Chapter 041.Doc

Chapter 4 Systems Design: Process Costing

True/False Questions

1. In a process costing system, the costs of one processing department become part of the costs of the next processing department.

Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy

2. The equivalent units of production will be the same under the weighted-average and the FIFO method if there is no beginning work in process inventory.

Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 2,5 Level: Medium

3. Under the weighted-average method, the equivalent units used to compute the unit costs of ending inventories relate only to work done during the current period.

Ans: False AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Hard

4. In order to equitably allocate costs in a process costing system, dissimilar products are restated in terms of equivalent units by weighting the number of units produced by their market values.

Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy

5. In a process costing system, units transferred to the next processing department are presumed to be 100% complete with respect to the work performed by the transferring department.


6. Under a weighted-average process costing system when all materials are added at the beginning of the production process, the equivalent units for materials is equal to the units completed and transferred out.

Ans: False AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Hard

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 4-7


7. In calculating cost per equivalent unit under the weighted-average method, prior period costs are combined with current period costs.


8. The equivalent units of production for a department using the FIFO process costing method is equal to the number of units completed plus the equivalent units in the ending inventory.

Ans: False AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5 Level: Hard

9. The step-down method of cost allocation is more accurate than the direct method since the step-down method considers services that service departments provide to each other.

Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 8,9 Level: Easy

10. The step-down method and the direct method of cost allocation will result in the same amount of service department cost being allocated to a given operating department, although the step-down method is easier to apply than the direct method.

Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 8,9 Level: Medium

11. The order in which the costs of service departments are allocated will affect the amounts allocated to an operating department when the direct method is used.

Ans: False AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 8 Level: Medium

12. The units in beginning work in process inventory plus the units started into production must equal the units transferred out of the department plus the units in ending work in process inventory.


4-8 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition


13. In a process costing system, direct labor cost combined with manufacturing overhead cost is known as conversion cost.


14. Process costing is employed in industries that produce basically homogeneous products such as bricks, flour, or cement but would not be appropriate for assembly-type operations such as those that manufacture computers.

Ans: False AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 10 Level: Medium

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

Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 10 Level: Easy

Multiple Choice Questions

16. Which of the following statements related to job-order costing and process costing are true?A) Under both costing methods, manufacturing overhead costs are included in the

computation of unit product costs.B) Under both costing methods, the journal entry to record the completion of

production will involve crediting a work in process account.C) Under both costing methods, the journal entry to record the cost of goods sold

will involve crediting the finished goods account.D) All of the above are true.

Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Hard



17. The completion of goods is recorded as a decrease in the work in process inventory account when using:

Job-order costing Process costingA) Yes NoB) Yes YesC) No YesD) No No

Ans: B AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy Source: CPA, adapted

18. In process costing, a separate work in process account is kept for each:A) individual order.B) equivalent unit.C) processing department.D) cost category (i.e., materials, conversion cost).

Ans: C AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy

19. The weighted-average method of process costing differs from the FIFO method of process costing in that the weighted-average method:A) does not consider the degree of completion of beginning work in process

inventory when computing equivalent units of production.B) considers ending work in process inventory to be fully complete.C) will always yield a higher cost per equivalent unit.D) All of the above.

Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 2,3,5,6 Level: Hard



20. Which of the following are needed to compute equivalent units for conversion costs under the weighted-average method of process costing?

Percentage completion of beginning work in process

Percentage completion of ending work in process

A) Yes YesB) No YesC) Yes NoD) No No

Ans: B AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy

21. Malcolm Company uses a weighted-average process costing system. All materials at Malcolm are added at the beginning of the production process. The equivalent units for materials at Malcolm would be the sum of:A) units in ending work in process and the units started.B) units in beginning work in process and the units started.C) units in ending work in process and the units started and completed.D) units in beginning work in process and the units started and completed.

Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Hard

22. In the computation of costs per equivalent unit, the weighted-average method of process costing considers:A) costs incurred during the current period only.B) costs incurred during the current period plus cost of ending work in process

inventory.C) costs incurred during the current period plus cost of beginning work in process

inventory.D) costs incurred during the current period less cost of beginning work in process

inventory.

Ans: C AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Easy Source: CPA, adapted



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

Material cost assigned to beginning work in process last period

Material cost added to production during the current period

A) Yes YesB) No YesC) Yes NoD) No No

Ans: A AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium

24. Under which of the following conditions will the FIFO method of process costing result in the same amount of cost being transferred to the next department as the weighted-average method?A) When the beginning and ending inventories are each fifty percent complete.B) When there is no beginning inventory.C) When there is no ending inventory.D) When units in the beginning inventory are all completed and transferred at the

same time.

Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 4,7 Level: Hard Source: CMA, adapted

25. In order to compute equivalent units of production using the FIF0 method of process costing, work for the period must be broken down into parts:A) completed during the period and units in ending inventory.B) completed from beginning inventory, started and completed during the month,

and units in ending inventory.C) started during the period and units transferred out during the period.D) processed during the period and units completed during the period.

Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium Source: CPA, adapted



26. Which of the following methods of allocating service departments take into account all of the effects of interdepartmental services?

Direct Step-DownA) Yes YesB) Yes NoC) No YesD) No No

Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 8,9 Level: Medium

27. All of the following statements are correct when referring to process costing except:A) Process costing would be appropriate for a jeweler who makes custom jewelry

to order.B) A process costing system has the same basic purposes as a job-order costing

system.C) Units produced are indistinguishable from each other.D) Costs are accumulated by department.

Ans: A AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 10 Level: Medium

28. For which of the following would it be best to use an operation costing system?A) home remodelingB) automobile productionC) cement used for roadwaysD) trash bags used for yard waste

Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 10 Level: Medium



29. Health Beverage Company uses a process costing system to collect costs related to the production of its celery flavored cola. The cola is first processed in a Mixing Department at Health and is then transferred out and finished up in the Bottling Department. The finished cases of cola are then transferred to Finished Goods Inventory. The following information relates to Health's two departments for the month of January:

Mixing BottlingCases of cola in work in process, January 1..................... 10,000 3,000Cases of cola completed/transferred out during January.. 77,000 ?Cases of cola in work in process, January 31................... 4,000 8,000

How many cases of cola were completed and transferred to Finished Goods Inventory during January?A) 66,000B) 71,000C) 72,000D) 74,000

Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Medium

Solution:

To solve for units transferred:+ Work in process, beginning................................................. 3,000+ Units started into production during the month.................. 77,000− Work in process, ending...................................................... 8,000 = Units completed and transferred out during the month....... 72,000



30. The Assembly Department started the month with 83,000 units in its beginning work in process inventory. An additional 334,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 34,000 units in the ending work in process inventory of the Assembly Department.How many units were transferred to the next processing department during the month?A) 417,000B) 285,000C) 451,000D) 383,000

Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy

Solution:

To solve for units transferred:+ Work in process, beginning............................................. 83,000+ Units started into production during the month.............. 334,000− Work in process, ending.................................................. 34,000 =Units completed and transferred out during the month.... 383,000



31. Colby Company has a process costing system in which the weighted-average method is used. The company adds all materials at the beginning of the process in the Molding Department, which is the first of two stages of its production process. Information concerning the materials used in the Molding Department during March is as follows:

UnitsMaterials

CostsWork in process at March 1............................................. 22,000 $11,000Units started during March.............................................. 90,000 $46,120Units completed and transferred to next department

during March................................................................ 97,000

What was the materials cost of the work in process inventory at March 31?A) $11,220B) $7,500C) $5,100D) $7,650

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



Solution:

To solve for ending work in process:+ Work in process, beginning.................................................. 22,000+ Units started into production during the month.................... 90,000− Units completed and transferred out during the month........ 97,000= Work in process, ending....................................................... 15,000

Equivalent units of productionMaterials

Transferred to next department........................................... 97,000 Ending work in process (materials: 15,000 units × 100%

complete)......................................................................... 15,000 Equivalent units of production........................................... 112,000

Cost per Equivalent UnitMaterials

Cost of beginning work in process..................................... $11,000 Cost added during the period.............................................. 46,120 Total cost (a)....................................................................... $57,120

Equivalent units of production (b)...................................... 112,000 Cost per equivalent unit, (a) ÷ (b)....................................... $0.51

MaterialsEnding work in process inventory:Equivalent units of production (materials: 15,000 units ×

100% complete; conversion: 15,000 units × % complete)......................................................................... 15,000

Cost per equivalent unit...................................................... $0.51 Cost of ending work in process inventory.......................... $7,650



32. Barnett Company uses the weighted-average method in its process costing system. The company adds materials at the beginning of the process in Department M. Conversion costs were 75% complete with respect to the 4,000 units in work in process at May 1 and 50% complete with respect to the 6,000 units in work in process at May 31. During May, 12,000 units were completed and transferred to the next department. An analysis of the costs relating to work in process at May 1 and to production activity for May follows:

Materials ConversionWork in process 5/1....................... $13,800 $3,740Costs added during May................ $42,000 $26,260

The total cost per equivalent unit for May was:A) $5.02B) $5.10C) $5.12D) $5.25

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

Solution:

Equivalent units of productionMaterials Conversion

Transferred to next department.......................... 12,000 12,000 Ending work in process (materials: 6,000 units

× 100% complete; conversion: 6,000 units × 50% complete)............................................... 6,000 3,000

Equivalent units of production........................... 18,000 15,000

Cost per Equivalent UnitMaterials Conversion Total

Cost of beginning work in process.................... $13,800 $ 3,740 Cost added during the period............................. 42,000 26,260 Total cost (a)...................................................... $55,800 $30,000

Equivalent units of production (b)..................... 18,000 15,000 Cost per equivalent unit, (a) ÷ (b)...................... $3.10 $2.00 $5.10



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

UnitsMaterials

CostsWork in process at April 1............................................... 12,000 $6,000Units started during April................................................ 100,000 $51,120Units completed and transferred to next department

during April.................................................................. 88,000

What was the materials cost of the work in process at April 30?A) $6,120B) $11,040C) $12,000D) $12,240

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



Solution:

To solve for ending work in process:+ Work in process, beginning............................................ 12,000+ Units started into production during the month.............. 100,000− Units completed and transferred out during the month... 88,000 = Work in process, ending.................................................. 24,000


Transferred to next department........................................... 88,000 Ending work in process (materials: 24,000 units × 100%

complete)......................................................................... 24,000 Equivalent units of production........................................... 112,000


Cost of beginning work in process..................................... $ 6,000 Cost added during the period.............................................. 51,120 Total cost (a)....................................................................... $57,120


MaterialsEnding work in process inventory:Equivalent units of production (materials: 24,000 units ×

100% complete).............................................................. 24,000 Cost per equivalent unit...................................................... $0.51 Cost of ending work in process inventory.......................... $12,240



34. Destry Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 10,000 units in its beginning work in process inventory that were 30% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $19,200. An additional 60,000 units were started into production during the month. There were 19,000 units in the ending work in process inventory of the Welding Department that were 70% complete with respect to conversion costs. A total of $380,060 in conversion costs were incurred in the department during the month.

What would be the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.)A) $6.400B) $6.334C) $6.209D) $4.811

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

Solution:

To solve for units transferred:+ Work in process, beginning.................................................. 10,000+ Units started into production during the month.................... 60,000− Work in process, ending....................................................... 19,000= Units completed and transferred out during the month........ 51,000

Equivalent units of productionConversion

Transferred to next department......................................... 51,000 Ending work in process (conversion: 19,000 units × 70%

complete)....................................................................... 13,300 Equivalent units of production.......................................... 64,300

Cost per Equivalent UnitConversion

Cost of beginning work in process.................................... $ 19,200 Cost added during the period............................................ 380,060 Total cost (a)..................................................................... $399,260

Equivalent units of production (b).................................... 64,300 Cost per equivalent unit, (a) ÷ (b)..................................... $6.209



35. Limber Company uses the weighted-average method in its process costing system. Operating data for the first processing department for the month of June appear below:

Units

Percent Complete with

Respect to Conversion

Beginning work in process inventory........ 18,000 80%Started into production during June........... 81,000Ending work in process inventory............. 17,000 80%

According to the company's records, the conversion cost in beginning work in process inventory was $15,264 at the beginning of June. Additional conversion costs of $68,208 were incurred in the department during the month.What was the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.)A) $0.873B) $0.696C) $0.842D) $1.060

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



Solution:

To solve for units transferred:+ Work in process, beginning........................................................................18,000+ Units started into production during the month..........................................81,000− Work in process, ending.............................................................................17,000= Units completed and transferred out during the month..............................82,000


Transferred to next department........................................... 82,000 Ending work in process

(conversion: 17,000 units × 80% complete)................... 13,600 Equivalent units of production........................................... 95,600


Cost of beginning work in process..................................... $15,264 Cost added during the period.............................................. 68,208 Total cost (a)....................................................................... $83,472




36. Roy Company manufactures a product in Departments A and B. Materials are added at the beginning of the process in Department B. Roy uses the weighted-average method in its process costing system. Conversion costs for Department B were 50% complete with respect to the 6,000 units in the beginning work in process and 75% complete with respect to the 8,000 units in the ending work in process. A total of 12,000 units were completed and transferred out of Department B during February. An analysis of the costs in Department B for February follows:

Transferred In Materials ConversionWork in process, February 1.......... $12,000 $2,500 $1,000Costs added during February......... $29,000 $5,500 $5,000

The total cost per equivalent unit during February was closest to:A) $2.75B) $2.78C) $2.82D) $2.85

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

Solution:

Materials ConversionTransferred to next department.......................... 12,000 12,000Ending work in process:

Materials: 8,000 units × 100% complete........ 8,000 Conversion: 8,000 units × 75% complete....... 6,000


Transferred In Materials Conversion Total

Work in process, beginning... $12,000 $2,500 $1,000Cost added during the month 29,000 5,500 5,000 Total cost (a).......................... $41,000 $8,000 $6,000Equivalent units (above) (b). . 20,000 20,000 18,000Cost per equivalent unit

(a) ÷ (b).............................. $2.05 $0.40 $0.33 $2.78



37. Hammoudi Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 16,000 units in its beginning work in process inventory that were 90% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $61,920. An additional 53,000 units were started into production during the month and 45,000 units were completed in the Welding Department and transferred to the next processing department. There were 24,000 units in the ending work in process inventory of the Welding Department that were 70% complete with respect to conversion costs. A total of $194,340 in conversion costs were incurred in the department during the month.



Solution:


Transferred to next department....................................................... 45,000 Ending work in process

(conversion: 24,000 units × 70% complete)............................... 16,800 Equivalent units of production....................................................... 61,800


Cost of beginning work in process................................................. $ 61,920 Cost added during the period.......................................................... 194,340 Total cost (a)................................................................................... $256,260

Equivalent units of production (b).................................................. 61,800 Cost per equivalent unit, (a) ÷ (b)................................................... $4.147



38. Paquet Company uses the weighted-average method in its process costing system. The Molding Department is the second department in its production process. The data below summarize the department's operations in January.

Units



Beginning work in process inventory.................... 7,700 40%Transferred in from the prior.................................department during January..................................... 56,000Completed and transferred to the next...................department during January..................................... 58,400Ending work in process inventory......................... 5,300 90%

The accounting records indicate that the conversion cost that had been assigned to beginning work in process inventory was $16,940 and a total of $347,320 in conversion costs were incurred in the department during January.

What was the cost per equivalent unit for conversion costs for January in the Molding Department? (Round off to three decimal places.)A) $5.500B) $5.666C) $5.766D) $6.202


Solution:Units transferred out..................................................................... 58,400Add: equivalent units in the ending inventory (5300 × 90%

complete)................................................................................... 4,770 Equivalent units of production...................................................... 63,170

Cost in the beginning inventory.................................................... $ 16,940Cost added during the month........................................................ 347,320 Total cost....................................................................................... $364,260

$364,260 ÷ 63,170 units = $5.766 per unit



39. Jimmy Company uses the weighted-average method in its process costing system. The ending work in process inventory consists of 9,000 units. The ending work in process inventory is 100% complete with respect to materials and 70% complete with respect to labor and overhead. If the cost per equivalent unit for the period is $3.75 for material and $1.25 for labor and overhead, what is the balance of the ending work in process inventory account?A) $41,625B) $33,750C) $45,000D) $31,500


Solution:

Ending work in process:Materials: 9,000 units × 100% complete.... 9,000Conversion: 9,000 units × 70% complete... 6,300

Ending work in process: Materials Conversion TotalEquivalent units of production............ 9,000 6,300Cost per equivalent unit...................... $3.75 $1.25Cost of ending work in process........... $33,750 $7,875 $41,625



40. Lawton Company produces canned tomato soup in a single processing department and has a process costing system in which it uses the weighted-average method. The company sold 250,000 units in the month of January. Data concerning inventories follow:

Units Inventory at January 1:

Work in process............................................................ NoneFinished goods.............................................................. 75,000

Inventory at January 31:Work in process (conversion 75% complete)............... 16,000Finished goods.............................................................. 60,000

What were the equivalent units for conversion costs for January?A) 235,000B) 247,000C) 251,000D) 253,000

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

Solution:

To calculate units transferred out:Units sold 250,000+ Ending finished goods inventory........... 60,000− Beginning finished goods inventory...... 75,000 = Units transferred out.............................. 235,000

Units transferred out......................................................... 235,000Ending work in process (16,000 units × 75% complete).. 12,000 Equivalent units of production.......................................... 247,000



41. Jersey Company has a process costing system in which it uses the weighted-average method. The equivalent units for conversion costs for the month were 47,500 units. The beginning work in process inventory consisted of 15,000 units, 60% complete with respect to conversion costs. The ending work in process inventory consisted of 10,000 units, 75% complete with respect to conversion costs. The number of units started during the month was:A) 25,000 unitsB) 34,000 unitsC) 35,000 unitsD) 40,000 units

Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Hard

Solution:

Units transferred out............................................................. 40,000 *Ending work in process (10,000 units × 75% complete)..... 7,500 Equivalent units for conversion costs.................................. 47,500

* Solve backwards: 47,500 − 7,500 = 40,000

Units in beginning inventory..................... 15,000+ Units started........................................... 35,000 *− Units in ending inventory...................... 10,000= Units transferred out.............................. 40,000

* Solve backwards: Units started = 40,000 −15,000 + 10,000 = 35,000



42. Boswal Company uses the weighted-average method in its process costing system. The Assembly Department started the month with 6,000 units in its beginning work in process inventory that were 80% complete with respect to conversion costs. An additional 52,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 18,000 units in the ending work in process inventory of the Assembly Department that were 20% complete with respect to conversion costs.What were the equivalent units for conversion costs in the Assembly Department for the month?A) 43,600B) 40,000C) 38,800D) 64,000

Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium

Solution:

To solve for units transferred:Work in process, beginning................................................ 6,000+ Units started into production during the month.............. 52,000− Work in process, ending.................................................. 18,000= Units completed and transferred out during the month... 40,000

ConversionTransferred to next department........................................ 40,000Ending work in process (18,000 units × 20% complete). 3,600 Equivalent units of production......................................... 43,600



43. Jolly Company uses the weighted-average method in its process costing system. Operating data for the Painting Department for the month of April appear below:

Units

Percent Complete

with Respect to Conversion

Beginning work in process inventory............................. 4,700 90%Transferred in from the prior department during April. . 59,700Ending work in process inventory.................................. 7,300 80%

What were the equivalent units for conversion costs in the Painting Department for April?A) 62,940B) 62,300C) 65,540D) 57,100


Solution:

Units in beginning inventory.................... 4,700+ Units started into production................. 59,700− Units in ending inventory...................... 7,300 = Units transferred out.............................. 57,100

Equivalent units transferred out.................................... 57,100Add: Equivalent units in the ending work in process

inventory (7,300 units × 80% complete)................... 5,840 Equivalent units for conversion costs........................... 62,940



44. Parks Company uses the weighted-average method in its process costing system. At the start of the year, the company had 5,000 units in process in Department A that were 60% complete with respect to conversion costs. At the end of the year, 6,500 units were in process, 40% complete with respect to conversion costs. During the year, 30,000 units were completed and transferred on to the next department. The equivalent units for conversion costs would be:A) 32,600 unitsB) 29,600 unitsC) 33,000 unitsD) 30,000 units

Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy

Solution:

Equivalent units transferred out..................................... 30,000Add: Equivalent units in the ending work in process

inventory (6,500 units × 40% complete).................... 2,600 Equivalent units for conversion costs............................ 32,600



45. Bart Co. adds materials at the beginning of the process in Department M. The company uses the weighted-average method in its process costing system. The following information pertains to Department M's work in process during April:

UnitsWork in process, April 1 (conversion 60% complete).... 3,000Started in April................................................................ 25,000Completed........................................................................ 20,000Work in process, April 30 (conversion 75% complete). . 8,000

The equivalent units for conversion cost are:A) 26,000B) 25,000C) 24,200D) 21,800

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

Solution:

Equivalent units transferred out.................................... 20,000Add: Equivalent units in the ending work in process

inventory (8,000 units × 75% complete)................... 6,000 Equivalent units for conversion costs........................... 26,000



46. Fatas Corporation uses the weighted-average method in its process costing system. The Assembly Department started the month with 8,000 units in its beginning work in process inventory that were 20% complete with respect to conversion costs. An additional 95,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. During the month 102,000 units were completed in the Assembly Department and transferred to the next processing department. There were 1,000 units in the ending work in process inventory of the Assembly Department that were 20% complete with respect to conversion costs.What were the equivalent units for conversion costs in the Assembly Department for the month?A) 102,200B) 100,600C) 102,000D) 88,000


