Deck 4: Process Costing and Hybrid Product-Costing Systems

Question 1

Which of the following choice of rows correctly depicts the companies that would likely use a process-costing system? $\begin{array} { l c c c } \text { Row } &\underline{ \text { Custom } } && \underline{ \text { Soft Drink Bottler } } \\&\underline{ \text { Furniture } } & \text { Chemical Producer } & \\& \underline { \text { Manufacturer } } \\1 & \text { Yes } & \text { Yes } & \text { Yes } \\2 & \text { Yes } & \text { No } & \text { No } \\3 & \text { No } & \text { Yes } & \text { No } \\4 & \text { No } & \text { Yes } & \text { Yes } \\5 & \text { No } & \text { No } & \text { Yes }\end{array}$

A)1
B)2
C)3
D)4
E)5

Answer 1

4

Question 2

Cake Corporation had 8,000 units of work in process on October 1. During October, 20,000 units were completed and as of October 30, 6,000 units remained in production. How many units were started during October?

A)14,000.
B)18,000.
C)20,000.
D)22,000.
E)34,000.

Answer 2

B

Question 3

Cooper Incorporation, which uses a process-costing system, had a balance in its Work-in-Process account of $81,000 on January 1. The account was charged with direct materials, direct labour, and manufacturing overhead of $515,000 throughout the year. If a review of the accounting records determined that $80,000 of goods were still in production at year-end, Cooper should make a journal entry on December 31 that includes:

A)a debit to Cost of Goods Sold for $516,000.
B)a credit to Finished-Goods Inventory for $516,000.
C)a credit to Work-in-Process Inventory for $516,000.
D)a debit to Finished-Goods Inventory for $80,000.
E)a credit to Work-in-Process Inventory for $80,000.

Answer 3

C

Question 4

Companies that use a process-cost accounting system would:

A)establish a separate Work-in-Process Inventory account for each manufacturing department.
B)establish a separate Finished-Goods Inventory account for each manufacturing department.
C)pass completed production directly to Cost of Goods Sold.
D)charge goods produced with actual overhead amounts rather than applied overhead amounts.
E)eliminate the need for the Finished-Goods Inventory account.

Question 5

Unit costs in a process-costing system are derived by using:

A)in-process units.
B)completed units.
C)physical units.
D)equivalent units.
E)a measure of activity other than those listed above.

Question 6

Texas Tees Company uses a process-cost accounting system. The company adds direct materials at the start of its production process; conversion cost, on the other hand, is incurred evenly throughout manufacturing. The firm has no beginning work-in-process inventory; its ending work in process is 30% complete. Which of the following sets of percentages would be used to calculate the correct number of equivalent units in the ending work-in-process inventory?

A)Materials, 30%; conversion cost, 30%.
B)Materials, 30%; conversion cost, 100%.
C)Materials, 100%; conversion cost, 30%.
D)Materials, 100%; conversion cost, 70%.
E)Materials, 100%; conversion cost, 100%.

Question 7

Which of the following manufacturers would most likely not use a process-cost accounting system?

A)A producer of computer monitors.
B)A paint manufacturer.
C)A producer of frozen orange juice.
D)A builder of customized yachts.
E)A lumber mill.

Question 8

Extra Inc. had 9,000 units of work in process on March 1. During March, 30,600 units were started and as of March 31, 7,500 units remained in production. How many units were completed during March?

A)16,500.
B)29,100.
C)32,100.
D)39,600.
E)47,100.

Question 9

In a process-costing system, manufacturing costs are accumulated by:

A)batch.
B)batch and time period.
C)department.
D)department and job order.
E)department or process, and time period.

Question 10

Scully Products Ltd., which uses a process-costing system, transfers completed production from Department no. 1 to Department no. 2 for further work. Which of the following best describes the account that would be debited to record this transfer?

A)Cost of Goods Sold.
B)Finished-Goods Inventory: Department no. 1.
C)Finished-Goods Inventory: Department no. 2.
D)Work-in-Process Inventory: Department no. 1.
E)Work-in-Process Inventory: Department no. 2.

Question 11

Draper Incorporated., had 8,000 units of work in process on November 1 that were 60% complete. During November, 15,000 units were completed and as of November 30, 9,000 units that were 40% complete remained in production. How many units were started during November?

A)8,400.
B)13,800.
C)16,000.
D)16,200.
E)32,000.

Question 12

Which of the following statements is false?

A)In job-order costing, costs are accumulated by job order.
B)In process costing, costs are accumulated by department.
C)In process costing, the cost per unit in a department is found by averaging the period's manufacturing costs over the production activity in the department.
D)In process costing, the total cost of each unit is found by dividing the total costs of the batch by the number of units in the batch.
E)In job-order costing, the unit cost is found by dividing the job's total cost by the job's total units.

