1,922,040 |
179. What total amount of cost should be assigned to the units in work in 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 Units of Production | | | |
| |Materials |Conversion | |
|To complete beginning work in process (materials: 18,000 units × 0% complete; |0 |16,200 | |
|conversion: 18,000 units × 90% complete) | | | |
|Units started and completed during the period (160,000 units started − 7,000 units|153,000 |153,000 | |
|in ending inventory) | | | |
|Ending work in process (materials: 7,000 units × 100% complete; conversion: 7,000 | 7,000 | 2,800 | |
|units × 40% complete) | | | |
|Equivalent units of production |160,000 |172,000 | |
| | | | |
|Cost per Equivalent Unit | | | |
| |Materials |Conversion | |
|Cost added during the period (a) |$496,000 |$1,290,000 | |
|Equivalent units of production (b) |160,000 |172,000 | |
|Cost per equivalent unit (a) ÷ (b) |$3.10 |$7.50 | |
| | | | |
| |Materials |Conversion |Total |
|Ending work in process inventory: | | | |
|Equivalent units of production |7,000 |2,800 | |
|Cost per equivalent unit |$3.10 |$7.50 | |
|Cost of ending work in process inventory |$21,700 |$21,000 |$42,700 |
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:
| |Custodial Services |500 square feet |
| |Maintenance |2,000 square feet |
| |Operating Department 1 |10,000 square feet |
| |Operating Department 2 |8,000 square feet |
Budgeted costs in the Custodial Services department total $36,000.
180. If Zorn Company uses the step-down method and allocates the 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 |Percent |
|Maintenance |2,000 |10% |
|Operating Department 1 |10,000 |50% |
|Operating Department 2 | 8,000 | 40% |
|Total square feet |20,000 |100% |
| | | |
|Total Custodial Services costs |$36,000 | |
|× % to Maintenance |10% | |
|Custodial Services costs allocated to Maintenance |$3,600 | |
181. The amount of Custodial Services department cost allocated to Operating 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 Department 1 |10,000 |56% |
|Operating Department 2 | 8,000 | 44% |
|Total square feet |18,000 |100% |
| | | |
|Total Custodial Services costs |$36,000 | |
|× % to Operating Department 2 |44% | |
|Custodial Services costs allocated to Operating Department 2 |$16,000 | |
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 |Number of Employees |
| |Service departments: | | |
| |Data Processing |– |15 |
| |Cafeteria |1,000 |– |
| |Operating departments: | | |
| |Investments |15,000 |114 |
| |Loans |9,000 |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 costs are allocated using the direct method, how much 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:
| | |S| |O| |
| | |e| |p| |
| | |r| |e| |
| | |v| |r| |
| | |i| |a| |
| | |c| |t| |
| | |e| |i| |
| | |D| |n| |
| | |e| |g| |
| | |p| |D| |
| | |a| |e| |
| | |r| |p| |
| | |t| |a| |
| | |m| |r| |
| | |e| |t| |
| | |n| |m| |
| | |t| |e| |
| | | | |n| |
| | | | |t| |
| |Data Processing |C| |I|Loans |
| | |a| |n| |
| | |f| |v| |
| | |e| |e| |
| | |t| |s| |
| | |e| |t| |
| | |r| |-| |
| | |i| |m| |
| | |a| |e| |
| | | | |n| |
| | | | |t| |
| | | | |s| |
| |Sigma |D| |C|Omega |
| | |e| |h| |
| | |l| |i| |
| | |t| | | |
| | |a| | | |
| |Sigma |Delta | |Chi |
| | |Adminis-trative |Facilities | |Assembly |Customer Solutions |
| |Departmental costs |$43,560 |$54,720 | |$561,960 |$253,030 |
| |Employee hours |4,000 |2,000 | |27,000 |17,000 |
| |Space occupied |1,000 |2,000 | |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 of Administrative Department cost 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 | | |
| |Admin. |F| |A|Customer |
| | |a| |s|Solutions |
| | |c| |s| |
| | |i| |e| |
| | |l| |m| |
| | |i| |b| |
| | |t| |l| |
| | |i| |y| |
| | |e| | | |
| | |s| | | |
| |Admin. |Facilities | |Assembly |
| | |Adminis-trative |Support | |Adult Medicine |Pediatrics |
| |Departmental costs |$23,600 |$51,480 | |$259,690 |$288,790 |
| |Employee hours |3,000 |2,000 | |26,000 |14,000 |
| |Space occupied |3,000 |2,000 | |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 of Administrative Department cost allocated to the Adult 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 | |Operating Department | | |
| |Admin. |S| |A|Pediatrics |
| | |u| |d| |
| | |p| |u| |
| | |p| |l| |
| | |o| |t| |
| | |r| |M| |
| | |t| |e| |
| | | | |d| |
| | | | |i| |
| | | | |c| |
| | | | |i| |
| | | | |n| |
| | | | |e| |
| |Admin. |Support | |Adult Medicine |
| | |Information |Personnel | |Fabri-cation |Customi-zation |
| | |Technology | | | | |
| |Departmental costs |$26,880 |$21,525 | |$251,210 |$447,000 |
| |Computer workstations |37 |18 | |43 |37 |
| |Employees |34 |13 | |73 |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 of Information Technology Department cost 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 Department cost after service department 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:
| |Service Department | |Operating Department | | |
| |Info. Tech. |Personnel | |Fabrication |
| | |Information |Admini-stration| |Surgery |Recovery |
| | |Technology | | | | |
| |Departmental costs |$25,956 |$36,356 | |$563,640 |$588,200 |
| |Computer workstations |20 |17 | |54 |30 |
| |Employees |15 |13 | |95 |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 of Information Technology Department cost 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 cost after service department allocations is 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 | |Operating Department | | |
