Test bank for connect with smartbook online access for managerial accounting 11th edition

Test Bank for Connect With Smartbook Online Access For Managerial Accounting 11th Edition

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Chapter 06 - Systems Design: Process Costing

Chapter 06 Systems Design: Process Costing

Multiple Choice Questions 1. (Appendix 6A) Which of the following statements referring to a production report is not correct?

A. The quantity schedule deals with physical units, not whole units.

B. The total "Costs to be accounted for" must equal the total cost of the units completed and transferred out, plus the cost of the ending work-in-process inventory.

C. The equivalent units in the ending work-in-process inventory will be different if the weighted-average method is used than it will be if the FIFO method is used.

D. The total of the "Units to be accounted for" will equal the total of the "Units accounted for."

Blooms: Understand CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Hard Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Learning Objective: 06-03 Compute the cost per equivalent unit using the weighted-average method.

Learning Objective: 06-04 Assign cost units using the weighted-average method.

Learning Objective: 06-06 Compute the equivalent units of production using the FIFO method.

Learning Objective: 06-08 Prepare a cost reconciliation report for accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the FIFO method.

Topic: 06-12 Weighted-Average Method Topic: 06-14 Cost per Equivalent Unit—Weighted-Average Method Topic: 06-23 A Comparison of Costing Methods

6-1 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

2. Assume that there is no beginning work-in-process inventory, and the ending work-inprocess inventory is 50% complete with respect to conversion costs. What would be the number of equivalent units of production with respect to conversion costs under the weightedaverage method?

A. The same as the units completed.

B. The same as the units started during the period.

C. Less than the units completed.

D. Less than the units started during the period.

Blooms: Understand CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Hard Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Learning Objective: 06-03 Compute the cost per equivalent unit using the weighted-average method.

Topic: 06-12 Weighted-Average Method Topic: 06-14 Cost per Equivalent Unit—Weighted-Average Method

3. (Appendix 6A) All production costs have been steadily rising in the Donner Company for several periods, and the company maintains large work-in-process inventories. What is the Donner Company's cost per equivalent unit, as computed using the FIFO method?

A. The same as that computed under the weighted-average method.

B. Higher than that computed under the weighted-average method.

C. Lower than that computed under the weighted-average method.

D. It could be the lower than, the same as, or higher than that computed under the weightedaverage method.

Blooms: Understand CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Hard Learning Objective: 06-06 Compute the equivalent units of production using the FIFO method.

Topic: 06-20 Equivalent Units—FIFO Method Topic: 06-21 Comparison of Equivalent Units of Production under the Weighted-Average and FIFO Methods

6-2 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

4. (Appendix 6A) If a company uses two different unit cost figures to cost transfers from one department to another under a process costing system, then which of the following statements is reasonable to assume?

A. There was no beginning work-in-process inventory.

B. Processing centres are arranged in a sequential pattern.

C. The FIFO cost method is being used.

D. The weighted-average cost method is being used.

Blooms: Understand CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-06 Compute the equivalent units of production using the FIFO method.

Learning Objective: 06-08 Prepare a cost reconciliation report for accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the FIFO method.

Topic: 06-20 Equivalent Units—FIFO Method Topic: 06-21 Comparison of Equivalent Units of Production under the Weighted-Average and FIFO Methods Topic: 06-23 A Comparison of Costing Methods

5. For which of the following industries would it NOT be appropriate to use process costing?

A. Custom furniture building.

B. Oil refining.

C. Grain milling.

D. Newsprint production.

Blooms: Understand CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Easy Learning Objective: 06-01 Record the flow of materials; labour; and overhead through a process costing system.

Topic: 06-04 Processing Departments Topic: 06-05 The Flow of Materials, Labour, and Overhead Costs

6-3 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

6. Which of the following is true about process costing?

A. Unit costs are computed by job on the job cost sheet B. The department production report is the key document showing the accumulation and disposition of costs by a department.

C. Costs are accumulated by individual job, regardless of the accounting period during which the work is done.

D. All units of product are different.

Blooms: Understand CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Easy Learning Objective: 06-01 Record the flow of materials; labour; and overhead through a process costing system.

Topic: 06-02 Comparison of Job-Order and Process Costing

7. The equivalent units of production (weighted-average method) for a department are: A. The number of units transferred to the next department B. The number of units transferred to the next department (or to finished goods) plus the equivalent units in the department's ending work in process inventory.

C. The equivalent units in the department's ending work in process inventory.

D. Equivalent units to complete beginning work in process inventory plus units started and completed during the period plus equivalent units in ending work in process inventory

Blooms: Understand CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Easy Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Topic: 06-11 Equivalent Units of Production

6-4 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

8. Which of the following statements best defines an operation costing system?

A. It is identical to a process costing system except that actual manufacturing overhead costs are traced to units of product.

B. It is the same as a process costing system except that direct materials costs are accounted for in the same way as in job-order costing system.

C. It is the same as a job-order costing system except that direct materials costs are accounted for in the same way as in a process costing system.

D. It is identical to a job-order costing system except that actual manufacturing overhead costs are traced to units of product.

Blooms: Understand CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Hard Learning Objective: 06-01 Record the flow of materials; labour; and overhead through a process costing system.

Learning Objective: 06-05 Prepare a cost reconciliation report accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the weighted-average method.

Topic: 06-04 Processing Departments Topic: 06-16 Summary of Tropic Breeze Fans Costing

9. Lucas Company uses the weighted-average method in its process costing system. The company adds materials at the beginning of the process in the Forming Department, which is the first of two stages in its production process. Information concerning operations in the Forming Department in October follows:

Materials Units 6,000

Work in process on October 1 Units started during October Units completed and transferred to the next Department during October

50,000 44,000

Cost $3,000 $25,560

6-5 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

What was the materials cost of work in process on October 31?

A. $3,060.

B. $5,520.

C. $6,000.

D. $6,120.

EI = 6,000 + 50,000 - 44,000 = 12,000 units * $28,560/56,000 = $6,120.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Hard Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Learning Objective: 06-03 Compute the cost per equivalent unit using the weighted-average method.

Learning Objective: 06-04 Assign cost units using the weighted-average method.

Learning Objective: 06-05 Prepare a cost reconciliation report accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the weighted-average method.

Topic: 06-12 Weighted-Average Method Topic: 06-14 Cost per Equivalent Unit—Weighted-Average Method Topic: 06-16 Summary of Tropic Breeze Fans Costing

6-6 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

10. David Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 20,000 units that were 80% complete with respect to conversion costs. The conversion cost in this beginning work-in-process inventory was $123,200. An additional 65,000 units were started into production during the month. There were 19,000 units in the ending work-in-process inventory of the Welding Department that were 10% complete with respect to conversion costs. A total of $389,250 in conversion costs were incurred in the department during the month.

What would be the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.)

A. $7.547.

B. $7.700.

C. $4.634.

D. $5.988.

EU = 66,000 + 19,000 *.1 = 67,900.

Cost/EU = (123,200 + 389,250)/67,900 = $7.547.

Blooms: Analyze CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Learning Objective: 06-03 Compute the cost per equivalent unit using the weighted-average method.

Topic: 06-12 Weighted-Average Method Topic: 06-14 Cost per Equivalent Unit—Weighted-Average Method

6-7 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

11. Larner Company uses the weighted-average method in its process costing system.

Operating data for the first processing department for the month of June appear below:

Units 24,000

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

Percentage complete 40%

86,000 19,000

20%

According to the company's records, the conversion cost in beginning work-in-process inventory was $68,064 at the beginning of June. Additional conversion costs of $585,324 were incurred in the department during the month.

What was the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.)

A. $5.575.

B. $6.174.

C. $6.892.

D. $7.090. ($68,064 + 585,324)/(91,000 + 19,000 * 20%) = $6.174.

Blooms: Analyze CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Learning Objective: 06-03 Compute the cost per equivalent unit using the weighted-average method.

Topic: 06-12 Weighted-Average Method Topic: 06-14 Cost per Equivalent Unit—Weighted-Average Method

6-8 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

12. Glo Co., a manufacturer of combs, uses the weighted-average method in its process costing system. The company sold 125,000 units during the month of April. There is only one processing department. The following additional information is provided:

Inventory at April 1: Work in process Finished goods Inventory at April 30: Work in process (75% complete as to conversion costs) Finished goods

None 37,500 units 8,000 units 30,000 units

What were the equivalent units of production for conversion costs for April?

A. 126,500 units.

B. 125,500 units.

C. 123,500 units.

D. 117,500 units.

Transferred out of WIP to FG = 125,000 + 30,000 - 37,500 = 117,500 (from FG information).

EU = 117,500 * 100% + 8,000 *.75 = 123,500 units.

Blooms: Analyze CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Hard Learning Objective: 06-01 Record the flow of materials; labour; and overhead through a process costing system.

Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Topic: 06-05 The Flow of Materials, Labour, and Overhead Costs Topic: 06-12 Weighted-Average Method

6-9 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

13. The Morgan Company uses the weighted-average method in its process costing system.

For a particular department, the company had 54,000 equivalent units of production with respect to conversion costs in March. There were 7,500 units in the department's beginning work-in-process inventory, two-thirds complete with respect to conversion costs. During March, 52,500 units were started and 50,000 were completed and transferred out of the department. What was the ending work-in-process inventory in the department?

A. Consisted of 5,000 units.

B. Consisted of 2,500 units.

C. 65% complete with respect to conversion costs.

D. 40% complete with respect to conversion costs.

7,500 + 52,500 = 60,000 less 50,000 transferred out = EI of 10,000 units.

EI equiv. units = 54,000 - 50,000 = 4,000 EU therefore 4,000/10,000 = 40% complete.

Blooms: Analyze CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Hard Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Topic: 06-12 Weighted-Average Method

6-10 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

14. The following data were taken from the accounting records of the Hazel Corporation, which uses the weighted-average method in its process costing system:

Beginning work in process inventory (100% complete as to materials; 70% complete as to conversion) Started in process during the period Ending work in process inventory (100% complete as to materials; 60% complete as to conversion)

30,000 units

90,000 units 20,000 units

What were the equivalent units of production for conversion costs?

A. 102,000 units.

B. 112,000 units.

C. 111,000 units.

D. 100,000 units.

T. out + WIP e.i. = 30,000 + 90,000 - 20,000 = 100,000 * 100% + 20,000 * 60% = 112,000 units.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Topic: 06-12 Weighted-Average Method

6-11 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

15. Baker Company uses the weighted-average method in its process costing system. The Assembly Department started the month with 8,000 units in its beginning work-in-process inventory that were 90% complete with respect to conversion costs. An additional 95,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 11,000 units in the ending work-in-process inventory of the Assembly Department that were 90% complete with respect to conversion costs.

What were the equivalent units of production for conversion costs in the Assembly Department for the month?

A. 94,700 units.

B. 101,900 units.

C. 98,000 units.

D. 92,000 units.

92,000 + 11,000 *.9 = 101,900 units.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Topic: 06-12 Weighted-Average Method

6-12 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

16. Jawson Company uses the weighted-average method in its process costing system.

Operating data for the Painting Department for the month of April appear below:

Units 6,300

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

Percentage complete 10%

65,600

4,600

70%

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

A. 67,300 units.

B. 68,820 units.

C. 70,520 units.

D. 63,900 units.

(6,300 + 65,600 - 4,600) * 100% + 4,600 * 70% = 70,520 units.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Topic: 06-12 Weighted-Average Method

6-13 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

17. Sarver Company uses the weighted-average method in its process costing system. The Fitting Department is the second department in its production process. The data below summarize the department's operations in March:

Units 7,100

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

Percentage complete 70%

61,000

4,600

30%

The Fitting Department's production report indicates that the cost per equivalent unit for conversion cost for March was $8.24.

How much conversion cost was assigned to the units transferred out of the Fitting Department during March?

A. $482,287.20.

B. $502,640.00.

C. $523,240.00.

D. $561,144.00.

(7,100 + 61,000 - 4,600) * $8.24 = $523,240.00.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-04 Assign cost units using the weighted-average method.

Learning Objective: 06-05 Prepare a cost reconciliation report accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the weighted-average method.

Topic: 06-16 Summary of Tropic Breeze Fans Costing

6-14 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

18. The Nichols Company uses the weighted-average method in its process costing system.

The company recorded 29,500 equivalent units of production for conversion costs for November in a particular department. There were 6,000 units in the ending work-in-process inventory on November 30, 75% complete with respect to conversion costs. The November 1 work-in-process inventory consisted of 8,000 units, 50% complete with respect to conversion costs. A total of 25,000 units were completed and transferred out of the department during the month. What was the number of units started during November in the department?

A. 24,500 units.

B. 23,000 units.

C. 27,000 units.

D. 21,000 units.

25,000 + 6,000 - 8,000 = 23,000 units started.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Learning Objective: 06-04 Assign cost units using the weighted-average method.

Learning Objective: 06-05 Prepare a cost reconciliation report accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the weighted-average method.

Topic: 06-12 Weighted-Average Method Topic: 06-16 Summary of Tropic Breeze Fans Costing

19. The Assembly Department started the month with 35,000 units in its beginning work-inprocess inventory. Additional units 472,000 were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 34,000 units in the ending work-in-process inventory of the Assembly Department. How many units were transferred to the next processing department during the month?

A. 507,000 units.

B. 473,000 units.

C. 471,000 units.

D. 541,000 units.

35,000 + 472,000 - 34,000 = 473,000 units.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Easy Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Learning Objective: 06-04 Assign cost units using the weighted-average method.

Learning Objective: 06-05 Prepare a cost reconciliation report accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the weighted-average method.

Topic: 06-12 Weighted-Average Method Topic: 06-16 Summary of Tropic Breeze Fans Costing

6-15 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

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

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

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

Cost of materials $11,000 $36,000

All materials are added at the beginning of the process. Which of the following costs is closest to the cost per equivalent unit for materials?

A. $0.43.

B. $0.45.

C. $0.55.

D. $0.59. ($11,000 + 36,000)/(85,000 + 25,000) = $0.43.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Learning Objective: 06-03 Compute the cost per equivalent unit using the weighted-average method.

Learning Objective: 06-04 Assign cost units using the weighted-average method.

Learning Objective: 06-05 Prepare a cost reconciliation report accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the weighted-average method.

Topic: 06-12 Weighted-Average Method Topic: 06-14 Cost per Equivalent Unit—Weighted-Average Method Topic: 06-16 Summary of Tropic Breeze Fans Costing

6-16 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

21. Harker Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 16,000 units in its beginning work-in-process inventory that were 40% complete with respect to conversion costs. The conversion cost in this beginning work-in-process inventory was $29,440. An additional 59,000 units were started into production during the month, and 61,000 units were completed in the Welding Department and transferred to the next processing department.

There were 14,000 units in the ending work-in-process inventory of the Welding Department that were 10% complete with respect to conversion costs. A total of $246,400 in conversion costs were incurred in the department during the month.

What would be the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.)

A. $4.176.

B. $4.600.

C. $3.375.

D. $4.421.

Cost/EU = ($29,440 + 246,400)/(61,000 + 14,000 *.1) = $4.421.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Learning Objective: 06-03 Compute the cost per equivalent unit using the weighted-average method.

Learning Objective: 06-04 Assign cost units using the weighted-average method.

Learning Objective: 06-05 Prepare a cost reconciliation report accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the weighted-average method.

