Question 1

Nate Company manufactures Products A and B from a joint process that also yields a by-product,X.Nate Company accounts for the revenue from its by-product sales as a deduction from the cost of its main products.Additional information is as follows:  ​
(1)Assuming that joint product costs are allocated using the relative sales value at split-off approach,what was the joint cost allocated to Products A and B?
(2)Prepare the journal entry to transfer the finished products to separate inventory accounts.
(3)Assuming the sales value of X is stable,prepare the journal entries to:
(a)place the by-product in stock
(b)record the sale of 3,000 units for $10,500 on account.

Accepted Answer

The answer of Nate Company manufactures Products A and B...

Question 2

The average cost method of process costing differs from the FIFO method of process costing in that the average cost method:

Accepted Answer

A) Requires that ending work in process inventory be stated in terms of equivalent units of production. 
B) Can be used under any cost-flow assumption. 
C) Does not consider the degree of completion of beginning work in process inventory when computing equivalent units of production. 
D) Considers the ending work in process inventory only partially complete.

Question 3

Howard Poster Incorporated had 12,000 units of work in process in Department A on October 1.These units were 60 percent complete as to conversion costs.Materials are added in the beginning of the process.During the month of October,38,000 units were started and 40,000 units were completed.Howard had 10,000 units of work in process on October 31.These units were 75 percent complete as to conversion costs.
1)Compute the equivalent units for materials and conversion costs for the month of October using the FIFO method.
2)Using the average cost method determine the equivalent units for materials and conversion costs for the month of October.

Accepted Answer

The answer of Howard Poster Incorporated had 12,000 units of...

Question 4

Information for Chaucer,Ltd.in July for the Prep Department,the first stage of the production cycle,is as follows:  Material costs are added at the beginning of the process.The ending work in process is two-thirds complete as to conversion costs.How would the total costs accounted for be distributed using the average cost method?

Accepted Answer

The answer of Information for Chaucer,Ltd.in July for the Prep...

Question 5

The following information is available for the month of August from the Second department of the Twigg Corporation:  Materials are added at the end of the process in the Second department.Using the average cost method,what are the equivalent units of production for materials and conversion costs for the month of August?

Accepted Answer

A) 192,000 160,000 
B) 160,000 192,000 
C) 160,000 208,000 
D) 240,000 192,000

Question 6

Material is added at the beginning of a process in a process costing system.The beginning work in process inventory for this process this period was 30 percent complete as to conversion costs.Using the first-in,first-out method of costing,the total equivalent units for material for this process during this period are equal to the:

Accepted Answer

A) Units started this period in this process. 
B) Beginning inventory this period for this process. 
C) Units started this period in this process plus the beginning inventory. 
D) Units started this period in this process plus 70 percent of the beginning inventory.

Question 7

Anderson Compounds produces two industrial chemical compounds,Gorp and Gumm,from the same process,which last year,cost $480,000.Anderson produced 20,000 pounds of Gorp,which sells for $60 per gallon and 60,000 gallons of Gumm,which sells for $30 per gallon.After the split-off point,Gorp required additional processing costing $300,000 to make it salable.Using the adjusted sales method,how much of the joint cost should be allocated to Gorp?

Accepted Answer

A) $120,000 
B) $320,000 
C) $160,000 
D) $192,000

Question 8

In a process cost system,the cost attributable to abnormal losses that occur due to unexpected circumstances such as machine operator error should be assigned to:

Accepted Answer

A) Ending work in process inventory. 
B) Cost of goods manufactured and ending work in process inventory in the ratio of units worked on during the period to units remaining in work in process inventory. 
C) A separate loss account in order to highlight production inefficiencies 
D) Cost of good manufactured (transferred out)

Question 9

Regina Manufacturing uses the FIFO method of process costing.The production report for the Curing Department,where the materials are added at the beginning of the period,for September was as follows:  The number of equivalent units for conversion costs during the period was:

Accepted Answer

A) 13,500 
B) 16,500 
C) 12,300 
D) 14,700

Question 10

If two or more products share a common process before they are separated,the joint costs should be allocated in a manner that:

Accepted Answer

A) Assigns a proportionate amount of the total cost to each product equitably. 
B) Maximizes total earnings. 
C) Minimizes variations in a unit of production cost. 
D) Does not introduce an element of estimation into the process of accumulating costs for each product.