| |Info. Tech. |Admin. | |Surgery |
| | |Service Department |Service Department | |Operating Department|Operating |
| | |A |B | |X |Department Y |
| |Departmental costs |$37,800 |$45,780 | |$247,360 |$304,330 |
| |Allocation base A |5,000 |1,000 | |29,000 |15,000 |
| |Allocation base B |5,000 |2,000 | |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 allocation, the amount of Service Department A cost 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 | |Operating Department | | |
| |Service Dept. A |S| |O|Oper. Dept.Y |
| | |e| |p| |
| | |r| |e| |
| | |v| |r| |
| | |i| |.| |
| | |c| |D| |
| | |e| |e| |
| | |D| |p| |
| | |e| |t| |
| | |p| |.| |
| | |t| |X| |
| | |.| | | |
| | |B| | | |
| |Service Dept. A |Service Dept. B | |Oper. Dept. X |
| | |Adminis-trative |Facilities | |Assembly |Finishing |
| |Departmental costs |$22,620 |$67,440 | |$105,520 |$427,780 |
| |Labor hours |3,000 |2,000 | |21,000 |16,000 |
| |Space occupied |7,000 |1,000 | |32,000 |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 allocation, the amount of Administration 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 Department | |Operating Department | | |
| |Admin. |F| |A|Finishing |
| | |a| |s| |
| | |c| |s| |
| | |i| |e| |
| | |l| |m| |
| | |i| |b| |
| | |t| |l| |
| | |i| |y| |
| | |e| | | |
| | |s| | | |
| |Admin. |Facilities | |Assembly |
| | |Personnel |IT | |Family Medicine |Geriatric Medicine|
| |Departmental costs |$66,930 |$11,678 | |$563,940 |$82,310 |
| |Employees |11 |27 | |104 |160 |
| |PCs |11 |27 | |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 allocation, the amount of Personnel Department cost 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 | |Operating Department | | |
| |Personnel |I| |F|Geriatric |
| | |T| |a|Medicine |
| | | | |m| |
| | | | |i| |
| | | | |l| |
| | | | |y| |
| | | | |M| |
| | | | |e| |
| | | | |d| |
| | | | |i| |
| | | | |c| |
| | | | |i| |
| | | | |n| |
| | | | |e| |
| |Personnel |IT | |Family Medicine |
| | |Personnel |IT | |Family Law |Corporate Law |
| |Departmental costs |$85,284 |$29,703 | |$883,360 |$189,010 |
| |Employees |11 |25 | |121 |163 |
| |PCs |12 |26 | |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 allocation, the amount of Personnel Department cost 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 | |Operating Department | | |
| |Personnel |I| |F|Corporate Law |
| | |T| |a| |
| | | | |m| |
| | | | |i| |
| | | | |l| |
| | | | |y| |
| | | | |L| |
| | | | |a| |
| | | | |w| |
| |Personnel |IT | |
| |Raw Materials | |$39,800 |
|(2) |Work in Process-Mixing Department |$16,100 | |
| |Salaries and Wages Payable | |$16,100 |
|(3) |Work in Process-Mixing Department |$45,700 | |
| |Manufacturing Overhead | |$45,700 |
|(4) |Work in Process-Drying Department |$87,600 | |
| |Work in Process-Mixing Department | |$87,600 |
|(5) |Finished Goods |$111,300 | |
| |Work in Process-Drying Department | |$111,300 |
|(6) |Cost of Goods Sold |$98,200 | |
| |Finished Goods | |$98,200 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy
203. During August, the following transactions were recorded at Goyer Corporation. The company uses processing costing.
1) Raw materials that cost $24,500 are withdrawn from the storeroom for use in the Assembly Department. All of these raw materials are classified as direct labor.
2) Direct labor costs of $29,000 are incurred, but not yet paid, in the Assembly Department.
3) Manufacturing overhead of $58,900 is applied in the Assembly Department using the department's predetermined overhead rate.
4) Units with a carrying cost of $101,200 finish processing in the Assembly Department and are transferred to the Painting Department for further processing.
5) Units with a carrying cost of $106,100 finish processing in the Painting Department, the final step in the production process, and are transferred to the finished goods warehouse.
6) Finished goods with a carrying cost of $95,100 are sold.
Required:
Prepare journal entries for each of the transactions listed above.
Ans:
|(1) |Work in Process-Assembly Department |$24,500 | |
| |Raw Materials | |$24,500 |
|(2) |Work in Process-Assembly Department |$29,000 | |
| |Salaries and Wages Payable | |$29,000 |
|(3) |Work in Process-Assembly Department |$58,900 | |
| |Manufacturing Overhead | |$58,900 |
|(4) |Work in Process-Painting Department |$101,200 | |
| |Work in Process-Assembly Department | |$101,200 |
|(5) |Finished Goods |$106,100 | |
| |Work in Process-Painting Department | |$106,100 |
|(6) |Cost of Goods Sold |$95,100 | |
| |Finished Goods | |$95,100 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy
204. Kamp Company uses the weighted-average method in its process costing. Information about units processed during a recent month in the Curing Department follow:
| | |Units |Conversion Percent Completion |
| |Beginning work in process inventory |10,000 |30% |
| |Units started into production |150,000 | |
| |Units completed and transferred out |140,000 | |
| |Ending work in process inventory |20,000 |40% |
The beginning work in process inventory had $4,600 in conversion cost. During the month, the Department incurred an additional $210,000 in conversion cost.
Required:
a. Determine the equivalent units of production for conversion for the month.
b. Determine the cost per equivalent unit of production for conversion for the month.
c. Determine the total conversion cost transferred out during the month.
d. Determine the conversion cost assigned to the ending work in process inventory.
