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Chapter 03 Process Costing Answer Key
True / False Questions
1. Process costing is used to calculate the cost of homogenous goods or
services.
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Learning Objective: 03-01 Describe the key features of a process costing system.
Topic: Basic concepts in process costing
2. A major difference between job order costing and process costing is the
treatment of nonmanufacturing costs.
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Learning Objective: 03-01 Describe the key features of a process costing system.
Topic: Flow of costs in process costing
3-1
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3. A separate Work in Process Inventory account is used in process costing for
each major production process.
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Learning Objective: 03-01 Describe the key features of a process costing system.
Topic: Flow of costs in process costing
4. Process costing often combines direct materials and direct labor into a single
category called conversion costs.
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Learning Objective: 03-01 Describe the key features of a process costing system.
Topic: Flow of costs in process costing
3-2
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5. The process costing production report is used to determine how much
manufacturing cost to transfer out of Finished Goods Inventory and into Cost
of Goods Sold.
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Learning Objective: 03-01 Describe the key features of a process costing system.
Topic: Process costing production report
6. The process costing production report can be prepared using either the
weighted-average method or the last-in, first-out (LIFO) method.
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Learning Objective: 03-01 Describe the key features of a process costing system.
Topic: Process costing production report
3-3
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7. The key difference between a process costing production report prepared
using one of the two acceptable methods is how they deal with any units and
costs that are in ending Work in Process Inventory.
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Learning Objective: 03-01 Describe the key features of a process costing system.
Topic: Process costing production report
8. Equivalent units for materials may differ from the equivalent units for
conversion costs.
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Difficulty: 1 Easy
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 2: Convert physical units into equivalent units
3-4
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9. An equivalent unit is a measure used to convert costs incurred in the previous
period to costs incurred in the current period.
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Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 2: Convert physical units into equivalent units
10. Under the weighted-average method, the only partially completed units that
need to be addressed are the units in beginning inventory.
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Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 2: Convert physical units into equivalent units
3-5
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11. Cost per equivalent unit is calculated separately for direct materials and for
conversion costs.
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Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 3: Calculate cost per equivalent unit
12. The total cost of Work in Process incurred in one department during the period
must be allocated between costs transferred to the next department and costs
transferred to Finished Goods.
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Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 4: Reconcile the total cost of work in process inventory
3-6
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13. The production report contains information about the number of physical units
and equivalent units, but not their costs.
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Learning Objective: 03-04 Prepare a process costing production report using the
weighted-average method.
Topic: Step 5: Prepare a production report
14. Under the FIFO method, the units completed during the period must be
allocated between beginning units in process and units started and
completed.
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Difficulty: 1 Easy
Learning Objective: 03-S1 Prepare a process costing production report using the
first-in, first-out (FIFO) method.
Topic: Supplement 3A FIFO method
3-7
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15. Under process costing when the product is through the last production
process, the journal entry for total manufacturing cost includes a debit to Work
in Process Inventory and a credit to Finished Goods Inventory.
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Learning Objective: 03-S2 Prepare journal entries to record the flow of
manufacturing costs in a process cost system.
Topic: Supplement 3B journal entries for process costing
Multiple Choice Questions
16. Which of the following is not a characteristic of process costing?
A. Products are homogenous.
B. Costs are traced to production processes rather than products.
D. Processes are standardized.
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Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-01 Describe the key features of a process costing system.
Topic: Basic concepts in process costing
17. Which of the following is a characteristic of process costing?
A. Products are unique.
B. Costs are traced to products rather than to production
processes.
processes.
D. It can only be used for manufacturing firms and not used for service firms.
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18. Which of the following companies would most likely use process costing?
B. A law firm
C. A custom garden equipment manufacturer
D. A home remodeling company
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19. Consider a winery that employs eight people who work 40 hours per week (full
time), four people who work 20 hours per week, and one person who works 10
hours per week. How many full-time equivalent employees does the winery
employ?
A. 8
B. 10
C. 10.25
To calculate the number of full-time equivalent employees, determine the
number of equivalent units of employees. Each employee who works 40 hours
per week counts as one full-time equivalent employee. (8 FTE = 8 employees
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Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Pioneers in sustainability
Topic: Step 2: Convert physical units into equivalent units
3-11
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20. Which of the following statements is not correct with respect to Fetzer
Vineyards's sustainability efforts?
bottom line sustainability accounting in 2014.
B. Fetzer accounts for its profit (one component of the triple bottom line) based
on growth and dollars.
C. Fetzer accounts for its plant impact (one component of the triple bottom
line) by protecting its environment.
D. Fetzer accounts for its people impact (one component of the triple bottom
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21. Conversion costs consist of:
A. all costs of production.
B. raw materials and direct labor.
C. direct labor and manufacturing overhead.
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Learning Objective: 03-01 Describe the key features of a process costing system.
Topic: Flow of costs in process costing
22. Under process costing, which manufacturing costs are assigned to the product
as it moves from one manufacturing process to the next?
A. Direct materials, direct labor, and conversion costs
B. Direct materials, indirect materials, and manufacturing overhead
D. Direct materials, direct labor, and indirect labor
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Learning Objective: 03-01 Describe the key features of a process costing system.
Topic: Flow of costs in process costing
23. Which of the following statements is true?
A. A process costing system will have a single Work in Process Inventory
account.
account for each of the major processes.
C. A job costing system will have a separate Work in Process Inventory
account for each of the major processes.
D. A process costing system will have a separate Raw Materials Inventory
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24. Which of the following accounts will be treated differently by a process costing
system as compared to a job order costing system?
A. Raw Materials Inventory
C. Finished Goods Inventory
D. Cost of Goods Sold
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Topic: Flow of costs in process costing
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25. Which of the following statements is incorrect regarding the production
costing report?
on an annual basis.
B. The production report provides information about the number of units and
manufacturing costs that flow through a production process during an
accounting period.
C. The production report is used to determine how much manufacturing cost to
transfer out of Work in Process Inventory and into the next processing
department or finished goods if it is the last production process.
D. The production report is used to value any units that are in process at the
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Learning Objective: 03-01 Describe the key features of a process costing system.
Topic: Process costing production report
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26. Which of the following statements is correct with respect to the differences
between using the weighted-average method or the FIFO method of preparing
a process production report?
A. Use of FIFO is acceptable for GAAP, while use of weighted-average
method is not.
B. FIFO is simpler to use than the weighted-average
method.
C. Use of FIFO or weighted-average results in large differences for companies
that maintain minimal work-in-process inventory.
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Learning Objective: 03-01 Describe the key features of a process costing system.
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27. Which of the following is not a category used to reconcile the number of
physical units using the weighted average method of process costing?
A. Units started
B. Ending units in inventory
D. Units completed
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Learning Objective: 03-02 Reconcile the number of physical units using the
weighted-average method.
Topic: Step 1: Reconcile the number of physical units
28. To reconcile the number of physical units using the weighted average method
of process costing, one must determine whether the units were:
B. sold or still in inventory at the end of the
period.
C. in the next production process or sold at the end of the period.
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Learning Objective: 03-02 Reconcile the number of physical units using the
weighted-average method.
Topic: Step 1: Reconcile the number of physical units
29. To reconcile the number of physical units using the weighted average method
of process costing, one must determine whether the units were:
A. in process at the beginning of the period or were completed at the
beginning of the period.
B. in process at the beginning of the current period or in process at the
beginning of the previous period.
C. in process at the beginning of the period or were sold at the beginning of
the period.
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Learning Objective: 03-02 Reconcile the number of physical units using the
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Topic: Step 1: Reconcile the number of physical units
3-19
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30. Which of the following relationships is correct?
in inventory
B. Units started = beginning units in inventory + units completed + ending units
in inventory
C. Units started - beginning units in inventory = units completed + ending units
in inventory
D. Ending units in inventory + beginning units in inventory = units started -
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31. How could a firm using the weighted average method of process costing
calculate how many units were worked on during a period?
A. Add beginning units in inventory and units completed
B. Add beginning units in inventory and ending units in
inventory
D. Add units started and units completed
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Learning Objective: 03-02 Reconcile the number of physical units using the
weighted-average method.
Topic: Step 1: Reconcile the number of physical units
32. Every unit that passes through the production process must have been
counted in which category of physical units at some point?
A. Beginning units in inventory
C. Ending units in inventory
D. Units completed
3-21
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Learning Objective: 03-02 Reconcile the number of physical units using the
weighted-average method.
Topic: Step 1: Reconcile the number of physical units
33. Brody Corp. uses a process costing system. Beginning inventory for January
consisted of 1,300 units that were 40% completed. 13,000 units were started
during January. On January 31, the inventory consisted of 650 units that were
70% completed. How many units were completed during the period?
A. 12,350
C. 14,300
D. 14,950
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Learning Objective: 03-02 Reconcile the number of physical units using the
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Topic: Step 1: Reconcile the number of physical units
3-22
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34. Braden Corp. uses a process costing system. Beginning inventory for January
consisted of 1,300 units that were 60% completed. 13,000 units were started
into the process during January. During January, 12,000 units were completed.
How many units were in ending inventory on January 31?
A. 1,950
B. 1,300
C. 650
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35. Bildy Corp. uses a process costing system. During January, 14,000 units were
started, and 18,000 units were completed. On January 31, the inventory
consisted of 500 units that were 70% completed. How many units were in
beginning inventory on January 1?