Solution:

Equivalent units transferred out...................................... 102,000Add: Equivalent units in the ending work in process

inventory (1,000 units × 20% complete)..................... 200 Equivalent units for conversion costs.............................. 102,200



47. Natiello Corporation uses the weighted-average method in its process costing system. Operating data for the Lubricating Department for the month of October appear below:

Units

Percent Complete


Beginning work in process inventory.............................. 9,100 20%Transferred in from the prior department during

October......................................................................... 38,500Completed and transferred to the next department

during October............................................................. 41,000Ending work in process inventory................................... 6,600 70%

What were the equivalent units for conversion costs in the Lubricating Department for October?A) 41,000B) 43,120C) 36,000D) 45,620


Solution:

Units in beginning inventory................... 9,100+ Units started into production................... 38,500− Units in ending inventory........................ 6,600 = Units transferred out................................ 41,000

Equivalent units transferred out.................................. 41,000Add: Equivalent units in the ending work in process

inventory (6,600 units × 70% complete)................. 4,620 Equivalent units for conversion costs......................... 45,620



48. Kew Company uses the weighted-average method in its process costing system. The company had 3,000 units in work in process at April 1 that were 60% complete with respect to conversion cost. During April, 10,000 units were completed. At April 30, 4,000 units remained in work in process and they were 40% complete with respect to conversion cost. Direct materials are added at the beginning of the process. How many units were started during April?A) 9,000B) 9,800C) 10,000D) 11,000

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

Solution:

To solve for units started into production:+ Work in process, ending...................................................... 4,000+ Units completed and transferred out during the month....... 10,000− Work in process, beginning................................................. 3,000 = Units started into production during the month................... 11,000



49. Pelican Corporation uses a weighted-average process costing system to collect costs related to production. The following selected information relates to production for March:

Units completed and transferred out.......... 5,000Units in work in process, March 31........... 800Equivalent units, materials......................... 5,800Equivalent units, conversion costs............. 5,200

Materials ConversionCosts in work in process on March 1..................... $ 2,900 $ 4,680Costs added to production during March............... 71,050 131,040 Total cost................................................................ $73,950 $135,720

All materials at Pelican are added at the beginning of the production process. Conversion costs are incurred uniformly over the production process. What total amount of cost should be assigned to the units in work in process at the end of March?A) $14,840B) $15,420C) $24,920D) $25,860

Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3,4 Level: Hard

Solution:

Materials Conversion TotalTotal cost................................................... $73,950 $135,720

÷ Equivalent units........................................ 5,800 5,200 = Cost per equivalent unit............................ $12.75 $26.10× Ending inventory

Materials: 800 units × $12.75................ $10,200Conversion costs: *200 units × $26.10.. $5,220 $15,420

Units in work in process, March 31............................................................... 800Less: Uncompleted as to conversion (5,800 total − 5,200 equivalent units). 600Equivalent units in ending work in process: conversion............................... 200



50. Kwan Manufacturing Company uses a process costing system. All materials at Kwan are added at the beginning of the production process. For the month of October, equivalent units for materials were 40,000 under the weighted-average method and 36,000 under the FIFO method. Kwan's costs for October were as follows:

Cost in beginning work in process (October 1)............... $ 25,200Cost added to production during October........................ 262,800 Total cost......................................................................... $288,000

What are Kwan’s equivalent costs per equivalent unit for October for materials under both process costing methods?

Weighted-Average FIFOA) $6.57 $8.00B) $6.57 $7.30C) $7.20 $8.00D) $7.20 $7.30

Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 3,6 Level: Medium

Solution:

Weighted-Average FIFOTotal cost........................... $288,000 $262,800÷ Equivalent units............. 40,000 36,000Cost per equivalent unit.... $7.20 $7.30



51. Safia Corporation uses the weighted-average method in its process costing system. The Fitting Department is the second department in its production process. The data below summarize the department's operations in March.

Units



Beginning work in process inventory...................... 3,300 40%Transferred in from the prior department during

March................................................................... 67,000Ending work in process inventory........................... 5,600 30%

The Fitting Department's cost per equivalent unit for conversion cost for March was $4.70.How much conversion cost was assigned to the units transferred out of the Fitting Department during March?A) $330,410.00B) $314,900.00C) $304,090.00D) $297,886.00


Solution:

Units in beginning inventory................... 3,300+ Units transferred in.................................. 67,000− Units in ending inventory........................ 5,600 = Units transferred out................................ 64,700× Cost per equivalent unit........................... $4.70

$304,090



52. The following data were taken from the accounting records of the Mixing Department of Kappa Company which uses the weighted-average method in its process costing system:

Beginning work in process inventory:Cost............................................................................... $19,000Units............................................................................. 30,000 unitsPercentage completion with respect to materials......... 100%Percentage completion with respect to conversion...... 60%

Units completed and transferred out................................ 82,000 unitsCost per equivalent unit:

Material......................................................................... $1.50Conversion.................................................................... $0.75

The cost of units transferred out was:A) $184,500B) $149,500C) $167,500D) $145,000


Solution:

Cost computation for units transferred out:82,000 units × ($1.50 + $0.75) = $184,500



53. Wit Company uses the weighted-average method in its process costing system. Information for the month of May concerning Department A, the first stage of the company's production process follows:

Materials ConversionWork in process, beginning....................... $ 4,000 $ 3,000Current costs added.................................... 20,000 16,000 Total costs.................................................. $24,000 $19,000Equivalent units......................................... 100,000 95,000Costs per equivalent unit............................ $0.24 $0.20Goods completed....................................... 90,000 unitsWork in process, ending............................ 10,000 units

Material costs are added at the beginning of the process. The ending work in process is 50% complete with respect to conversion costs. How would the costs be distributed?

Goods completed and transferred out Ending work in processA) $39,600 $3,400B) $39,600 $4,400C) $43,000 $0D) $44,000 $3,400

Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium Source: CPA, adapted



Solution:

Materials ConversionTransferred to next department............ 90,000 90,000Ending work in process:

Materials: 10,000 units × 100% complete........................................ 10,000

Conversion: 10,000 units × 50% complete........................................ 5,000

Equivalent units of production............. 100,000 95,000

Materials ConversionWork in process, beginning................. $ 4,000 $ 3,000Cost added during the month............... 20,000 16,000 Total cost (a)........................................ $24,000 $19,000Equivalent units (above) (b)................. 100,000 95,000Cost per equivalent unit (a) ÷ (b)......... $0.24 $0.20

Materials Conversion TotalUnits transferred out............................ 90,000 90,000Cost per equivalent unit....................... $0.24 $0.20Cost transferred out.............................. $21,600 $18,000 $39,600

Materials Conversion TotalEquivalent units of production:

ending work in process..................... 10,000 5,000Cost per equivalent unit....................... $0.24 $0.20Cost of ending work in process............ $2,400 $1,000 $3,400



54. Lap Company uses the weighted-average method in its process costing system. The beginning work in process inventory in a particular department consisted of 80,000 units, 100% complete with respect to materials and 25% complete with respect to conversion costs. The total dollar value of this inventory was $226,000. During the month, 150,000 units were transferred out of the department. The costs per equivalent unit for the month were $2.00 for materials and $3.50 for conversion costs. The value of the units completed and transferred out of the department was:A) $681,000B) $765,000C) $821,000D) $825,000

Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium

Solution:

150,000 units × ($2.00 + $3.50) = $825,000

55. Bly Company uses the weighted-average method in its process costing system. During March, Bly Company's Department Y costs per equivalent unit were as follows:

Materials................ $1Conversion............. $3Transferred-in........ $5

There were 4,000 units (40% complete with respect to conversion cost and 0% complete with respect to materials cost) in Work in Process at March 31. The total costs assigned to the March 31, Work in Process inventory should be:A) $36,000B) $28,800C) $27,200D) $24,800

Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Hard Source: CPA, adapted

Solution:

Ending work in process: Conversion costs (4,000 × 40%) × $3.... $ 4,800Transferred in costs (4,000 × $5).................................................... 20,000 Total cost: Work in process, March 31........................................... $24,800



56. The following information was provided by Fystro Corporation for the month of March. Fystro uses the weighted-average method in its process costing system.

Total cost transferred out during March................ $74,000Cost in Work in Process, March 1......................... $12,000Cost in Work in Process, March 31....................... $5,000

How much cost did Fystro add to production during March?A) $57,000B) $62,000C) $67,000D) $81,000


Solution:

Work in process, ending...................................................... $ 5,000+ Cost transferred out during the month.............................. 74,000− Work in process, beginning.............................................. 12,000 = Cost added to production during the month..................... $67,000



57. Rangan Corporation uses the weighted-average method in its process costing system. The Molding Department is the second department in its production process. The data below summarize the department's operations in January.

Units



Beginning work in process inventory........ 2,100 50%Transferred in from the prior department

during January........................................ 76,000Completed and transferred to the next

department during January..................... 74,200Ending work in process inventory............. 3,900 70%

The Molding Department's cost per equivalent unit for conversion cost for January was $3.91.

How much conversion cost was assigned to the ending work in process inventory in the Molding Department for January?A) $10,674.30B) $15,249.00C) $4,574.70D) $4,105.50


Solution:

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

2,730

× $3.91Conversion costs in ending work in process inventory........... $10,674.30



58. Merckley Company has a process costing system and uses the FIFO method. For May, the company's beginning work in process inventory was 80% complete with respect to conversion, and the ending work in process inventory was 50% complete with respect to conversion. Information on units processed and conversion costs incurred during May follow:

UnitsConversion

CostWork in process inventory on May 1..................... 25,000 $22,000Units started into production, and costs incurred

during the month................................................ 135,000 $143,000Units completed and transferred to finished

goods during the month...................................... 100,000Work in process inventory on May 31................... 60,000

The amount of conversion cost in the ending work in process inventory was:A) $33,000B) $38,100C) $39,000D) $45,000

Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5,6,7 Level: Medium Source: CMA, adapted



Solution:

Equivalent Units of ProductionConversion

To complete beginning work in process (conversion: 25,000 units × 20% complete)....................................... 5,000

Units started and completed during the period (135,000 units started − 60,000 units in ending inventory).......... 75,000

Ending work in process (60,000 units × 50% complete). . 30,000 Equivalent units of production.......................................... 110,000


Cost added during the period (a)....................................... $143,000 Equivalent units of production (b).................................... 110,000 Cost per equivalent unit (a) ÷ (b)...................................... $1.30

Costs of Ending Work in Process Inventory and Units Transferred OutConversion

Ending work in process inventory:Equivalent units of production.......................................... 30,000 Cost per equivalent unit.................................................... $1.30 Cost of ending work in process inventory........................ $39,000



59. Doofus Music Company manufactures air guitars and uses a FIFO process costing system to collect costs related to its production. Doofus only accounts for conversion costs because the only direct material, air, has no cost. The following information relates to September production:

Number of units

Percent complete with respect to

conversion costsWork in process, September 1....... 20,000 20%Units started into production.......... 90,000Work in process, September 30..... 8,000 75%

Conversion cost in work in process on September 1........... $ 263,120Conversion cost added to production during September..... 5,262,400 Total cost............................................................................. $5,525,520

What amount of cost should Doofus assign to the units (guitars) in work in process on September 30?A) $125,580B) $303,600C) $318,780D) $343,200

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



Solution:

Equivalent Units of ProductionMaterials Conversion

To complete beginning work in process (materials: 20,000 units × 100% complete; conversion: 20,000 units × 80% complete).......................................... 20,000 16,000

Units started and completed during the period (90,000 units started − 8,000 units in ending inventory)................................. 82,000 82,000

Ending work in process (materials: 8,000 units × 0% complete; conversion: 8,000 units × 75% complete).............................. 0 6,000

Equivalent units of production..................... 102,000 104,000

Cost per Equivalent UnitMaterials Conversion

Cost added during the period (a).................. $0 $5,262,400 Equivalent units of production (b)............... 102,000 104,000 Cost per equivalent unit (a) ÷ (b)................. $0.00 $50.60

Costs of Ending Work in Process Inventory and Units Transferred Out

Materials Conversion TotalEnding work in process inventory:Equivalent units of production..................... 0 6,000 Cost per equivalent unit............................... $0.00 $50.60 Cost of ending work in process inventory.... $0 $303,600 $303,600



60. Edwin Company uses the FIFO method in its process costing system. The first processing department, the Welding Department, started the month with 22,000 units in its beginning work in process inventory that were 20% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $24,200. An additional 96,000 units were started into production during the month. There were 20,000 units in the ending work in process inventory of the Welding Department that were 90% complete with respect to conversion costs. A total of $585,900 in conversion costs were incurred in the department during the month.What would be the cost per equivalent unit for conversion costs? (Round off to three decimal places.)A) $6.103B) $5.170C) $5.500D) $5.250


Solution:


To complete beginning work in process (22,000 units × 80% complete)............................................................................... 17,600

Units started and completed during the period (96,000 units started − 20,000 units in ending inventory)........................... 76,000

Ending work in process (20,000 units × 90% complete).......... 18,000 Equivalent units of production.................................................. 111,600


Cost added during the period (a)............................................... $585,900Equivalent units of production (b)............................................. 111,600Cost per equivalent unit (a) ÷ (b).............................................. $5.250



61. Makridakis Corporation uses the FIFO method in its process costing system. Operating data for the Casting Department for the month of September appear below:

Units

Percent Complete


Beginning work in process inventory.............................. 17,000 10%Transferred in from the prior department during

September..................................................................... 50,000Ending work in process inventory................................... 17,000 40%

According to the company's records, the conversion cost in beginning work in process inventory was $3,434 at the beginning of September. Additional conversion costs of $117,914 were incurred in the department during the month.What would be the cost per equivalent unit for conversion costs for September? (Round off to three decimal places.)A) $2.020B) $1.811C) $2.140D) $2.358

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

Solution:


To complete beginning work in process (17,000 units × 90% complete)............................................................. 15,300

Units started and completed during the period (50,000 units started − 17,000 units in ending inventory)........ 33,000

Ending work in process (17,000 units × 40% complete) 6,800 Equivalent units of production........................................ 55,100


Cost added during the period (a)..................................... $117,914Equivalent units of production (b).................................. 55,100Cost per equivalent unit (a) ÷ (b).................................... $2.140



62. Krumbly Company uses the FIFO method in its process costing system. At the beginning of the month, Department D's work in process inventory contained 2,000 units. These units were fully complete with respect to materials and 40% complete with respect to conversion costs, with a total cost at that point of $3,600. During the month, conversion costs amounted to $8 per equivalent unit. If all 2,000 units are fully complete by the end of the month, their total cost by that time will be:A) $19,600B) $10,000C) $13,200D) $9,000

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

Solution:

Cost from beginning inventory......................................................................$ 3,600Cost to finish beginning inventory: (1 − 40%) = 60% ×

2,000 = 1,200 EU × $8 cost per EU........................................................... 9,600 Total cost of units from beginning inventory................................................$13,200



63. Inka Corporation uses the FIFO method in its process costing system. The first processing department, the Forming Department, started the month with 13,000 units in its beginning work in process inventory that were 20% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $4,160. An additional 97,000 units were started into production during the month and 97,000 units were completed and transferred to the next processing department. There were 13,000 units in the ending work in process inventory of the Forming Department that were 30% complete with respect to conversion costs. A total of $136,637 in conversion costs were incurred in the department during the month.


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


To complete beginning work in process (13,000 units × 80% complete). 10,400Units started and completed during the period (97,000 units started −

13,000 units in ending inventory).......................................................... 84,000Ending work in process (13,000 units × 30% complete)........................... 3,900 Equivalent units of production................................................................... 98,300


Cost added during the period (a)............................................................... $136,637Equivalent units of production (b)............................................................. 98,300Cost per equivalent unit (a) ÷ (b)............................................................... $1.390



64. Qvr Corporation uses the FIFO method in its process costing system. Operating data for the Cutting Department for the month of March appear below:

Units

Percent Complete with Respect to

ConversionBeginning work in process inventory.............................. 2,500 60%Transferred in from the prior department during March. 45,000Completed and transferred to the next department

during March................................................................ 40,500Ending work in process inventory................................... 7,000 70%

According to the company's records, the conversion cost in beginning work in process inventory was $3,600 at the beginning of March. Additional conversion costs of $99,477 were incurred in the department during the month.What would be the cost per equivalent unit for conversion costs for March? (Round off to three decimal places.)A) $2.211B) $2.400C) $2.170D) $2.266


Solution:


To complete beginning work in process (2,500 units × 40% complete)................................................................................. 1,000

Units started and completed during the period (45,000 units started − 7,000 units in ending inventory)............................... 38,000

Ending work in process (7,000 units × 70% complete).............. 4,900 Equivalent units of production.................................................... 43,900


Cost added during the period (a)................................................. $99,477Equivalent units of production (b).............................................. 43,900Cost per equivalent unit (a) ÷ (b)................................................ $2.266



65. Marston Company uses the FIFO method in its process costing system. The equivalent units for March for conversion costs totaled 37,500 units. The beginning work in process inventory in March consisted of 15,000 units, 60% complete with respect to conversion costs. The ending work in process inventory in March consisted of 10,000 units, 75% complete with respect to conversion costs. The number of units started during the month was:A) 41,500 unitsB) 34,000 unitsC) 25,000 unitsD) 72,500 units

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

Solution:

Equivalent Units of Production Calculation:To complete beginning work in process (15,000 units × 40%

complete).............................................................................................. 6,000Units started and completed during the period (? units started − 10,000

units in ending inventory).................................................................... ?Ending work in process (10,000 units × 75% complete)......................... 7,500 Equivalent units of production................................................................ 37,500

To solve for Units started and completed during the period, solve algebraically:6,000 + ? + 7,500 = 37,500

? = 24,000Next:Units started and completed = units started – 10,000 units from ending inventory 24,000 = units started – 10,000

= 34,000



66. Catin Company uses the FIFO method in its process costing system. The Assembly Department started the month with 7,000 units in its beginning work in process inventory that were 40% complete with respect to conversion costs. An additional 60,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 19,000 units in the ending work in process inventory of the Assembly Department that were 90% complete with respect to conversion costs.

What were the equivalent units for conversion costs in the Assembly Department for the month?A) 48,000B) 72,000C) 62,300D) 65,100

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

Solution:

To solve for units transferred:+ Work in process, beginning............................................... 7,000+ Units started into production during the month................. 60,000− Work in process, ending.................................................... 19,000= Units completed and transferred out during the month..... 48,000


To complete beginning work in process (7,000 units × 60% complete).............................................................................. 4,200

Units started and completed during the period (60,000 units started − 19,000 units in ending inventory)......................... 41,000

Ending work in process (19,000 units × 90% complete)......... 17,100Equivalent units of production................................................. 62,300



67. Kavadias Corporation uses the FIFO method in its process costing system. Operating data for the Enameling Department for the month of May appear below:

Units


ConversionBeginning work in process inventory........ 7,400 80%Transferred in from the prior.....................department during May.............................. 75,200Ending work in process inventory............. 3,000 90%

What were the equivalent units for conversion costs in the Enameling Department for May?A) 79,600B) 82,300C) 76,380D) 70,800

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

Solution:

To solve for units transferred:+ Work in process, beginning............................................... 7,400+ Units started into production during the month................. 75,200− Work in process, ending.................................................... 3,000 = Units completed and transferred out during the month..... 79,600







68. Kale Company uses the FIFO method in its process costing system. At the beginning of March, the inventory in the Blending Processing Center consisted of 3,000 units, 90% complete with respect to conversion costs. At the end of the month, the inventory consisted of 2,000 units that were 60% complete with respect to conversion costs. If 10,000 units were transferred to the next processing center during the period, the equivalent units for conversion costs would be:A) 8,500 unitsB) 11,500 unitsC) 10,500 unitsD) 9,500 units

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

Solution:

To solve for units started into production:+ Work in process, ending.................................................... 2,000+ Units completed and transferred out during the month..... 10,000− Work in process, beginning............................................... 3,000 = Units started into production during the month................. 9,000


To complete beginning work in process (3,000 units × 10% complete)................................................................................. 300


Ending work in process (2,000 units × 60% complete).............. 1,200Equivalent units of production.................................................... 8,500



69. Billings Company uses the FIFO method in its process costing system. On July 1, Department A had 10,000 units in process that were 80% complete with respect to conversion. On July 31 the department had 8,000 units in process that were 60% complete with respect to conversion. The department transferred 40,000 units out during the month, of which 10,000 units came from the beginning work in process inventory, and 30,000 units were started and completed during the month. All materials are added at the beginning of the process in Department A. What are the equivalent units for the month for materials and conversion, respectively?A) 38,000 units, and 36,800 unitsB) 38,000 units, and 38,000 unitsC) 48,000 units, and 44,800 unitsD) 48,000 units, and 48,000 units

Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium Source: CMA, adapted

Solution:

To solve for units started into production:+ Work in process, ending..................................................... 8,000+ Units completed and transferred out during the month...... 40,000− Work in process, beginning................................................ 10,000= Units started into production during the month.................. 38,000


To complete beginning work in process (materials: 10,000 units × 0% complete; conversion: 10,000 units × 20% complete)................................................. 0 2,000

Units started and completed during the period (38,000 units started − 8,000 units in ending inventory).......... 30,000 30,000

Ending work in process (materials: 8,000 units × 100% complete; conversion: 8,000 units × 60% complete). . 8,000 4,800

Equivalent units of production........................................ 38,000 36,800