Ans:
|a. |Units transferred out |140,000 |
| |Add: equivalent units in the ending inventory | 8,000 |
| |Equivalent units of production |148,000 |
| | | |
|b. |Cost in the beginning inventory |$ 4,600 |
| |Cost added during the month | 210,000 |
| |Total cost |$214,600 |
$214,600 ÷ 148,000 units = $1.45 per unit
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 AICPA FN: Reporting LO: 2,3,4 Level: Medium
205. Timberline Associates uses the weighted-average method in its process costing system. The following data are for the first processing department for a recent month:
| |Work in process, beginning: | |
| |Units in process |2,400 |
| |Percent complete with respect to materials |75% |
| |Percent complete with respect to conversion |50% |
| |Costs in the beginning inventory: | |
| |Materials cost |$8,400 |
| |Conversion cost |$7,200 |
| |Units started into production during the month |20,800 |
| |Units completed and transferred out |22,200 |
| |Costs added to production during the month: | |
| |Materials cost |$97,400 |
| |Conversion cost |$129,600 |
| |Work in process, ending: | |
| |Units in process |1,000 |
| |Percent complete with respect to materials |80% |
| |Percent complete with respect to conversion |60% |
Required:
a. Determine the equivalent units of production.
b. Determine the costs per equivalent unit.
c. Determine the cost of ending work in process inventory.
d. Determine the cost of the units transferred to the next department.
Ans:
|a. | |Materials |Conversion |
| |Transferred to next department |22,200 |22,200 |
| |Ending work in process: | | |
| |Materials: 1,000 units × 80% | 800 | |
| |Conversion: 1,000 units × 60% | | 600 |
| |Equivalent units of production |23,000 |22,800 |
|b. | |Materials |Conversion |
| |Work in process, beginning |$ 8,400 |$ 7,200 |
| |Cost added during the month | 97,400 | 129,600 |
| |Total cost (a) |$105,800 |$136,800 |
| |Equivalent units (above) (b) |23,000 |22,800 |
| |Cost per equivalent unit (a) ÷ (b) |$4.60 |$6.00 |
|c. | |Materials |Conversion |Total |
| |Units transferred out |22,200 |22,200 | |
| |Cost per equivalent unit |$4.60 |$6.00 | |
| |Cost transferred out |$102,120 |$133,200 |$235,320 |
|d. | |Materials |Conversion |Total |
| |Equivalent units of production: ending work in process |800 |600 | |
| |Cost per equivalent unit |$4.60 |$6.00 | |
| |Cost of ending work in process |$3,680 |$3,600 |$7,280 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3,4 Level: Hard
206. Avignon 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 |900 |
| |Percent complete with respect to materials |80% |
| |Percent complete with respect to conversion |10% |
| |Costs in the beginning inventory: | |
| |Materials cost |$6,768 |
| |Conversion cost |$3,186 |
| |Units started into production during the month |10,000 |
| |Units completed and transferred out |10,100 |
| |Costs added to production during the month: | |
| |Materials cost |$97,104 |
| |Conversion cost |$356,940 |
| |Work in process, ending: | |
| |Units in process |800 |
| |Percent complete with respect to materials |90% |
| |Percent complete with respect to conversion |20% |
Required:
a. Determine the equivalent units of production.
b. Determine the costs per equivalent unit.
c. Determine the cost of ending work in process inventory.
d. Determine the cost of the units transferred to the next department.
Ans:
|a. | |Materials |Conversion |
| |Units transferred to next department |10,100 |10,100 |
| |Ending work in process: | | |
| |Materials: 800 units × 90% | 720 | |
| |Conversion: 800 units × 20% | | 160 |
| |Equivalent units of production |10,820 |10,260 |
|b. | |Materials |Conversion |
| |Cost of beginning work in process |$ 6,768 |$ 3,186 |
| |Cost added during the month | 97,104 | 356,940 |
| |Total cost |$103,872 |$360,126 |
| |Equivalent units |10,820 |10,260 |
| |Cost per equivalent unit |$9.60 |$35.10 |
|c. |Ending work in process: |Materials |Conversion |Total |
| |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. | |Materials |Conversion |Total |
| |Units completed and transferred out |10,100 |10,100 | |
| |Cost per equivalent unit |$9.60 |$35.10 | |
| |Cost of units transferred out |$96,960 |$354,510 |$451,470 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3,4 Level: Medium
207. Bansal 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 |300 |
| |Percent complete with respect to materials |60% |
| |Percent complete with respect to conversion |60% |
| |Costs in the beginning inventory: | |
| |Materials cost |$342 |
| |Conversion cost |$4,518 |
| |Units started into production during the month |22,000 |
| |Units completed and transferred out |21,800 |
| |Costs added to production during the month: | |
| |Materials cost |$45,963 |
| |Conversion cost |$538,602 |
| |Work in process, ending: | |
| |Units in process |500 |
| |Percent complete with respect to materials |50% |
| |Percent complete with respect to conversion |20% |
Required:
Using the weighted-average method:
a. Determine the equivalent units of production for materials and conversion costs.
b. Determine the cost per equivalent unit for materials and conversion costs.
c. Determine the cost of units transferred out of the department during the month.
d. Determine the cost of ending work in process inventory in the department.
Ans:
Weighted-average method:
|a. | |Materials |Conversion |
| |Units transferred to next department |21,800 |21,800 |
| |Ending work in process: | | |
| |Materials: 500 units × 50% | 250 | |
| |Conversion: 500 units × 20% | | 100 |
| |Equivalent units of production |22,050 |21,900 |
|b. | |Materials |Conversion |
| |Cost of beginning work in process |$ 342 |$ 4,518 |
| |Cost added during the month | 45,963 | 538,602 |
| |Total cost |$46,305 |$543,120 |
| |Equivalent units |22,050 |21,900 |
| |Cost per equivalent unit |$2.10 |$24.80 |
|c. |Ending work in process: |Materials |Conversion |Total |
| |Equivalent units of production |250 |100 | |
| |Cost per equivalent unit |$2.10 |$24.80 | |
| |Cost of ending work in process |$525 |$2,480 |$3,005 |
|d. | |Materials |Conversion |Total |
| |Units completed and transferred out |21,800 |21,800 | |
| |Cost per equivalent unit |$2.10 |$24.80 | |
| |Cost of units transferred out |$45,780 |$540,640 |$586,420 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3,4 Level: Medium
208. Whitney Company uses the weighted-average method in its process costing system. The following data were taken from the records of the first processing department for a recent month.
| |Work in process, beginning: | |
| |Units in process |10 |
| |Percent complete with respect to materials |60% |
| |Percent complete with respect to conversion |30% |
| |Costs in the beginning inventory: | |
| |Materials cost |$1,200 |
| |Conversion cost |$3,000 |
| |Units started into production during the month |150 |
| |Costs added to production during the month: | |
| |Materials cost |$42,460 |
| |Conversion cost |$137,400 |
| |Work in process, ending: | |
| |Units in process |20 |
| |Percent complete with respect to materials |40% |
| |Percent complete with respect to conversion |20% |
Required:
a. How many units were transferred to the next department during the month?
b. What were the equivalent units of production for materials and for conversion costs for the month?
c. What were the costs per equivalent unit of production for materials and for conversion costs for the month?
d. What was the cost of the ending work in process inventory in the department at the end of the month?