Topic: 06-12 Weighted-Average Method Topic: 06-14 Cost per Equivalent Unit—Weighted-Average Method Topic: 06-16 Summary of Tropic Breeze Fans Costing

6-17 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

22. Paxton Company uses the weighted-average method in its process costing system. The Moulding Department is the second department in its production process. The data below summarize the department's operations in January:

Units 2,700

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

Percentage complete 80%

57,000

50,300

9,400

20%

The accounting records indicate that the conversion cost that had been assigned to beginning work-in-process inventory was $10,973, and a total of $268,107 in conversion costs were incurred in the department during January.

What was the cost per equivalent unit for conversion costs for January in the Moulding Department? (Round off to three decimal places.)

A. $5.348.

B. $4.038.

C. $5.080.

D. $4.704. ($10,973 + 268,107)/(50,300 + 9,400 *.2) = $5.348.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Learning Objective: 06-03 Compute the cost per equivalent unit using the weighted-average method.

Learning Objective: 06-04 Assign cost units using the weighted-average method.

Learning Objective: 06-05 Prepare a cost reconciliation report accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the weighted-average method.

Topic: 06-12 Weighted-Average Method Topic: 06-14 Cost per Equivalent Unit—Weighted-Average Method Topic: 06-16 Summary of Tropic Breeze Fans Costing

6-18 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

23. The Richmond Company uses the weighted-average method in its process costing system.

The company has only a single processing department. The company's ending work-inprocess inventory on August 31 consisted of 18,000 units. The units in the ending work-inprocess inventory were 100% complete with respect to materials and 60% complete with respect to labour and overhead. If the cost per equivalent unit for August was $2.75 for materials and $4.25 for labour and overhead, what was the total cost assigned to the ending work-in-process inventory?

A. $126,000.

B. $75,600.

C. $80,100.

D. $95,400.

18,000 * $2.75 + 18,000 *.6 * $4.25 = $95,400.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Learning Objective: 06-04 Assign cost units using the weighted-average method.

Learning Objective: 06-05 Prepare a cost reconciliation report accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the weighted-average method.

Topic: 06-12 Weighted-Average Method Topic: 06-16 Summary of Tropic Breeze Fans Costing

6-19 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

24. (Appendix 6A) On November 1, Yankee Company had 20,000 units of work in process in Department No. 1 that were 100% complete with respect to material costs and 20% complete with respect to conversion costs. During November, 160,000 units were started in Department No. 1, and 170,000 units were completed and transferred to Department No. 2. The work in process on November 30 was 100% complete with respect to material costs and 40% complete with respect to conversion costs. By what amount would the equivalent units of production for conversion costs for the month of November differ if the FIFO method were used instead of the weighted-average method?

A. 20,000 decrease.

B. 16,000 decrease.

C. 8,000 decrease.

D. 4,000 decrease.

Transferred out 170,000 units, EI = 10,000 units.

W. Avg.: EU = 170,000 + 10,000 *.4 = 174,000 EU FIFO: 20,000 *.8 + 150,000 * 1 + 10,000 *.4 = 170,000 EU. Therefore 4,000 less using FIFO.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Hard Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Learning Objective: 06-06 Compute the equivalent units of production using the FIFO method.

Topic: 06-12 Weighted-Average Method Topic: 06-20 Equivalent Units—FIFO Method

6-20 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

25. Fabian Company uses the weighted-average method in its process costing system. The Assembly Department started the month with 9,000 units in its beginning work-in-process inventory that were 70% complete with respect to conversion costs. During the month, an additional 90,000 units were transferred in from the prior department to begin processing in the Assembly Department. During the month, 87,000 units were completed in the Assembly Department and transferred to the next processing department. There were 12,000 units in the ending work-in-process inventory of the Assembly Department that were 20% complete with respect to conversion costs.

What were the equivalent units of production for conversion costs in the Assembly Department for the month?

A. 93,000 units.

B. 83,100 units.

C. 87,000 units.

D. 89,400 units.

87,000 + 12,000 *.20 = 89,400 units.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Easy Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Topic: 06-12 Weighted-Average Method

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Chapter 06 - Systems Design: Process Costing

26. Narver Company uses the weighted-average method in its process costing system.

Conversion costs are added equally throughout the production process. Operating data for the Lubricating Department for the month of October appear below:

Units 6,600

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

Percentage complete 60%

40,100

37,100

9,600

80%

What were the equivalent units of production for conversion costs in the Lubricating Department for October?

A. 43,100 units.

B. 37,100 units.

C. 44,780 units.

D. 47,780 units.

37,100 + 9,600 *.80 = 44,780 units.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Easy Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Topic: 06-12 Weighted-Average Method

6-22 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

27. Black Company uses the weighted-average method in its process costing system. The company's ending work-in-process inventory consists of 5,000 units, 80% complete with respect to materials and 50% complete with respect to labour and overhead. If the total dollar value of the inventory is $60,000 and the cost per equivalent unit for labour and overhead is $8.00, what is the cost per equivalent unit for materials?

A. $5.00.

B. $10.00.

C. $8.00.

D. $4.00.

Value for Labour and Overhead in Inventory = 5,000 *.5 * $8 = $20,000 Material cost in inventory = $60,000 - $20,000 = $40,000 Material Cost/EU = $40,000/(5,000 *.8) = $10.

Blooms: Analyze CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Hard Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Learning Objective: 06-03 Compute the cost per equivalent unit using the weighted-average method.

