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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 FN: Reporting Appendix: 4A LO: 2,5 Level: Medium

AICPA BB: Critical Thinking

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 FN: Reporting LO: 2 Level: Hard

AICPA BB: Critical Thinking

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

AICPA FN: Reporting

AACSB: Reflective Thinking

LO:

2

AICPA BB: Critical Thinking

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

AICPA FN: Reporting

AACSB: Reflective Thinking

LO:

2

AICPA BB: Critical Thinking

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 FN: Reporting LO: 2 Level: Hard

AICPA BB: Critical Thinking

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 FN: Reporting LO: 10 Level: Medium

AICPA BB: Critical Thinking

15. Process costing is used where many different products are produced each period to customer specifications.

Ans: False

AICPA FN: Reporting

AACSB: Reflective Thinking

LO: 10

AICPA BB: Critical Thinking

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 FN: Reporting LO: 1 Level: Hard

AICPA BB: Critical Thinking

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

AICPA FN: Reporting

AACSB: Reflective Thinking

LO:

1

AICPA BB: Critical Thinking

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 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 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 FN: Reporting LO: 2 Level: Hard

AICPA BB: Critical Thinking

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 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 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 FN: Reporting LO: 10 Level: Medium

AICPA BB: Critical Thinking

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 FN: Reporting LO: 1 Level: Medium

AICPA BB: Critical Thinking

Solution:

To solve for units transferred:

+ Work in process, beginning + Units started into production during the month − Work in process, ending = Units completed and transferred out during the month

3,000

77,000

8,000

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 FN: Reporting LO: 1 Level: Easy

AICPA BB: Critical Thinking

Solution:

To solve for units transferred:

+ Work in process, beginning + Units started into production during the month − Work in process, ending =Units completed and transferred out during the month

83,000

334,000

34,000

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:

 

Materials

 

Units

Costs

22,00

Work in process at March 1

0

$11,000

90,00

Units started during March

0

$46,120

Units completed and transferred to next department

97,00

during March

0

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; conversion: 15,000 units × % complete)

15,000

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 FN: Reporting LO: 2,3 Level: Medium

AICPA BB: Critical Thinking

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

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:

 

Materials

 

Units

Costs

Work in process at April 1

12,000

$6,000

100,00

Units started during April

0

$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 FN: Reporting LO: 2,3 Level: Medium

AICPA BB: Critical Thinking

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

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:

Percent

Complete with

Respect to

 

Units

Conversion

18,00

Beginning work in process inventory

0

80%

81,00

Started into production during June

0

17,00

Ending work in process inventory

0

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 FN: Reporting LO: 2,3 Level: Medium

AICPA BB: Critical Thinking

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 (conversion: 17,000 units × 80% complete)

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

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 Ending work in process:

12,000

12,000

Materials: 8,000 units × 100% complete Conversion: 8,000 units × 75% complete Equivalent units of production

8,000

 

6,000

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) Cost per equivalent unit

20,000

20,000

18,000

(a) ÷ (b)

$2.05

$0.40

$0.33

$2.78

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 FN: Reporting LO: 2,3 Level: Medium

AICPA BB: Critical Thinking

Solution:

Equivalent units of production

 

Conversion

Transferred to next department

45,000

Ending work in process (conversion: 24,000 units × 70% complete)

16,800

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.

Percent

Complete with

 

Respect to

 

Units

Conversion

Beginning work in process inventory Transferred in from the prior

7,700

40%

56,00

department during January Completed and transferred to the next

0

58,40

department during January

0

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 FN: Reporting LO: 2,3 Level: Medium

AICPA BB: Critical Thinking

Solution:

Units transferred out Add: equivalent units in the ending inventory (5300 × 90% complete) Equivalent units of production

58,400

4,770

63,170

Cost in the beginning inventory Cost added during the month Total cost $364,260 ÷ 63,170 units = $5.766 per unit

$ 16,940

347,320

$364,260

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 FN: Reporting LO: 2,4 Level: Medium

AICPA BB: Critical Thinking

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:

Inventory at January 1:

Work in process

Finished goods Inventory at January 31:

Units

None

75,00

0

16,00

Work in process (conversion 75% complete)

0

60,00

Finished goods

0

What were the equivalent units for conversion costs for January?

A) 235,000

B) 247,000

C) 251,000

D) 253,000

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

Solution:

To calculate units transferred out:

Units sold

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 FN: Reporting LO: 2 Level: Hard

AICPA BB: Critical Thinking

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 FN: Reporting LO: 2 Level: Medium

AICPA BB: Critical Thinking

Solution:

To solve for units transferred:

Work in process, beginning + Units started into production during the month − Work in process, ending = Units completed and transferred out during the month

6,000

52,000

18,000

40,000

Conversion

Transferred to next department Ending work in process (18,000 units × 20% complete). Equivalent units of production

40,000

3,600

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:

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

Units

4,700

59,700

7,300

Percent

Complete

with

Respect to

Conversion

90%

80%

What were the equivalent units for conversion costs in the Painting Department for April?

A) 62,940

B) 62,300

C) 65,540

D) 57,100

Ans: A AACSB: Analytic

AICPA FN: Reporting LO: 2 Level: Medium

AICPA BB: Critical Thinking

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% complete)

5,840

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 FN: Reporting LO: 2 Level: Easy

AICPA BB: Critical Thinking

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

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

25,00

Started in April

0

20,00

Completed

0

Work in process, April 30 (conversion 75%

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 Add: Equivalent units in the ending work in process inventory (8,000 units × 75% complete) Equivalent units for conversion costs

20,000

6,000

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 FN: Reporting LO: 2 Level: Easy

AICPA BB: Critical Thinking

Solution:

Equivalent units transferred out Add: Equivalent units in the ending work in process inventory (1,000 units × 20% complete) Equivalent units for conversion costs

102,000

200

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:

Percent

Complete

 

with Respect

 

Units

to Conversion

Beginning work in process inventory

9,100

20%

Transferred in from the prior department during

38,50

October

0

Completed and transferred to the next department

41,00

during October

0

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 FN: Reporting LO: 2 Level: Easy

AICPA BB: Critical Thinking

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 Add: Equivalent units in the ending work in process inventory (6,600 units × 70% complete) Equivalent units for conversion costs

41,000

4,620

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 FN: Reporting LO: 3,4 Level: Hard

AICPA BB: Critical Thinking

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 Conversion costs: *200 units × $26.10

$10,200

 

$5,220

$15,42

0

Units in work in process, March 31 Less: Uncompleted as to conversion (5,800 total − 5,200 equivalent units). Equivalent units in ending work in process: conversion

800

600

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

$288,00

Total cost

0

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.

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

Units

3,300

67,000

5,600

Percent

Complete with

Respect to

Conversion

40%

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 FN: Reporting LO: 4 Level: Medium

AICPA BB: Critical Thinking

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 Cost per equivalent unit:

82,000 units

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 FN: Reporting LO: 4 Level: Medium

AICPA BB: Critical Thinking

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 Ending work in process:

90,000

90,000

Materials: 10,000 units × 100% complete Conversion: 10,000 units × 50% complete Equivalent units of production

10,000

 

5,000

100,000

95,000

 

Materials

Conversion

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

$

4,000

$

3,000

20,000

16,000

$24,000

 

$19,000

100,000

95,000

 

$0.24

$0.20

 

Materials

Conversion

Total

Units transferred out Cost per equivalent unit Cost transferred out

 

90,000

90,000

$0.24

$0.20

$21,600

 

$18,000

$39,600

 

Materials

Conversion

Total

Equivalent units of production:

ending work in process Cost per equivalent unit Cost of ending work in process

 

10,000

5,000

$0.24

$0.20

$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 FN: Reporting LO: 4 Level: Medium

AICPA BB: Critical Thinking

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.

 

$74,00

Total cost transferred out during March

0

$12,00

Cost in Work in Process, March 1

0

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 FN: Reporting LO: 4 Level: Medium

AICPA BB: Critical Thinking

Solution:

Work in process, ending + Cost transferred out during the month − Work in process, beginning = Cost added to production during the month

$ 5,000

74,000

12,000

$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.

Percent

Complete with

 

Respect to

 

Units

Conversion

Beginning work in process inventory

2,100

50%

Transferred in from the prior department

76,00

during January

0

Completed and transferred to the next

74,20

department during January

0

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 FN: Reporting LO: 4 Level: Easy

AICPA BB: Critical Thinking

Solution:

Equivalent units in ending inventory: 3,900 units × 70% complete

2,730

× $3.91

Conversion costs in ending work in process inventory

$10,674.3

0

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:

 

Conversion

 

Units

Cost

Work in process inventory on May 1

25,000

$22,000

Units started into production, and costs incurred

135,00

during the month

0

$143,000

Units completed and transferred to finished

100,00

goods during the month

0

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 units in ending inventory)

75,000

Ending work in process (60,000 units × 50%

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

$5,525,52

Total cost

0

What amount of cost should Doofus assign to the units (guitars) in work in process on September 30?