Ans:
Weighted-average method:
|a. |Units in beginning inventory |10 | | |
| | + Units started into production |150 | | |
| | − Units in ending inventory | 20 | | |
| | = Units transferred out |140 | | |
| | | | | |
|b. | |Materials |Conversion | |
| |Transferred to next department |140 |140 | |
| |Work in process, ending | 8 | 4 | |
| |Equivalent units of production |148 |144 | |
| | | | | |
|c. | |Materials |Conversion | |
| |Work in process, beginning |$ 1,200 |$ 3,000 | |
| |Cost added during the month | 42,460 | 137,400 | |
| |Total cost (a) |$43,660 |$140,400 | |
| |Equivalent units (above) (b) |148 |144 | |
| |Cost per equivalent unit (a) ÷ (b) |$295 |$975 | |
| | | | | |
|d. | |Materials |Conversion |Total |
| |Ending work in process equivalent units |8 |4 | |
| |Cost per equivalent unit |$295 |$975 | |
| |Cost of ending work in process |$2,360 |$3,900 |$6,260 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3,4 Level: Medium
209. Mccabe Corporation uses the weighted-average method in its process 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 November |8,200 | | |
| |Units completed during November and transferred to the next |7,300 | | |
| |department | | | |
| |Work in process, November 30 |1,700 |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:
| | |Materials |Conversion |
| |Units transferred to the next department |7,300 |7,300 |
| |Work in process, November 30: | | |
| |1,700 units × 75% |1,275 | |
| |1,700 units × 25% | | 425 |
| |Equivalent units of production |8,575 |7,725 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy
210. The following data have been provided by Cutts Corporation, which uses the weighted-average method in its process costing. The data are for the company's Shaping Department for February.
| | | |Percent Complete |
| | |Units |Materials |Conversion |
| |Work in process, February 1 |300 |50% |10% |
| |Units started into production during February |5,200 | | |
| |Units completed during February and transferred to the next |4,800 | | |
| |department | | | |
| |Work in process, February 28 |700 |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:
| | |Materials |Conversion |
| |Units transferred to the next department |4,800 |4,800 |
| |Work in process, February 28: | | |
| |700 units × 50% | 350 | |
| |700 units × 40% | | 280 |
| |Equivalent units of production |5,150 |5,080 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy
211. Camelin 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 |600 |
| |Percent complete with respect to materials |60% |
| |Percent complete with respect to conversion |70% |
| |Units started into production during the month |20,000 |
| |Work in process, ending: | |
| |Units in process |800 |
| |Percent complete with respect to materials |80% |
| |Percent complete with respect to conversion |50% |
Required:
Using the weighted-average method, determine the equivalent units of production for materials and conversion costs.
Ans:
Weighted-average method:
| | |Materials |Conversion |
| |Transferred to next department |19,800 |19,800 |
| |Work in process, ending: | | |
| |Materials: 800 units × 80% | 640 | |
| |Conversion: 800 units × 50% | | 400 |
| |Equivalent units of production |20,440 |20,200 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy
212. Poirrier Corporation uses process costing. The following data pertain to its Assembly Department for May.
| |Units in process, May 1: materials 75% complete, conversion 30% complete |700 |
| |Units started into production during May |5,500 |
| |Units completed and transferred to the next department |4,600 |
| |Units in process, May 31: materials 85% complete, conversion 65% complete |1,600 |
Required:
Determine the equivalent units of production for the Assembly Department for May using the weighted-average method.
Ans:
Weighted-average method:
| | |Materials |Conversion |
| |Transferred to next department |4,600 |4,600 |
| |Work in process, ending: | | |
| |Materials: 1,600 units × 85% |1,360 | |
| |Conversion: 1,600 units × 65% | |1,040 |
| |Equivalent units of production |5,960 |5,640 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy
213. Greenham Corporation uses the weighted-average method in its process costing. The following data pertain to its Materials Preparation Department for March.
| |Units in process, March 1: materials 75% complete, conversion 60% complete |400 |
| |Units started into production during March |6,800 |
| |Units completed and transferred to the next department |6,300 |
| |Units in process, March 31: materials 55% complete, conversion 10% complete |900 |
Required:
Determine the equivalent units of production for the Materials Preparation Department for March using the weighted-average method.
Ans:
Weighted-average method:
| | |Materials |Conversion |
| |Transferred to next department |6,300 |6,300 |
| |Work in process, ending: | | |
| |Materials: 900 units × 55% | 495 | |
| |Conversion: 900 units × 10% | | 90 |
| |Equivalent units of production |6,795 |6,390 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy
214. Jahncke Inc. uses the weighted-average method in its processing costing. The following data concern the company's Assembly Department for the month of April.
| | |Materials |Conversion |
| |Work in process, April 1 |$3,600 |$1,902 |
| |Cost added to production in the Assembly Department during April |$103,882 |$278,010 |
| |Equivalent units of production for April |8,810 |8,720 |
Required:
Compute the costs per equivalent unit for the Assembly Department for April.