70. Gadroy Corporation uses the FIFO method in its process costing system. The Grinding Department started the month with 13,000 units in its beginning work in process inventory that were 80% complete with respect to conversion costs. An additional 52,000 units were transferred in from the prior department during the month to begin processing in the Grinding Department. During the month 55,000 units were completed in the Grinding Department and transferred to the next processing department. There were 10,000 units in the ending work in process inventory of the Grinding Department that were 70% complete with respect to conversion costs.What were the equivalent units for conversion costs in the Grinding Department for the month?A) 62,000B) 49,000C) 55,000D) 51,600

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

Solution:


To complete beginning work in process (13,000 units × 20% complete)............................................................................... 2,600

Units started and completed during the period (52,000 units started − 10,000 units in ending inventory)........................... 42,000

Ending work in process (10,000 units × 70% complete).......... 7,000 Equivalent units of production.................................................. 51,600



71. Outiniki Company uses the FIFO method in its process costing system. Operating data for the Brazing Department for the month of November appear below:

Units



Beginning work in process inventory.......................... 3,400 30%Transferred in from the prior department during

November................................................................. 54,100Completed and transferred to the next department

during November...................................................... 52,600Ending work in process inventory............................... 4,900 70%

What were the equivalent units for conversion costs in the Brazing Department for November?A) 55,010B) 55,600C) 56,030D) 52,600


Solution:







72. Steven Company uses the FIFO method in its process costing system. The following data were taken from the accounting records of a particular department for last month:

Beginning work in process inventory: (10,000 units; materials 100% complete, conversion 60% complete).......... $17,500

Units completed and transferred out during the month............. 60,000 unitsCost per equivalent unit:

Material.................................................................................. $2.50Conversion.............................................................................. $2.00

The cost of units transferred out of the department during the month is:A) $270,000B) $242,500C) $254,500D) $250,500


Solution:EU

Total Materials ConversionTotal Cost

Transferred to the next department:From beginning work in process*. . 10,000 0 4,000From started and completed during

month.......................................... 50,000 50,000 50,000Total EU this period....................... 60,000 50,000 54,000Cost per EU.................................... $2.50 $2.00Cost from current period (EU ×

Cost per EU)............................... $125,000 $108,000 $233,000Cost from beginning work in

process......................................... 17,500 Total cost of units transferred out

of the department during current month.......................................... $250,500

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



73. Teboul Corporation uses the FIFO method in its process costing system. Operating data for the Curing Department for the month of March appear below:

Units


ConversionBeginning work in process inventory.................... 7,900 20%Transferred in from the prior department during

March.................................................................. 40,000Completed and transferred to the next department

during March...................................................... 43,900Ending work in process inventory......................... 4,000 60%

According to the company's records, the conversion cost in beginning work in process inventory was $11,850 at the beginning of March. The cost per equivalent unit for conversion costs for March was $7.40.How much conversion cost would be assigned to the units completed and transferred out of the department during March?A) $325,018B) $313,168C) $296,000D) $324,860


Solution:


To complete beginning work in process (materials: 7,900 units × 100% complete; conversion: 7,900 units × 80% complete)........ 7,900 6,320

Units started and completed during the period (40,000 units started − 4,000 units in ending inventory)......................................................... 36,000 36,000

Ending work in process (materials: 4,000 units × % complete; conversion: 4,000 units × 60% complete).......................................................... 0 2,400

Equivalent units of production............................. 43,900 44,720




Cost added during the period (a).......................... $0 $330,928 $330,928 Equivalent units of production (b)....................... 43,900 44,720 Cost per equivalent unit (a) ÷ (b)......................... $0.00 $7.40


Materials Conversion TotalEnding work in process inventory:Equivalent units of production............................. 0 2,400 Cost per equivalent unit....................................... $0.00 $7.40 Cost of ending work in process inventory........... $0 $17,760 $17,760

Units transferred out:Cost in beginning inventory................................. $0 $11,850 $ 11,850 Cost to complete the units in beginning

inventory:Equivalent units of production required to

complete the beginning inventory.................... 7,900 6,320 Cost per equivalent unit....................................... $0.00 $7.40 Cost to complete the units in beginning

inventory........................................................... $0 $46,768 46,768 Cost of units started and completed this period:Units started and completed this period............... 36,000 36,000 Cost per equivalent unit....................................... $0.00 $7.40 Cost of units started and completed this period... $0 $266,400 266,400 Cost of units transferred out................................. $325,018



74. Koehl Corporation uses the direct method to allocate service department costs to operating departments. The company has two service departments, Administrative and Facilities, and two operating departments, Assembly and Wholesaling.

Service Department Operating Department

Administrative FacilitiesAssembl

y WholesalingDepartmental costs....... $19,440 $71,340 $185,580 $392,950Employee hours........... 4,000 2,000 22,000 14,000Space occupied............. 3,000 1,000 39,000 2,000

Administrative costs are allocated on the basis of employee hours and Facilities costs are allocated on the basis of space occupied. The total Wholesaling Department cost after the allocations of service department costs is closest to:A) $403,990B) $396,430C) $403,642D) $402,601

Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 8 Level: Easy

Solution:

Service DepartmentOperating

DepartmentAdmin-istrative

Facil-ities

Assem-bly

Whole-saling Total

Departmental costs before allocation..... $19,440 $71,340 $185,580 $392,950 $669,310

Allocation:Administrative costs

(22/36, 14/36) *...... (19,440) 11,880 7,560Facilities costs

(39/41, 2/41)**....... (71,340) 67,860 3,480Total cost after

allocation................ $ 0 $ 0 $265,320 $403,990 $669,310

* Based on the employee hours in the two operating departments, which are 22,000 hours + 14,000 hours = 36,000 hours

**Based on the space occupied by the two operating departments, which is 39,000 + 2,000 = 41,000.



75. Behrend Clinic uses the direct method to allocate service department costs to operating departments. The clinic has two service departments, Personnel and Support, and two operating departments, Prenatal and Pediatrics.

Service Department Operating DepartmentPersonnel Support Prenatal Pediatrics

Departmental costs....... $29,200 $55,040 $242,050 $423,200Employee hours........... 5,000 1,000 26,000 14,000Space occupied............. 3,000 2,000 35,000 8,000

Personnel Department costs are allocated on the basis of employee hours and Support Department costs are allocated on the basis of space occupied in square feet. The total Pediatrics Department cost after the allocations of service department costs is closest to:A) $441,260B) $443,660C) $433,440D) $444,471

Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 8 Level: Easy

Solution:Service Department Operating DepartmentPersonnel Support Prenatal Pediatrics Total

Departmental costs before allocation............ $29,200 $55,040 $242,050 $423,200 $749,490

Allocation:Personnel costs

(26/40, 14/40)* (29,200) 18,980 10,220Support costs

(35/43, 8/43)** (55,040) 44,800 10,240 Total cost after allocation............ $ 0 $ 0 $305,830 $443,660 $749,490

* Based on the employee hours in the two operating departments, which are 26,000 hours + 14,000 hours = 40,000 hours

**Based on the space occupied by the two operating departments, which is 35,000 + 8,000 = 43,000.



76. Stoltz Corporation uses the direct method to allocate service department costs to operating departments. The company has two service departments, Data Processing and Personnel, and two operating departments, Assembly and Finishing.


DepartmentData

Processing Personnel Assembly FinishingDepartmental costs.......... $26,488 $18,630 $188,980 $506,980Computer workstations.. . 37 12 45 41Employees....................... 35 11 46 35

Data Processing Department costs are allocated on the basis of computer workstations and Personnel Department costs are allocated on the basis of employees. The total amount of Data Processing Department cost allocated to the two operating departments is closest to:A) $23,245B) $26,488C) $61,567D) $16,874




Solution:


DepartmentData

Processing Personnel Assembly Finishing TotalDepartmental costs before allocation............. $26,488 $18,630 $188,980 $506,960 $741,078

Allocation:Data processing costs (45/86, 41/86)*................. (26,488) 13,860 12,628

Personnel costs (46/81, 35/81)**............... (18,630) 10,580 8,050

Total cost after allocation $ 0 $ 0 $213,420 $527,638 $741,078

* Based on the number of computer workstations in the two operating departments, which are 45 + 41 = 86

**Based on the number of employees in the two operating departments, which is 46 + 35 = 81



77. The direct method is used by Marrero Publishing, Inc., to allocate service department costs to operating departments. The company has two service departments, Information Technology and Personnel, and two operating departments, Prepress and Printing.


DepartmentInformation Technology Personnel Prepress Printing

Departmental costs.......... $27,412 $27,008 $376,940 $530,110Computer workstations.. . 28 19 51 38Employees....................... 27 14 98 30

Information Technology Department costs are allocated on the basis of computer workstations and Personnel Department costs are allocated on the basis of employees. The total Prepress Department cost after service department allocations is closest to:A) $406,961B) $413,326C) $402,881D) $410,563




Solution:


DepartmentInformation Technology Personnel Prepress Printing Total

Departmental costs before allocation........... $27,412 $27,008 $376,940 $530,110 $961,470

Allocation:Information technology

costs (51/89, 38/89)* (27,412) 15,708 11,704Personnel costs (98/128,

30/128)**.......... (27,008) 20,678 6,330 Total cost after allocation $ 0 $ 0 $413,326 $548,144 $961,470

* Based on the number of computer workstations in the two operating departments, which are 51 + 38 = 89




78. Kolinski Surgical Hospital uses the direct method to allocate service department costs to operating departments. The hospital has two service departments, Telecommunications and Administration, and two operating departments, Surgery and Recovery.


DepartmentTelecomm-unications

Adminis-tration Surgery Recovery

Departmental costs.......... $26,344 $27,472 $282,750 $599,690Telecommunications

ports............................. 31 14 40 34Employees....................... 30 11 74 27

Telecommunications Department costs are allocated on the basis of the number of telecommunications ports in departments and Administration Department costs are allocated on the basis of employees. The total Surgery Department cost after service department allocations is closest to:A) $317,118B) $314,853C) $310,244D) $305,921




Solution:


DepartmentTelecom-

municationsAdminis-

tration Surgery Recovery TotalDepartmental costs

before allocation. . $26,344 $27,472 $282,750 $599,690 $936,256Allocation:Telecommunication

costs (40/74, 34/74) *................ (26,344) 14,240 12,104

Administration costs (74/101, 27/101)**............. (27,472) 20,128 7,344

Total cost after allocation............. $ 0 $ 0 $317,118 $619,138 $936,256

* Based on the number of telecommunication ports in the two operating departments, which are 40 + 34 = 74




79. Dainels Corporation uses the step-down method to allocate service department costs to operating departments. The company has two service departments, General Management and Physical Plant, and two operating departments, Sales and After-Sales. Data concerning those departments follow:


DepartmentGeneral

ManagementPhysical

Plant SalesAfter-Sales

Departmental costs.......... $36,550 $70,300 $412,500 $492,780Employee time................ 5,000 2,000 27,000 14,000Space occupied................ 1,000 1,000 38,000 7,000

General Management Department costs are allocated first on the basis of employee time and Physical Plant Department costs are allocated second on the basis of space occupied. The total After-Sales Department cost after allocations is closest to:A) $516,196B) $515,880C) $503,980D) $513,911




Solution:


DepartmentGeneral Mgmt

Physical Plant Sales

After-Sales Total

Departmental costs before allocation....... $36,550 $70,300 $412,500 $492,780 $1,012,130

Allocation:General costs (2/43, 27/43, 14/43)*.......... (36,550) 1,700 22,950 11,900 0

Physical plant costs (38/45, 7/45)**......... (72,000) 60,800 11,200 0

Total costs after allocation.................. $ 0 $ 0 $496,250 $515,880 $1,012,130

*Based on the employee time in Physical Plant and the two operating departments, which are 2,000 + 27,000 + 14,000 = 43,000.**Based on the space occupied by the two operating departments, 38,000 + 7,000 = 45,000.



80. Cervetti, Inc., allocates service department costs to operating departments using the step-down method. The company has two service departments, Administration and Physical Plant, and two operating departments, Assembly and Testing. Data concerning those departments follow:


Department

AdministrationPhysical

Plant Assembly TestingDepartmental costs. . $26,220 $78,860 $127,160 $737,860Employee time......... 4,000 1,000 25,000 12,000Space occupied........ 9,000 1,000 37,000 6,000

Administration Department costs are allocated first on the basis of employee time and Physical Plant Department costs are allocated second on the basis of space occupied. The total Testing Department cost after allocations is closest to:A) $754,279B) $757,240C) $748,960D) $757,368




Solution:


DepartmentAdmini-stration

Physical Plant Assembly Testing Total

Departmental costs before allocation........ $26,220 $78,860 $127,160 $737,860 $970,100

Allocation:Administration costs (1/38, 25/38, 12/38)*. (26,220) 690 17,250 8,280 0

Physical plant costs (37/43, 6/43)**.......... (79,550) 68,450 11,100 0

Total costs after allocation................... $ 0 $ 0 $212,860 $757,240 $970,100

*Based on the employee time in Physical Plant and the two operating departments, which are 1,000 + 25,000 + 12,000 = 38,000.**Based on the space occupied by the two operating departments, 37,000 + 6,000 = 43,000.



81. Reddicks Clinic uses the step-down method to allocate service department costs to operating departments. The clinic has two service departments, Personnel and Information Technology (IT), and two operating departments, Family Medicine and Pediatric. Data concerning those departments follow:


Department

Personnel ITFamily

Medicine PediatricDepartmental costs. . $86,184 $45,995 $608,130 $316,290Employees............... 18 26 128 188PCs.......................... 19 26 125 156

Personnel costs are allocated first on the basis of employees and IT costs are allocated second on the basis of PCs. The total Pediatric Department cost after allocations is closest to:A) $345,462B) $393,099C) $392,838D) $383,307

Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 9 Level: Easy

Solution:


Department

Personnel ITFamily

Medicine Pediatric TotalDepartmental costs before allocation.......... $86,184 $45,995 $608,130 $316,290 $1,056,599

Allocation:Personnel costs (26/342, 128/342, 188/342)*..... (86,184) 6,552 32,256 47,376 0

IT costs (125/281, 156/281)**................... (52,547) 23,375 29,172 0

Total costs after allocation..................... $ 0 $ 0 $663,761 $392,838 $1,056,599

*Based on the employees in IT and the two operating departments, which are 26 + 128 + 188 = 342.**Based on PCs of the two operating departments, 125 + 156 = 281.



82. Rondo Children's Clinic allocates service department costs to operating departments using the step-down method. The clinic has two service departments, Administration and Information Technology (IT), and two operating departments, Prenatal and Pediatric. Data concerning those departments follow:


DepartmentAdministration IT Prenatal Pediatric

Departmental costs. . $54,736 $37,449 $383,270 $259,590Employees............... 15 21 118 172PCs........................... 15 21 102 109

Administration costs are allocated first on the basis of employees and IT costs are allocated second on the basis of PCs. The total Pediatric Department cost after allocations is closest to:A) $311,117B) $280,845C) $304,995D) $311,400




Solution:


DepartmentAdmini-stration IT Prenatal Pediatric Total

Departmental costs before allocation......... $54,736 $37,449 $383,270 $259,590 $735,045

Allocation:Administration costs (21/311, 118/311, 172/311)*................... (54,736) 3,696 20,768 30,272 0

IT costs (102/211, 109/211)**................. (41,145) 19,890 21,255 0

Total costs after allocation.................... $ 0 $ 0 $423,928 $311,117 $735,045

*Based on the employee time in IT and the two operating departments, which are 21 + 118 + 172 = 311.**Based on the number of PCs of the two operating departments, 102 + 109 = 211.

Use the following to answer questions 83-86:

Kota Toy Company manufactures lizard dolls in two departments, Molding and Hairification. In the Molding Department, plastic is injected into a lizard-shaped mold. The dolls that come out of the molds are then transferred to the Hairification Department where hair is applied. Kota uses a weighted-average process cost system to collect costs in both departments.On January 1, the Molding Department had 4,000 dolls in process. These dolls were 100% complete with respect to direct materials and 70% complete with respect to conversion cost. During January, Molding completed 79,000 dolls. On January 31, Molding had 7,000 dolls in work in process. These dolls were 100% complete with respect to direct materials and 25% complete with respect to conversion cost.



83. How many dolls were started in the Molding Department during January?A) 75,000B) 76,000C) 82,000D) 86,000


Solution:

Beginning work in process inventory... 4,000+ Units started into production............. 82,000 *− Units completed and transferred........ 79,000= Ending work in process inventory..... 7,000

* 4000 + Units started into production − 79,000 = 7,000 Units started into production = 82,000

84. What account would Kota debit to record the transfer of dolls out of the Molding Department?A) Work in Process–HairificationB) Finished GoodsC) Manufacturing OverheadD) Work in Process–Molding




85. What are the Molding Department's equivalent units related to materials for January?A) 79,000B) 86,000C) 89,000D) 93,000


Solution:

MaterialsTransferred to next department............ 79,000Ending work in process:

Materials: 7,000 dolls × 100%.......... 7,000 Equivalent units of production............. 86,000

86. What are the Molding Department's equivalent units related to conversion costs for January?A) 77,950B) 80,750C) 83,750D) 84,250


Solution:

ConversionTransferred to next department............ 79,000Ending work in process:

Conversion: 7,000 dolls × 25%......... 1,750 Equivalent units of production............. 80,750




Yoder Company uses the weighted-average method in its process costing system. The following data pertain to operations in the first processing department for a recent month:

Work in process, beginning:Units in process............................................................ 40,000Percent complete with respect to materials.................. 70%Percent complete with respect to conversion............... 60%Costs in the beginning inventory:

Materials cost............................................................ $8,600Conversion cost......................................................... $4,800

Units started into production during the month............... 750,000Units completed and transferred out during the month... ?Costs added to production during the month:

Materials cost................................................................ $223,000Conversion cost............................................................ $149,000

Work in process, ending:Units in process............................................................ 30,000Percent complete with respect to materials.................. 40%Percent complete with respect to conversion............... 30%

87. How many units were completed and transferred to the next department during the month?A) 750,000 unitsB) 790,000 unitsC) 760,000 unitsD) 740,000 units


Solution:




88. What was the cost per equivalent unit for materials during the month?A) $0.30B) $0.25C) $0.20D) $0.15


Solution:



Transferred to next department.............................................. 760,000 Ending work in process (30,000 units × 40% complete)....... 12,000 Equivalent units of production.............................................. 772,000


Cost of beginning work in process........................................ $ 8,600 Cost added during the period................................................. 223,000 Total cost (a).......................................................................... $231,600

Equivalent units of production (b)......................................... 772,000 Cost per equivalent unit, (a) ÷ (b).......................................... $0.30



89. How much cost, in total, was assigned to the ending work in process inventory?A) $2,600B) $4,300C) $15,000D) $5,400


Solution:



Transferred to next department................................ 760,000 760,000 Ending work in process (materials: 30,000 units × 40% complete; conversion: 30,000 units × 30% complete) 12,000 9,000

Equivalent units of production................................. 772,000 769,000


Cost of beginning work in process........................... $ 8,600 $ 4,800 Cost added during the period.................................... 223,000 149,000 Total cost (a)............................................................. $231,600 $153,800

Equivalent units of production (b)............................ 772,000 769,000 Cost per equivalent unit, (a) ÷ (b)............................ $0.30 $0.20

Materials Conversion TotalEnding work in process inventory:Equivalent units of production (materials: 30,000 units × 40% complete; conversion: 30,000 units × 30% complete) 12,000 9,000

Cost per equivalent unit............................................ $0.30 $0.20 Cost of ending work in process inventory................ $3,600 $1,800 $5,400




Onitsha Corporation uses a weighted-average process costing system to collect costs related to production. The following selected information relates to production for June:

Units started into production.......................... 25,000Units completed and transferred out............... 20,000Equivalent units, materials............................. 28,000Equivalent units, conversion costs................. 26,000

Materials ConversionCosts in work in process on June 1................ $ 6,720 $ 9,100Costs added to production during June.......... 57,120 88,400 Total cost........................................................ $63,840 $97,500

All materials at Onitsha are added at the beginning of the production process. Conversion costs are incurred uniformly over the production process.

90. How many partially completed units were in work in process inventory at the beginning of June?A) 3,000B) 5,000C) 7,000D) 8,000

Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Hard

Solution:

Since all materials are added at the beginning of the production process, the “equivalent units, materials” of 28,000 units represents the number of units that were in ending work in process inventory plus the units completed transferred out.

Thus:Beginning work in process inventory.............................. 3,000 *

+ Units started into production........................................... 25,000= Equivalent units............................................................... 28,000

* Beginning work in process inventory + 25,000 = 28,000Beginning work in process inventory = 3,000



91. What total amount of cost should be assigned to the units completed and transferred out during June?A) $102,510B) $108,800C) $120,600D) $136,000

Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3,4 Level: Hard

Solution:

Materials ConversionWork in process, beginning................. $ 6,720 $ 9,100Cost added during the month............... 57,120 88,400 Total cost (a)........................................ $63,840 $97,500Equivalent units (above) (b)................. 28,000 26,000Cost per equivalent unit (a) ÷ (b)......... $2.28 $3.75

Materials Conversion TotalUnits transferred out............................ 20,000 20,000Cost per equivalent unit....................... $2.28 $3.75Cost transferred out.............................. $45,600 $75,000 $120,600




Aple Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 300 units. The costs and percentage completion of these units in beginning inventory were:

Cost Percent CompleteMaterials costs................... $3,100 70%Conversion costs................ $2,900 50%

A total of 8,500 units were started and 8,100 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:

Materials costs..................... $110,500Conversion costs.................. $153,900

The ending inventory was 90% complete with respect to materials and 55% complete with respect to conversion costs.Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.