A. 0
B. 500
C. 3,500
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36. Bosco Corp. uses a process costing system. Beginning inventory for January
consisted of 1,500 units that were 50% completed. During January, 10,000
units were completed. On January 31, the inventory consisted of 750 units that
were 75% completed. How many units were started during January?
A. 8,500
C. 10,000
D. 10,750
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37. How could a firm using the weighted average method of process costing
calculate how many units were started during a period?
A. Add units completed and beginning units in inventory, then subtract ending
units in inventory.
units in inventory.
C. Add beginning units in inventory, units completed, and ending units in
inventory.
D. Subtract ending units in inventory from units completed, then add beginning
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38. A firm using process costing needs to reconcile the number of physical units in
order to:
B. determine the number of units that were started during the
period.
C. reconcile beginning Work in Process Inventory with ending Work in Process
Inventory.
D. separate physical units from the equivalent units.
The point of reconciling physical units is to separate completed units, which
are 100% complete, from units in ending work in inventory, which are partially
complete.
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39. An equivalent unit is calculated by:
A. dividing the number of physical units by the percentage of completion.
completion.
C. dividing the number of physical units into direct materials and conversion
costs.
D. subtracting the number of physical units in ending Work in Process
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40. Equivalent units are tracked separately for which two categories of costs?
A. Direct labor and manufacturing
overhead.
cost.
C. Direct materials and indirect materials.
D. Finished goods and cost of goods
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Learning Objective: 03-03 Calculate the number of equivalent units using the
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Topic: Step 2: Convert physical units into equivalent units
41. Physical units multiplied by the percentage of completion yields:
A. units completed and transferred out.
B. beginning units in process.
D. ending units in process.
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Difficulty: 1 Easy
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 2: Convert physical units into equivalent units
42. For units that are completed and transferred out in a firm that uses the
weighted average method of process costing:
A. the number of units that came from beginning inventory is the same as the
number of units that were started during the period.
number of equivalent units for conversion cost.
C. the number of equivalent units is less than the number of physical units.
D. the number of equivalent units is more than the number of physical units.
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43. For a firm that uses the weighted average method of process costing, which of
the following must be true?
B. Equivalent units must be greater than or equal to physical units.
C. Physical units must be equal to equivalent units.
D. Physical units can be greater than or less than equivalent
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44. Brody Corp. uses a process costing system in which direct materials are
added at the beginning of the process and conversion costs are incurred
uniformly throughout the process. Beginning inventory for January consisted of
1,300 units that were 40% completed. 13,000 units were started into the
process during January. On January 31, the inventory consisted of 650 units
that were 70% completed. What would be the equivalent units for conversion
cost using the weighted average method?
A. 13,000
B. 13,585
D. 14,300
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45. Brody Corp. uses a process costing system in which direct materials are
added at the beginning of the process and conversion costs are incurred
uniformly throughout the process. Beginning inventory for January consisted of
1,300 units that were 40% completed. 13,000 units were started into the
process during January. On January 31, the inventory consisted of 650 units
that were 70% completed. What would be the equivalent units for direct
materials cost using the weighted average method?
A. 13,000
B. 13,585
C. 14,105
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46. Frost, Inc. is a service firm that uses process costing. The firm worked on a
total of 1,600 cases this month, 800 of which were completed during the
period. The remaining cases were 40% complete. The firm incurred $180,000
in direct labor and manufacturing overhead costs during the period, and had
$4,800 in direct labor and manufacturing costs in beginning inventory. Using
the weighted average method, what was the total number of equivalent units?
A. 800
C. 1,440
D. 1,600
800 cases were complete, leaving 800 (1,600 - 800 = 800) cases still in
process at 40% complete. Equivalent units = (800 × 100%) + (800 × 40%) =
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47. For a firm using the weighted average method of process costing, it would not
be necessary to translate physical units into equivalent units if:
A. the FIFO method were used instead.
B. direct materials were all added at the beginning of the process.
C. direct labor and manufacturing overhead were combined into a single
category called conversion costs.
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Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 2: Convert physical units into equivalent units
48. For a firm that uses process costing, calculating equivalent units makes it
possible to fulfill which of the following requirements of GAAP?
B. Assigning an appropriate value to liabilities
C. Expensing period costs as they are incurred
D. Recognizing revenue when it is realized or realizable
3-35
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Learning Objective: 03-03 Calculate the number of equivalent units using the
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Topic: Step 2: Convert physical units into equivalent units
49. Crador Corp. uses a process costing system in which direct materials are
added at the beginning of the process and conversion costs are incurred
uniformly throughout the process. Beginning inventory for January consisted of
1,300 units. 13,000 units were started into the process during January. On
January 31, the inventory consisted of 650 units. Equivalent units for
conversion costs were 14,235. What percentage complete was the ending
inventory with respect to conversion costs on January 31?