Ans:
Weighted-average method:
| | |Materials |Conversion |
| |Work in process, April 1 |$ 3,600 |$ 1,902 |
| |Cost added during the month in the Assembly Department | 103,882 | 278,010 |
| |Total cost |$107,482 |$279,912 |
| |Equivalent units of production |8,810 |8,720 |
| |Cost per equivalent unit |$12.20 |$32.10 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Easy
215. Holling Inc. uses the weighted-average method in its processing costing. The following data concern the company's Mixing Department for the month of December.
| | |Materials |Conversion |
| |Work in process, December 1 |$7,530 |$8,528 |
| |Cost added to production in the Mixing Department during December |$225,900 |$283,632 |
| |Equivalent units of production for December |9,300 |8,800 |
Required:
Compute the cost per equivalent unit for materials and conversion for the Mixing Department in December.
Ans:
Weighted-average method:
| | |Materials |Conversion |
| |Work in process, December 1 |$ 7,530 |$ 8,528 |
| |Cost added during the month in the Mixing Department | 225,900 | 283,632 |
| |Total cost |$233,430 |$292,160 |
| |Equivalent units of production |9,300 |8,800 |
| |Cost per equivalent unit |$25.10 |$33.20 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Easy
216. Hutchcroft Corporation uses the weighted-average method in its processing costing. The following data concern the company's Assembly Department for the month of December.
| | |Materials |Conversion |
| |Cost per equivalent unit |$24.30 |$27.10 |
| |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 per unit |$318,680 |
| |Work in process, December 31: | |
| |Materials, 630 EUs at $24.30 per EU |$15,309 |
| |Conversion, 225 EUs at $27.10 per EU | 6,098 |
| |Total work in process, December 31 |$21,407 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium
217. Lorona Inc. has provided the following data concerning the Assembly Department for the month of June. The company uses the weighted-average method in its processing costing.
| | |Materials |Conversion |
| |Cost per equivalent unit |$8.10 |$28.50 |
| |Equivalent units in ending work in 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 |$270,840 |
| |Work in process, June 30: | |
| |Materials, 1,330 EUs at $8.10 per EU |$10,773 |
| |Conversion, 1,235 EUs at $28.50 per EU |35,198 |
| |Total work in process, June 30 |$45,971 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium
218. Dalsace 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 |400 |
| |Percent complete with respect to materials |60% |
| |Percent complete with respect to conversion |40% |
| |Costs in the beginning inventory: | |
| |Materials cost |$1,944 |
| |Conversion cost |$4,512 |
| |Units started into production during the month |15,000 |
| |Units completed and transferred out |14,500 |
| |Costs added to production during the month: | |
| |Materials cost |$119,053 |
| |Conversion cost |$418,950 |
| |Work in process, ending: | |
| |Units in process |900 |
| |Percent complete with respect to materials |90% |
| |Percent complete with respect to conversion |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 ending work in process inventory.
d. Determine the cost of units transferred out of the department during the month.
Ans:
FIFO method:
|a. | |Materials |Conversion | |
| |To complete the beginning work in process: | | | |
| |Materials: 400 units × (100% − 60%) |160 | | |
| |Conversion: 400 units × (100% − 40%) | |240 | |
| |Units started and completed (14,500 − 400) |14,100 |14,100 | |
| |Ending work in process: | | | |
| |Materials: 900 units × 90% | 810 | | |
| |Conversion: 900 units × 40% | | 360 | |
| |Equivalent units of production |15,070 |14,700 | |
| | | | | |
|b. | |Materials |Conversion | |
| |Cost added during the month |$119,053 |$418,950 | |
| |Equivalent units of production |15,070 |14,700 | |
| |Cost per equivalent unit |$7.90 |$28.50 | |
| | | | | |
|c. | |Materials |Conversion |Total |
| |Ending work in process: | | | |
| |Equivalent units of production |810 |360 | |
| |Cost per equivalent unit |$7.90 |$28.50 | |
| |Cost of ending work in process |$6,399 |$10,260 |$16,659 |
| | | | | |
|d. | |Materials |Conversion |Total |
| |Cost from the beginning inventory |$1,944 |$4,512 |$6,456 |
| |Cost to complete the units in beginning inventory: | | | |
| |Equivalent units to complete |160 |240 | |
| |Cost per equivalent unit |$7.90 |$28.50 | |
| |Cost to complete |$1,264 |$6,840 |$8,104 |
| |Cost of units started and completed: | | | |
| |Units started and completed |14,100 |14,100 | |
| |Cost per equivalent unit |$7.90 |$28.50 | |
| |Cost of units started and completed |$111,390 |$401,850 |$513,240 |
| |Total cost of units transferred out | | |$527,800 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5,6,7 Level: Hard
219. Engsbye 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 |200 |
| |Percent complete with respect to materials |80% |
| |Percent complete with respect to conversion |10% |
| |Costs in the beginning inventory: | |
| |Materials cost |$800 |
| |Conversion cost |$406 |
| |Units started into production during the month |20,000 |
| |Units completed and transferred out |20,000 |
| |Costs added to production during the month: | |
| |Materials cost |$96,000 |
| |Conversion cost |$413,648 |
| |Work in process, ending: | |
| |Units in process |200 |
| |Percent complete with respect to materials |80% |
| |Percent complete with respect to conversion |50% |
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 ending work in process inventory.
d. Determine the cost of units transferred out of the department during the 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: | | |
| |Materials: 200 units × 80% | 160 | |
| |Conversion: 200 units × 50% | | 100 |
| |Equivalent units of production |20,000 |20,080 |
|b. | |Materials |Conversion |
| |Cost added during the month |$96,000 |$413,648 |
| |Equivalent units of production |20,000 |20,080 |
| |Cost per equivalent unit |$4.80 |$20.60 |
|c. |Ending work in process: |Materials |Conversion |Total |
| |Equivalent units of production |160 |100 | |
| |Cost per equivalent unit |$4.80 |$20.60 | |
| |Cost of ending work in process |$768 |$2,060 |$2,828 |
| | | | | |
|d. | |Materials |Conversion |Total |
| |Cost from the beginning inventory |$800 |$406 |$1,206 |
| |Cost to complete the units in beginning inventory: | | | |
| |Equivalent units to complete |40 |180 | |
| |Cost per equivalent unit |$4.80 |$20.60 | |
| |Cost to complete |$192 |$3,708 |$3,900 |
| |Cost of units started and completed: | | | |
| |Units started and completed |19,800 |19,800 | |
| |Cost per equivalent unit |$4.80 |$20.60 | |
| |Cost of units started and completed |$95,040 |$407,880 |$502,920 |
| |Total cost of units transferred out | | |$508,026 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5,6,7 Level: Hard
220. Lenning Corporation uses the FIFO method in its process costing. The following data pertain to its Assembly Department for July.