Question 13

Anderson Corporation, which uses a process-costing system, transfers completed production from Department A to Department B for further work. Which of the following best describes the account that would be credited to record this transfer?

A) Cost of Goods Transferred.
B)Finished-Goods Inventory: Department no. A.
C)Finished-Goods Inventory: Department no. B.
D) Work-in-Process Inventory: Department no. A.
E) Work-in-Process Inventory: Department no. B.

Question 14

Daphne's Desktops Inc., which uses a process-costing system, passes completed production from Department A to Department B for further manufacturing. The journal entry to record completed production in Department A requires:

A) a debit to Work-in-Process Inventory and a credit to Finished-Goods Inventory.
B) a debit to Finished-Goods Inventory and a credit to Work-in-Process Inventory.
C) a debit to Finished-Goods Inventory and a credit to Work-in-Process Inventory: Department A.
D) a debit to Work-in-Process Inventory: Department A and a credit to Work-in-Process Inventory: Department B.
E) a debit to Work-in-Process Inventory: Department B and a credit to Work-in-Process Inventory: Department A.

Question 15

Which of the following choice of rows correctly shows how costs are accumulated in a process-costing system? $\begin{array}{lccc}\text { Row } & \underline { \text { By Batch } } && \underline { \text { By Process or } } \\&& \text { By Time Period } & \underline {\text { Department }} \\1 & \text { Yes } & \text { Yes } & \text { Yes } \\2 & \text { Yes } & \text { Yes } & \text { No } \\3 & \text { No } & \text { Yes } & \text { No } \\4 & \text { No } & \text { Yes } & \text { Yes } \\5 & \text { No } & \text { No } & \text { Yes }\end{array}$

A)1
B)2
C)3
D)4
E)5

Question 16

Process costing would be used in all of the following industries except:

A)petroleum refining.
B)chemicals.
C)truck tire manufacturing.
D)wood pulp production.
E)automobile repair.

Question 17

Process costing is used to account for:

A)large numbers of identical products that are produced in a continuous manufacturing environment.
B)small number of products that are produced in batches.
C)raw materials that are converted directly to finished goods.
D)finished goods that are refined and processed further.
E)large number of products that are produced in a non-repetitive process.

Question 18

Water Canada Inc. uses a process-cost system for its single product. Material A is added at the beginning of the process; in contrast, material B is added when the units are 50% complete. The firm's ending work-in-process inventory consists of 6,000 units that are 90% complete with respect to conversion activity. Which of the following correctly expresses the equivalent units of production with respect to materials A and B in the ending work-in-process inventory?

A)A, 4,800; B, 0.
B)A, 4,800; B, 4,800.
C)A, 6,000; B, 0.
D)A, 6,000; B, 4,800.
E)A, 6,000; B, 6,000.

Question 19

Dome Company, which uses a process-costing system, began operations on January 1 of the current year. The company incurred conversion cost evenly throughout manufacturing. If Dome started work on 3,000 units during the period and these units were 70% of the way through manufacturing, it would be correct to say that the company has:

A)3,000 physical units in production.
B)2,100 completed units.
C)900 in-process units.
D)900 equivalent units of production.
E)3,000 equivalent units of production.

Question 20

Wanda Window Panes Inc. uses a process-costing system for its single product, which is manufactured from Material X. Material X is introduced to the production at the beginning of the manufacturing process whereas conversion activities occur uniformly throughout the process. The company started and completed 40,000 units during the period, and had an ending work-in-process inventory amounting to 8,000 units, 20% complete with respect to conversion activity. Which of the following choices correctly expresses the total equivalent units of production for Material X and conversion activities respectively?

A)46,000, 41,600
B)46,000, 46,000
C)48,000, 40,000
D)48,000, 41,600
E)48,000, 46,000

Question 21

Bing Manufacturing uses a weighted-average process-costing system. All materials are introduced at the start of manufacturing, and conversion costs are incurred evenly throughout the process. The company's beginning and ending work-in-process inventories totaled 30,000 units and 35,000 units, respectively, with the latter units being 40% complete at the end of the period. Bing started 30,000 units into production and completed 25,000 units. Manufacturing costs were as follows: Beginning work in process: Materials, $100,000; conversion cost, $200,000
Current work in process: Materials, $160,000; conversion cost, $450,000.
Bing's equivalent-unit cost for conversion cost is:

A)$8.00.
B)$10.83.
C)$11.54.
D)$16.67.
E)$26.00.

Question 22

Maybe Garments Inc. manufactures a variety of fabrics. All materials are introduced at the beginning of production; conversion costs are incurred evenly throughout the manufacturing process. The Weaving Department had 1,000 units of work in process on November 1 that were 60% complete as to conversion costs. During November, 11,000 units were completed and on November 30, 5,000 units remained in production, 20% complete with respect to conversion costs. Calculate the equivalent units of direct materials for November total.