92. What are the equivalent units for conversion costs for the month in the first processing department?A) 385B) 8,800C) 8,100D) 8,485


Solution:

To solve for ending work in process:+ Work in process, beginning............................................... 300+ Units started into production during the month................. 8,500− Units completed and transferred out during the month..... 8,100= Work in process, ending.................................................... 700


Transferred to next department............................................ 8,100 Ending work in process (materials: 700 units × 90% complete; conversion: 700 units × 55% complete)............. 385

Equivalent units of production............................................. 8,485



93. The cost per equivalent unit for materials for the month in the first processing department is closest to:A) $12.91B) $12.66C) $12.56D) $13.01


Solution:



Transferred to next department......................................... 8,100 Ending work in process (materials: 700 units × 90%

complete; conversion: 700 units × 55% complete)....... 630 Equivalent units of production.......................................... 8,730


Cost of beginning work in process.................................... $ 3,100 Cost added during the period............................................ 110,500 Total cost (a)..................................................................... $113,600

Equivalent units of production (b).................................... 8,730 Cost per equivalent unit, (a) ÷ (b)..................................... $13.01



94. The cost per equivalent unit for conversion costs for the first department for the month is closest to:A) $17.82B) $19.40C) $18.14D) $18.48


Solution:

To solve for ending work in process:+ Work in process, beginning............................................. 300+ Units started into production during the month............... 8,500− Units completed and transferred out during the month.... 8,100= Work in process, ending................................................... 700


Transferred to next department...................................... 8,100 Ending work in process (700 units × 55% complete)... . 385 Equivalent units of production....................................... 8,485


Cost of beginning work in process................................. $ 2,900 Cost added during the period.......................................... 153,900 Total cost (a)................................................................... $156,800

Equivalent units of production (b).................................. 8,485 Cost per equivalent unit, (a) ÷ (b).................................. $18.48



95. The total cost transferred from the first processing department to the next processing department during the month is closest to:A) $264,400B) $277,138C) $270,400D) $255,093


Solution:



Transferred to next department............................. 8,100 8,100 Ending work in process (materials: 700 units × 90% complete; conversion: 700 units × 55% complete) 630 385

Equivalent units of production.............................. 8,730 8,485


Cost of beginning work in process........................ $ 3,100 $ 2,900 Cost added during the period................................. 110,500 153,900 Total cost (a).......................................................... $113,600 $156,800

Equivalent units of production (b)......................... 8,730 8,485 Cost per equivalent unit, (a) ÷ (b)......................... $13.01 $18.48

Materials Conversion TotalUnits transferred out:Units transferred to the next department............... 8,100 8,100 Cost per equivalent unit......................................... $13.01 $18.48 Cost of units transferred out.................................. $105,402 $149,685 $255,087



96. The cost of ending work in process inventory in the first processing department according to the company's cost system is closest to:A) $19,841B) $15,313C) $22,045D) $12,125


Solution:



Transferred to next department............................. 8,100 8,100 Ending work in process (materials: 700 units × 90% complete; conversion: 700 units × 55% complete).............. 630 385



Cost of beginning work in process........................ $3,100 $2,900 Cost added during the period................................. 110,500 153,900 Total cost (a).......................................................... $113,600 $156,800


Materials Conversion TotalEnding work in process inventory:Equivalent units of production (materials: 700 units × 90% complete; conversion: 700 units × 55% complete) 630 385

Cost per equivalent unit......................................... $13.01 $18.48 Cost of ending work in process inventory............. $8,198 $7,115 $15,313




Buklin Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 700 units. The costs and percentage completion of these units in beginning inventory were:



Materials costs................... $166,500Conversion costs................ $96,300

The ending inventory was 75% complete with respect to materials and 15% complete with respect to conversion costs.Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.

97. How many units are in ending work in process inventory in the first processing department at the end of the month?A) 1,600B) 700C) 7,300D) 900


Solution:

To solve for ending work in process:+ Work in process, beginning.............................................. 700+ Units started into production during the month................ 8,000− Units completed and transferred out during the month.... 7,100= Work in process, ending................................................... 1,600



98. What are the equivalent units for conversion costs for the month in the first processing department?A) 7,340B) 8,700C) 7,100D) 240


Solution:



Transferred to next department........................................... 7,100 Ending work in process (1,600 units × 15% complete)...... 240 Equivalent units of production............................................ 7,340





Solution:



Transferred to next department........................................... 7,100 Ending work in process (1,600 units × 75% complete)...... 1,200 Equivalent units of production............................................ 8,300


Cost of beginning work in process...................................... $ 15,700 Cost added during the period.............................................. 166,500 Total cost (a)....................................................................... $182,200






Solution:



Transferred to next department........................................... 7,100 Ending work in process (1,600 units × 15% complete)...... 240 Equivalent units of production............................................ 7,340


Cost of beginning work in process...................................... $ 4,800 Cost added during the period.............................................. 96,300 Total cost (a)....................................................................... $101,100






Solution:



Transferred to next department............................... 7,100 7,100 Ending work in process (materials: 1,600 units × 75%

complete; conversion: 1,600 units × 15% complete) 1,200 240 Equivalent units of production................................ 8,300 7,340


Cost of beginning work in process.......................... $ 15,700 $ 4,800 Cost added during the period.................................. 166,500 96,300 Total cost (a)........................................................... $182,200 $101,100

Equivalent units of production (b).......................... 8,300 7,340 Cost per equivalent unit, (a) ÷ (b)........................... $21.952 $13.774

Materials Conversion TotalUnits transferred out:Units transferred to the next department................. 7,100 7,100 Cost per equivalent unit.......................................... $21.95 $13.77 Cost of units transferred out.................................... $155,858 $97,794 $253,652





Solution:



Transferred to next department................................ 7,100 7,100 Ending work in process (materials: 1,600 units × 75%

complete; conversion: 1,600 units × 15% complete) 1,200 240 Equivalent units of production................................. 8,300 7,340




Materials Conversion TotalEnding work in process inventory:Equivalent units of production (materials: 1,600 units × 75%

complete; conversion: 1,600 units × 15% complete) 1,200 240 Cost per equivalent unit............................................ $21.95 $13.77 Cost of ending work in process inventory................ $26,342 $3,306 $29,648




Cavalerio Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 700 units. The costs and percentage completion of these units in beginning inventory were:




The ending inventory was 80% complete with respect to materials and 70% complete with respect to conversion costs.

Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.

103. How many units are in ending work in process inventory in the first processing department at the end of the month?A) 800B) 1,500C) 900D) 6,500

Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy

Solution:

To solve for ending work in process:+ Work in process, beginning............................................... 700+ Units started into production during the month................. 7,200− Units completed and transferred out during the month..... 6,400= Work in process, ending.................................................... 1,500



104. What are the equivalent units for conversion costs for the month in the first processing department?A) 7,900B) 7,450C) 6,400D) 1,050


Solution:



Transferred to next department.............................................. 6,400 Ending work in process (1,500 units × 70% complete)......... 1,050 Equivalent units of production............................................... 7,450





Solution:





Cost of beginning work in process......................................... $ 9,100 Cost added during the period................................................. 96,700 Total cost (a).......................................................................... $105,800






Solution:




complete; conversion: 1,500 units × 70% complete) 1,200 1,050 Equivalent units of production................................ 7,600 7,450








Escoffier Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 500 units. The costs and percentage completion of these units in beginning inventory were:








Solution:


Transferred to next department............................................ 4,400 Ending work in process (1,100 units × 25% complete)....... 275 Equivalent units of production............................................. 4,675





Solution:


Transferred to next department......................................... 4,400 Ending work in process (1,100 units × 85% complete)... . 935 Equivalent units of production.......................................... 5,335


Cost of beginning work in process.................................... $ 11,400 Cost added during the period............................................. 112,200 Total cost (a)...................................................................... $123,600

Equivalent units of production (b)..................................... 5,335 Cost per equivalent unit, (a) ÷ (b)..................................... $23.17





Solution:



complete; conversion: 1,100 units × 25% complete) 935 275 Equivalent units of production................................ 5,335 4,675








Fuchs Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 300 units. The costs and percentage completion of these units in beginning inventory were:









Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3,4 Level: Medium

Solution:


Transferred to next department............................. 8,500 8,500 Ending work in process (materials: 900 units × 85% complete; conversion: 900 units × 15% complete) 765 135





Cost of Ending Work in Process Inventory and Units Transferred Out

Materials Conversion TotalUnits transferred out:Units transferred to the next department............... 8,500 8,500 Cost per equivalent unit......................................... $22.97 $33.18 Cost of units transferred out.................................. $195,229 $282,021 $477,250




Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3,4 Level: Medium

Solution:


Transferred to next department............................... 8,500 8,500 Ending work in process (materials: 900 units × 85% complete; conversion: 900 units × 15% complete)................ 765 135

Equivalent units of production................................ 9,265 8,635






Cost per equivalent unit.......................................... $22.97 $33.18 Cost of ending work in process inventory.............. $17,571 $4,479 $22,050




Guerin Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 300 units. The costs and percentage completion of these units in beginning inventory were:






112. How many units are in ending work in process inventory in the first processing department at the end of the month?A) 5,100B) 300C) 900D) 600

Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy

Solution:




113. What are the equivalent units for materials for the month in the first processing department?A) 4,800B) 5,700C) 720D) 5,520


Solution:



Transferred to next department.............................................. 4,800 Ending work in process (900 units × 80% complete)............ 720 Equivalent units of production............................................... 5,520



114. What are the equivalent units for conversion costs for the month in the first processing department?A) 4,800B) 5,295C) 495D) 5,700


Solution:








Solution:











Solution:



Transferred to next department..................................... 4,800 Ending work in process (materials: 900 units × 80%

complete; conversion: 900 units × 55% complete).... 495 Equivalent units of production...................................... 5,295


Cost of beginning work in process................................ $ 2,200 Cost added during the period........................................ 92,500 Total cost (a)................................................................. $94,700

Equivalent units of production (b)................................ 5,295 Cost per equivalent unit, (a) ÷ (b)................................. $17.88





Solution:



Transferred to next department............................ 4,800 4,800 Ending work in process (materials: 900 units × 80% complete; conversion: 900 units × 55% complete) 720 495



Cost of beginning work in process....................... $ 4,400 $ 2,200 Cost added during the period............................... 120,000 92,500 Total cost (a)........................................................ $124,400 $94,700

Equivalent units of production (b)....................... 5,520 5,295 Cost per equivalent unit, (a) ÷ (b)........................ $22.54 $17.88

Materials Conversion TotalUnits transferred out:Units transferred to the next department.............. 4,800 4,800 Cost per equivalent unit....................................... $22.54 $17.88 Cost of units transferred out................................. $108,174 $85,847 $194,021



118. The cost of ending work in process inventory in the first processing department according to the company’s cost system is closest to:A) $25,079B) $36,379C) $20,008D) $29,103


Solution:

To solve for ending work in process:+ Work in process, beginning............................................... 300+ Units started into production during the month................. 5,400− Units completed and transferred out during the month..... 4,800= Work in process, ending.................................................... 900 Equivalent units of production

Materials ConversionTransferred to next department............................... 4,800 4,800 Ending work in process (materials: 900 units × 80% complete; conversion: 900 units × 55% complete)................ 720 495







Cost per equivalent unit.......................................... $22.54 $17.88 Cost of ending work in process inventory.............. $16,226 $8,853 $25,079




Hall Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below:

Beginning work in process inventory:Units in beginning work in process inventory...................... 500Materials costs...................................................................... $7,700Conversion costs................................................................... $2,900Percent complete with respect to materials........................... 75%Percent complete with respect to conversion........................ 25%

Units started into production during the month....................... 6,700Units transferred to the next department during the month..... 5,900Materials costs added during the month.................................. $108,600Conversion costs added during the month............................... $121,000Ending work in process inventory:

Units in ending work in process inventory........................... 1,300Percent complete with respect to materials........................... 65%Percent complete with respect to conversion........................ 40%


119. What are the equivalent units for materials for the month in the first processing department?A) 845B) 6,745C) 7,200D) 5,900


Solution:


Transferred to next department.................................................... 5,900Ending work in process (1,300 units × 65% complete)............... 845 Equivalent units of production.................................................... 6,745





Solution:Equivalent units of production

ConversionTransferred to next department..................................................... 5,900 Ending work in process (1,300 units × 40% complete)................ 520 Equivalent units of production...................................................... 6,420



Solution:


Transferred to next department............................................... 5,900Ending work in process (1,300 units × 65% complete).......... 845 Equivalent units of production................................................ 6,745


Cost of beginning work in process.......................................... $ 7,700Cost added during the period................................................... 108,600 Total cost (a)............................................................................ $116,300

Equivalent units of production (b)........................................... 6,745Cost per equivalent unit, (a) ÷ (b)........................................... $17.24





Solution:


Transferred to next department................................................. 5,900Ending work in process (1,300 units × 40% complete)............ 520 Equivalent units of production.................................................. 6,420


Cost of beginning work in process............................................ $ 2,900Cost added during the period.................................................... 121,000 Total cost (a)............................................................................. $123,900

Equivalent units of production (b)............................................ 6,420Cost per equivalent unit, (a) ÷ (b)............................................. $19.30





Solution:



complete; conversion: 1,300 units × 40% complete) 845 520 Equivalent units of production................................ 6,745 6,420









Solution:


Transferred to next department............................... 5,900 5,900 Ending work in process (materials: 1,300 units × 65% complete; conversion: 1,300 units × 40% complete)............. 845 520





Materials Conversion TotalEnding work in process inventory:Equivalent units of production (materials: 1,300 units × 65% complete; conversion: 1,300 units × 40% complete) 845 520




Kumari Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below:

Beginning work in process inventory:Units in beginning work in process inventory...................... 200Materials costs...................................................................... $2,900Conversion costs................................................................... $6,400Percent complete with respect to materials.......................... 85%Percent complete with respect to conversion....................... 70%


Units in ending work in process inventory........................... 600Percent complete with respect to materials.......................... 60%Percent complete with respect to conversion....................... 35%





Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3,4 Level: Medium

Solution:


Transferred to next department............................... 7,400 7,400 Ending work in process (materials: 600 units ×

60% complete; conversion: 600 units × 35% complete)............................................................. 360 210

Equivalent units of production............................... 7,760 7,610


Cost of beginning work in process......................... $ 2,900 $ 6,400 Cost added during the period.................................. 128,000 332,600 Total cost (a)........................................................... $130,900 $339,000


Materials Conversion TotalUnits transferred out:Units transferred to the next department................ 7,400 7,400 Cost per equivalent unit.......................................... $16.87 $44.55 Cost of units transferred out................................... $124,827 $329,645 $454,473




Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3,4 Level: Medium

Solution:


Transferred to next department............................. 7,400 7,400 Ending work in process (materials: 600 units ×

60% complete; conversion: 600 units × 35% complete)........................................................... 360 210





Materials Conversion TotalEnding work in process inventory:........................Equivalent units of production (materials: 600

units × 60% complete; conversion: 600 units × 35% complete)................................................... 360 210

Cost per equivalent unit......................................... $16.87 $44.55 Cost of ending work in process inventory............. $6,073 $9,355 $15,428




Loxham Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below:

Beginning work in process inventory:Units in beginning work in process inventory.................... 400Materials costs..................................................................... $6,900Conversion costs................................................................. $2,500Percent complete with respect to materials......................... 80%Percent complete with respect to conversion...................... 15%

Units started into production during the month..................... 6,000Units transferred to the next department during the month. . . 5,400Materials costs added during the month................................. $112,500Conversion costs added during the month............................. $210,300Ending work in process inventory:

Units in ending work in process inventory......................... 1,000Percent complete with respect to materials......................... 80%Percent complete with respect to conversion...................... 30%






Solution:


Transferred to next department......................................... 5,400 Ending work in process (materials: 1,000 units × 80%

complete; conversion: 1,000 units × 30% complete)..... 800 Equivalent units of production.......................................... 6,200



Solution:










Solution:


Transferred to next department................................ 5,400 5,400 Ending work in process (materials: 1,000 units ×

80% complete; conversion: 1,000 units × 30% complete).............................................................. 800 300

Equivalent units of production................................. 6,200 5,700




Materials Conversion TotalEnding work in process inventory:Equivalent units of production (materials: 1,000

units × 80% complete; conversion: 1,000 units × 30% complete)...................................................... 800 300

Cost per equivalent unit............................................ $19.26 $37.33 Cost of ending work in process inventory................ $15,406 $11,200 $26,606




Doz Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 600 units. The costs and percentage completion of these units in beginning inventory were:






130. How many units are in ending work in process inventory in the first processing department at the end of the month?A) 900B) 800C) 1,400D) 4,400


Solution:






Solution:



Transferred to next department............................................ 4,200 Ending work in process (1,400 units × 35% complete)....... 490 Equivalent units of production............................................. 4,690





Solution:



Transferred to next department......................................... 4,200 Ending work in process (1,400 units × 75% complete)... . 1,050 Equivalent units of production.......................................... 5,250







L.A. Company uses the weighted-average method in its process costing system. The following information for the assembly department was obtained from the accounting records for September (all materials are added at the beginning of the process):

Number of Units

Labor and Overhead Percent

CompleteWork in process inventory, Sept. 1...... 40,000 25%Transferred in during the month.......... 100,000Work in process inventory, Sept. 30.... 20,000 50%

Transferred In Materials

Labor and Overhead

Beginning work in process inventory. . $80,000 $37,600 $5,000Cost added during the month............... $251,000 $122,400 $66,500

133. The equivalent units for material for the month are:A) 100,000 unitsB) 120,000 unitsC) 140,000 unitsD) 160,000 units




Solution:

To solve for units transferred:+ Work in process, beginning.............................................. 40,000+ Units started into production during the month................ 100,000− Work in process, ending................................................... 20,000 = Units completed and transferred out during the month.... 120,000


Transferred to next department............................................ 120,000 Ending work in process (20,000 units × 100% complete). . . 20,000 Equivalent units of production............................................. 140,000

134. The cost per equivalent unit for labor and overhead for the month is:A) $0.50B) $0.125C) $0.52D) $0.55


Solution:

To solve for units transferred:+ Work in process, beginning.............................................. 40,000+ Units started into production during the month................ 100,000− Work in process, ending................................................... 20,000 = Units completed and transferred out during the month.... 120,000

Equivalent units of productionLabor and Overhead

Transferred to next department.............................................. 120,000 Ending work in process (20,000 units × 50% complete)....... 10,000 Equivalent units of production............................................... 130,000



Cost per Equivalent UnitLabor and Overhead




Iyer Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below:

Beginning work in process inventory:Units in beginning work in process inventory........................ 800Materials costs........................................................................ $13,900Conversion costs..................................................................... $7,200Percent complete with respect to materials............................ 85%Percent complete with respect to conversion......................... 20%

Units started into production during the month......................... 7,200Units transferred to the next department during the month....... 6,100Materials costs added during the month.................................... $115,700Conversion costs added during the month................................. $240,600Ending work in process inventory:

Units in ending work in process inventory............................. 1,900Percent complete with respect to materials............................ 75%Percent complete with respect to conversion......................... 10%






Solution:


Transferred to next department........................................................ 6,100 Ending work in process (1,900 units × 10% complete)................... 190 Equivalent units of production......................................................... 6,290



Solution:









Jones Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below:

Beginning work in process inventory:Units in beginning work in process inventory...................... 500Materials costs...................................................................... $8,500Conversion costs................................................................... $14,700Percent complete with respect to materials.......................... 85%Percent complete with respect to conversion....................... 55%


Units in ending work in process inventory........................... 1,400Percent complete with respect to materials.......................... 50%Percent complete with respect to conversion....................... 30%



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



Solution:Equivalent units of production

MaterialsTransferred to next department......................................... 4,400 Ending work in process (1,400 units × 50% complete)... . 700 Equivalent units of production.......................................... 5,100






Solution:









(Appendix 4A) The following data relate to the Mixing Department of Dillard Company for a recent month:

Units


ProcessingBeginning work in process inventory..... 10,000 65%Units started into production................... 50,000Units completed and transferred out....... 51,000Ending work in process inventory.......... 9,000 30%

All materials are added at the beginning of the mixing process.