| | | |Percent Complete |
| | |Units |Materials |Conversion |
| |Work in process, July 1 |300 |75% |10% |
| |Units started into production during July |6,100 | | |
| |Units completed during July and transferred to the next |5,600 | | |
| |department | | | |
| |Work in process, July 31 |800 |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:
| | |Materials |Conversion |
| |Work in process, July 1: | | |
| |300 units × (100% − 75%) |75 | |
| |300 units × (100% − 10%) | |270 |
| |Units started and completed in July |5,300 |5,300 |
| |Work in process, July 31: | | |
| |800 units × 90% | 720 | |
| |800 units × 85% | | 680 |
| |Equivalent units of production |6,095 |6,250 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium
221. The following data pertain to the Milling Department of Malmberg Corporation for June. The company uses the FIFO method in its process costing.
| | | |Percent Complete |
| | |Units |Materials |Conversion |
| |Work in process, June 1 |800 |80% |35% |
| |Units started into production during June |9,400 | | |
| |Units completed during June and transferred to the next |8,300 | | |
| |department | | | |
| |Work in process, June 30 |1,900 |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:
| | |Materials |Conversion |
| |Work in process, June 1: | | |
| |800 units × (100% − 80%) |160 | |
| |800 units × (100% − 35%) | |520 |
| |Units started and completed in June |7,500 |7,500 |
| |Work in process, June 30: | | |
| |1,900 units × 75% |1,425 | |
| |1,900 units × 40% | | 760 |
| |Equivalent units of production |9,085 |8,780 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium
222. Fuchs 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 |800 |
| |Percent complete with respect to materials |70% |
| |Percent complete with respect to conversion |10% |
| |Units started into production during the month |14,000 |
| |Work in process, ending: | |
| |Units in process |800 |
| |Percent complete with respect to materials |60% |
| |Percent complete with respect to conversion |40% |
Required:
Using the FIFO method, determine the equivalent units of production for materials and conversion costs.
Ans:
FIFO method:
| | |Materials |Conversion |
| |To complete the beginning work in process: | | |
| |Materials: 800 units × (100% − 70%) |240 | |
| |Conversion: 800 units × (100% − 10%) | |720 |
| |Units started and completed (14,000 − 800) |13,200 |13,200 |
| |Ending work in process: | | |
| |Materials: 800 units × 60% | 480 | |
| |Conversion: 800 units × 40% | | 320 |
| |Equivalent units of production |13,920 |14,240 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium
223. Clarks Corporation uses the FIFO method in its process costing. The following data pertain to its Assembly Department for August.
| |Units in process, August 1: materials 85% complete, conversion 20% complete |700 |
| |Units started into production during August |9,400 |
| |Units completed and transferred to the next department |8,300 |
| |Units in process, August 31: materials 90% complete, conversion 60% complete |1,800 |
Required:
Determine the equivalent units of production for the Assembly Department for August using the FIFO method.
Ans:
FIFO method:
| | |Materials |Conversion |
| |To complete the beginning work in process: | | |
| |Materials: 700 units × (100% − 85%) |105 | |
| |Conversion: 700 units × (100% − 20%) | |560 |
| |Units started and completed (8,300 – 700) |7,600 |7,600 |
| |Ending work in process: | | |
| |Materials: 1,800 units × 90% |1,620 | |
| |Conversion: 1,800 units × 60% | |1,080 |
| |Equivalent units of production |9,325 |9,240 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium
224. The following data have been provided by Corby 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% complete |500 |
| |Units started into production during May |8,900 |
| |Units started and completed during May |7,800 |
| |Units completed and transferred to the next department during May |8,300 |
| |Units in process, May 31: materials 80% complete, conversion 40% complete |1,100 |
Required:
Determine the equivalent units of production for the Circuit Prep Department for May using the FIFO method.
Ans:
FIFO method:
| | |Materials |Conversion |
| |To complete the beginning work in process: | | |
| |Materials: 500 units × (100% − 60%) |200 | |
| |Conversion: 500 units × (100% − 45%) | |275 |
| |Units started and completed |7,800 |7,800 |
| |Ending work in process: | | |
| |Materials: 1,100 units × 80% | 880 | |
| |Conversion: 1,100 units × 40% | | 440 |
| |Equivalent units of production |8,880 |8,515 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium
225. Zubris Corporation uses the FIFO method in its processing costing. The following data concern the company's Assembly Department for the month of July.
| | |Materials |Conversion |
| |Work in process, July 1 |$4,761 |$5,365 |
| |Cost added to production in the Assembly Department during July|$26,496 |$34,040 |
| |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:
| | |Materials |Conversion |
| |Cost added during July |$26,496 |$34,040 |
| |Equivalent units of production |2,070 |1,850 |
| |Cost per equivalent unit |$12.80 |$18.40 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 6 Level: Easy
226. Rauzman Corporation uses the FIFO method in its processing costing. The following data concern the company's Mixing Department for the month of August.
| | |Materials |Conversion |
| |Work in process, August 1 |$25,641 |$15,300 |
| |Cost added to production in the Mixing Department during August |$170,940 |$179,775 |
| |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:
| | |Materials |Conversion |
| |Cost added during the month |$170,940 |$179,775 |
| |Equivalent units |7,770 |7,650 |
| |Cost per equivalent unit |$22.00 |$23.50 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 6 Level: Easy
227. Crone Corporation uses the FIFO method in its processing costing system. The following data concern the company's Assembly Department for the month of October.
| |Cost in beginning work in process inventory |$1,920 |
| |Units started and completed this month |3,130 |
| | |Materials |Conversion |
| |Cost per equivalent unit |$9.50 |$20.40 |
| |Equivalent units required to complete the units in beginning work in |360 |140 |
| |process inventory | | |
| |Equivalent units in ending work in process inventory |330 |264 |
Required:
Determine the cost of ending work in process inventory and the cost of units transferred out of the department during October using the FIFO method.
Ans:
FIFO method:
| |Transferred to the next department: | |
| |From the beginning work in process inventory: | |
| |Cost in beginning work in process inventory |$ 1,920 |
| |Cost to complete these units: | |
| |Materials, 360 EUs at $9.50 per EU |3,420 |
| |Conversion, 140EUs at $20.40 per EU | 2,856 |
| |Total cost from beginning inventory |8,196 |
| |Units started and completed this month, 3,130 units at $29.90 per unit | 93,587 |
| |Total cost transferred to the next department |$101,783 |
| | | |
| |Work in process, October 31: | |
| |Materials, 330 EUs at $9.50 per EU |$3,135 |
| |Conversion, 264 EUs at $20.40 per EU | 5,386 |
| |Total work in process, October 31 |$8,521 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 7 Level: Medium
228. The following data has been provided by Glasco Inc., a company 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 work in process inventory |$1,690 |
| |Units started and completed this month |4,110 |
| | |Materials |Conversion |
| |Cost per equivalent unit |$12.50 |$45.70 |
| |Equivalent units required to complete the units in beginning work in |460 |260 |
| |process inventory | | |
| |Equivalent units in ending work in process inventory |220 |176 |
Required:
Determine the cost of ending work in process inventory and the cost of the units transferred out of the department during June using the FIFO method.
Ans:
FIFO method:
| |Transferred to the next department: | |
| |From the beginning work in process inventory: | |
| |Cost in beginning work in process inventory |$ 1,690 |
| |Cost to complete these units: | |
| |Materials, at 460 EUs $12.50 per EU |5,750 |
| |Conversion, at 260 EUs $45.70 per EU | 11,882 |
| |Total cost from beginning inventory |19,322 |
| |Units started and completed this month, 4,110 units at $58.20 per unit | 239,202 |
| |Total cost transferred to the next department |$258,524 |
| | | |
| |Work in process, June 30: | |
| |Materials, 220 EUs at $12.50 per EU |$ 2,750 |
| |Conversion, 176 EUs at $45.70 per EU | 8,043 |
| |Total work in process, June 30 |$10,793 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 7 Level: Medium
229. Central Medical Clinic has two service departments, Building Services and 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 | |Operating Departments |
| | |Building |Energy | |Pediatrics |Geriatrics |Surgery |
| | |Services | | | | | |
| |Budgeted costs before |$20,000 |$10,000 | |$90,000 |$60,000 |$100,000 |
| |allocation | | | | | | |
| |Square feet |1,000 |4,000 | |6,000 |18,000 |12,000 |
| |Patient days |0 |0 | |5,500 |7,700 |8,800 |
Required:
a. Prepare a schedule to allocate service department costs to operating departments by the direct method (round all dollar amounts to the nearest whole dollar).
b. Prepare a schedule to allocate service department costs to operating departments by the step-down method, allocating Building Services first (round all amounts to the nearest whole dollar).
Ans:
a. Direct Method:
| | |Building |Energy |Pediatrics |Geriatrics |Surgery |
| | |Services | | | | |
| |Budgeted costs before |$20,000 |$10,000 |$90,000 |$60,000 |$100,000 |
| |allocation | | | | | |
| |Allocation of Building |(20,000) | | | | |
| |Services: | | | | | |
| |Pediatrics: 6,000/36,000 × | | |3,333 | | |
| |$20,000 | | | | | |
| |Geriatrics:18,000/36,000 × | | | |10,000 | |
| |$20,000 | | | | | |
| |Surgery: 12,000/36,000 × | | | | |6,667 |
| |$20,000 | | | | | |
| |Allocation of Energy: | |(10,000) | | | |
| |Pediatrics: 5,500/22,000 × | | |2,500 | | |
| |$10,000 | | | | | |
| |Geriatrics: 7,700/22,000 × | | | |3,500 | |
| |$10,000 | | | | | |
| |Surgery: 8,800/22,000 × $10,000| | | | |4,000 |
| |Costs after allocation |$0 |$0 |$95,833 |$73,500 |$110,667 |
b. Step Method
| | |Building |Energy |Pediatrics |Geriatrics |Surgery |
| | |Services | | | | |
| |Budgeted costs before |$20,000 |$10,000 |$90,000 |$60,000 |$100,000 |
| |allocation | | | | | |
| |Allocation of Building |(20,000) | | | | |
| |Services: | | | | | |
| |Energy: 4,000/40,000 × $20,000 | |2,000 | | | |
| |Pediatrics: 6,000/40,000 × | | |3,000 | | |
| |$20,000 | | | | | |
| |Geriatrics: 18,000/40,000 × | | | |9,000 | |
| |$20,000 | | | | | |
| |Surgery: 12,000/40,000 × | | | | |6,000 |
| |$20,000 | | | | | |
| |Allocation of Energy: | |(12,000) | | | |
| |Pediatrics: 5,500/22,000 × | | |3,000 | | |
| |$12,000 | | | | | |
| |Geriatrics: 7,700/22,000 × | | | |4,200 | |
| |$12,000 | | | | | |
| |Surgery: 8,800/22,000 × $12,000| | | | |4,800 |
| |Costs after allocation |$0 |$0 |$96,000 |$73,200 |$110,800 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 8,9 Level: Medium
230. Cerce Corporation uses the direct method to allocate service department costs to operating departments. The company has two service departments, Administrative and Facilities, and two operating departments, Assembly and Finishing.