A)11,000.
B)16,000.
C)16,600.
D)17,000.
E)17,600.

Question 23

Windsor Corporation, which adds materials at the beginning of production, uses a weighted-average process costing system. Consider the data that follow: $\begin{array} { | l | c | r | r | } \hline & \text { Number of Units } & { \text { Cost of Materials } } \\\hline \text { Beginning work in process } & 40,000 & \$ 80,600 & \\\hline \text { Started in June } & 60,000 & 124,400 & \\\hline \text { Production completed } & 75,000 & & \\\hline \text { Ending work in process } & 25,000 & & \\\hline\end{array}$ The company's cost per equivalent unit for materials is:

A)$1.24.
B)$1.66.
C)$1.67.
D)$2.05.
E)$8.20.

Question 24

Maybe Garments Inc. manufactures a variety of fabrics. All materials are introduced at the beginning of production; conversion costs are incurred evenly throughout the manufacturing process. The Weaving Department had 1,000 units of work in process on November 1 that were 60% complete as to conversion costs. During November, 11,000 units were completed and on November 30, 5,000 units remained in production, 20% complete with respect to conversion costs. The equivalent units of conversion for November

A)11,000.
B)12,000.
C)12,600.
D)15,600.
E)16,000.

Question 25

St. Lawrence River Chemical manufactures a product called Spec. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 80% complete with respect to conversion; the ending work-in-process inventory is 30% complete. The following data pertain to March: $\begin{array}{ll}&\underline {\text { Units } }\\\text { Work in process, March 1 } & 20,000 \\\text { Units started during March } & 70,000 \\\text { Units completed and transferred out } & 73,000 \\\text { Work in process, March 31 } & 17,000\end{array}$


$\begin{array}{lcccccc}&&&& \text { Direct } & &\text { Conversion } \\&&\text { Total } && \text { Materials }& & \text { Costs } \\\hline \text { Costs: }\\\text { Work in process, March 1 } & \$ & 50,283 & \$ & 23,400 & \$ &26,883 \\\text { Costs incurred during March } & & 234,900 & & 72,000 && 162,900 \\\hline \text { Totals } & \$ & 285,183 & \$ & 95,400 & \$ &189,783 \\\hline\end{array}$ Using the weighted-average method of process costing, the cost per unit of conversion activity is:

A)$1.79.
B)$2.11.
C)$2.13.
D)$2.43.
E)$2.60.

Question 26

Bing Manufacturing uses a weighted-average process-costing system. All materials are introduced at the start of manufacturing, and conversion costs are incurred evenly throughout the process. The company's beginning and ending work-in-process inventories totaled 30,000 units and 35,000 units, respectively, with the latter units being 40% complete at the end of the period. Bing started 30,000 units into production and completed 25,000 units. Manufacturing costs were as follows: Beginning work in process: Materials, $100,000; conversion cost, $200,000
Current work in process: Materials, $160,000; conversion cost, $450,000.
Bing's equivalent-unit cost for materials is:

A)$2.67.
B)$4.00.
C)$4.33.
D)$7.20
E)$10.40.

Question 27

First Corporation adds all materials at the beginning of production and incurs conversion costs evenly throughout the manufacturing process. The company completed 70,000 units during the year and had 12,000 units in process at December 31, 20% complete with respect to conversion cost. Calculate the equivalent units of direct materials and conversion for the year.

A)Materials, 70,000; conversion, 70,000.
B)Materials, 70,000; conversion, 2,400.
C)Materials, 72,400; conversion, 72,400.
D)Materials, 82,000; conversion, 72,400.
E)Materials, 82,000; conversion, 82,000.

Question 28

Equivalent-unit calculations are necessary to allocate manufacturing costs between:

A)units completed and ending work in process.
B)beginning work in process and units completed.
C)units sold and ending work in process.
D)cost of goods manufactured and beginning work in process.
E)cost of goods manufactured and cost of goods sold.

Question 29

Gorski ltd. began operations on January 1 of the current year. The company uses a process-costing system, and conversion costs are incurred evenly throughout the manufacturing process. By January 31, the firm had completed 56,000 units. Which of the following statements could be true about the ending work-in-process inventory if equivalent units for conversion cost totalled 59,000 units?

A)There is no ending work-in-process inventory.
B)The ending work-in-process inventory totalled of 3,000 physical units.
C)The ending work-in-process inventory of 10,000 physical units was 30% complete.
D)The ending work-in-process inventory of 20,000 physical units was 85% complete.
E)The ending work-in-process inventory of 30,000 physical units was 90% complete.