Learning Objective: 06-04 Assign cost units using the weighted-average method.

Learning Objective: 06-05 Prepare a cost reconciliation report accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the weighted-average method.

Topic: 06-12 Weighted-Average Method Topic: 06-14 Cost per Equivalent Unit—Weighted-Average Method Topic: 06-16 Summary of Tropic Breeze Fans Costing

6-23 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

28. Department 2 is the second of three sequential processes. All materials are added at the beginning of processing in Department 2. During October, Department 2 reported the following data:

Number of units Units started Completed and transferred Work in process, October 1 Work in process, October 31

Costs for October Work in process, October 1 Added during the month

60,000 50,000 26,000 36,000

Conversion costs percentage complete

60% 20%

Transferred In $45,000

Materials $25,000

Conversion Costs $54,000

81,000

115,000

315,000

6-24 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

The company uses the weighted-average method in its process costing system. To the nearest cent, what is the cost per equivalent unit on the production report for conversion costs?

A. $5.51.

B. $6.45.

C. $6.30.

D. $7.38.

(54,000 + 315,000)/(50,000 + 36,000 *.2) = $6.45.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Learning Objective: 06-03 Compute the cost per equivalent unit using the weighted-average method.

Learning Objective: 06-04 Assign cost units using the weighted-average method.

Learning Objective: 06-05 Prepare a cost reconciliation report accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the weighted-average method.

Topic: 06-12 Weighted-Average Method Topic: 06-14 Cost per Equivalent Unit—Weighted-Average Method Topic: 06-16 Summary of Tropic Breeze Fans Costing

6-25 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

29. Overland, Inc., uses the weighted-average method in its process costing system. The company's work-in-process inventory on April 30 consists of 25,000 units. The units in the ending inventory are 100% complete with respect to materials and 75% complete with respect to conversion costs. If the cost per equivalent unit is $3.00 for materials and $5.50 for conversion costs, what is the total cost in the April 30 work-in-process inventory?

A. $212,500.

B. $178,125.

C. $159,375.

D. $109,375.

25,000 * $3 + 25,000 *.75 * $5.50 = $178,125.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Learning Objective: 06-03 Compute the cost per equivalent unit using the weighted-average method.

Learning Objective: 06-04 Assign cost units using the weighted-average method.

Learning Objective: 06-05 Prepare a cost reconciliation report accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the weighted-average method.

Topic: 06-12 Weighted-Average Method Topic: 06-14 Cost per Equivalent Unit—Weighted-Average Method Topic: 06-16 Summary of Tropic Breeze Fans Costing

30. Valley Manufacturing Company's beginning work-in-process inventory consisted of 10,000 units, 100% complete with respect to materials cost and 40% complete with respect to conversion costs. The total cost in the beginning inventory was $30,000. During the month, 50,000 units were transferred out. The equivalent unit cost was computed to be $2.00 for materials and $3.70 for conversion costs under the weighted-average method. Given this information, what was the total cost of the units completed and transferred out?

A. $255,000.

B. $270,000.

C. $240,000.

D. $285,000.

50,000 * ($2 + $3.70) = $285,000.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Easy Learning Objective: 06-04 Assign cost units using the weighted-average method.

Learning Objective: 06-05 Prepare a cost reconciliation report accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the weighted-average method.

Topic: 06-12 Weighted-Average Method Topic: 06-16 Summary of Tropic Breeze Fans Costing

6-26 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

31. Ogden Company uses the weighted-average method in its process costing system.

Information for the month of January concerning Department A, the first stage of the company's production process, follows:

Work in process, beginning Current added during January Equivalent units of production Cost per equivalent unit

Materials $8,000 $40,000

Conversion costs $6,000 $32,000

100,000

95,000

$0.48

$0.40

Units completed and transferred to the next department Work in process, ending

90,000 units 10,000 units

Materials are added at the beginning of the process. The ending work in process is 50% complete with respect to conversion costs. What cost would be recorded for the ending workin-process inventory?

A. $6,800.

B. $8,800.

C. $3,400.

D. $4,400.

10,000 * $0.48 + 10,000 *.5 * $0.40 = $6,800.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-04 Assign cost units using the weighted-average method.

Learning Objective: 06-05 Prepare a cost reconciliation report accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the weighted-average method.

Topic: 06-12 Weighted-Average Method Topic: 06-16 Summary of Tropic Breeze Fans Costing

6-27 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

32. Clover Sweet Company uses the weighted-average method in its process costing system.

Information for the month of February concerning Department A, the first stage of the company's production process, follows:

Work in process, beginning Current added during January Equivalent units of production Cost per equivalent unit

Materials $7,000 $45,000

Conversion costs $5,000 $37,000

105,000

100,000

$0.58

$0.5

Units completed and transferred to the next department Work in process, ending

95,000 units 15,000 units

Materials are added at the beginning of the process. The ending work in process is 60% complete with respect to conversion costs. What cost would be recorded for the ending workin-process inventory?

A. $13,500 B. $13,200 C. $14,300 D. $12,300 15,000 * 0.58 + 15,000 * 0.6 * 0.5 = $13,200.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-04 Assign cost units using the weighted-average method.

Learning Objective: 06-05 Prepare a cost reconciliation report accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the weighted-average method.