139. Assuming that Dillard Company uses the FIFO method, the equivalent units for materials would be:A) 47,200B) 50,000C) 51,000D) 59,000

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

Solution:

Equivalent Units of ProductionMaterials

To complete beginning work in process (10,000 units × 0%).... 0 Units started and completed during the period (50,000 units

started − 9,000 units in ending inventory).............................. 41,000 Ending work in process (9,000 units × 100% complete)........... 9,000 Equivalent units of production................................................... 50,000



140. Assuming that Dillard Company uses the FIFO method, the equivalent units for processing would be:A) 47,200B) 50,200C) 51,000D) 60,000


Solution:


To complete beginning work in process (10,000 units × 35%).. 3,500 Units started and completed during the period (50,000 units

started − 9,000 units in ending inventory).............................. 41,000 Ending work in process (9,000 units × 30% complete)............. 2,700 Equivalent units of production................................................... 47,200

141. Assuming that Dillard Company uses the weighted-average method, the equivalent units for materials would be:A) 50,000B) 51,000C) 53,700D) 60,000


Solution:


Transferred to next department......................................................................51,000 Ending work in process (9,000 units × 100% complete)............................... 9,000 Equivalent units of production.......................................................................60,000



142. Assuming that Dillard Company uses the weighted-average method, the equivalent units for processing would be:A) 53,700B) 51,000C) 50,200D) 47,200


Solution:




(Appendix 4A) Activities in the Sargent Company's Assembly Department for the month of March follow:

Units Materials


Respect to Labor & Overhead

Work-in-process inventory, March 1...... 7,000 70% 35%Started into production during March..... 66,000Work-in-process inventory, March 31.... 5,000 45% 30%



143. The equivalent units for materials for March, using the weighted-average method, would be:A) 66,000B) 68,000C) 70,250D) 71,000


Solution:






144. The equivalent units for labor and overhead for March, using the weighted-average method, would be:A) 69,500B) 68,000C) 67,500D) 71,000


Solution:


Equivalent units of productionLabor and Overhead




145. The equivalent units for materials for March using the FIFO method, would be:A) 68,000B) 65,350C) 71,000D) 67,000

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

Solution:


Equivalent Units of Production

MaterialsTo complete beginning work in process (7,000 units × 30%)........... 2,100 Units started and completed during the period (66,000 units started

− 5,000 units in ending inventory)................................................. 61,000 Ending work in process (5,000 units × 45% complete)..................... 2,250 Equivalent units of production........................................................... 65,350



146. The equivalent units for labor and overhead for March using the FIFO method, would be:A) 62,950B) 65,050C) 66,000D) 67,050


Solution:


Equivalent Units of ProductionLabor and Overhead

To complete beginning work in process (7,000 units × 65%)........ 4,550 Units started and completed during the period (66,000 units

started − 5,000 units in ending inventory)................................... 61,000 Ending work in process (5,000 units × 30% complete).................. 1,500 Equivalent units of production........................................................ 67,050


Bronson Company has a process costing system and uses the weighted-average method. The company had 6,000 units in work in process on January 1 that were 60% complete with respect to conversion costs. During January 20,000 units were completed. On January 31, 8,000 units remained in work in process that were 40% complete with respect to conversion costs. Materials are added at the beginning of the process.



147. The equivalent units for January for conversion costs were:A) 19,600B) 22,400C) 23,200D) 25,600

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

Solution:



148. How many units were started into production during January?A) 18,000B) 19,600C) 20,000D) 22,000

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

Solution:

To solve for units started into production:+ Work in process, ending................................................... 8,000+ Units completed and transferred out during the month.... 20,000− Work in process, beginning.............................................. 6,000 = Units started into production during the month................ 22,000




The following information relates to the Blending Department of Kedakai Products Company for the month of May. Kedakai uses a weighted-average process costing system.

Work in process, beginning (May 1):Units in process...........................................................................................30,000Percent complete with respect to materials.................................................100%Percent complete with respect to conversion..............................................10%

Units completed and transferred out during May..........................................290,000Work in process, ending (May 31):

Units in process...........................................................................................17,000Percent complete with respect to materials.................................................100%Percent complete with respect to conversion..............................................80%

149. What are the Blending Department's equivalent units related to materials for May?A) 260,000B) 277,000C) 290,000D) 307,000


Solution:


Transferred to next department......................................... 290,000 Ending work in process (17,000 units × 100% complete) 17,000 Equivalent units of production.......................................... 307,000



150. What are the Blending Department's equivalent units related to conversion costs for May?A) 266,400B) 290,400C) 293,400D) 303,600


Solution:


Transferred to next department......................................... 290,000 Ending work in process (17,000 units × 80% complete). . 13,600 Equivalent units of production.......................................... 303,600


Bettie Corporation uses a weighted-average process costing system to collect costs related to production. The following selected information relates to production for October:

Materials ConversionUnits completed and transferred out...................... 50,000 50,000Equivalent units: work in process, October 31...... 10,000 4,000 Total equivalent units............................................. 60,000 54,000

Materials ConversionCosts in work in process on October 1.................. $ 9,000 $ 5,400Costs added to production during October............ 243,000 513,000 Total cost................................................................ $252,000 $518,400

All materials at Bettie are added at the beginning of the production process.



151. What total amount of cost should be assigned to the units completed and transferred out during October?A) $642,000B) $677,500C) $690,000D) $691,900


Solution:

Materials Conversion TotalTotal cost................................................... $252,000 $518,400Equivalent units......................................... ÷ 60,000 ÷ 54,000Cost per equivalent unit............................. $4.20 $9.60× # of units completed and transferred out 50,000 50,000Total cost of units completed and

transferred out........................................ $210,000 $480,000 $690,000

152. What total amount of cost should be assigned to the units in work in process on October 31?A) $78,500B) $80,400C) $135,500D) $138,000


Solution:

Materials Conversion TotalTotal cost................................................... $252,000 $518,400Equivalent units......................................... ÷ 60,000 ÷ 54,000Cost per equivalent unit............................. $4.20 $9.60× # of equivalent units in ending work in

process................................................... 10,000 4,000Total cost of ending work in process......... $42,000 $38,400 $80,400




(Appendix 4A) Owens Company uses a process costing system. For March, the beginning work in process inventory consisted of 60,000 units that were 60% complete with respect to processing. The ending work in process inventory for the month consisted of units that were 20% complete with respect to processing. A summary of unit and cost data for the month follows:

Units Processing CostWork in process inventory on March 1...... 60,000 $35,000Units started into production and costs

incurred during the month...................... 190,000 $700,000Units completed and transferred out.......... 200,000

153. Assuming that Owens Company uses the weighted-average method, which of the following is closest to the cost per equivalent unit for processing cost for March?A) $4.08B) $3.87C) $3.68D) $3.50


Solution:

To solve for ending work in process:+ Work in process, beginning............................................... 60,000+ Units started into production during the month................. 190,000− Units completed and transferred out during the month..... 200,000= Work in process, ending.................................................... 50,000



Equivalent units of productionProcessing

CostTransferred to next department.............................................. 200,000

Ending work in process (50,000 units × 20% complete)....... 10,000 Equivalent units of production............................................... 210,000




154. Assuming that Owens Company uses the FIFO method, which of the following is closest to the cost per equivalent unit for processing cost for March?A) $3.23B) $3.98C) $4.02D) $4.22

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



Solution:

To solve for ending work in process:+ Work in process, beginning............................................... 60,000+ Units started into production during the month................. 190,000− Units completed and transferred out during the month..... 200,000= Work in process, ending.................................................... 50,000

Equivalent Units of ProductionProcessing

CostTo complete beginning work in process (60,000 units ×

40%)................................................................................... 24,000 Units started and completed during the period (190,000

units started − 50,000 units in ending inventory)............... 140,000

Ending work in process (50,000 units × 20% complete)....... 10,000 Equivalent units of production............................................... 174,000


Cost added during the period (a)............................................ $700,000 Equivalent units of production (b)......................................... 174,000 Cost per equivalent unit (a) ÷ (b)........................................... $4.02


The following information relates to the Assembly Department of Jataca Corporation for the month of November. Jataca uses a weighted-average process costing system. All materials at Jataca are added at the beginning of the production process.

Number of Units


ConversionWork in process, November 1....... 4,000 40%Units started into production.......... 317,000Work in process, November 30..... 10,000 90%

On November 1, the work in process inventory account contained $6,400 of material cost and $4,400 of conversion cost. Cost per equivalent unit for November was $1.50 for materials and $2.80 for conversion costs.



155. What total amount of cost should be assigned to the units transferred out during November?A) $1,337,300B) $1,348,100C) $1,369,500D) $1,380,300


Solution:

To solve for units transferred:+ Work in process, beginning.............................................. 4,000+ Units started into production during the month................ 317,000− Work in process, ending.................................................... 10,000 = Units completed and transferred out during the month..... 311,000


Transferred to next department............................ 311,000 311,000 Ending work in process (materials: 10,000 units

× 100% complete; conversion: 10,000 units × 90% complete).................................................. 10,000 9,000


Cost per equivalent unit (given)........................... $1.50 $2.80

Materials Conversion

Units transferred out:Units transferred to the next department.............. 311,000 311,000 Cost per equivalent unit....................................... $1.50 $2.80 Cost of units transferred out................................. $466,500 $870,800 $1,337,300



156. What total amount of cost should be assigned to the units in work in process on November 30?A) $17,800B) $38,700C) $40,200D) $43,000


Solution:

To solve for units transferred:+ Work in process, beginning.............................................. 4,000+ Units started into production during the month................ 317,000− Work in process, ending.................................................... 10,000 = Units completed and transferred out during the month..... 311,000


Transferred to next department............................ 311,000 311,000 Ending work in process (materials: 10,000 units

× 100% complete; conversion: 10,000 units × 90% complete)................................................. 10,000 9,000

Equivalent units of production............................ 321,000 320,000

Cost per equivalent unit (given).......................... $1.50 $2.80


Materials ConversionEnding work in process inventory:Equivalent units of production (materials:

10,000 units × 100% complete; conversion: 10,000 units × 90% complete)......................... 10,000 9,000

Cost per equivalent unit....................................... $1.50 $2.80 Cost of ending work in process inventory........... $15,000 $25,200 $40,200




(Appendix 4A) Moureaux Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below:

Beginning work in process inventory:Units in beginning work in process inventory............. 600Materials costs............................................................. $7,800Conversion costs.......................................................... $10,700Percent complete with respect to materials.................. 65%Percent complete with respect to conversion............... 50%

Units started into production during the month.............. 5,700Units transferred to the next department during the

month........................................................................... 5,000Materials costs added during the month......................... $92,400Conversion costs added during the month...................... $160,000Ending work in process inventory:

Units in ending work in process inventory.................. 1,300Percent complete with respect to materials.................. 70%Percent complete with respect to conversion............... 40%






Solution:


To complete beginning work in process (600 units × 35%)....... 210 Units started and completed during the period (5,700 units

started − 1,300 units in ending inventory).............................. 4,400 Ending work in process (1,300 units × 70% complete)............. 910 Equivalent units of production................................................... 5,520

158. What are the equivalent units for conversion costs for the month in the first processing department?A) 520B) 6,300C) 4,400D) 5,220


Solution:


To complete beginning work in process (600 units × 50%)........ 300 Units started and completed during the period (5,700 units

started − 1,300 units in ending inventory)................................ 4,400 Ending work in process (1,300 units × 40% complete)............... 520 Equivalent units of production..................................................... 5,220





Solution:





Cost added during the period (a)................................................ $92,400 Equivalent units of production (b).............................................. 5,520 Cost per equivalent unit (a) ÷ (b)............................................... $16.74





Solution:





Cost added during the period (a)................................................ $160,000 Equivalent units of production (b).............................................. 5,220 Cost per equivalent unit (a) ÷ (b)............................................... $30.65





Solution:


To complete beginning work in process (materials: 600 units × 35% complete; conversion: 600 units × 50% complete)......... 210 300

Units started and completed during the period (5,700 units started − 1,300 units in ending inventory)........................................................ 4,400 4,400

Ending work in process (materials: 1,300 units × 70% complete; conversion: 1,300 units × 40% complete)................................................ 910 520



Cost added during the period (a)........................ $92,400 $160,000 Equivalent units of production (b)...................... 5,520 5,220 Cost per equivalent unit (a) ÷ (b)....................... $16.74 $30.65 $47.39



Units transferred out:Cost in beginning inventory............................... $7,800 $10,700 $ 18,500Cost to complete the units in beginning inventory:Equivalent units of production required to

complete the beginning inventory................... 210 300 Cost per equivalent unit...................................... $16.74 $30.65 Cost to complete the units in beginning

inventory......................................................... $3,515 $9,195 12,710Cost of units started and completed this period:Units started and completed this period............. 4,400 4,400 Cost per equivalent unit...................................... $16.74 $30.65 Cost of units started and completed this period. $73,652 $134,866 208,518 Cost of units transferred out............................... $239,728



Solution:


To complete beginning work in process (materials: 600 units × 35%; conversion: 600 units × 50%). 210 300

Units started and completed during the period (5,700 units started − 1,300 units in ending inventory)............................................................ 4,400 4,400

Ending work in process (materials: 1,300 units × 70% complete; conversion: 1,300 units × 40% complete)............................................................. 910 520





Cost added during the period (a)............................ $92,400 $160,000 Equivalent units of production (b).......................... 5,520 5,220 Cost per equivalent unit (a) ÷ (b)............................ $16.74 $30.65


Materials ConversionEnding work in process inventory:Equivalent units of production............................... 910 520 Cost per equivalent unit.......................................... $16.74 $30.65 Cost of ending work in process inventory.............. $15,233 $15,939 $31,171


(Appendix 4A) Prochino Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below:

Beginning work in process inventory:Units in beginning work in process inventory...................... 900Materials costs...................................................................... $9,500Conversion costs................................................................... $4,100Percent complete with respect to materials........................... 75%Percent complete with respect to conversion........................ 25%


Units in ending work in process inventory........................... 2,100Percent complete with respect to materials........................... 80%Percent complete with respect to conversion........................ 45%




163. What are the equivalent units for materials for the month in the first processing department?A) 1,680B) 9,605C) 10,700D) 7,700


Solution:


To complete beginning work in process (900 units × 25% complete)................................................................................ 225

Units started and completed during the period (9,800 units started − 2,100 units in ending inventory).............................. 7,700

Ending work in process (2,100 units × 80% complete)............. 1,680 Equivalent units of production................................................... 9,605





Solution:


To complete beginning work in process (900 units × 75% complete)................................................................................... 675

Units started and completed during the period (9,800 units started − 2,100 units in ending inventory)................................. 7,700

Ending work in process (2,100 units × 45% complete)................ 945 Equivalent units of production...................................................... 9,320


Cost added during the period (a)................................................... $143,000 Equivalent units of production (b)................................................. 9,320 Cost per equivalent unit (a) ÷ (b).................................................. $15.34





Solution:Equivalent Units of Production

Materials ConversionTo complete beginning work in process

(materials: 900 units × 25% complete; conversion: 900 units × 75% complete)........ 225 675

Units started and completed during the period (9,800 units started − 2,100 units in ending inventory)...................................................... 7,700 7,700

Ending work in process (materials: 2,100 units × 80% complete; conversion: 2,100 units × 45% complete)............................................... 1,680 945

Equivalent units of production.......................... 9,605 9,320


Cost added during the period (a)....................... $112,900 $143,000 Equivalent units of production (b).................... 9,605 9,320 Cost per equivalent unit (a) ÷ (b)...................... $11.75 $15.34 $27.10

Units transferred out:Cost in beginning inventory.............................. $9,500 $4,100 $ 13,600 Cost to complete the units in beginning inventory:Equivalent units of production required to

complete the beginning inventory................. 225 675 Cost per equivalent unit.................................... $11.75 $15.34 Cost to complete the units in beginning

inventory........................................................ $2,645 $10,357 13,001



Cost of units started and completed this period:Units started and completed this period............ 7,700 7,700 Cost per equivalent unit.................................... $11.75 $15.34 Cost of units started and completed this period $90,508 $118,144 208,652 Cost of units transferred out.............................. $235,253


(Appendix 4A) Malmedy Company uses the FIFO method in its process costing system. The following data pertain to operations in the first processing department for a recent month:

Work in process, beginning:Units in process................................................................. ?Percent complete with respect to materials....................... 75%Percent complete with respect to conversion.................... 50%Costs in the beginning inventory:Materials cost..................................................................... $2,300Conversion cost................................................................. $3,600

Units started into production during the month.................... 25,200Units completed and transferred out during the month........ 24,000Costs added to production during the month:

Materials cost..................................................................... $98,750Conversion cost................................................................. $220,500

Work in process, ending:Units in process................................................................. 2,000Percent complete with respect to materials....................... 80%Percent complete with respect to conversion.................... 45%

166. How many units were in the beginning work in process inventory?A) 600 unitsB) 1,000 unitsC) 800 unitsD) 1,400 units


Solution:+ Work in process, ending.................................................... 2,000+ Units completed and transferred out during the month..... 24,000− Units started into production during the month................. 25,200= Work in process, beginning............................................... 800



167. What was the cost per equivalent unit for materials during the month?A) $3.95B) $4.50C) $2.00D) $5.00


Solution:


started − 2,000 units in ending inventory)............................... 23,200 Ending work in process (2,000 units × 80% complete).............. 1,600 Equivalent units of production.................................................... 25,000

Cost per Equivalent UnitCost added during the period (a)................................................. $98,750 Equivalent units of production (b).............................................. 25,000 Cost per equivalent unit (a) ÷ (b)................................................ $3.95




(Appendix 4A) Quochang Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below:

Beginning work in process inventory:Units in beginning work in process inventory.............. 400Materials costs.............................................................. $6,900Conversion costs........................................................... $6,900Percent complete with respect to materials.................. 60%Percent complete with respect to conversion............... 35%

Units started into production during the month............... 5,700Materials costs added during the month.......................... $142,800Conversion costs added during the month....................... $242,800Ending work in process inventory:

Units in ending work in process inventory................... 900Percent complete with respect to materials.................. 70%Percent complete with respect to conversion............... 45%




168. How many units were started AND completed during the month in the first processing department?A) 5,200B) 4,800C) 6,100D) 5,700


Solution:

To solve for units transferred:+ Work in process, beginning............................................... 400+ Units started into production during the month................. 5,700− Work in process, ending.................................................... 900 = Units completed and transferred out during the month..... 5,200

Since there were 400 units in beginning work in process, these were not started AND completed, so the 400 should be subtracted from the total units completed and transferred out during the month (5,200 – 400 = 4,800) to arrive at the total units which were both started and completed during the month.





Solution:

ConversionTo complete beginning work in process (400 units × 65%

complete)................................................................................. 260 Units started and completed during the period (5,700 units

started − 900 units in ending inventory).................................. 4,800 Ending work in process (900 units × 45% complete)................. 405 Equivalent units of production.................................................... 5,465


Cost added during the period (a)................................................. $242,800 Equivalent units of production (b).............................................. 5,465 Cost per equivalent unit (a) ÷ (b)................................................ $44.43




(Appendix 4A) Noguti Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below:


Units started into production during the month............... 7,300Units transferred to the next department during the

month........................................................................... 7,000Materials costs added during the month.......................... $82,700Conversion costs added during the month $174,600Ending work in process inventory:..................................

Units in ending work in process inventory................... 500Percent complete with respect to materials.................. 50%Percent complete with respect to conversion............... 45%






Solution:


To complete beginning work in process (200 units × 30% complete) 60

Units started and completed during the period (7,300 units started − 500 units in ending inventory)................................. 6,800

Ending work in process (500 units × 50% complete)................ 250 Equivalent units of production................................................... 7,110





Solution:


To complete beginning work in process (200 units × 60% complete).................................................................................. 120

Units started and completed during the period (7,300 units started − 500 units in ending inventory)................................... 6,800

Ending work in process (500 units × 45% complete).................. 225 Equivalent units of production..................................................... 7,145


Cost added during the period (a).................................................. $174,600 Equivalent units of production (b)............................................... 7,145 Cost per equivalent unit (a) ÷ (b)................................................. $24.44




(Appendix 4A) Outinki Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below:


Units started into production during the month............... 7,800Units transferred to the next department during the

month........................................................................... 6,800Materials costs added during the month.......................... $97,600Conversion costs added during the month....................... $172,900Ending work in process inventory:

Units in ending work in process inventory................... 1,700Percent complete with respect to materials.................. 90%Percent complete with respect to conversion............... 25%




172. What are the equivalent units for conversion costs for the month in the first processing department?A) 6,910B) 425C) 8,500D) 6,100


Solution:


To complete beginning work in process (700 units × 55% complete)................................................................................... 385


Ending work in process (1,700 units × 25% complete)................ 425 Equivalent units of production...................................................... 6,910





Solution:


To complete beginning work in process (700 units × 25% complete)..................................................................................... 175

Units started and completed during the period (7,800 units started − 1,700 units in ending inventory).............................................. 6,100

Ending work in process (1,700 units × 90% complete).................. 1,530 Equivalent units of production........................................................ 7,805


Cost added during the period (a)..................................................... $97,600 Equivalent units of production (b).................................................. 7,805 Cost per equivalent unit (a) ÷ (b).................................................... $12.50


(Appendix 4A) Sumptuous Beer Company manufactures beer in two departments, Fermenting and Bottling. In the Fermenting Department, ingredients are placed in a large vat and fermented for three days. The beer is then transferred over to Bottling where it is further purified and bottled. Sumptuous uses a FIFO process cost system to collect costs in both departments.

On May 1, the Fermenting Department had 32,000 gallons (units) in process. These gallons were 100% complete with respect to materials (ingredients) and 80% complete with respect to conversion cost. During May, Fermenting started an additional 460,000 gallons into production. On May 31, Fermenting had 18,000 gallons in work in process. These gallons were 100% complete with respect to materials and 60% complete with respect to conversion cost.



174. What are the Fermenting Department's equivalent units (gallons) of production related to materials for May?A) 442,000B) 460,000C) 474,000D) 492,000


Solution:


To complete beginning work in process (32,000 units × 0% complete)...................................................................................... 0

Units started and completed during the period (460,000 units started − 18,000 units in ending inventory).................................. 442,000

Ending work in process (18,000 units × 100% complete)............... 18,000 Equivalent units of production......................................................... 460,000

175. What are the Fermenting Department's equivalent units (gallons) of production related to conversion costs for May?A) 459,200B) 474,800C) 477,200D) 478,400


Solution:


To complete beginning work in process (32,000 units × 20% complete)..................................................................................... 6,400


Ending work in process (18,000 units × 60% complete)................ 10,800 Equivalent units of production........................................................ 459,200




(Appendix 4A) Lahania Corporation uses a FIFO process costing system to collect costs related to production. The following selected information relates to production for April:

Equivalent units: Materials ConversionUnits in process, April 1........................................ 0 2,500Units started and completed during April.............. 32,000 32,000Units in process, April 31...................................... 8,000 1,500 Total equivalent units............................................. 40,000 36,000

Materials ConversionCosts in work in process on April 1....................... $ 50,400 $126,000Costs added to production during April................. 169,600 529,200 Total cost................................................................ $220,000 $655,200

All materials at Lahania are added at the beginning of the production process. Conversion costs are incurred uniformly over the production process. During April, Lahania completed 44,000 units.