Question 30

St. Lawrence River Chemical manufactures a product called Spec. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 80% complete with respect to conversion; the ending work-in-process inventory is 30% complete. The following data pertain to March: $\begin{array}{ll}&\underline {\text { Units } }\\\text { Work in process, March 1 } & 20,000 \\\text { Units started during March } & 70,000 \\\text { Units completed and transferred out } & 73,000 \\\text { Work in process, March 31 } & 17,000\end{array}$


$\begin{array}{lcccccc}&&&& \text { Direct } & &\text { Conversion } \\&&\text { Total } && \text { Materials }& & \text { Costs } \\\hline \text { Costs: }\\\text { Work in process, March 1 } & \$ & 50,283 & \$ & 23,400 & \$ &26,883 \\\text { Costs incurred during March } & & 234,900 & & 72,000 && 162,900 \\\hline \text { Totals } & \$ & 285,183 & \$ & 95,400 & \$ &189,783 \\\hline\end{array}$ Using the weighted-average method of process costing, the equivalent units of direct materials total:

A)73,000.
B)78,100.
C)89,000.
D)90,000.
E)106,000.

Question 31

Gilbert adds materials at the beginning of production and incurs conversion costs uniformly throughout the manufacturing process. Consider the data that follow. $\begin{array} { | l | c | } \hline & \text { Units } \\\hline \text { Beginning work in process } & 20,000 \\\hline \text { Started in August } & 60,000 \\\hline \text { Production completed } & 55,000 \\\hline \text { Ending work in process, } 40 ^ { \circ } \% \text { complete } & 25,000 \\\hline\end{array}$ Conversion cost in the beginning work-in-process inventory totaled $120,000, and August conversion costs totaled $270,000. Assuming use of the weighted-average method, which of the following choices correctly depicts the number of equivalent units for materials and the conversion cost per equivalent unit? $\begin{array} { | l | c | c | } \hline & \begin{array} { c } \text { Equivalent } \\\text { Units: } \\\underline {\text { Materials }}\end{array} & \begin{array} { c } \text { Conversion Cost } \\\underline {\text { Per Equivalent Unit }}\end{array} \\\hline 1 & 55.000 & \$ 4.91 \\\hline 2 & 65,000 & \$ 4.88 \\\hline 3 & 65.000 & \$ 6.00 \\\hline 4 & 80.000 & \$ 4.88 \\\hline 5 & 80.000 & \$ 6.00 \\\hline\end{array}$

A)1
B)2
C)3
D)4
E)5

Question 32

Which of the following is (are) needed to calculate the total cost of the ending work-in-process inventory under the weighted-average process-costing method? $\begin{array}{|l|c|c|}\hline & \underline { \text { Unit } } & \underline { \text { Equivalent Units }} \\& \underline { \text { Cost }} \\\hline 1 & \text { Yes } & \text { Yes } \\\hline 2 & \text { Yes } & \text { No } \\\hline 3 & \text { No } & \text { Yes } \\\hline 4 & \text { No } & \text { No } \\\hline 5 & \text { Yes } & \text { Yes, but only in } \\&&\text { specialized cases }\\\hline\end{array}$

A)1
B)2
C)3
D)4
E)5

Question 33

When calculating unit costs under the weighted-average process costing method, the unit cost is based on:

A)only the current period's manufacturing costs.
B)only costs incurred in the period's beginning work-in-process inventory.
C)a summation of the cost of work in process inventory plus the cost incurred during the current period divided by total equivalent units.
D)only costs incurred in previous accounting periods.
E)a summation of the cost of work in process inventory plus the cost to be incurred in the upcoming period divided by total equivalent units.

Question 34

When computing the conversion cost per equivalent unit under the weighted-average method of process costing, all of the following information would be needed except:

A)the number of units completed during the current accounting period.
B)the conversion work performed during the current period on the ending work-in-process inventory.
C)the conversion work performed during the current period on the beginning work-in-process inventory.
D)the conversion cost incurred in the beginning work-in-process inventory.
E)the conversion cost incurred during the current accounting period.

Question 35

St. Lawrence River Chemical manufactures a product called Spec. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 80% complete with respect to conversion; the ending work-in-process inventory is 30% complete. The following data pertain to March: $\begin{array}{ll}&\underline {\text { Units } }\\\text { Work in process, March 1 } & 20,000 \\\text { Units started during March } & 70,000 \\\text { Units completed and transferred out } & 73,000 \\\text { Work in process, March 31 } & 17,000\end{array}$


$\begin{array}{lcccccc}&&&& \text { Direct } & &\text { Conversion } \\&&\text { Total } && \text { Materials }& & \text { Costs } \\\hline \text { Costs: }\\\text { Work in process, March 1 } & \$ & 50,283 & \$ & 23,400 & \$ &26,883 \\\text { Costs incurred during March } & & 234,900 & & 72,000 && 162,900 \\\hline \text { Totals } & \$ & 285,183 & \$ & 95,400 & \$ &189,783 \\\hline\end{array}$ Using the weighted-average method of process costing, the equivalent units of conversion activity total:

A)73,000.
B)78,100.
C)89,000.
D)90,000.
E)106,000.