Topic: 06-12 Weighted-Average Method Topic: 06-16 Summary of Tropic Breeze Fans Costing

6-28 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

33. Trapp Company uses the weighted-average method in its process costing system. The beginning work-in-process inventory in its Painting Department consisted of 3,000 units that were 70% complete with respect to materials and 60% complete with respect to conversion costs. The cost of the beginning work-in-process inventory in the department was recorded as $10,000. During the period, 9,000 units were completed and transferred on to the next department. The costs per equivalent unit for the period were $2.00 for material and $3.00 for conversion costs. What was the cost of units transferred out during the month?

A. $39,600.

B. $45,000.

C. $45,400.

D. $35,400.

9,000 * ($2 + $3) = $45,000.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Easy Learning Objective: 06-04 Assign cost units using the weighted-average method.

Learning Objective: 06-05 Prepare a cost reconciliation report accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the weighted-average method.

Topic: 06-12 Weighted-Average Method Topic: 06-16 Summary of Tropic Breeze Fans Costing

6-29 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

34. Strap Company uses the weighted-average method in its process costing system. The company has only one processing department. The ending work-in-process inventory consists of 10,000 units, 60% complete with respect to materials. The total dollar value of this inventory is $38,000. The costs per equivalent unit are $5.00 for materials and $4.00 for conversion costs for the period. With respect to conversion costs, what is the ending work-inprocess inventory?

A. 10% complete.

B. 20% complete.

C. 38% complete.

D. 30% complete.

EI cost of material; 10,000 *.6 * $5 = $30,000 (38,000 - 30,000)/$4/EU = 2,000 EU for conversion costs therefore 2,000/10,000 = 20% complete.

Blooms: Analyze CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Hard Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Learning Objective: 06-04 Assign cost units using the weighted-average method.

Learning Objective: 06-05 Prepare a cost reconciliation report accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the weighted-average method.

Topic: 06-12 Weighted-Average Method Topic: 06-16 Summary of Tropic Breeze Fans Costing

6-30 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

35. Rariton Company uses the weighted-average method in its process costing system. The Moulding Department is the second department in its production process. The data below summarize the department's operations in January:

Units 4,800

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

Percentage complete 60%

78,000

80,900

1,900

40%

The Moulding Department's production report indicates that the cost per equivalent unit for conversion cost for January was $5.37.

How much conversion cost was assigned to the ending work-in-process inventory in the Moulding Department for January?

A. $4,081.20.

B. $10,203.00.

C. $10,310.40.

D. $6,121.80.

1,900 *.4 * $5.37 = $4,081.20.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Easy Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Learning Objective: 06-04 Assign cost units using the weighted-average method.

Learning Objective: 06-05 Prepare a cost reconciliation report accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the weighted-average method.

Topic: 06-12 Weighted-Average Method Topic: 06-16 Summary of Tropic Breeze Fans Costing

6-31 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

36. Wire One Company uses the weighted-average method in its process costing system. The Coating Department is the second department in its production process. The data below summarize the department's operations in February:

Units 3,800

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

Percentage complete 70%

52,000

53,000

2,800

30%

The Coating Department's production report indicates that the cost per equivalent unit for conversion cost for January was $4.37.

How much conversion cost was assigned to the ending work-in-process inventory in the Coating Department for February?

A. $3,589.20 B. $3670.80 C. $5,081.20 D. $6121.80 2,800 *.3 * $4.37 = $3670.80.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Easy Learning Objective: 06-02 Compute the equivalent units of production using the weighted-average method.

Learning Objective: 06-04 Assign cost units using the weighted-average method.

Learning Objective: 06-05 Prepare a cost reconciliation report accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the weighted-average method.

Topic: 06-12 Weighted-Average Method Topic: 06-16 Summary of Tropic Breeze Fans Costing

6-32 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

37. (Appendix 6A) Ebis Company uses the FIFO method in its process costing system. The first processing department, the Welding Department, started the month with 13,000 units in its beginning work-in-process inventory; 10% of the units were complete with respect to conversion costs. The conversion cost in this beginning work-in-process inventory was $12,610. An additional 89,000 units were started into production during the month. There were 22,000 units in the ending work-in-process inventory of the Welding Department; 30% of these units were complete with respect to conversion costs. A total of $806,085 in conversion costs were incurred in the department during the month.

What would be the cost per equivalent unit for conversion costs for the month on the department's production report? (Round off to three decimal places.)

A. $8.026.

B. $9.700.

C. $9.057.

D. $9.450.

Transferred out = 13,000 + 89,000 - 22,000 = 80,000 units of which 13,000 are from Beginning inventory. $806,085/(13,000 *.9 + 67,000 * 1 + 22,000 *.3) = $9.45.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Hard Learning Objective: 06-06 Compute the equivalent units of production using the FIFO method.

Topic: 06-20 Equivalent Units—FIFO Method Topic: 06-21 Comparison of Equivalent Units of Production under the Weighted-Average and FIFO Methods

6-33 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

38. (Appendix 6A) Marten Company uses the FIFO method in its process costing system.

Operating data for the Casting Department for the month of September appear below:

Units 19,000

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

Percentage complete 80%

74,000

17,000

90%

According to the company's records, the conversion cost in beginning work-in-process inventory was $83,600 at the beginning of September. Additional conversion costs of $427,682 were incurred in the department during the month.

What would be the cost per equivalent unit for conversion costs for September on the Casting Department's production report? (Round off to three decimal places.)

A. $5.498.

B. $5.779.

C. $5.620.

D. $5.500. $427,682/(19,000 *.2 + 57,000 * 1 + 17,000 *.9) = $5.62.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-06 Compute the equivalent units of production using the FIFO method.

Topic: 06-20 Equivalent Units—FIFO Method Topic: 06-21 Comparison of Equivalent Units of Production under the Weighted-Average and FIFO Methods

6-34 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

39. (Appendix 6A) Herston Company uses the FIFO method in its process costing system.

The beginning work-in-process inventory in a particular department consisted of 6,000 units, two-thirds complete with respect to conversion costs. During the month, 42,000 units were started and 40,000 units were completed and transferred out of the department. The company had 40,000 equivalent units of production for conversion costs. Which of the following represents the ending work-in-process inventory in the department? (Do not round intermediate calculations.)

A. 8,000 units, 25% complete with respect to conversion costs.

B. 0 units.

C. 8,000 units, 50% complete with respect to conversion costs.

D. 4,000 units, 100% complete with respect to conversion costs.

Total EU was 40,000. From transferred out the EU = 6,000 * 1/3 + 34,000 = 36,000 EU Therefore, 40,000 - 36,000 = 4,000 EU in EI. EI consists of 6,000 + 42,000 - 40,000 = 8,000 units 50% complete (4,000/8,000).

Blooms: Analyze CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Hard Learning Objective: 06-06 Compute the equivalent units of production using the FIFO method.

Topic: 06-20 Equivalent Units—FIFO Method

6-35 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

40. (Appendix 6A) Carson Company uses the FIFO method in its process costing system. The Assembly Department started the month with 6,000 units in its beginning work-in-process inventory; 20% of the units were complete with respect to conversion costs. An additional 74,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. Of the 8,000 units in the ending work-in-process inventory of the Assembly Department, 60% were complete with respect to conversion costs.

What were the equivalent units of production for conversion costs in the Assembly Department for the month?

A. 72,000 units.

B. 75,600 units.

C. 76,000 units.

D. 76,800 units.

6,000 + 74,000 - 8,000 = 72,000 transferred out.

EU = 6,000 *.8 + 66,000 * 1 + 8,000 *.6 = 75,600 units.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-06 Compute the equivalent units of production using the FIFO method.

Topic: 06-20 Equivalent Units—FIFO Method

41. (Appendix 6A) Karmen Company uses the FIFO method in its process costing system.

Operating data for the Enamelling Department for the month of May appear below:

Units 2,400

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

Percentage complete 40%

87,000

8,600

60%

6-36 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

What were the equivalent units of production for conversion costs in the Enamelling Department for May? A. 85,000 units.

B. 85,960 units.

C. 93,200 units.

D. 80,800 units.

Trans. Out = 2,400 + 87,000 - 8,600 = 80,800 units of which 2,400 come from BI. EU = 2,400 *.6 + 78,400 * 1 + 8,600 *.6 = 85,000 units.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-06 Compute the equivalent units of production using the FIFO method.

Topic: 06-20 Equivalent Units—FIFO Method

6-37 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

42. (Appendix 6A) Creer Company uses the FIFO method in its process costing system.

Department A had 20,000 units in process at the beginning of January, and 40% were complete with respect to conversion costs. All materials are added at the beginning of the process in Department A. The January 1 work-in-process inventory in Department A contained $10,000 in materials cost and $11,600 in conversion cost. During January, materials costs were $0.50 per equivalent unit, and conversion costs were $1.50 per equivalent unit. All of the units in the beginning work-in-process inventory were completed and transferred out during the month. What was the total cost attached to these units when they were transferred to the next department?

A. $39,600.

B. $33,600.

C. $45,600.

D. $37,600.

BI = $10,000 + 11,600 = $21,600 Cost to complete these units = 20,000 *.6 * $1.50 = $18,000 for a total of $39,600.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-06 Compute the equivalent units of production using the FIFO method.

Learning Objective: 06-08 Prepare a cost reconciliation report for accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the FIFO method.

Topic: 06-20 Equivalent Units—FIFO Method Topic: 06-21 Comparison of Equivalent Units of Production under the Weighted-Average and FIFO Methods Topic: 06-23 A Comparison of Costing Methods

6-38 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

43. (Appendix 6A) Mukluk Company uses the FIFO method in its process costing system.

The conversion cost for the month of April is $5.00 per equivalent unit, and the materials cost is $2.90 per equivalent unit. At the beginning of the month, 1,000 units were in process, and 100% were complete with respect to materials and 30% were complete with respect to conversion, with a total cost at that point of $2,400. If these units are fully complete by the end of the month, what will be their total cost?

A. $3,500.

B. $3,900.

C. $5,900.

D. $8,000. $2,400 + 1,000 *.7 * $5 = $5,900.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-06 Compute the equivalent units of production using the FIFO method.

Learning Objective: 06-08 Prepare a cost reconciliation report for accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the FIFO method.