176. What total amount of cost should be assigned to the units completed and transferred out during April?A) $642,830B) $819,230C) $833,360D) $1,009,760

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

Solution:

Equivalent Units of ProductionMaterialsConversion

To complete beginning work in process............................. 0 2,500 Units started and completed during the period................... 32,000 32,000 Ending work in process....................................................... 8,000 1,500 Equivalent units of production............................................ 40,000 36,000

Cost per Equivalent UnitMaterialsConversion

Cost added during the period (a)......................................... $169,600 $529,200 Equivalent units of production (b)...................................... 40,000 36,000 Cost per equivalent unit (a) ÷ (b)........................................ $4.24 $14.70

Units transferred out:Cost in beginning inventory................................................ $50,400 $126,000 Cost to complete the units in beginning inventory:Equivalent units of production required to complete the

beginning inventory......................................................... 0 2,500 Cost per equivalent unit...................................................... $4.24 $14.70 Cost to complete the units in beginning inventory............. $0 $36,750 Cost of units started and completed this period:Units started and completed this period.............................. 32,000 32,000 Cost per equivalent unit...................................................... $4.24 $14.70 Cost of units started and completed this period.................. $135,680 $470,400 Cost of units transferred out................................................ $186,080 $633,150

Total cost of units transferred out = $186,080 + $633,150 =$819,230.



177. What total amount of cost should be assigned to the units in work in process on April 30?A) $55,970B) $71,300C) $151,520D) $179,930


Solution:

Equivalent Units of Production:MaterialsConversion

To complete beginning work in process................... 0 2,500 Units started and completed during the period......... 32,000 32,000 Ending work in process............................................ 8,000 1,500 Equivalent units of production................................. 40,000 36,000

Cost per Equivalent Unit:MaterialsConversion Total

Cost added during the period (a).............................. $169,600 $529,200 Equivalent units of production (b)............................ 40,000 36,000 Cost per equivalent unit (a) ÷ (b)............................. $4.24 $14.70 $18.94

Costs of Ending Work in Process Inventory and Units Transferred Out:MaterialsConversion

Ending work in process inventory:Equivalent units of production................................. 8,000 1,500 Cost per equivalent unit............................................ $4.24 $14.70 Cost of ending work in process inventory................ $33,920 $22,050 $55,970




(Appendix 4A) The following information relates to the Cutting Department of Kittina Corporation for the month of February. Kittina uses a FIFO process costing system. All materials at Kittina are added at the beginning of the production process.

Number of units

Percentage complete with respect to

conversionWork in process, February 1.......... 18,000 10%Units started into production.......... 160,000Work in process, February 28........ 7,000 40%

On February 1, the work in process inventory account contained $55,620 of material cost and $123,120 of conversion cost. Cost per equivalent unit for February was $3.10 for materials and $7.50 for conversion costs.



178. What total amount of cost should be assigned to the units completed and transferred out during February?A) $1,743,300B) $1,812,600C) $1,814,040D) $1,922,040

Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 7 Level: Hard

Solution:


To complete beginning work in process (materials: 18,000 units × 0% complete; conversion: 18,000 units × 90% complete)...... 0 16,200

Units started and completed during the period (160,000 units started − 7,000 units in ending inventory)......................................................... 153,000 153,000

Ending work in process (materials: 7,000 units × 100% complete; conversion: 7,000 units × 40% complete).................................................. 7,000 2,800



Cost added during the period (a).......................... $496,000 $1,290,000 Equivalent units of production (b)....................... 160,000 172,000 Cost per equivalent unit (a) ÷ (b)......................... $3.10 $7.50 $10.60

Units transferred out:Cost in beginning inventory................................. $55,620 $123,120 $ 178,740Cost to complete the units in beginning inventory:Equivalent units of production required to

complete the beginning inventory.................... 0 16,200 Cost per equivalent unit....................................... $3.10 $7.50 Cost to complete the units in beginning

inventory........................................................... $0 $121,500 121,500



Cost of units started and completed this period:Units started and completed this period............... 153,000 153,000 Cost per equivalent unit....................................... $3.10 $7.50 Cost of units started and completed this period... $474,300 $1,147,500 1,621,800 Cost of units transferred out................................. $1,922,040

179. What total amount of cost should be assigned to the units in work in process on February 28?A) $29,680B) $42,700C) $44,520D) $53,200


Solution:


To complete beginning work in process (materials: 18,000 units × 0% complete; conversion: 18,000 units × 90% complete)............................................................ 0 16,200

Units started and completed during the period (160,000 units started − 7,000 units in ending inventory)............ 153,000 153,000

Ending work in process (materials: 7,000 units × 100% complete; conversion: 7,000 units × 40% complete)..... 7,000 2,800

Equivalent units of production.......................................... 160,000 172,000


Cost added during the period (a)....................................... $496,000 $1,290,000 Equivalent units of production (b)..................................... 160,000 172,000 Cost per equivalent unit (a) ÷ (b)...................................... $3.10 $7.50

Materials Conversion TotalEnding work in process inventory:Equivalent units of production.......................................... 7,000 2,800 Cost per equivalent unit..................................................... $3.10 $7.50 Cost of ending work in process inventory......................... $21,700 $21,000 $42,700




(Appendix 4B) Zorn Company has a Custodial Services department which services the company's Maintenance department and its two operating departments. Costs of the Custodial Services department are allocated to other departments on the basis of square feet of space occupied. The amount of space occupied by each department is given below:

Custodial Services.............. 500 square feetMaintenance....................... 2,000 square feetOperating Department 1..... 10,000 square feetOperating Department 2..... 8,000 square feet

Budgeted costs in the Custodial Services department total $36,000.

180. If Zorn Company uses the step-down method and allocates the Custodial Services costs first, the amount of this cost allocated to the Maintenance department would be closest to:A) $3,512B) $3,600C) $9,000D) $0


Solution:

Department: Square Feet PercentMaintenance..................................................................... 2,000 10%Operating Department 1................................................... 10,000 50%Operating Department 2................................................... 8,000 40% Total square feet............................................................... 20,000 100%

Total Custodial Services costs......................................... $36,000× % to Maintenance......................................................... 10%Custodial Services costs allocated to Maintenance......... $3,600



181. The amount of Custodial Services department cost allocated to Operating Department 2 under the direct method would be closest to:A) $14,400B) $14,049C) $16,000D) $9,000


Solution:

Department: Square Feet PercentOperating Department 1.............................. 10,000 56%Operating Department 2.............................. 8,000 44% Total square feet.......................................... 18,000 100%

Total Custodial Services costs.................... $36,000× % to Operating Department 2.................. 44%Custodial Services costs allocated to

Operating Department 2.......................... $16,000




(Appendix 4B) Kahuna Financial Services Corporation has two service departments and two operating departments. Selected information on the four departments for last year are as follows:

CPU HoursNumber of Employees

Service departments:Data Processing............... – 15Cafeteria.......................... 1,000 –

Operating departments:Investments..................... 15,000 114Loans............................... 9,000 171

Kahuna allocates Data Processing cost first on the basis of CPU hours. Kahuna then allocates Cafeteria cost on the basis of the number of employees. Operating costs in Data Processing for last year were $870,000. Operating costs in Cafeteria for last year were $200,000. No distinction is made between variable and fixed costs.



182. If service department costs are allocated using the direct method, how much service cost will be allocated from Data Processing to Investments?A) $435,000B) $522,000C) $528,000D) $543,750


Solution:


DepartmentData

Processing CafeteriaInvest-ments Loans Total

Departmental costs before allocation..... $870,000 $200,000 $1,070,000

Allocation:Data processing costs

(15/24, 9/24)*......... (870,000) $543,750 $326,250 0 Cafeteria costs

(114/285, 171/285)**............. (200,000) 80,000 120,000 0

Total costs after allocation................ $ 0 $ 0 $623,750 $446,250 $1,070,000

*Data processing costs are allocated on the basis of CPU hours: 15 + 9 = 24.**Cafeteria costs are allocated on the basis of the number of employees: 114 + 171 = 285.



183. If service department costs are allocated using the step-down method, how much service cost will be allocated from Data Processing to Loans?A) $313,200B) $316,800C) $326,250D) $330,000


Solution:


DepartmentData

Processing CafeteriaInvest-ments Loans Total

Departmental costs before allocation............. $870,000 $200,000 $1,070,000

Allocation:Data processing costs (1/25, 15/25, 9/25)*........ (870,000) 34,800 $522,000 $313,200 0

Cafeteria costs (114/285, 171/285)**..................... (234,800) 93,920 140,880 0

Total costs after allocation........................ $ 0 $ 0 $615,920 $454,080 $1,070,000

*Data processing costs are allocated on the basis of CPU hours: 15 + 9 + 1 = 25.**Cafeteria costs are allocated on the basis of the number of employees: 114 + 171 = 285.


(Appendix 4B) Greek Corporation has two service departments (Sigma and Delta) that provide service to each other and to two operating departments (Chi and Omega). Sigma provides 25% of its service to Delta, 15% of its service to Chi, and 60% of its service to Omega. Delta provides 8% of its service to Sigma, 69% of its service to Chi, and 23% of its service to Omega. Operating costs in Sigma are $90,000. Operating costs in Delta are $50,000. Cost allocations are made starting with Sigma. No distinction is made between variable and fixed costs.



184. If service department costs are allocated using the direct method, what is the total amount of service cost that will be allocated to Omega?A) $84,500B) $70,675C) $72,125D) $73,075


Solution:Service

DepartmentOperating

DepartmentSigma Delta Chi Omega Total

Departmental costs before allocation $90,000 $50,000 $140,000

Allocation:Sigma costs (15/75, 60/75)* (90,000) $18,000 $72,000 0 Delta costs (69/92, 23/92)** (50,000) 37,500 12,500 0 Total costs after allocation $ 0 $ 0 $55,500 $84,500 $140,000

*Sigma department costs allocation: 15% + 60% = 75%.**Delta department costs allocation: 69% + 23% = 92%.



185. If service department costs are allocated using the step-down method, what is the total amount of service cost that will be allocated to Chi?A) $48,000B) $67,875C) $63,525D) $64,125


Solution:Service

DepartmentOperating

DepartmentSigma Delta Chi Omega Total

Departmental costs before allocation................................ $90,000 $50,000 $140,000

Allocation:Sigma costs (25%, 15%, 60%)*..................................... (90,000) 22,500 $13,500 $54,000 0

Delta costs (69/92, 23/92)**. . . (72,500) 54,375 18,125 0 Total costs after allocation...... $ 0 $ 0 $67,875 $72,125 $140,000

*Sigma department costs allocation: 15% + 60% + 25% = 100%.**Delta department costs allocation: 69% + 23% = 92%.


(Appendix 4B) Seidell Corporation has two service departments, Administrative and Facilities, and two operating departments, Assembly and Customer Solutions.

Service Department Operating DepartmentAdminis-

trative Facilities AssemblyCustomer Solutions

Departmental costs.... $43,560 $54,720 $561,960 $253,030Employee hours........ 4,000 2,000 27,000 17,000Space occupied.......... 1,000 2,000 37,000 1,000

The company uses the direct method to allocate service department costs to operating departments. Administrative costs are allocated on the basis of employee hours and Facilities costs are allocated on the basis of space occupied.



186. The total amount of Administrative Department cost allocated to the Assembly Department is closest to:A) $26,730B) $25,568C) $42,414D) $23,522


Solution:Service

DepartmentOperating

Department

Admin. Facilities AssemblyCustomer Solutions Total

Departmental costs before allocation......................... $43,560 $54,720 $561,960 $253,030 $913,270

Allocation:Admin. costs (27/44, 17/44)*............................. (43,560) 26,730 16,830 0

Facilities costs (37/38, 1/38)**............................. (54,720) 53,280 1,440 0

Total costs after allocation $ 0 $ 0 $641,970 $271,300 $913,270

*Administration costs are allocated on the basis of employee hours: 27 + 17 = 44.**Facilities costs are allocated on the basis of space occupied: 37 + 1 = 38.



187. The total Customer Solutions Department cost after the allocations of service department costs is closest to:A) $269,175B) $254,470C) $270,593D) $271,300


Solution:Service

Department Operating Department

Admin. Facilities AssemblyCustomer Solutions Total

Departmental costs before allocation......................... $43,560 $54,720 $561,960 $253,030 $913,270

Allocation:Admin. costs (27/44,

17/44)*............................ (43,560) 26,730 16,830 0 Facilities costs (37/38,

1/38)**............................ (54,720) 53,280 1,440 0 Total costs after allocation. $ 0 $ 0 $641,970 $271,300 $913,270

*Administrative costs are allocated on the basis of employee hours: 27 + 17 = 44.**Facilities costs are allocated on the basis of space occupied: 37 + 1 = 38.




(Appendix 4B) Maute Clinic has two service departments, Administrative and Support, and two operating departments, Adult Medicine and Pediatrics.


trative SupportAdult

Medicine PediatricsDepartmental costs.... $23,600 $51,480 $259,690 $288,790Employee hours........ 3,000 2,000 26,000 14,000Space occupied.......... 3,000 2,000 38,000 6,000

The clinic uses the direct method to allocate service department costs to operating departments. Administrative Department costs are allocated on the basis of employee hours and Support Department costs are allocated on the basis of space occupied in square feet.



188. The total amount of Administrative Department cost allocated to the Adult Medicine Department is closest to:A) $13,636B) $14,610C) $20,382D) $15,340


Solution:Service

DepartmentOperating

Department

Admin. SupportAdult

Medicine Pediatrics TotalDepartmental costs before allocation........................... $23,600 $51,480 $259,690 $288,790 $623,560

Allocation:Admin. costs (26/40, 14/40)*............................... (23,600) 15,340 8,260 0

Support costs (38/44, 6/44)**............................... (51,480) 44,460 7,020 0

Total costs after allocation. . $ 0 $ 0 $319,490 $304,070 $623,560

*Administration costs are allocated on the basis of employee hours: 26 + 14 = 40.**Support costs are allocated on the basis of space occupied: 38 + 6 = 44.



189. The total Pediatrics Department cost after the allocations of service department costs is closest to:A) $302,436B) $304,070C) $304,136D) $295,810


Solution:Service

DepartmentOperating

Department

Admin. SupportAdult

Medicine Pediatrics TotalDepartmental costs before allocation........................... $23,600 $51,480 $259,690 $288,790 $623,560

Allocation:Admin. costs (26/40, 14/40)*............................... (23,600) 15,340 8,260 0

Support costs (38/44, 6/44)**............................... (51,480) 44,460 7,020 0


*Administration costs are allocated on the basis of employee hours: 26 + 14 = 40.**Support costs are allocated on the basis of space occupied: 38 + 6 = 44.




(Appendix 4B) Ockey Corporation uses the direct method to allocate service department costs to operating departments. The company has two service departments, Information Technology and Personnel, and two operating departments, Fabrication and Customization.

Service Department Operating DepartmentInformation Technology Personnel

Fabri-cation

Customi-zation

Departmental costs.... $26,880 $21,525 $251,210 $447,000Computer

workstations........... 37 18 43 37Employees................. 34 13 73 32

Information Technology Department costs are allocated on the basis of computer workstations and Personnel Department costs are allocated on the basis of employees.

190. The total amount of Information Technology Department cost allocated to the two operating departments is closest to:A) $26,880B) $15,929C) $58,119D) $21,943


Solution:

All of the Information Technology Department cost will be allocated to the two operating departments.



191. The total Fabrication Department cost after service department allocations is closest to:A) $270,110B) $277,969C) $280,623D) $274,308


Solution:Service

DepartmentOperating

DepartmentInfo. Tech. Personnel Fabrication Custom. Total

Departmental costs before allocation.......................... $26,880 $21,525 $251,210 $447,000 $746,615

Allocation:Info. Tech. costs (43/80, 37/80)*............................. (26,880) 14,448 12,432 0

Personnel costs (73/105, 32/105)**......................... (21,525) 14,965 6,560 0


*Information technology costs are allocated on the basis of number of computer workstations: 26 + 14 = 40.**Personnel costs are allocated on the basis of employees: 38 + 6 = 44.




(Appendix 4B) Romain Surgical Hospital uses the direct method to allocate service department costs to operating departments. The hospital has two service departments, Information Technology and Administration, and two operating departments, Surgery and Recovery.

Service Department Operating DepartmentInformation Technology

Admini-stration Surgery Recovery

Departmental costs.... $25,956 $36,356 $563,640 $588,200Computer

workstations........... 20 17 54 30Employees................. 15 13 95 27

Information Technology Department costs are allocated on the basis of computer workstations and Administration Department costs are allocated on the basis of employees.

192. The total amount of Information Technology Department cost allocated to the two operating departments is closest to:A) $18,019B) $109,015C) $21,587D) $25,956


Solution:

All of the Information Technology Department cost will be allocated to the two operating departments.



193. The total Surgery Department cost after service department allocations is closest to:A) $598,249B) $608,636C) $602,727D) $605,827


Solution:Service

DepartmentOperating

DepartmentInfo. Tech. Admin. Surgery Recovery Total

Departmental costs before allocation.......................... $25,956 $36,356 $563,640 $588,200 $1,214,152

Allocation:Info. Tech. costs (54/84, 30/84)*............................. (25,956) 16,686 9,270 0

Administration costs (95/122, 27/122)**........... (36,356) 28,310 8,046 0

Total costs after allocation $ 0 $ 0 $608,636 $605,516 $1,214,152

*Administration costs are allocated on the basis of computer workstations: 54 + 30 = 84.**Support costs are allocated on the basis of employees: 95 + 27 = 122.




(Appendix 4B) Strzelecki Corporation uses the step-down method to allocate service department costs to operating departments. The company has two service departments, Service Department A and Service Department B, and two operating departments, Operating Department X and Operating Department Y. Data concerning those departments follow:

Service Department Operating DepartmentService

Department A

Service Department

B

Operating Department

X


YDepartmental costs.... $37,800 $45,780 $247,360 $304,330Allocation base A...... 5,000 1,000 29,000 15,000Allocation base B...... 5,000 2,000 39,000 3,000

Service Department A costs are allocated first on the basis of allocation base A and Service Department B costs are allocated second on the basis of allocation base B.



194. In the first step of the allocation, the amount of Service Department A cost allocated to the Operating Department X is closest to:A) $24,360B) $21,924C) $16,948D) $24,914


Solution:


DepartmentService Dept. A

Service Dept. B

Oper. Dept. X

Oper. Dept.Y Total

Departmental costs before allocation............. $37,800 $45,780 $247,360 $304,330 $635,270

Allocation:Serv. Dept. A costs (1/45, 29/45, 15/45)*................ (37,800) 840 24,360 12,600 0

Serv. Dept. B costs (39/42, 3/42)**............... (46,620) 43,290 3,330 0

Total costs after allocation........................ $ 0 $ 0 $315,010 $320,260 $635,270

*Service Department A costs are allocated on the basis of allocation base A: 1 + 29 + 15 = 45.**Service Department B costs are allocated on the basis of allocation base B: 39 + 3 = 42.



195. The total Operating Department Y cost after allocations is closest to:A) $320,486B) $318,473C) $320,260D) $307,660


Solution:Service

DepartmentOperating

DepartmentService Dept. A

Service Dept. B

Oper. Dept. X

Oper. Dept.Y Total

Departmental costs before allocation............................ $37,800 $45,780 $247,360 $304,330 $635,270

Allocation:Serv. Dept. A costs (1/45, 29/45, 15/45)*..................... (37,800) 840 24,360 12,600 0

Serv. Dept. B costs (39/42, 3/42)**................................ (46,620) 43,290 3,330 0

Total costs after allocation... $ 0 $ 0 $315,010 $320,260 $635,270

*Service Department A costs are allocated on the basis of allocation base A: 1 + 29 + 15 = 45.**Service Department B costs are allocated on the basis of allocation base B: 39 + 3 = 42.




(Appendix 4B) Yamane Corporation, a manufacturer, uses the step-down method to allocate service department costs to operating departments. The company has two service departments, Administration and Facilities, and two operating departments, Assembly and Finishing. Data concerning those departments follow:


trative Facilities Assembly FinishingDepartmental costs.... $22,620 $67,440 $105,520 $427,780Labor hours............... 3,000 2,000 21,000 16,000Space occupied.......... 7,000 1,000 32,000 3,000

Administration Department costs are allocated first on the basis of labor hours and Facilities Department costs are allocated second on the basis of space occupied.



196. In the first step of the allocation, the amount of Administration Department cost allocated to the Assembly Department is closest to:A) $4,476B) $12,838C) $11,310D) $12,180


Solution:Service

DepartmentOperating

DepartmentAdmin. Facilities Assembly Finishing Total

Departmental costs before allocation........................... $22,620 $67,440 $105,520 $427,780 $623,360

Allocation:Admin. costs (2/39, 21/39, 16/39)*............................... (22,620) 1,160 12,180 9,280 0

Facilities costs (32/35, 3/35)**............................... (68,600) 62,720 5,880 0


*Administration costs are allocated on the basis of labor hours: 2 + 21 + 16 = 39.**Facilities costs are allocated on the basis of space occupied: 32 + 3 = 35.