Question 36

St. Lawrence River Chemical manufactures a product called Spec. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 80% complete with respect to conversion; the ending work-in-process inventory is 30% complete. The following data pertain to March: $\begin{array}{ll}&\underline {\text { Units } }\\\text { Work in process, March 1 } & 20,000 \\\text { Units started during March } & 70,000 \\\text { Units completed and transferred out } & 73,000 \\\text { Work in process, March 31 } & 17,000\end{array}$


$\begin{array}{lcccccc}&&&& \text { Direct } & &\text { Conversion } \\&&\text { Total } && \text { Materials }& & \text { Costs } \\\hline \text { Costs: }\\\text { Work in process, March 1 } & \$ & 50,283 & \$ & 23,400 & \$ &26,883 \\\text { Costs incurred during March } & & 234,900 & & 72,000 && 162,900 \\\hline \text { Totals } & \$ & 285,183 & \$ & 95,400 & \$ &189,783 \\\hline\end{array}$ Using the weighted-average method of process costing, the cost per unit of direct materials is:

A)$0.90.
B)$1.06.
C)$1.07.
D)$1.22.
E)$1.31.

Question 37

Michael-Inc. uses a process-costing system. A newly hired accountant has identified the following procedures that must be performed by the close of business on Friday: 1-Calculation of equivalent units
2-Analysis of physical flows of units
3-Assignment of costs to completed units and units still in process
4-Calculation of unit costs
Which of the following choices correctly expresses the proper order of the preceding tasks?

A)1, 2, 3, 4.
B)1, 2, 4, 3.
C)1, 4, 3, 2.
D)2, 1, 4, 3.
E)2, 1, 3, 4.

Question 38

Majestic ltd, which uses a process-costing system, adds material at the beginning of production and incurs conversion costs evenly throughout manufacturing process. The following selected information was taken from the company's accounting records: Total equivalent units of materials: 5,000
Total equivalent units of conversion: 4,400
Units started and completed during the period: 3,500
On the basis of this information, the ending work-in-process inventory's stage of completion with respect to conversion cost is:

A)40%.
B)60%.
C)70%.
D)80%.
E)100%.

Question 39

Cochrane Limited, which uses a process-costing system, adds all material at the beginning of production and incurs conversion costs evenly throughout manufacturing process. The information that follows relates to the period just ended:
Units started and completed: 75,000
Units in ending work-in-process inventory: 15,000, 60% complete
Which of the following choices correctly expresses the total equivalent units of production with respect to material and conversion cost? $\begin{array} { | c | c | c | } \hline & \text { Material } & \text { Conversion } \\\hline 1 & 75,000 & 75.000 \\\hline 2 & 84.000 & 84.000 \\\hline 3 & 90,000 & 81.000 \\\hline 4 & 90,000 & 84.000 \\\hline 5 & 90.000 & 90.000 \\\hline\end{array}$

A)1
B)2
C)3
D)4
E)5

Question 40

Average Company uses a weighted-average process-costing system. The Company records disclosed that Department A completed 100,000 units during the month and had 20,000 units in process at month-end, 50% complete. Conversion costs associated with the beginning work-in-process inventory amounted to $401,000, and amounts that relate to the current month totaled $950,000. If conversion is incurred uniformly throughout manufacturing, Average's equivalent-unit cost is:

A)$3.65.
B)$4.01.
C)$9.50.
D)$12.28.
E)$13.51.

Question 41

Portal Manufacturing, which began business in 2011, uses a weighted-average process-costing system. The following figures pertain to July: All materials are introduced at the start of the process, and conversion costs are incurred evenly throughout production. The company used direct materials that cost $640,000; conversion amounted to $8 per equivalent unit.
Required:
A. Calculate the direct materials cost per equivalent unit.
B. Calculate the cost of units completed and transferred.
C. What percentage of conversion work will be performed on the 40,000-unit ending work-in-process inventory during August?
D. In all likelihood, were all of the 120,000 completed units begun in July? Explain.

Question 42

Abnormal spoilage is considered to be.

A)a product cost.
B)a period cost.
C)a product cost recorded in a Loss from Abnormal Spoilage account.
D)a period cost recorded in a Loss from Abnormal Spoilage account.
E)a period cost recorded in a Loss from Abnormal Spoilage account in the period in which the spoilage is identified.