Topic: 06-01 Costing the "Quicker-Picker-Upper" Topic: 06-02 Comparison of Job-Order and Process Costing Topic: 06-03 Process Cost Flows

6-39 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

44. (Appendix 6A) Index Company uses the FIFO method in its process costing system. The first processing department, the Forming Department, started the month with 17,000 units in its beginning work-in-process inventory; the units were 10% complete with respect to conversion costs. The conversion cost in this beginning work-in-process inventory was $9,010. An additional 76,000 units were started into production during the month, and 83,000 units were completed and transferred to the next processing department. There were 10,000 units in the ending work-in-process inventory of the Forming Department; 70% of the units were complete with respect to conversion costs. A total of $445,915 in conversion costs were incurred in the department during the month.

What would be the cost per equivalent unit for conversion costs for the month on the Forming Department's production report? (Round off to three decimal places.)

A. $5.050.

B. $5.300.

C. $5.867.

D. $5.150. $445,915/(17,000 *.9 + 66,000 * 1 + 10,000 *.7) = $5.05.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Hard Learning Objective: 06-06 Compute the equivalent units of production using the FIFO method.

Topic: 06-20 Equivalent Units—FIFO Method Topic: 06-21 Comparison of Equivalent Units of Production under the Weighted-Average and FIFO Methods

6-40 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

45. (Appendix 6A) Qart Company uses the FIFO method in its process costing system.

Operating data for the Cutting Department for the month of March appear below:

Units 4,500

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

Percentage complete 20%

74,000

74,500

4,000

60%

According to the company's records, the conversion cost in beginning work-in-process inventory was $1,656 at the beginning of March. Additional conversion costs of $129,960 were incurred in the department during the month.

What would be the cost per equivalent unit for conversion costs for March on the Cutting Department's production report? (Round off to three decimal places.)

A. $1.710.

B. $1.677.

C. $1.756.

D. $1.840.

4,500 *.8 + 70,000 * 1 + 4,000 *.6 = 76,000 EU. Cost/EU = $129,960/76,000 = $1.71.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-06 Compute the equivalent units of production using the FIFO method.

Topic: 06-20 Equivalent Units—FIFO Method Topic: 06-21 Comparison of Equivalent Units of Production under the Weighted-Average and FIFO Methods

6-41 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 06 - Systems Design: Process Costing

46. (Appendix 6A) Roger Company uses the FIFO method in its process costing system. The following data are taken from the accounting records of a particular department for June: Beginning work in process inventory:

Cost Units Percentage completion: Materials Conversion

$17,500 20,000 units 100% 60%

Units completed and transferred out: 75,000 units Cost per equivalent unit: Material: $1.75 Conversion: $0.50 What is the cost of the 75,000 units transferred out of the department during June?

A. $151,250.

B. $145,250.

C. $131,500.

D. $168,750.

Transferred out 20,000 from BI *.4 = 8,000 EU, units started and completed 55,000.

Cost of units transferred out then = $17,500 + 8,000 * $0.50 + 55,000 * $2.25 = $145,250.

Blooms: Analyze CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-06 Compute the equivalent units of production using the FIFO method.

Learning Objective: 06-08 Prepare a cost reconciliation report for accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the FIFO method.

Topic: 06-20 Equivalent Units—FIFO Method Topic: 06-21 Comparison of Equivalent Units of Production under the Weighted-Average and FIFO Methods Topic: 06-23 A Comparison of Costing Methods

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Chapter 06 - Systems Design: Process Costing

47. (Appendix 6A) Winkle Company uses the FIFO method in its process costing system. At the beginning of March, the work-in-process inventory in the Blending Processing Center consisted of 5,000 units, 90% complete with respect to conversion costs. At the end of the month, the work-in-process inventory consisted of 2,000 units that were 60% complete with respect to conversion costs. If 10,000 units were transferred to the next processing center during the month, what would be the equivalent units of production for conversion costs?

A. 6,700 units.

B. 11,700 units.

C. 10,300 units.

D. 13,000 units.

5,000 *.1 + 5,000 * 1 + 2,000 *.6 = 6,700 units.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Medium Learning Objective: 06-06 Compute the equivalent units of production using the FIFO method.

Topic: 06-20 Equivalent Units—FIFO Method Topic: 06-21 Comparison of Equivalent Units of Production under the Weighted-Average and FIFO Methods

48. (Appendix 6A) Winder Company uses the FIFO method in its process costing system.

Department One is the first stage of the company's production process. The following information pertains to conversion costs for April for Department One:

Units Work in process, beginning (40% complete) Started in April Completed in April and transferred to Department Two Work in process, ending (60% complete)

40,000 320,000 340,000 20,000

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Chapter 06 - Systems Design: Process Costing

What are the equivalent units of production for conversion costs?

A. 320,000 units.

B. 336,000 units.

C. 352,000 units.

D. 360,000 units.

40,000 *.6 + 300,000 * 1 + 20,000 *.6 = 336,000 units.

Blooms: Apply CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.

Difficulty: Easy Learning Objective: 06-06 Compute the equivalent units of production using the FIFO method.

Learning Objective: 06-08 Prepare a cost reconciliation report for accounting for the costs transferred out and the costs in work in process inventory at the end of the period using the FIFO method.

Topic: 06-20 Equivalent Units—FIFO Method Topic: 06-21 Comparison of Equivalent Units of Production under the Weighted-Average and FIFO Methods Topic: 06-23 A Comparison of Costing Methods

6-44 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.