A) $125,580

B) $303,600

C) $318,780

D) $343,200

Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5,6,7 Level: Hard

Solution:

Equivalent Units of Production

Materials Conversion

To complete beginning work in process (materials: 20,000 units × 100% complete; conversion: 20,000 units × 80% complete) Units started and completed during the period (90,000 units started − 8,000 units in ending inventory) Ending work in process (materials: 8,000 units × 0% complete; conversion: 8,000 units × 75% complete) Equivalent units of production

20,000

16,000

82,000

82,000

0

6,000

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

Ending work in process inventory:

Materials Conversion

Total

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 inventory)

76,000

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:

Percent

Complete

 

with Respect

 

Units

to Conversion

17,00

Beginning work in process inventory

0

10%

Transferred in from the prior department during

50,00

September

0

17,00

Ending work in process inventory

0

40%

According to the company's records, the conversion cost in beginning work in process inventory was $3,434 at the beginning of September. Additional conversion costs of $117,914 were incurred in the department during the month. What would be the cost per equivalent unit for conversion costs for September? (Round off to three decimal places.)

A) $2.020

B) $1.811

C) $2.140

D) $2.358

Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5,6 Level: Medium

Solution:

Equivalent 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 in ending inventory)

33,000

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 Cost to finish beginning inventory: (1 − 40%) = 60% × 2,000 = 1,200 EU × $8 cost per EU

$ 3,600

9,600

 

$13,20

Total cost of units from beginning inventory

0

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%

45,00

Transferred in from the prior department during March.

0

Completed and transferred to the next department

40,50

during March

0

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) Units started and completed during the period (45,000 units started − 7,000 units in ending inventory) Ending work in process (7,000 units × 70% complete) Equivalent units of production

1,000

38,000

4,900

43,900

Cost per Equivalent Unit

 

Conversion

Cost added during the period (a) Equivalent units of production (b) Cost per equivalent unit (a) ÷ (b)

$99,477

43,900

$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

37,50

Equivalent units of production 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

0

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 ending inventory)

41,000

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 inventory)

72,200

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 inventory)

7,000

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

10,000

38,000

 

Work in process, beginning

= Units started into production during the month

Equivalent Units of Production

 

Materials

Conversion

To complete beginning work in process (materials:

10,000 units × 0% complete; conversion: 10,000

units × 20% complete) Units started and completed during the period (38,000

0

2,000

units started − 8,000 units in ending inventory)

30,000

30,000

Ending work in process (materials: 8,000 units × 100% complete; conversion: 8,000 units × 60%

8,000

4,800

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 ending inventory)

42,000

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:

Percent

Complete with

 

Respect to

 

Units

Conversion

Beginning work in process inventory

3,400

30%

Transferred in from the prior department during

54,10

November

0

Completed and transferred to the next department

52,60

during November

0

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 inventory)

49,200

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% complete) Units completed and transferred out during the month Cost per equivalent unit:

100% complete, conversion 60% complete) Units completed and transferred out during the month Cost per equivalent

Material

Conversion

$17,500

60,000 units

$2.50

$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

 

Total

Materials

Conversion

Cost

Transferred to the next department:

 

10,00

From beginning work in From started and completed during month

0

0

4,000

50,00

0

50,000

50,000

 

60,00

Total EU this period Cost per EU Cost from current period (EU × Cost per EU) Cost from beginning work in process Total cost of units transferred out of the department during current month

0

50,000

54,000

$2.50

$2.00

$125,000

$108,000

$233,000

 

17,500

$250,500

*(Materials=100% complete; 0% needed to complete with respect to materials; Conversion=60% complete; (1 − 0.6) = 40% × 10,000 units to complete units with respect to conversion)

73. Teboul Corporation 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

40,00

March

0

Completed and transferred to the next department

43,90

during March

0

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% complete; conversion: 7,900 units × 80% complete) Units started and completed during the period (40,000 units started − 4,000 units in ending inventory) Ending work in process (materials: 4,000 units × % complete; conversion: 4,000 units × 60% complete) Equivalent units of production

7,900

6,320

36,000

36,000

0

2,400

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 Cost to complete the units in beginning inventory:

$0

$11,850 $ 11,850

Equivalent units of production required to complete the beginning inventory

Units started and completed this period

7,900

6,320

Cost per equivalent unit Cost to complete the units in beginning

$0.00

$7.40

inventory

$0

$46,768

46,768

Cost of 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

 

Assembl

 

Administrative

Facilities

y

Wholesaling

Departmental costs Employee hours Space occupied

$19,440

$71,340

$185,580

$392,950

4,000

2,000

22,000

14,000

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