Question 43

Focus Company, which uses a weighted-average process-costing system, had 7,000 units in production at the end of the current period that were 60% complete. Material A is introduced at the beginning of the process; material B is introduced at the end of the process; and conversion cost is incurred evenly throughout manufacturing. Equivalent-unit production costs follow. Material A: $12.50
Material B: $2.00
Conversion cost: $6.60
The cost of the company's ending work-in-process inventory is:

A)$88,620.
B)$115,220.
C)C.$129,220.
D)D.$123,620.
E)E.$147,700.

Question 44

Shawinigan Inc. uses a weighted-average process-costing system. All materials are introduced at the beginning of production; conversion costs are incurred evenly throughout the manufacturing process. The following information pertains to April:
The company's accountant has already computed the cost per equivalent unit, as follows: materials, $5; conversion, $14.
Required:
Calculate the cost of goods completed during April and the cost of the ending work-in-process inventory.

Question 45

Superior Chemical Company refines a variety of petrochemical products. The following data pertain to the firm's Cincinnati plant:
Required:
Compute the equivalent units of direct materials and conversion for August.

Question 46

St. Lawrence River Chemical manufactures a product called Spec. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 80% complete with respect to conversion; the ending work-in-process inventory is 30% complete. The following data pertain to March: $\begin{array}{ll}&\underline {\text { Units } }\\\text { Work in process, March 1 } & 20,000 \\\text { Units started during March } & 70,000 \\\text { Units completed and transferred out } & 73,000 \\\text { Work in process, March 31 } & 17,000\end{array}$


$\begin{array}{lcccccc}&&&& \text { Direct } & &\text { Conversion } \\&&\text { Total } && \text { Materials }& & \text { Costs } \\\hline \text { Costs: }\\\text { Work in process, March 1 } & \$ & 50,283 & \$ & 23,400 & \$ &26,883 \\\text { Costs incurred during March } & & 234,900 & & 72,000 && 162,900 \\\hline \text { Totals } & \$ & 285,183 & \$ & 95,400 & \$ &189,783 \\\hline\end{array}$ Using the weighted-average method of process costing, the cost of goods completed and transferred during March is:

A)$189,800.
B)$208,050.
C)$208,780.
D)$254,770.
E)$285,183.

Question 47

Which of the following is a key document in a typical process-costing system?

A)Departmental production report.
B)Master schedule.
C)Production budget.
D)Sequential product report.
E)Materials requirement report.

Question 48

Operation costing might be used to determine the cost of all of the following products except:

A)sweaters.
B)automobiles.
C)living-room sofas.
D)dishwashing detergent.
E)high-definition (HD) and surround-sound cables.

Question 49

Professor Jones is concerned that her students do not understand the concept of equivalent units. She has therefore prepared the following questions, to appear on an upcoming examination:
Equivalent units are used in a process-costing accounting system.
A. Equivalent units are needed as a measure of production volume. At the end of the period, manufacturing costs must be spread over the units produced, and it is incorrect to combine fully completed units with those that are still in production (akin to adding apples and oranges). Separate totals are needed because materials are often introduced at specific points in production whereas conversion is often introduced uniformly throughout manufacturing.
A. Explain the need for equivalent units and why separate equivalent-unit totals are calculated for direct materials and conversion cost.
B. If an examination of goods in production at the end of the period revealed 12,000 units that are, on average, 75% complete, would it be correct to say that 9,000 units were finished during the period? Why?
Required:
Prepare a complete answer key that can be used in grading the examination questions.
B. No. The units are still in production, so none of them are fully completed. It would be correct to say that the firm has done the work equivalent to manufacturing 9,000 finished units.

Question 50

National Chemical Limited uses a weighted-average process-costing system. The following data relate to October: Required:
A. Calculate the number of pounds completed during October.
B. Calculate equivalent units of materials and conversion for October.
C. Does National Chemical Limited introduce all of its direct materials at the very beginning of production? Explain your answer.

Question 51

Chen Corporation, a new company, adds material at the beginning of its production process; conversion costs, in contrast, are incurred evenly throughout the manufacturing process. During May, the firm completed 15,000 units and had ending work in process of 2,000 units, 60% complete. Equivalent-unit costs were: materials, $15; conversion, $22. The cost of Chen's completed production is:

A)$225,000.
B)$330,000.
C)$333,000.
D)$555,000.
E)$629,000.

Question 52

O'Farrell Manufacturing Inc. uses a weighted-average process-costing system and has one production department. All materials are introduced at the start of manufacturing; in contrast, conversion costs are incurred uniformly throughout production. The company had respective work-in-process inventories on July 1 and July 31 of 80,000 units and 90,000 units, the latter of which was 50% complete. The production supervisor noted that O'Farrell completed 120,000 units during the month.
Costs in the July 1 work-in-process inventory were subdivided as follows: materials, $50,000; conversion, $30,000. During July, O'Farrell charged production with $460,000 of material and $810,000 of conversion, resulting in a material cost per equivalent unit of $2.
Required:
A. Determine the number of units that O'Farrell started during July.
B. Compute the number of equivalent units with respect to conversion cost.
C. Determine the conversion cost per equivalent unit.
D. Compute the cost of the July 31 work-in-process inventory.
E. What account would have been credited to record O'Farrell's completed production?