Question 11

Terrell Corporation manufactures Products X,Y,and Z from a joint process.Additional information is as follows:  Assuming that joint costs are allocated using the relative sales value at split-off approach,what was the sales value at split off for Product X?

Accepted Answer

The answer of Terrell Corporation manufactures Products X,Y,and Z from...

Question 12

Which of the following statements best describes a by-product?

Accepted Answer

A) A product with a value that can easily and accurately be determined. 
B) A product that has a greater value than the main product. 
C) A product created along with the main product whose sales value does not cover the cost of its production. 
D) A product that usually produces a small amount of revenue when compared to the main product revenue.

Question 13

If a company using the adjusted sales value method to assign joint costs produces two products,A and B,from a joint process,and B requires additional processing after the split-off in order to be salable,how is the joint cost allocated to B determined?

Accepted Answer

A) The costs of the additional processing are ignored in allocating joint costs. 
B) The costs of the additional processing are subtracted from the joint costs allocated to B. 
C) The relative sales value used to allocate the joint cost are determined after the costs of further processing are subtracted from the ultimate sales value of B. 
D) None of these are correct.

Question 14

Van Pelt Company uses the average cost method of process costing.The production report for the Mixing department follows:  What are the equivalent units for: Materials Conversion Costs

Accepted Answer

A) 5,650 5,450 
B) 5,450 5,275 
C) 4,850 4,400 
D) 5,400 5,220

Question 15

When two products are produced during a common process,what is the factor that determines whether the products are joint products or one principal product and a by-product?

Accepted Answer

A) Potential marketability for each product 
B) Amount of additional work expended in the production of each product 
C) Management policy 
D) Relative total sales value

Question 16

Normal losses that occur in the manufacturing process are properly classified as:

Accepted Answer

A) Extraordinary items. 
B) Product costs. 
C) Period costs. 
D) Deferred charges.

Question 17

Jim Davis Company processes hogs into three products,chops,bacon and sausage.Production and selling price data follow:  Hogs are processed in the Processing Department.From the split-off point,bacon is smoked,sliced and packaged in the Bacon Department.The cost incurred for these processes was $100,000.In addition,sausage was ground and formed into patties in the Sausage Department after the split-off.This process cost $60,000.
Required:
a)If joint processing costs were $1,500,000,calculate the total cost of each product using the adjusted sales value method.
b)Prepare the journal entries to 1)record the joint processing and movement of product out of the Processing Department after the split off,and 2)record the additional processing and completion of the bacon and sausage.

Accepted Answer

The answer of Jim Davis Company processes hogs into three...

Question 18

Stanley Company adds materials at the beginning of the process in Department M.Data concerning the materials used in the March production follows:  Using the average cost method,the equivalent units for the materials unit cost calculation are:

Accepted Answer

A) 38,000. 
B) 52,000. 
C) 56,000. 
D) 37,000.

Exam 6: Process Cost Accounting--Additional Procedures

The average cost method of process costing differs from the FIFO method of process costing in that the average cost method:

In a process cost system,the cost attributable to abnormal losses that occur due to unexpected circumstances such as machine operator error should be assigned to:

Regina Manufacturing uses the FIFO method of process costing.The production report for the Curing Department,where the materials are added at the beginning of the period,for September was as follows: The number of equivalent units for conversion costs during the period was:

If two or more products share a common process before they are separated,the joint costs should be allocated in a manner that:

Terrell Corporation manufactures Products X,Y,and Z from a joint process.Additional information is as follows: Assuming that joint costs are allocated using the relative sales value at split-off approach,what was the sales value at split off for Product X?

Which of the following statements best describes a by-product?

If a company using the adjusted sales value method to assign joint costs produces two products,A and B,from a joint process,and B requires additional processing after the split-off in order to be salable,how is the joint cost allocated to B determined?

Van Pelt Company uses the average cost method of process costing.The production report for the Mixing department follows: What are the equivalent units for: Materials Conversion Costs

When two products are produced during a common process,what is the factor that determines whether the products are joint products or one principal product and a by-product?

Normal losses that occur in the manufacturing process are properly classified as:

Stanley Company adds materials at the beginning of the process in Department M.Data concerning the materials used in the March production follows: Using the average cost method,the equivalent units for the materials unit cost calculation are: