Test bank managerial accounting by garrison 13e chapter 04

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 proces

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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 ifthere is no beginning work in process inventory

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 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 unitscompleted and transferred out Ans:��False

weighted-AACSB:��Analytic AICPA�BB:��Critical�Thinking AICPA�FN:��Reporting LO:��2 Level:��Hard

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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 Thestep-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 Theorder 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

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13 In a process costing system, direct labor cost combined with

manufacturing overhead cost is known as conversion cost

Ans:��True AACSB:��Reflective�Thinking

Level:��Easy 14 Process costing is employed in industries that produce basically homogeneous products such as bricks, flour, or cement but would not beappropriate for assembly-type operations such as those that manufacture

computers Ans:��False AACSB:��Analytic

Level:��Medium 15 Process costing is used where many different products are produced each period to customer specifications

Ans:��False AACSB:��Reflective�Thinking

Level:��EasyMultiple 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 goodsaccount D) All of the above are true Ans:��D AACSB:��Analytic AICPA�BB:��Critical�Thinking AICPA�FN:��Reporting LO:��1 Level:��Hard

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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

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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 process#Percentage completion of ending work in 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 atthe 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

Level:��Hard 22 In the computation of costs per equivalent unit, the weighted-average method of process costing considers:A) costs incurred duringthe 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

Level:��Easy Source:��CPA,�adapted

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

#Material cost assigned to beginning work in process last period#Material cost added to production during the current

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 processcosting, work for the period must be broken down into parts: A) completedduring the period and units in ending inventory B) completed from

beginning inventory, started and completed during the month, and units in endinginventory C) started during the period and units transferred out during theperiod 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

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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

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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)

#####################" #W#o#r#k# #i#n# #p#r#o#c#e#s#s#,# #e#n#d#i#n#g#

###�#�#8#,#0#0#0#######=# #U#n#i#t#s# #c#o#m#p#l#e#t#e#d# #a#n#d#

#t#r#a#n#s#f#e#r#r#e#d# #o#u#t# #d#u#r#i#n#g# #t#h#e# #m#o#n#t#h#

###7#2#,#0#0#0######

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## #3#0#.# #T#h#e# #A#s#s#e#m#b#l#y# #D#e#p#a#r#t#m#e#n#t#

#s#t#a#r#t#e#d# #t#h#e# #m#o#n#t#h# #w#i#t#h# #8#3#,#0#0#0# #u#n#i#t#s# #i#n#

#i#t#s# #b#e#g#i#n#n#i#n#g# #w#o#r#k# #i#n# #p#r#o#c#e#s#s#

#i#n#v#e#n#t#o#r#y#.# #A#n# #a#d#d#i#t#i#o#n#a#l# #3#3#4#,#0#0#0# #u#n#i#t#s#

#w#e#r#e# #t#r#a#n#s#f#e#r#r#e#d 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, be#g#i#n#n#i#n#g#

###8#3#,#0#0#0#######+# #U#n#i#t#s# #s#t#a#r#t#e#d# #i#n#t#o#

#p#r#o#d#u#c#t#i#o#n# #d#u#r#i#n#g# #t#h#e# #m#o#n#t#h#

###3#3#4#,#0#0#0########" #W#o#r#k# #i#n# #p#r#o#c#e#s#s#,# #e#n#d#i#n#g#

###�#�#3#4#,#0#0#0#######=#U#n#i#t#s# #c#o#m#p#l#e#t#e#d# #a#n#d#

###3#8#3#,#0#0#0######

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## #3#1#.# #C#o#l#b#y# #C#o#m#p#a#n#y# #h#a#s# #a# #p#r#o#c#e#s#s#

#c#o#s#t#i#n#g# #s#y#s#t#e#m# #i#n# #w#h#i#c#h# #t#h#e#

#w#e#i#g#h#t#e#d#-#a#v#erage 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)

AACSB:��Analytic AICPA�BB:��Critical�Thinking AICPA�FN:��Reporting LO:��2,3 Level:��Medium Source:��CPA,�adapted

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Solution:#To solve for ending work in process:####+ Work in process,beginning #22,000###+ Units started into production during the month

#90,000#########################################################################

####################################################################"

#U#n#i#t#s# #c#o#m#p#l#e#t#e#d# #a#n#d# #t#r#a#n#s#f#e#r#r#e#d# #o#u#t#

#d#u#r#i#n#g# #t#h#e# #m#o#n#t#h# ###9#7#,#0#0#0#######=# #W#o#r#k# #i#n#

#p#r#o#c#e#s#s#,# #e#n#d#i#n#g# ###1#5#,#0#0#0########E#q#u#i#v#a#l#e#n#t#

#u#n#i#t#s# #o#f#

#p#r#o#d#u#c#t#i#o#n###########M#a#t#e#r#i#a#l#s#######T#r#a#n#s#f#e#r#r#e#d#

#t#o# #n#e#x#t# #d#e#p#a#r#t#m#e#n#t# ###9#7#,#0#0#0# #######E#n#d#i#n#g#

#w#o#r#k# #i#n# #p#r#o#c#e#s#s# #(#m#a#t#e#r#i#a#l#s#:# #1#5#,#0#0#0#

#u#n#i#t#s# #�# #1#0#0#%# #c#o#m#p#l#e#t#e#)# ##�15,000 ###Equivalent units ofproduction #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; conversion: 15,000 units � % complete) #15,000 ###Cost per equivalent unit #$0.51 ###Cost of ending work in process inventory #$7,650

##

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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 inprocess 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 forMay 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; conversion: 6,000 units � 50% complete) #�6,000 #�3,000

####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 ##

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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

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Solution:#To solve for ending work in process:####+ Work in process,beginning #12,000###+ Units started into production during the month

#100,000########################################################################

####################" #U#n#i#t#s# #c#o#m#p#l#e#t#e#d# #a#n#d#

###�#8#8#,#0#0#0#######=# #W#o#r#k# #i#n# #p#r#o#c#e#s#s#,# #e#n#d#i#n#g#

###�#2#4#,#0#0#0########E#q#u#i#v#a#l#e#n#t# #u#n#i#t#s# #o#f#

#p#r#o#d#u#c#t#i#o#n###########M#a#t#e#r#i#a#l#s#######T#r#a#n#s#f#e#r#r#e#d#

#w#o#r#k# #i#n# #p#r#o#c#e#s#s# #(#m#a#t#e#r#i#a#l#s#:# #2#4#,#0#0#0#

#u#n#i#t#s# #�# #1#0#0#%# #c#o#m#p#l#e#t#e#) #�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

###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 ##

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34 Destry Company uses the weighted-average method in its process costing system The first processing department, the Welding Department, startedthe month with 10,000 units in its beginning work in process inventory that were30% complete with respect to conversion costs The conversion cost in this beginning work in process inventory was $19,200 An additional 60,000 units werestarted 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

Ans:��C AACSB:��Analytic AICPA�BB:��Critical�Thinking AICPA�FN:��Reporting LO:��2,3

Level:��Medium Solution:#To solve for units transferred#:#########+#

#W#o#r#k# #i#n# #p#r#o#c#e#s#s#,# #b#e#g#i#n#n#i#n#g####1#0#,#0#0#0#######+#

#U#n#i#t#s# #s#t#a#r#t#e#d# #i#n#t#o# #p#r#o#d#u#c#t#i#o#n# #d#u#r#i#n#g#

#t#h#e# #m#o#n#t#h# ###6#0#,#0#0#0########" #W#o#r#k# #i#n#

#p#r#o#c#e#s#s#,# #e#n#d#i#n#g# ###1#9#,#0#0#0#######=# #U#n#i#t#s#

#c#o#m#p#l#e#t#e#d# #a#n#d# #t#r#a#n#s#f#e#r#r#e#d# #o#u#t# #d#u#r#i#n#g#

#t#h#e# #m#o#n#t#h# ###5#1#,#0#0#0########E#q#u#i#v#a#l#e#n#t# #u#n#i#t#s#

#o#f# #p#r#o#d#u#c#t#i#o#n###########C#o#n#v#e#r#s#i#o#n#######T#r#ansferred 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 ##

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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 conversioncost 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)

AACSB:��Analytic AICPA�BB:��Critical�Thinking AICPA�FN:��Reporting LO:��2,3 Level:��Medium

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Solution: #To solve for units transferred:####+ Work in process, beginning #18,000###+ Units started into production during the month

#81,000#########################################################################

##################" #W#o#r#k# #i#n# #p#r#o#c#e#s#s#,# #e#n#d#i#n#g#

###1#7#,#0#0#0#######=# #U#n#i#t#s# #c#o#m#p#l#e#t#e#d# #a#n#d#

###8#2#,#0#0#0########E#q#u#i#v#a#l#e#n#t# #u#n#i#t#s# #o#f#

#p#r#o#d#u#c#t#i#o#n###########C#o#n#v#e#r#s#i#o#n#######T#r#a#n#s#f#e#r#r#e#d#

#w#o#r#k# #i#n# #p#r#o#c#e#s#s# ###(#c#o#n#v#e#r#s#i#o#n#:# #1#7#,#0#0#0#

#u#n#i#t#s# #�# #8#0#%# #c#o#m#p#l#e#t#e#) #13,600 ###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

###Cost per equivalent unit, (a) � (b) #$0.873 ##

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36 Roy Company manufactures a product in Departments A and B Materialsare 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 #(a) � (b)