Question 53

Operation costing:

A)tends to parallel job-order costing with respect to the treatment of conversion cost.
B)tends to parallel process costing with respect to the treatment of conversion cost.
C)tends to parallel process costing with respect to the treatment of direct materials.
D)would likely be used by a manufacturing plant that produces one model of a single product.
E)is commonly known as a joint-costing system.

Question 54

Marcus Corporation, which uses the weighted-average method of process costing, reported the following as of February 1:
Conversations with the production supervisor revealed that materials are introduced at the start of the process and conversion costs are incurred evenly throughout the manufacturing process. The company started 29,000 units during the month. Goods in process at the beginning and end of February totalled 3,000 units and 5,000 units, respectively, the latter batch being 60% complete.
Just prior to leaving on vacation, a trusted staff assistant was asked to compute the cost of February's ending work-in-process inventory. Her calculations showed a huge rise in unit cost when compared with the February 1 figures, soaring to $250 [($470,000 + $280,000) ÷ 3,000 units (5,000 units x 60%)].
Required:
A. Did the staff assistant make any errors in her calculations? Explain.
B. Analyze the company's production volume and determine the proper equivalent-unit figures for February.
C. Calculate the proper unit costs for February.
D. Calculate the cost of the February 28 work-in-process inventory.

Question 55

Which of the following best describes the procedures used in operation costing to assign direct material and conversion costs to production? $\begin{array} { l l } { \text { Direct Material Costs } } & \text { Conversion Costs } \\\hline 1 \text { Similar to those in job costing } & \text { Similar to those in job costing } \\2 \text { Similar to those in job costing } & \text { Similar to those in process costing } \\3 \text { Similar to those in process costing } & \text { Similar to those in job costing } \\4 \text { Similar to those in process costing } & \text { Similar to those in process costing } \\5 \text { Similar to those in job costing } & \text { Similar to those in actual costing }\end{array}$

A)1
B)2
C)3
D)4
E)5

Question 56

St. Lawrence River Chemical manufactures a product called Spec. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 80% complete with respect to conversion; the ending work-in-process inventory is 30% complete. The following data pertain to March: $\begin{array}{ll}&\underline {\text { Units } }\\\text { Work in process, March 1 } & 20,000 \\\text { Units started during March } & 70,000 \\\text { Units completed and transferred out } & 73,000 \\\text { Work in process, March 31 } & 17,000\end{array}$


$\begin{array}{lcccccc}&&&& \text { Direct } & &\text { Conversion } \\&&\text { Total } && \text { Materials }& & \text { Costs } \\\hline \text { Costs: }\\\text { Work in process, March 1 } & \$ & 50,283 & \$ & 23,400 & \$ &26,883 \\\text { Costs incurred during March } & & 234,900 & & 72,000 && 162,900 \\\hline \text { Totals } & \$ & 285,183 & \$ & 95,400 & \$ &189,783 \\\hline\end{array}$ Using the weighted-average method of process costing, the total costs remaining in work in process on March 31 are:

A)$0.
B)$30,413.
C)$76,403.
D)$77,133.
E)$95,383.

Question 57

A considerable portion of the text's process-costing presentation illustrated the proper way to allocate manufacturing costs to the units completed during the period and the ending work-in-process inventory. For companies that have a single manufacturing department, the journal entry to recognize completed production involves a debit to Finished-Goods Inventory and a credit to Work-in-Process Inventory. What journal entry, if any, is needed for these same companies to properly account for ending work in process?

Question 58

Chen Corporation, a new company, adds material at the beginning of its production process; conversion costs, in contrast, are incurred evenly throughout the manufacturing process. During May, the firm completed 15,000 units and had ending work in process of 2,000 units, 60% complete. Equivalent-unit costs were: materials, $15; conversion, $22. The cost of the company's ending work-in-process inventory is:

A)$26,640.
B)$44,400.
C)$48,000.
D)$56,400.
E)$74,000.

Question 59

When determining the cost of a manufactured item under an operation-costing system, a company would:

A)trace direct-material cost and actual conversion cost to each product produced.
B)trace direct-material cost to each batch product produced and use a predetermined application rate for conversion cost.
C)trace actual conversion cost to each product produced and use a predetermined application rate for direct material.
D)use a predetermined application rate for both direct-material cost and conversion cost.
E)often switches to a job-costing system to simplify record keeping procedures.