197. The total Finishing Department cost after allocations is closest to:A) $443,342B) $433,660C) $441,102D) $442,940


Solution:Service

DepartmentOperating

DepartmentAdmin. Facilities Assembly Finishing Total

Departmental costs before allocation.............................. $22,620 $67,440 $105,520 $427,780 $623,360

Allocation:Admin. costs (2/39, 21/39, 16/39)*.................................. (22,620) 1,160 12,180 9,280 0

Facilities costs (32/35, 3/35)**.................................. (68,600) 62,720 5,880 0

Total costs after allocation..... $ 0 $ 0 $180,420 $442,940 $623,360

*Administration costs are allocated on the basis of labor hours: 2 + 21 + 16 = 39.**Facilities costs are allocated on the basis of space occupied: 32 + 3 = 35.




(Appendix 4B) Muckenfuss Clinic uses the step-down method to allocate service department costs to operating departments. The clinic has two service departments, Personnel and Information Technology (IT), and two operating departments, Family Medicine and Geriatric Medicine. Data concerning those departments follow:


Personnel ITFamily

MedicineGeriatric Medicine

Departmental costs.... $66,930 $11,678 $563,940 $82,310Employees................. 11 27 104 160PCs............................ 11 27 85 87

Personnel costs are allocated first on the basis of employees and IT costs are allocated second on the basis of PCs.



198. In the first step of the allocation, the amount of Personnel Department cost allocated to the Family Medicine Department is closest to:A) $23,920B) $58,405C) $23,049D) $26,366


Solution:Service

DepartmentOperating

Department

Personnel ITFamily

MedicineGeriatric Medicine Total

Departmental costs before allocation........................... $66,930 $11,678 $563,940 $82,310 $724,858

Allocation:Personnel costs (27/291, 104/291, 160/291)*........... (66,930) 6,210 23,920 36,800 0

IT costs (85/172, 87/172)** (17,888) 8,840 9,048 0 Total costs after allocation. . $ 0 $ 0 $596,700 $128,158 $724,858

*Personnel costs are allocated on the basis of employees: 27 + 104 + 160 = 291.**IT costs are allocated on the basis of number of PCs: 85 + 87 = 172.



199. The total Geriatric Medicine Department cost after allocations is closest to:A) $122,608B) $128,781C) $128,158D) $91,358


Solution:Service

DepartmentOperating

Department

Personnel ITFamily

MedicineGeriatric Medicine Total

Departmental costs before allocation.......................... $66,930 $11,678 $563,940 $82,310 $724,858

Allocation:Personnel costs (27/291, 104/291, 160/291)*.......... (66,930) 6,210 23,920 36,800 0

IT costs (85/172, 87/172)**.......................................... (17,888) 8,840 9,048 0






(Appendix 4B) Blondell Legal Services, LLC, uses the step-down method to allocate service department costs to operating departments. The firm has two service departments, Personnel and Information Technology (IT), and two operating departments, Family Law and Corporate Law. Data concerning those departments follow:


Personnel ITFamily

LawCorporate

LawDepartmental costs.... $85,284 $29,703 $883,360 $189,010Employees................. 11 25 121 163PCs............................ 12 26 112 137

Personnel costs are allocated first on the basis of employees and IT costs are allocated second on the basis of PCs.



200. In the first step of the allocation, the amount of Personnel Department cost allocated to the Family Law Department is closest to:A) $32,248B) $70,252C) $36,336D) $33,396


Solution:Service

DepartmentOperating

Department

Personnel ITFamily

LawCorporate

Law TotalDepartmental costs before allocation.......................... $85,284 $29,703 $883,360 $189,010 $1,187,357


IT costs (112/249, 137/249)**....................... (36,603) 16,464 20,139 0





201. The total Corporate Law Department cost after allocations is closest to:A) $254,137B) $246,630C) $254,301D) $209,149


Solution:Service

DepartmentOperating

Department

Personnel ITFamily

LawCorporate

Law TotalDepartmental costs before allocation.......................... $85,284 $29,703 $883,360 $189,010 $1,187,357


IT costs (112/249, 137/249)**....................... (36,603) 16,464 20,139 0





Essay Questions

202. Bayas Corporation uses processing costing. A number of transactions that occurred in November are listed below.

(1) Raw materials that cost $39,800 are withdrawn from the storeroom for use in the Mixing Department. All of these raw materials are classified as direct labor.

(2) Direct labor costs of $16,100 are incurred, but not yet paid, in the Mixing Department.

(3) Manufacturing overhead of $45,700 is applied in the Mixing Department using the department's predetermined overhead rate.

(4) Units with a carrying cost of $87,600 finish processing in the Mixing Department and are transferred to the Drying Department for further processing.

(5) Units with a carrying cost of $111,300 finish processing in the Drying Department, the final step in the production process, and are transferred to the finished goods warehouse.

(6) Finished goods with a carrying cost of $98,200 are sold.

Required:

Prepare journal entries for each of the transactions listed above.

Ans:

(1) Work in Process-Mixing Department $39,800Raw Materials $39,800

(2) Work in Process-Mixing Department $16,100Salaries and Wages Payable $16,100

(3) Work in Process-Mixing Department $45,700Manufacturing Overhead $45,700

(4) Work in Process-Drying Department $87,600Work in Process-Mixing Department $87,600

(5) Finished Goods $111,300Work in Process-Drying Department $111,300

(6) Cost of Goods Sold $98,200Finished Goods $98,200

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy



203. During August, the following transactions were recorded at Goyer Corporation. The company uses processing costing.

(1) Raw materials that cost $24,500 are withdrawn from the storeroom for use in the Assembly Department. All of these raw materials are classified as direct labor.

(2) Direct labor costs of $29,000 are incurred, but not yet paid, in the Assembly Department.

(3) Manufacturing overhead of $58,900 is applied in the Assembly Department using the department's predetermined overhead rate.

(4) Units with a carrying cost of $101,200 finish processing in the Assembly Department and are transferred to the Painting Department for further processing.

(5) Units with a carrying cost of $106,100 finish processing in the Painting Department, the final step in the production process, and are transferred to the finished goods warehouse.

(6) Finished goods with a carrying cost of $95,100 are sold.

Required:

Prepare journal entries for each of the transactions listed above.

Ans:

(1) Work in Process-Assembly Department $24,500Raw Materials $24,500

(2) Work in Process-Assembly Department $29,000Salaries and Wages Payable $29,000

(3) Work in Process-Assembly Department $58,900Manufacturing Overhead $58,900

(4) Work in Process-Painting Department $101,200Work in Process-Assembly Department $101,200

(5) Finished Goods $106,100Work in Process-Painting Department $106,100

(6) Cost of Goods Sold $95,100Finished Goods $95,100




204. Kamp Company uses the weighted-average method in its process costing. Information about units processed during a recent month in the Curing Department follow:

UnitsConversion Percent

CompletionBeginning work in process inventory........ 10,000 30%Units started into production...................... 150,000Units completed and transferred out.......... 140,000Ending work in process inventory............. 20,000 40%

The beginning work in process inventory had $4,600 in conversion cost. During the month, the Department incurred an additional $210,000 in conversion cost.

Required:

a. Determine the equivalent units of production for conversion for the month.b. Determine the cost per equivalent unit of production for conversion for the month.c. Determine the total conversion cost transferred out during the month.d. Determine the conversion cost assigned to the ending work in process inventory.

Ans:

a. Units transferred out............................................... 140,000Add: equivalent units in the ending inventory....... 8,000 Equivalent units of production............................... 148,000

b. Cost in the beginning inventory............................. $ 4,600Cost added during the month................................. 210,000 Total cost................................................................ $214,600

$214,600 ÷ 148,000 units = $1.45 per unit

c. 140,000 units × $1.45 per unit = $203,000

d. 20,000 units × 40% × $1.45 per unit = $11,600

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3,4 Level: Medium



205. Timberline Associates uses the weighted-average method in its process costing system. The following data are for the first processing department for a recent month:

Work in process, beginning:Units in process......................................................... 2,400Percent complete with respect to materials............... 75%Percent complete with respect to conversion............ 50%

Costs in the beginning inventory:Materials cost............................................................ $8,400Conversion cost......................................................... $7,200

Units started into production during the month........... 20,800Units completed and transferred out............................ 22,200Costs added to production during the month:

Materials cost............................................................ $97,400Conversion cost......................................................... $129,600

Work in process, ending:Units in process......................................................... 1,000Percent complete with respect to materials............... 80%Percent complete with respect to conversion............ 60%

Required:

a. Determine the equivalent units of production.b. Determine the costs per equivalent unit.c. Determine the cost of ending work in process inventory.d. Determine the cost of the units transferred to the next department.



Ans:

a. Materials ConversionTransferred to next department............ 22,200 22,200Ending work in process:

Materials: 1,000 units × 80%............ 800 Conversion: 1,000 units × 60%......... 600

Equivalent units of production............. 23,000 22,800

b. Materials ConversionWork in process, beginning................. $ 8,400 $ 7,200Cost added during the month............... 97,400 129,600 Total cost (a)........................................ $105,800 $136,800Equivalent units (above) (b)................. 23,000 22,800Cost per equivalent unit (a) ÷ (b)......... $4.60 $6.00

c. Materials Conversion TotalUnits transferred out............................ 22,200 22,200Cost per equivalent unit....................... $4.60 $6.00Cost transferred out.............................. $102,120 $133,200 $235,320

d. Materials Conversion TotalEquivalent units of production: ending

work in process................................. 800 600Cost per equivalent unit....................... $4.60 $6.00Cost of ending work in process............ $3,680 $3,600 $7,280

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3,4 Level: Hard



206. Avignon Inc. uses the weighted-average method in its process costing system. The following data concern the operations of the company's first processing department for a recent month.

Work in process, beginning:Units in process................................................... 900Percent complete with respect to materials......... 80%Percent complete with respect to conversion...... 10%

Costs in the beginning inventory:Materials cost...................................................... $6,768Conversion cost................................................... $3,186

Units started into production during the month..... 10,000Units completed and transferred out...................... 10,100Costs added to production during the month:

Materials cost...................................................... $97,104Conversion cost................................................... $356,940

Work in process, ending:Units in process................................................... 800Percent complete with respect to materials......... 90%Percent complete with respect to conversion...... 20%

Required:

a. Determine the equivalent units of production.b. Determine the costs per equivalent unit.c. Determine the cost of ending work in process inventory.d. Determine the cost of the units transferred to the next department.



Ans:

a. Materials ConversionUnits transferred to next department....... 10,100 10,100Ending work in process:

Materials: 800 units × 90%.................. 720 Conversion: 800 units × 20%............... 160 Equivalent units of production............. 10,820 10,260

b. Materials ConversionCost of beginning work in process.......... $ 6,768 $ 3,186Cost added during the month.................. 97,104 356,940 Total cost................................................. $103,872 $360,126Equivalent units....................................... 10,820 10,260Cost per equivalent unit........................... $9.60 $35.10

c. Ending work in process: Materials Conversion TotalEquivalent units of production................ 720 160Cost per equivalent unit........................... $9.60 $35.10Cost of ending work in process

inventory.............................................. $6,912 $5,616 $12,528

d. Materials Conversion TotalUnits completed and transferred out....... 10,100 10,100Cost per equivalent unit........................... $9.60 $35.10Cost of units transferred out.................... $96,960 $354,510 $451,470




207. Bansal Inc. uses the weighted-average method in its process costing system. The following data concern the operations of the company's first processing department for a recent month.


Costs in the beginning inventory:Materials cost...................................................... $342Conversion cost................................................... $4,518

Units started into production during the month..... 22,000Units completed and transferred out...................... 21,800Costs added to production during the month:



Required:

Using the weighted-average method:a. Determine the equivalent units of production for materials and conversion costs.b. Determine the cost per equivalent unit for materials and conversion costs.c. Determine the cost of units transferred out of the department during the month.d. Determine the cost of ending work in process inventory in the department.



Ans:

Weighted-average method:a. Materials Conversion

Units transferred to next department....... 21,800 21,800Ending work in process:

Materials: 500 units × 50%.................. 250 Conversion: 500 units × 20%............... 100 Equivalent units of production............. 22,050 21,900

b. Materials ConversionCost of beginning work in process.......... $ 342 $ 4,518Cost added during the month.................. 45,963 538,602 Total cost................................................. $46,305 $543,120Equivalent units....................................... 22,050 21,900Cost per equivalent unit........................... $2.10 $24.80

c. Ending work in process: Materials Conversion TotalEquivalent units of production................ 250 100Cost per equivalent unit........................... $2.10 $24.80Cost of ending work in process............... $525 $2,480 $3,005

d. Materials Conversion TotalUnits completed and transferred out....... 21,800 21,800Cost per equivalent unit........................... $2.10 $24.80Cost of units transferred out.................... $45,780 $540,640 $586,420




208. Whitney Company uses the weighted-average method in its process costing system. The following data were taken from the records of the first processing department for a recent month.


Costs in the beginning inventory:Materials cost...................................................... $1,200Conversion cost................................................... $3,000

Units started into production during the month..... 150Costs added to production during the month:



Required:

a. How many units were transferred to the next department during the month?b. What were the equivalent units of production for materials and for conversion

costs for the month?c. What were the costs per equivalent unit of production for materials and for

conversion costs for the month?d. What was the cost of the ending work in process inventory in the department at the

end of the month?



Ans:

Weighted-average method:a. Units in beginning inventory...................... 10

+ Units started into production.................. 150 − Units in ending inventory....................... 20 = Units transferred out............................... 140

b. Materials ConversionTransferred to next department.................. 140 140Work in process, ending............................. 8 4 Equivalent units of production................... 148 144

c. Materials ConversionWork in process, beginning........................ $ 1,200 $ 3,000Cost added during the month..................... 42,460 137,400 Total cost (a)............................................... $43,660 $140,400Equivalent units (above) (b)....................... 148 144Cost per equivalent unit (a) ÷ (b)............... $295 $975

d. Materials Conversion TotalEnding work in process equivalent units.... 8 4Cost per equivalent unit.............................. $295 $975Cost of ending work in process.................. $2,360 $3,900 $6,260




209. Mccabe Corporation uses the weighted-average method in its process costing. The following data pertain to its Assembly Department for November.

Percent CompleteUnits Materials Conversion

Work in process, November 1................... 800 55% 10%Units started into production during

November............................................... 8,200Units completed during November and

transferred to the next department.......... 7,300Work in process, November 30................. 1,700 75% 25%

Required:

Compute the equivalents units of production for both materials and conversion costs for the Assembly Department for November using the weighted-average method.

Ans:

Weighted-average method:Materials Conversion

Units transferred to the next department.......... 7,300 7,300Work in process, November 30:

1,700 units × 75%......................................... 1,2751,700 units × 25%......................................... 425

Equivalent units of production......................... 8,575 7,725




210. The following data have been provided by Cutts Corporation, which uses the weighted-average method in its process costing. The data are for the company's Shaping Department for February.


Work in process, February 1.................... 300 50% 10%Units started into production during

February................................................ 5,200Units completed during February and

transferred to the next department........ 4,800Work in process, February 28.................. 700 50% 40%

Required:

Compute the equivalents units of production for both materials and conversion costs for the Shaping Department for February using the weighted-average method.

Ans:


Units transferred to the next department................ 4,800 4,800Work in process, February 28:

700 units × 50%.................................................. 350 700 units × 40%.................................................. 280 Equivalent units of production............................ 5,150 5,080




211. Camelin Inc. uses the weighted-average method in its process costing system. The following data concern the operations of the company's first processing department for a recent month.

Work in process, beginning:Units in process............................................................. 600Percent complete with respect to materials................... 60%Percent complete with respect to conversion................ 70%

Units started into production during the month................ 20,000Work in process, ending:

Units in process............................................................. 800Percent complete with respect to materials................... 80%Percent complete with respect to conversion................ 50%

Required:

Using the weighted-average method, determine the equivalent units of production for materials and conversion costs.

Ans:


Transferred to next department............ 19,800 19,800Work in process, ending:

Materials: 800 units × 80%............... 640 Conversion: 800 units × 50%............ 400 Equivalent units of production.......... 20,440 20,200




212. Poirrier Corporation uses process costing. The following data pertain to its Assembly Department for May.

Units in process, May 1: materials 75% complete, conversion 30% complete................................................ 700

Units started into production during May........................... 5,500Units completed and transferred to the next department..... 4,600Units in process, May 31: materials 85% complete,

conversion 65% complete................................................ 1,600

Required:

Determine the equivalent units of production for the Assembly Department for May using the weighted-average method.

Ans:



Materials: 1,600 units × 85%............ 1,360Conversion: 1,600 units × 65%......... 1,040Equivalent units of production.......... 5,960 5,640




213. Greenham Corporation uses the weighted-average method in its process costing. The following data pertain to its Materials Preparation Department for March.

Units in process, March 1: materials 75% complete, conversion 60% complete................................................. 400

Units started into production during March.......................... 6,800Units completed and transferred to the next department...... 6,300Units in process, March 31: materials 55% complete,

conversion 10% complete................................................. 900

Required:

Determine the equivalent units of production for the Materials Preparation Department for March using the weighted-average method.

Ans:



Materials: 900 units × 55%............... 495 Conversion: 900 units × 10%............ 90 Equivalent units of production.......... 6,795 6,390




214. Jahncke Inc. uses the weighted-average method in its processing costing. The following data concern the company's Assembly Department for the month of April.

Materials ConversionWork in process, April 1.................................. $3,600 $1,902Cost added to production in the Assembly

Department during April.............................. $103,882 $278,010Equivalent units of production for April.......... 8,810 8,720

Required:

Compute the costs per equivalent unit for the Assembly Department for April.

Ans:


Work in process, April 1........................................ $ 3,600 $ 1,902Cost added during the month in the Assembly

Department......................................................... 103,882 278,010 Total cost................................................................ $107,482 $279,912Equivalent units of production............................... 8,810 8,720Cost per equivalent unit......................................... $12.20 $32.10




215. Holling Inc. uses the weighted-average method in its processing costing. The following data concern the company's Mixing Department for the month of December.

Materials ConversionWork in process, December 1.......................................... $7,530 $8,528Cost added to production in the Mixing Department

during December.......................................................... $225,900 $283,632Equivalent units of production for December................. 9,300 8,800

Required:

Compute the cost per equivalent unit for materials and conversion for the Mixing Department in December.

Ans:


Work in process, December 1.......................................... $ 7,530 $ 8,528Cost added during the month in the Mixing Department 225,900 283,632 Total cost......................................................................... $233,430 $292,160Equivalent units of production........................................ 9,300 8,800Cost per equivalent unit................................................... $25.10 $33.20




216. Hutchcroft Corporation uses the weighted-average method in its processing costing. The following data concern the company's Assembly Department for the month of December.

Materials ConversionCost per equivalent unit................................................... $24.30 $27.10Equivalent units in ending work in process..................... 630 225

During the month, 6,200 units were completed and transferred from the Assembly Department to the next department.

Required:

Determine the cost of ending work in process inventory and the cost of units transferred out of the department during December using the weighted-average method.

Ans:

Weighted-average method:Transferred to the next department:

6,200 units at $51.40 per unit.....................................................................$318,680Work in process, December 31:

Materials, 630 EUs at $24.30 per EU.........................................................$15,309Conversion, 225 EUs at $27.10 per EU...................................................... 6,098 Total work in process, December 31..........................................................$21,407

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium



217. Lorona Inc. has provided the following data concerning the Assembly Department for the month of June. The company uses the weighted-average method in its processing costing.

Materials ConversionCost per equivalent unit......................................... $8.10 $28.50Equivalent units in ending work in process........... 1,330 1,235

During the month, 7,400 units were completed and transferred from the Assembly Department to the next department.

Required:

Determine the cost of ending work in process inventory and the cost of units transferred out of the department during June using the weighted-average method.

Ans:

Weighted-average method:Transferred to the next department:

7,400 units × $36.60 per unit........................... $270,840Work in process, June 30:

Materials, 1,330 EUs at $8.10 per EU............. $10,773Conversion, 1,235 EUs at $28.50 per EU........ 35,198Total work in process, June 30........................ $45,971

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium



218. Dalsace Inc. uses the FIFO method in its process costing system. The following data concern the operations of the company's first processing department for a recent month.

Work in process, beginning:Units in process............................................................ 400Percent complete with respect to materials.................. 60%Percent complete with respect to conversion............... 40%

Costs in the beginning inventory:Materials cost................................................................ $1,944Conversion cost............................................................ $4,512

Units started into production during the month............... 15,000Units completed and transferred out................................ 14,500Costs added to production during the month:


Work in process, ending:Units in process............................................................ 900Percent complete with respect to materials.................. 90%Percent complete with respect to conversion............... 40%

Required:

Using the FIFO method:a. Determine the equivalent units of production for materials and conversion costs.b. Determine the cost per equivalent unit for materials and conversion costs.c. Determine the cost of ending work in process inventory.d. Determine the cost of units transferred out of the department during the month.