#$2.05#$0.40#$0.33#$2.78##

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37 Hammoudi Company uses the weighted-average method in its process costing system The first processing department, the Welding Department, startedthe month with 16,000 units in its beginning work in process inventory that were90% complete with respect to conversion costs The conversion cost in this beginning work in process inventory was $61,920 An additional 53,000 units werestarted into production during the month and 45,000 units were completed in the Welding Department and transferred to the next processing department There were24,000 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

Unit#####Conversion###Cost of beginning work in process #$�61,920 ###Cost added during the period #�194,340 ###Total cost (a) #$256,260 #######Equivalentunits of production (b) #61,800 ###Cost per equivalent unit, (a) � (b) #$4.147

##

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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 infrom 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)

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

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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##

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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

Level:��Medium Source:��CPA,�adapted Solution: To calculate units transferred out:#Units sold#250,000###+ Ending finished goods inventory

#60,000#########################################################################

##########" #B#e#g#i#n#n#i#n#g# #f#i#n#i#s#h#e#d# #g#o#o#d#s#

#i#n#v#e#n#t#o#r#y# ###�#7#5#,#0#0#0#######=# #U#n#i#t#s#

#t#r#a#n#s#f#e#r#r#e#d# #o#u#t# ###2#3#5#,#0#0#0########U#n#i#t#s#

#t#r#a#n#s#f#e#r#r#e#d# #o#u#t# ###2#3#5#,#0#0#0#######E#n#d#i#n#g#

#w#o#r#k# #i#n# #p#r#o#c#e#s#s# #(#1#6#,#0#0#0# #u#n#i#t#s# #

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#�# #7#5#%# #c#o#m#p#l#e#t#e#)# ###�#1#2#,#0#0#0#######E#q#u#i#v#a#l#e#n#t#

#u#n#i#t#s# #o#f# #p#r#o#d#u#c#t#i#o#n# ###2#4#7#,#0#0#0######

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## #4#1#.# #J#e#r#s#e#y# #C#o#m#p#a#n#y# #h#a#s# #a# #p#r#o#c#ess costingsystem 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

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� 75% complete) #�7,500####Equivalent units for conversion costs

#47,500###* Solve backwards:

47,500##########################################################################

################################################################################

#############################################################################

##" #7#,#5#0#0# #=# #4#0#,#0#0#0#####U#n#i#t#s# #i#n# #b#e#g#i#n#n#i#n#g#

#i#n#v#e#n#t#o#r#y# ###1#5#,#0#0#0#########+# #U#n#i#t#s# #s#t#a#r#t#e#d#

###3#5#,#0#0#0###*########" #U#n#i#t#s# #i#n# #e#n#d#i#n#g#

#i#n#v#e#n#t#o#r#y# ###1#0#,#0#0#0#########=# #U#n#i#t#s#

#t#r#a#n#s#f#e#r#r#e#d# #o#u#t# ###4#0#,#0#0#0#######*# #S#o#l#v#e#

#b#a#c#k#w#a#r#d#s#:# #U#n#i#t#s# #s#t#a#r#t#e#d# #=# #4#0#,#0#0#0#

##"1#5#,#0#0#0# #+# #1#0#,#0#0#0# #=# #3#5#,#0#0#0###

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## #4#2#.# #B#o#s#w#a#l# #C#o#m#p#a#n#y# #u#s#e#s# 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 inthe 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)

###########################################" #W#o#r#k# #i#n# #p#r#o#c#e#s#s#,#

#e#n#d#i#n#g# ###1#8#,#0#0#0#######=# #U#n#i#t#s# #c#o#m#p#l#e#t#e#d#

#a#n#d# #t#r#a#n#s#f#e#r#r#e#d# #o#u#t# #d#u#r#i#n#g# #t#h#e# #m#o#n#t#h#

###4#0#,#0#0#0##########C#o#n#v#e#r#s#i#o#n#######T#r#a#n#s#f#e#r#r#e#d#

#t#o# #n#e#x#t# #d#e#p#a#r#t#m#e#n#t# ###4#0#,#0#0#0#######E#n#d#i#n#g#

#w#o#r#k# #i#n# #p#r#o#c#e#s#s# #(#1#8#,#0#0#0# #u#n#i#t#s# #�# #2#0#%#

#c#o#m#p#l#e#t#e#)# ###�#�#3#,#6#0#0#######E#q#u#i#v#a#l#e#n#t# #u#n#i#t#s#

#o#f# #p#r#o#d#u#c#t#i#o#n# ###4#3#,#600##

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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 infrom 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)