Question 60

General Conduits Inc. employs a process-costing system for its manufacturing operations. All materials are added at the beginning of the process, and conversion costs are incurred uniformly throughout production. The information that follows relates to February. Required:
A. Calculate equivalent units of direct material for February.
B. Calculate equivalent units of conversion activity for February.

Question 61

On May 1, Dandy Company had a work-in-process inventory of 10,000 units. The units were 100% complete for direct materials and 30% complete for conversion, with respective costs of $30,000 and $1,850.
During the month, 150,000 units were completed and transferred to finished goods. The May 31 ending work-in-process inventory consisted of 10,000 units that were 100% complete with respect to materials and 80% complete with respect to conversion.
Costs added during the month were $330,000 for materials and $503,750 for conversion.
Required:
Using the weighted-average method, calculate:
A. total equivalent units for material and conversion.
B. the cost per equivalent unit for material and conversion.
C. the cost transferred to finished goods.
D. the cost of ending work in process.

Question 62

Edwards Company had a beginning work-in-process inventory of 30,000 units on June 1. These units contained $120,000 of direct materials and $272,000 of conversion costs. The following data relate to activity during June:
Edwards uses a weighted-average process-costing system. All materials are added at the start of manufacturing; in contrast, conversion costs are incurred evenly throughout the production process.
Required:
A. Compute the total equivalent units for direct material and conversion cost.
B. Compute the cost per equivalent unit of direct material and conversion cost.
C. Determine the cost of completed production.
D. Determine the cost of the June 30 work in process.

Question 63

Orville Knitters manufactures sweaters and uses an operation-costing system. All sweaters are processed through Department No. 1, with subsequent processing taking place in Department No. 2 or Department No. 3 depending on the type of fabric used. 20,000 sweaters were produced during the year; there was no beginning or ending work in process. 60% of the goods were sent to Department No. 2 for manufacturing.
Conversion costs incurred in the three departments totalled $504,000, subdivided as follows: Department No. 1, $360,000; Department No. 2, $60,000; and Department No. 3, $84,000. Data pertaining to two representative orders, Nos. 545 and 567, were: Required:
A. Explain the nature of operation costing.
B. Determine the cost of order nos. 545 and 567.

Question 64

Baxter Products manufactures office furniture by using an assembly-line process. All direct materials are introduced at the start of the process, and conversion costs are incurred evenly throughout the manufacturing process. An examination of the company's work-in-process account for August revealed the following selected information:
Debit side-
August 1 balance: 600 units, 40% complete; cost, $44,600
Production started: 1,800 units
Direct materials used during August: $90,000
August conversion costs: $51,400
Credit side-
Production completed: 1,400 units
Supplementary records disclosed direct material cost of $30,000 and conversion costs of $14,600.
Conversations with manufacturing personnel revealed that the ending work in process was 80% complete.
Required:
A. Determine the number of units in the August 31 work-in-process inventory.
B. Calculate the cost of goods completed during August, and prepare the appropriate journal entry to record completed production.
C. Determine the cost of the August 31 work-in-process inventory.

Question 65

Grace Incorporated, which uses an operation-costing system, has three processing departments. All units pass through Department No. 1; upon completion, 60% of the goods are sent to Department No. 2 and 40% are sent to Department No. 3. Additional data follow.
Fifty thousand units were manufactured during the year.
Conversion costs in each department were: No. 1, $400,000; No. 2, $216,000; and No. 3, $170,000.
Batch No. A535, which consisted of 700 units, was sent to Department No. 3 for its additional processing. Direct materials of $24,500 and $12,900 were introduced to this batch in Department Nos. 1 and 3, respectively.
Grace assigns conversion costs to goods manufactured on the basis of units produced.
Required:
A. Determine the conversion cost per unit in Department no. 1, Department no. 2, and Department no. 3.
B. Compute the total cost of batch no. A535.
C. Operation costing is sometimes referred to as a hybrid costing system. Briefly explain.

Question 66

Lackey Manufacturing Company uses a weighted-average process-costing system. Material A is added at the start of production; packaging material is introduced at the end. Conversion costs are incurred evenly throughout the manufacturing process.
The following selected data were extracted from the company's production report: Required:
A. Compute the equivalent-unit cost for conversion cost.
B. How far into the manufacturing process is the ending work-in-process inventory?
C. Would the total equivalent units for Material A and the packaging material be the same? Why?
D. Compute the cost of goods completed during the period.
E. Compute the cost of the ending work-in-process inventory.

Question 67

Operation costing is a popular type of accounting system, one that combines selected features of job-order and process-cost accounting.
Required:
A. Briefly discuss the basic features that are associated with an operation-costing system.
B. Explain why a sweater manufacturer may have a need for an operation-costing system.