| | |Service Department | |Operating Department |
| | |Administrative |Facilities | |Assembly |Finishing |
| |Departmental costs |$29,440 |$46,740 | |$258,880 |$320,280 |
| |Employee hours |5,000 |2,000 | |29,000 |17,000 |
| |Space occupied–square feet |2,000 |2,000 | |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
| | |Administrative |Facilities |Assembly |Finishing |
| |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 AICPA FN: Reporting Appendix: 4B LO: 8 Level: Easy
231. Sandven Corporation uses the direct method to allocate its two service department costs to its two operating departments. Data concerning those departments follow:
| | |Service Department |Service Department |Operating |Operating |
| | |A |B |Department X |Department 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 Department |Service Department |Operating |Operating |
| | |A |B |Department X |Department 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 |$524,070 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 8 Level: Easy
232. The direct method is used by Kurpinski Clinic to allocate its service department costs to its operating departments. Data concerning those departments follow:
| | |Service Departments | |Operating Departments |
| | |Information |Personnel | |Pediatrics |Prenatal |
| | |Technology | | | | |
| |Departmental costs |$34,650 |$31,356 | |$566,960 |$688,220 |
| |Computers |22 |17 | |44 |46 |
| |Employees |15 |15 | |75 |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 | |Operating Departments |
| | |Information Technology|Personnel | |Pediatrics |Prenatal |
| |Departmental costs |$34,650 |$31,356 | |$566,960 |$688,220 |
| |Information Technology |(34,650) | | |16,940 |17,710 |
| |Personnel | |(31,356) | | 20,100 | 11,256 |
| |Total costs after allocation |$ 0 |$ 0 | |$604,000 |$717,186 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 8 Level: Easy
233. Mercik Consultancy uses the direct method to allocate its 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:
| | |Service Departments | |Operating Departments |
| | |Information Technology|Admini-stration| |Corporate Practice|Government Practice |
| |Departmental costs |$26,244 |$21,696 | |$226,170 |$477,980 |
| |Computers |39 |14 | |51 |30 |
| |Employees |32 |10 | |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
| | |Information Technology|Administration |Corporate Practice|Government Practice |
| |Departmental costs |$26,244 |$21,696 |$226,170 |$477,980 |
| |Information Technology |(26,244) | |16,524 |9,720 |
| |Administration | |(21,696) | 15,820 | 5,876 |
| |Total costs after allocation |$ 0 |$ 0 |$258,514 |$493,576 |
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 8 Level: Easy
234. Bazin Corporation has two service departments, Service Department A and Service Department B, and two operating departments, Operating Department X and Operating Department Y.
| | |Service Department |Service Department |Operating |Operating Department|
| | |A |B |Department X |Y |
| |Departmental costs |$31,280 |$55,640 |$161,490 |$399,350 |
| |Allocation base A |4,000 |1,000 |26,000 |19,000 |
| |Allocation base B |6,000 |2,000 |30,000 |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 step-down method.
Ans:
| | |Service Department A |Service Department B |Operating Department X|Operating Department Y|
| |Departmental costs |$31,280 |$55,640 |$161,490 |$399,350 |
| |Service Department A costs |(31,280) |680 |17,680 |12,920 |
| |Service Department B costs | |(56,320) | 52,800 | 3,520 |
| |Total costs after allocation |$ 0 |$ 0 |$231,970 |$415,790 |
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 AICPA FN: Reporting Appendix: 4B LO: 9 Level: Easy
235. Coakley Corporation 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.
| | |Service Department | |Operating Department |
| | |Administration |Facilities | |Assembly |Finishing |
| |Departmental costs |$22,260 |$69,130 | |$137,520 |$900,750 |
| |Employee time |4,000 |1,000 | |25,000 |16,000 |
| |Space occupied |6,000 |1,000 | |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 step-down method.
Ans:
| | |Admini-stration |Facilities |Assembly |Finishing |
| |Departmental costs |$22,260 |$69,130 |$137,520 |$900,750 |
| |Administration costs |(22,260) |530 |13,250 |8,480 |
| |Facilities costs | |(69,660) | 55,080 | 14,580 |
| |Total costs after allocation |$ 0 |$ 0 |$205,850 |$923,810 |
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 AICPA FN: Reporting Appendix: 4B LO: 9 Level: Easy
236. Georgeson Emergency Care Hospital uses the step-down method to allocate 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.
| | |Service Department | |Operating Department |
| | |Admini-stration |IT | |Emergency Room |Intensive Care |
| |Departmental costs |$13,340 |$15,805 | |$597,700 |$396,240 |
| |Employees |4 |5 | |142 |83 |
| |Computers |4 |4 | |65 |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 step-down method.
Ans:
| | |Admini-stration |IT |Emergency Room |Intensive Care |
| |Departmental costs |$13,340 |$15,805 |$597,700 |$396,240 |
| |Administration costs |(13,340) |290 |8,236 |4,814 |
| |IT costs | |(16,095) | 9,425 | 6,670 |
| |Total costs after allocation |$ 0 |$ 0 |$615,361 |$407,724 |
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 AICPA FN: Reporting Appendix: 4B LO: 9 Level: Easy
237. Lester Natal Clinic uses the step-down method to allocate service 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.
| | |Service Department | |Operating Department |
| | |Admini-stration |IT | |Prenatal Care |Postnatal Care |
| |Departmental costs |$20,448 |$22,506 | |$570,720 |$369,880 |
| |Employees |2 |3 | |131 |79 |
| |Computers |2 |2 | |45 |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 step-down method.
Ans:
| | |Admini-stration |IT |Prenatal Care |Postnatal Care |
| |Departmental costs |$20,448 |$22,506 |$570,720 |$369,880 |
| |Administration costs |(20,448) |288 |12,576 |7,584 |
| |IT costs | |(22,794) |11,790 |11,004 |
| |Total costs after allocation |$0 |$0 |$595,086 |$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 AICPA FN: Reporting Appendix: 4B LO: 9 Level: Easy
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