#i#n# #b#e#g#i#n#n#i#n#g# #i#n#v#e#n#t#o#r#y# ###4#,#7#0#0#######+#

#U#n#i#t#s# #s#t#a#r#t#e#d# #i#n#t#o# #p#r#o#d#u#c#t#i#o#n#

###5#9#,#7#0#0########" #U#n#i#t#s# #i#n# #e#n#d#i#n#g#

#i#n#v#e#n#t#o#r#y# #�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% complete) #�5,840###Equivalent units for conversion costs #62,940##

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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

Level:��Easy Solution:#Equivalent units transferred out

#30,000###Add: Equivalent units in the ending work in process inventory (6,500 units � 40% complete) #�2,600###Equivalent units for conversion costs

#32,600##

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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)

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% complete) #��6,000###Equivalent units forconversion costs #26,000##

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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% complete) #��200###Equivalent units for conversion costs #102,200##

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47 Natiello Corporation uses the weighted-average method in its processcosting 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 infrom 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

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#########################################################################

################################################################################

######################"##U#n#i#t#s# #i#n# #e#n#d#i#n#g# #i#n#v#e#n#t#o#r#y#

###�#6#,#6#0#0#######=###U#n#i#t#s# #t#r#a#n#s#f#e#r#r#e#d# #o#u#t#

###4#1#,#0#0#0########E#q#u#i#v#a#l#e#n#t# #u#n#i#t#s#

#t#r#a#n#s#f#e#r#r#e#d# #o#u#t# ###4#1#,#0#0#0#######A#d#d#:#

#E#q#u#i#v#a#l#e#n#t# #u#n#i#t#s# #i#n# #t#h#e# #e#n#d#i#n#g# #w#o#r#k# #i#n#

#p#r#o#c#e#s#s# #i#n#v#e#n#t#o#r#y# #(#6#,#6#0#0# #u#n#i#t#s# #�# #7#0#%#

#c#o#m#p#l#e#t#e#)# ###�#�#4#,#6#2#0#######E#q#u#i#v#a#l#e#n#t# #u#n#i#t#s#

#f#o#r# #c#o#n#v#e#r#s#i#o#n# #c#o#s#t#s# ##45,620##

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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#########################################################################

################################################################################

##########################################################" #W#o#r#k# #i#n#

#p#r#o#c#e#s#s#,# #b#e#g#i#n#n#i#n#g# ###�#3#,#0#0#0#######=# #U#n#i#t#s#

#s#t#a#r#t#e#d# #i#n#t#o# #p#r#o#d#u#c#t#i#o#n# #d#u#r#i#n#g# #t#h#e#

#m#o#n#t#h# ###1#1#,#0#0#0######

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## #4#9#.# #P#e#l#i#c#a#n# #C#o#r#p#o#r#a#t#i#o#n# #u#s#e#s# #a#

#w#e#i#g#h#t#e#d#-#a#v#e#r#a#g#e# #p#r#o#c#e#s#s# #c#o#s#t#i#n#g# #s#y#s#t#e#m#

#t#o# #c#o#l#l#e#c#t# #c#o#s#t#s# #r#e#l#a#t#e#d# #t#o# #p#r#o#d#u#c#t#i#o#n#.#

#T#h#e# #f#o#l#l#o#w#i#n#g# #s#e#l#e#c#t#e#d# #i#n#f#o#r#m#a#t#i#o#n#

#r#e#l#a#t#e#s# #t#o 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

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######Co#n#v#e#r#s#i#o#n# #c#o#s#t#s#:#

#*#2#0#0# #u#n#i#t#s# #�# #$#2#6#.#1#0# #####$#5#,#2#2#0###$#1#5#,#4#2#0#####

###U#n#i#t#s# #i#n# #w#o#r#k# #i#n# #p#r#o#c#e#s#s#,# #M#a#r#c#h# #3#1#

###8#0#0#######L#e#s#s#:# #U#n#c#o#m#p#l#e#t#e#d# #a#s# #t#o#

#c#o#n#v#e#r#s#i#o#n# #(#5#,#8#0#0# #t#o#t#a#l# ##" #5#,#2#0#0#

#e#q#u#i#v#a#l#e#n#t# #u#n#i#t#s#)# ###6#0#0#######E#q#u#i#v#a#l#e#n#t#

#u#n#i#t#s# #i#n# #e#n#d#i#n#g# #w#o#r#k# #i#n# #p#r#o#c#e#s#s#:#

#c#o#n#v#e#r#s#i#o#n# ###2#0#0######

Trang 39

## #5#0#.# #K#w#a#n# #M#a#nufacturing 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 costsfor 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##

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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 infrom the prior department during March #67,000####Ending work in process inventory #5,600#30%## The Fitting Department's cost per equivalentunit 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

Level:��Medium Solution:##Units in beginning inventory

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