Ans:

FIFO method:a. Materials Conversion

To complete the beginning work in process:Materials: 400 units × (100% − 60%).................... 160Conversion: 400 units × (100% − 40%)................. 240

Units started and completed (14,500 − 400)............. 14,100 14,100Ending work in process:

Materials: 900 units × 90%.................................... 810 Conversion: 900 units × 40%................................. 360 Equivalent units of production............................... 15,070 14,700

b. Materials ConversionCost added during the month.................................... $119,053 $418,950Equivalent units of production.................................. 15,070 14,700Cost per equivalent unit............................................. $7.90 $28.50

c. Materials Conversion TotalEnding work in process:Equivalent units of production.................................. 810 360Cost per equivalent unit............................................. $7.90 $28.50Cost of ending work in process................................. $6,399 $10,260 $16,659

d. Materials Conversion TotalCost from the beginning inventory............................ $1,944 $4,512 $6,456Cost to complete the units in beginning inventory:

Equivalent units to complete.................................. 160 240Cost per equivalent unit......................................... $7.90 $28.50Cost to complete..................................................... $1,264 $6,840 $8,104

Cost of units started and completed:Units started and completed................................... 14,100 14,100Cost per equivalent unit......................................... $7.90 $28.50Cost of units started and completed....................... $111,390 $401,850 $513,240

Total cost of units transferred out............................. $527,800

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



219. Engsbye Inc. uses the FIFO method in its process costing system. The following data concern the operations of the company's first processing department for a recent month.


Costs in the beginning inventory:Materials cost................................................................ $800Conversion cost............................................................ $406

Units started into production during the month............... 20,000Units completed and transferred out................................ 20,000Costs added to production during the month:


Work in process, ending:Units in process............................................................ 200Percent complete with respect to materials.................. 80%Percent complete with respect to conversion............... 50%

Required:

Using the FIFO method:a. Determine the equivalent units of production for materials and conversion costs.b. Determine the cost per equivalent unit for materials and conversion costs.c. Determine the cost of ending work in process inventory.d. Determine the cost of units transferred out of the department during the month.



Ans:

FIFO method:a. Materials Conversion

To complete the beginning work in process:Materials: 200 units × (100% − 80%)......... 40Conversion: 200 units × (100% − 10%)...... 180

Units started and completed (20,000 − 200)... 19,800 19,800Ending work in process:

Materials: 200 units × 80%.......................... 160 Conversion: 200 units × 50%...................... 100

Equivalent units of production........................ 20,000 20,080

b. Materials ConversionCost added during the month.......................... $96,000 $413,648Equivalent units of production....................... 20,000 20,080Cost per equivalent unit.................................. $4.80 $20.60

c. Ending work in process: Materials Conversion TotalEquivalent units of production................ 160 100Cost per equivalent unit........................... $4.80 $20.60Cost of ending work in process............... $768 $2,060 $2,828

d. Materials Conversion TotalCost from the beginning inventory.......... $800 $406 $1,206Cost to complete the units in beginning

inventory:Equivalent units to complete................ 40 180Cost per equivalent unit....................... $4.80 $20.60Cost to complete................................... $192 $3,708 $3,900

Cost of units started and completed:Units started and completed................. 19,800 19,800Cost per equivalent unit....................... $4.80 $20.60Cost of units started and completed..... $95,040 $407,880 $502,920

Total cost of units transferred out........... $508,026

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



220. Lenning Corporation uses the FIFO method in its process costing. The following data pertain to its Assembly Department for July.


Work in process, July 1.............................. 300 75% 10%Units started into production during July... 6,100Units completed during July and

transferred to the next department.......... 5,600Work in process, July 31............................ 800 90% 85%

Required:

Compute the equivalent units of production for both materials and conversion costs for the Assembly Department for July using the FIFO method.

Ans:

FIFO method:Materials Conversion

Work in process, July 1:300 units × (100% − 75%)...................... 75300 units × (100% − 10%)...................... 270

Units started and completed in July........... 5,300 5,300Work in process, July 31:

800 units × 90%...................................... 720 800 units × 85%...................................... 680

Equivalent units of production................... 6,095 6,250

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



221. The following data pertain to the Milling Department of Malmberg Corporation for June. The company uses the FIFO method in its process costing.


Work in process, June 1............................. 800 80% 35%Units started into production during June. . 9,400Units completed during June and

transferred to the next department.......... 8,300Work in process, June 30........................... 1,900 75% 40%

Required:

Compute the equivalents units of production for both materials and conversion costs for the Milling Department for June using the FIFO method.

Ans:


Work in process, June 1:800 units × (100% − 80%)..........................................................................160800 units × (100% − 35%).......................................................................... 520

Units started and completed in June..............................................................7,500 7,500Work in process, June 30:

1,900 units × 75%.......................................................................................1,4251,900 units × 40%....................................................................................... 760

Equivalent units of production.......................................................................9,085 8,780




222. Fuchs Inc. uses the FIFO method in its process costing system. The following data concern the operations of the company's first processing department for a recent month.


Units started into production during the month............... 14,000Work in process, ending:

Units in process............................................................ 800Percent complete with respect to materials.................. 60%Percent complete with respect to conversion............... 40%

Required:

Using the FIFO method, determine the equivalent units of production for materials and conversion costs.

Ans:


To complete the beginning work in process:Materials: 800 units × (100% − 70%)................. 240Conversion: 800 units × (100% − 10%)............. 720

Units started and completed (14,000 − 800).......... 13,200 13,200Ending work in process:

Materials: 800 units × 60%................................. 480 Conversion: 800 units × 40%.............................. 320





223. Clarks Corporation uses the FIFO method in its process costing. The following data pertain to its Assembly Department for August.

Units in process, August 1: materials 85% complete, conversion 20% complete............................................ 700

Units started into production during August................... 9,400Units completed and transferred to the next department. 8,300Units in process, August 31: materials 90% complete,

conversion 60% complete............................................ 1,800

Required:

Determine the equivalent units of production for the Assembly Department for August using the FIFO method.

Ans:


To complete the beginning work in process:Materials: 700 units × (100% − 85%).............. 105Conversion: 700 units × (100% − 20%).......... 560

Units started and completed (8,300 – 700)......... 7,600 7,600Ending work in process:

Materials: 1,800 units × 90%........................... 1,620Conversion: 1,800 units × 60%........................ 1,080

Equivalent units of production............................ 9,325 9,240




224. The following data have been provided by Corby Corporation for the Circuit Prep Department. The company uses the FIFO method in its process costing.

Units in process, May 1: materials 60% complete, conversion 45% complete............................................................................. 500

Units started into production during May...................................... 8,900Units started and completed during May....................................... 7,800Units completed and transferred to the next department during

May............................................................................................ 8,300Units in process, May 31: materials 80% complete, conversion

40% complete............................................................................. 1,100

Required:

Determine the equivalent units of production for the Circuit Prep Department for May using the FIFO method.

Ans:


To complete the beginning work in process:Materials: 500 units × (100% − 60%)................. 200Conversion: 500 units × (100% − 45%)............. 275

Units started and completed................................... 7,800 7,800Ending work in process:

Materials: 1,100 units × 80%.............................. 880 Conversion: 1,100 units × 40%........................... 440





225. Zubris Corporation uses the FIFO method in its processing costing. The following data concern the company's Assembly Department for the month of July.

Materials ConversionWork in process, July 1.............................. $4,761 $5,365Cost added to production in the Assembly

Department during July.......................... $26,496 $34,040Equivalent units of production for July..... 2,070 1,850

Required:

Compute the costs per equivalent unit for the Assembly Department for July using the FIFO method.

Ans:


Cost added during July............................... $26,496 $34,040Equivalent units of production................... 2,070 1,850Cost per equivalent unit............................. $12.80 $18.40

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 6 Level: Easy



226. Rauzman Corporation uses the FIFO method in its processing costing. The following data concern the company's Mixing Department for the month of August.

Materials ConversionWork in process, August 1.................................. $25,641 $15,300Cost added to production in the Mixing

Department during August.............................. $170,940 $179,775Equivalent units of production for August.......... 7,770 7,650

Required:

Compute the cost per equivalent unit for materials and conversion for the Mixing Department for August using the FIFO method.

Ans:


Cost added during the month......... $170,940 $179,775Equivalent units............................. 7,770 7,650Cost per equivalent unit................. $22.00 $23.50

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4A LO: 6 Level: Easy



227. Crone Corporation uses the FIFO method in its processing costing system. The following data concern the company's Assembly Department for the month of October.

Cost in beginning work in process inventory........ $1,920Units started and completed this month................. 3,130

Materials ConversionCost per equivalent unit......................................... $9.50 $20.40Equivalent units required to complete the units in

beginning work in process inventory................. 360 140Equivalent units in ending work in process

inventory............................................................. 330 264

Required:

Determine the cost of ending work in process inventory and the cost of units transferred out of the department during October using the FIFO method.

Ans:

FIFO method:Transferred to the next department:

From the beginning work in process inventory:Cost in beginning work in process inventory............ $ 1,920Cost to complete these units:

Materials, 360 EUs at $9.50 per EU....................... 3,420Conversion, 140EUs at $20.40 per EU.................. 2,856

Total cost from beginning inventory......................... 8,196Units started and completed this month, 3,130 units at

$29.90 per unit.......................................................... 93,587 Total cost transferred to the next department............... $101,783

Work in process, October 31:Materials, 330 EUs at $9.50 per EU............................. $3,135Conversion, 264 EUs at $20.40 per EU....................... 5,386 Total work in process, October 31............................... $8,521




228. The following data has been provided by Glasco Inc., a company that uses the FIFO method in its processing costing system. The data concern the company's Shaping Department for the month of June.

Cost in beginning work in process inventory.................. $1,690Units started and completed this month.......................... 4,110

Materials ConversionCost per equivalent unit....................................... $12.50 $45.70Equivalent units required to complete the units

in beginning work in process inventory........... 460 260Equivalent units in ending work in process

inventory........................................................... 220 176

Required:

Determine the cost of ending work in process inventory and the cost of the units transferred out of the department during June using the FIFO method.

Ans:

FIFO method:Transferred to the next department:

From the beginning work in process inventory:Cost in beginning work in process inventory. . $ 1,690Cost to complete these units:

Materials, at 460 EUs $12.50 per EU........... 5,750Conversion, at 260 EUs $45.70 per EU........ 11,882

Total cost from beginning inventory............... 19,322Units started and completed this month, 4,110

units at $58.20 per unit.................................... 239,202 Total cost transferred to the next department..... $258,524

Work in process, June 30:Materials, 220 EUs at $12.50 per EU................. $ 2,750Conversion, 176 EUs at $45.70 per EU.............. 8,043 Total work in process, June 30........................... $10,793




229. Central Medical Clinic has two service departments, Building Services and Energy, and three operating departments, Pediatrics, Geriatrics, and Surgery. Central allocates the cost of Building Services on the basis of square feet and Energy on the basis of patient days. No distinction is made between variable and fixed costs. Budgeted operating data for the year just completed follow:

Service Departments Operating Departments

Building Services Energy Pediatrics Geriatrics Surgery

Budgeted costs before allocation. $20,000 $10,000 $90,000 $60,000 $100,000

Square feet............. 1,000 4,000 6,000 18,000 12,000Patient days............ 0 0 5,500 7,700 8,800

Required:

a. Prepare a schedule to allocate service department costs to operating departments by the direct method (round all dollar amounts to the nearest whole dollar).

b. Prepare a schedule to allocate service department costs to operating departments by the step-down method, allocating Building Services first (round all amounts to the nearest whole dollar).



Ans:

a. Direct Method:


Budgeted costs before allocation $20,000 $10,000 $90,000 $60,000 $100,000

Allocation of Building Services: (20,000)Pediatrics:

6,000/36,000 × $20,000............ 3,333

Geriatrics:18,000/36,000 × $20,000............ 10,000

Surgery: 12,000/36,000 × $20,000......... 6,667

Allocation of Energy: (10,000)Pediatrics:

5,500/22,000 × $10,000............ 2,500

Geriatrics: 7,700/22,000 × $10,000............ 3,500

Surgery: 8,800/22,000 × $10,000............ 4,000

Costs after allocation............ $0 $0 $95,833 $73,500 $110,667



b. Step Method


Budgeted costs before allocation. $20,000 $10,000 $90,000 $60,000 $100,000

Allocation of Building Services: (20,000)Energy:

4,000/40,000 × $20,000............ 2,000

Pediatrics: 6,000/40,000 × $20,000............ 3,000

Geriatrics: 18,000/40,000 × $20,000......... 9,000

Surgery: 12,000/40,000 × $20,000......... 6,000

Allocation of Energy: (12,000)Pediatrics:

5,500/22,000 × $12,000............ 3,000

Geriatrics: 7,700/22,000 × $12,000............ 4,200

Surgery: 8,800/22,000 × $12,000............ 4,800

Costs after allocation............ $0 $0 $96,000 $73,200 $110,800

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 8,9 Level: Medium



230. Cerce Corporation uses the direct method to allocate service department costs to operating departments. The company has two service departments, Administrative and Facilities, and two operating departments, Assembly and Finishing.

Service Department Operating DepartmentAdministrative Facilities Assembly Finishing

Departmental costs.... $29,440 $46,740 $258,880 $320,280Employee hours........ 5,000 2,000 29,000 17,000Space occupied–

square feet.............. 2,000 2,000 30,000 8,000

Administrative Department costs are allocated on the basis of employee hours and Facilities Department costs are allocated on the basis of space occupied.

Required:

Allocate the service department costs to the operating departments using the direct method.

Ans:

Allocation rate for administrative costs = Cost to be allocated ÷ Allocation base= $29,440 ÷ (29,000 + 17,000) = $0.64Allocation rate for facilities costs = Cost to be allocated ÷ Allocation base= $46,740 ÷ (30,000 + 8,000) = $1.23

Administrative Facilities Assembly FinishingDepartmental costs................ $29,440 $46,740 $258,880 $320,280Allocation:

Administrative costs.......... (29,440) 18,560 10,880Facilities costs.................... (46,740) 36,900 9,840 Total costs after allocation. $ 0 $ 0 $314,340 $341,000

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 4B LO: 8 Level: Easy



231. Sandven Corporation uses the direct method to allocate its two service department costs to its two operating departments. Data concerning those departments follow:

Service Department

A

Service Department

B


X


YDepartmental costs.... $34,300 $66,230 $161,710 $503,220Allocation base A...... 5,000 1,000 32,000 17,000Allocation base B...... 8,000 2,000 32,000 5,000

Service Department A costs are allocated on the basis of allocation base A and Service Department B costs are allocated on the basis of allocation base B.

Required:

Allocate the service department costs to the operating departments using the direct method.Ans:

Allocation rate for Service Department A costs = Cost to be allocated ÷ Allocation base= $34,300 ÷ (32,000 + 17,000) = $0.70Allocation rate for Service Department B costs = Cost to be allocated ÷ Allocation base= $66,230 ÷ (32,000 + 5,000) = $1.79

Service Department

A

Service Department

B


X


YDepartmental costs....... $34,300 $66,230 $161,710 $503,220Service Department A.. (34,300) 22,400 11,900Service Department B. . (66,230) 57,280 8,950 Total costs after

allocation.................. $ 0 $ 0 $241,390 $524,070




232. The direct method is used by Kurpinski Clinic to allocate its service department costs to its operating departments. Data concerning those departments follow:

Service DepartmentsOperating

DepartmentsInformation Technology Personnel Pediatrics Prenatal

Departmental costs. $34,650 $31,356 $566,960 $688,220Computers.............. 22 17 44 46Employees.............. 15 15 75 42

Information Technology costs are allocated on the basis of computers and Personnel costs are allocated on the basis of employees.

Required:


Ans:

Allocation rate for Information Technology costs = Cost to be allocated ÷ Allocation base= $34,650 / (44 + 46) = $385.00Allocation rate for Personnel costs = Cost to be allocated ÷ Allocation base= $31,356 / (75 + 42) = $268.00

Service Departments Operating DepartmentsInformation Technology Personnel Pediatrics Prenatal

Departmental costs. . $34,650 $31,356 $566,960 $688,220Information

Technology.......... (34,650) 16,940 17,710Personnel................. (31,356) 20,100 11,256 Total costs after

allocation.............. $ 0 $ 0 $604,000 $717,186




233. Mercik Consultancy uses the direct method to allocate its service department costs to its operating departments. The company has two service departments, Information Technology and Administration, and two operating departments, Corporate Practice and Government Practice. Data concerning those departments follow:

Service Departments Operating DepartmentsInformation Technology

Admini-stration

Corporate Practice

Government Practice

Departmental costs. $26,244 $21,696 $226,170 $477,980Computers.............. 39 14 51 30Employees.............. 32 10 70 26

Information Technology Department costs are allocated on the basis of computers and Administration Department costs are allocated on the basis of employees.

Required:


Ans:

Allocation rate for Information Technology costs = Cost to be allocated ÷ Allocation base = $26,244 / (51 + 30) = $324.00Allocation rate for Administration costs = Cost to be allocated ÷ Allocation base = $21,696 / (70 + 26) = $226.00

Information Technology Administration

Corporate Practice

Government Practice

Departmental costs. $26,244 $21,696 $226,170 $477,980Information

Technology......... (26,244) 16,524 9,720Administration....... (21,696) 15,820 5,876 Total costs after

allocation............ $ 0 $ 0 $258,514 $493,576




234. Bazin Corporation has two service departments, Service Department A and Service Department B, and two operating departments, Operating Department X and Operating Department Y.

Service Department

A

Service Department

B


X


YDepartmental costs. $31,280 $55,640 $161,490 $399,350Allocation base A... 4,000 1,000 26,000 19,000Allocation base B... 6,000 2,000 30,000 2,000

The company uses the step-down method to allocate service department costs to operating departments. Service Department A costs are allocated first on the basis of allocation base A and Service Department B costs are allocated second on the basis of allocation base B.

Required:

Allocate the service department costs to the operating departments using the step-down method.

Ans:

Service Department

A

Service Department

B


X


YDepartmental costs................ $31,280 $55,640 $161,490 $399,350Service Department A costs.. (31,280) 680 17,680 12,920Service Department B costs. . (56,320) 52,800 3,520 Total costs after allocation.... $ 0 $ 0 $231,970 $415,790

Allocation rate for Service Department A costs = Cost to be allocated / Allocation base = $31,280 / (1,000 + 26,000 + 19,000) = $0.68Allocation rate for Service Department B costs = Cost to be allocated / Allocation base= ($55,640 + $680) / (30,000 + 2,000) = $1.76




235. Coakley Corporation uses the step-down method to allocate service department costs to operating departments. The company has two service departments, Administration and Facilities, and two operating departments, Assembly and Finishing.


DepartmentAdministration Facilities Assembly Finishing

Departmental costs. $22,260 $69,130 $137,520 $900,750Employee time....... 4,000 1,000 25,000 16,000Space occupied....... 6,000 1,000 34,000 9,000

Administration Department costs are allocated first on the basis of employee time and Facilities Department costs are allocated second on the basis of space occupied.

Required:


Ans:Admini-stration Facilities Assembly Finishing

Departmental costs................ $22,260 $69,130 $137,520 $900,750Administration costs............. (22,260) 530 13,250 8,480Facilities costs....................... (69,660) 55,080 14,580 Total costs after allocation.... $ 0 $ 0 $205,850 $923,810

Allocation rate for Administration Department costs = Cost to be allocated ÷ Allocation base= $22,260 ÷ (1,000 + 25,000 + 16,000) = $0.53Allocation rate for Facilities Department costs = Cost to be allocated ÷ Allocation base= ($69,130 + $530) ÷ (34,000 + 9,000) = $1.62




236. Georgeson Emergency Care Hospital uses the step-down method to allocate service department costs to operating departments. The hospital has two service departments, Administration and Information Technology (IT), and two operating departments, Emergency Room and Intensive Care.

Service Department Operating DepartmentAdmini-stration IT

Emergency Room

Intensive Care

Departmental costs. $13,340 $15,805 $597,700 $396,240Employees.............. 4 5 142 83Computers.............. 4 4 65 46

Administration Department costs are allocated first on the basis of employees and IT Department costs are allocated second on the basis of computers.

Required:


Ans:Admini-stration IT

Emergency Room

Intensive Care

Departmental costs........ $13,340 $15,805 $597,700 $396,240Administration costs...... (13,340) 290 8,236 4,814IT costs.......................... (16,095) 9,425 6,670 Total costs after

allocation.................... $ 0 $ 0 $615,361 $407,724

Allocation rate for Administration Department costs = Cost to be allocated ÷ Allocation base= $13,340 ÷ (5 + 142 + 83) = $58Allocation rate for IT Department costs = Cost to be allocated ÷ Allocation base= ($15,805 + $290) ÷ (65 + 46) = $145




237. Lester Natal Clinic uses the step-down method to allocate service department costs to operating departments. The clinic has two service departments, Administration and Information Technology (IT), and two operating departments, Prenatal Care and Postnatal Care.

Service Department Operating DepartmentAdmini-stration IT

Prenatal Care

Postnatal Care

Departmental costs. $20,448 $22,506 $570,720 $369,880Employees.............. 2 3 131 79Computers.............. 2 2 45 42

Administration Department costs are allocated first on the basis of employees and IT Department costs are allocated second on the basis of computers.

Required:


Ans:Admini-stration IT

Prenatal Care

Postnatal Care

Departmental costs............. $20,448 $22,506 $570,720 $369,880Administration costs.......... (20,448) 288 12,576 7,584IT costs.............................. (22,794) 11,790 11,004Total costs after allocation. $0 $0 $595,086 $388,468

Allocation rate for Administration Department costs = Cost to be allocated ÷ Allocation base= $20,448 ÷ (3 + 131 + 79) = $96Allocation rate for IT Department costs = Cost to be allocated ÷ Allocation base= ($22,506 + $288) ÷ (45 + 42) = $262





Documents

Chapter 041.Doc