A. 70%
B. 80%
D. 100%
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50. Gatlin Manufacturing adds direct materials at the beginning of the production
process, while conversion costs are incurred uniformly throughout the process.
At the end of the period, equivalent units for direct materials were 250 more
than equivalent units for conversion costs. 1,000 units were started during the
period, and 1,000 units were also completed. Ending Work in Process
Inventory was 50% complete. How many physical units were in ending Work in
Process Inventory?
A. 250
C. 750
D. 1,000
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Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 2: Convert physical units into equivalent units
3-37
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51. Computing equivalent units is especially important for:
airplanes.
B. Goods that are started and completed during the same period.
C. Goods that take a relatively short time to produce, such as plastic bottles.
D. Goods with sustainability implications in their production processes.
AICPA: BB Critical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 2: Convert physical units into equivalent units
3-38
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52. Under the weighted average method of process costing, which of the following
formulas is used to calculate the cost per equivalent unit?
A. (Ending Inventory + Current Costs)/Physical Units
B. (Beginning Inventory + Current Costs)/Physical Units
C. (Ending Inventory + Current Costs)/Equivalent
Units
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 3: Calculate cost per equivalent unit
53. Under the weighted average method of process costing, the cost per
equivalent unit is calculated for which of the following categories?
A. Units sold and units in ending Finished Goods Inventory
C. Manufacturing costs and nonmanufacturing costs
D. Completed units and ending units in process
3-39
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McGraw-Hill Education.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 3: Calculate cost per equivalent unit
54. Cost per equivalent unit is kept separate for direct materials and conversion
costs because:
A. the physical units are different for the two categories.
B. the total manufacturing costs are different for the two categories.
D. the ending inventories are different for the two categories.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 3: Calculate cost per equivalent unit
3-40
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McGraw-Hill Education.
55. Which of the following is not used in the calculation of cost per equivalent
unit?
A. Current manufacturing costs
C. Equivalent units
D. Beginning inventory costs
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 3: Calculate cost per equivalent unit
56. To calculate cost per equivalent unit in process costing, divide total
manufacturing costs by the total number of equivalent units. Under the
weighted average method, what costs are reflected in total manufacturing
costs?
A. Only current period costs
B. Only prior period costs
costs
D. Both current and future period costs
3-41
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McGraw-Hill Education.
AICPA: BB Critical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 3: Calculate cost per equivalent unit
57. For a process costing firm, one could calculate the cost of beginning inventory
in which of the following ways?
B. Current costs - (equivalent units × cost per equivalent unit)
C. (Current costs × cost per equivalent unit) - equivalent units
D. Equivalent units × (current costs - cost per equivalent unit)
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Calculate cost per equivalent unit
3-42
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58. Frost, Inc. is a service firm that uses process costing. The firm worked on a
total of 1,600 cases this month, 800 of which were completed during the
period. The remaining cases were 40% complete. The firm incurred $180,000
in direct labor and manufacturing overhead costs during the period, and had
$4,800 in direct labor and manufacturing costs in beginning inventory. Using
the weighted average method, what was the cost per equivalent unit?
A. $115.50
B. $141.43
C. $145.20
800 cases were complete, leaving 800 (1,600 - 800 = 800) cases still in
process at 40% complete. Equivalent units = (800 × 100%) + (800 × 40%) =
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 3: Calculate cost per equivalent unit
3-43
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McGraw-Hill Education.
59. Kenney Co. uses process costing to account for the production of canned
energy drinks. Direct materials are added at the beginning of the process and
conversion costs are incurred uniformly throughout the process. Equivalent
units have been calculated to be 19,200 units for materials and 16,000 units
for conversion costs. Beginning inventory consisted of $11,200 in materials
and $6,400 in conversion costs. April costs were $57,600 for materials and
$64,000 for conversion costs. Ending inventory still in process was 6,400 units
(100% complete for materials, 50% for conversion). The cost per equivalent
unit for conversion costs using the weighted average method would be
A. $4.00
C. $1.10
D. $8.70
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 3: Calculate cost per equivalent unit
3-44
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McGraw-Hill Education.
60. Kenney Co. uses process costing to account for the production of canned
energy drinks. Direct materials are added at the beginning of the process and
conversion costs are incurred uniformly throughout the process. Equivalent
units have been calculated to be 19,200 units for materials and 16,000 units
for conversion costs. Beginning inventory consisted of $11,200 in materials
and $6,400 in conversion costs. April costs were $57,600 for materials and
$64,000 for conversion costs. Ending inventory still in process was 6,400 units
(100% complete for materials, 50% for conversion). The cost per equivalent
unit for materials using the weighted average method would be closest to:
A. $0.9167
B. $3.0000
D. $7.2500
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 3: Calculate cost per equivalent unit
3-45
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McGraw-Hill Education.
61. Kenney Co. uses process costing to account for the production of canned
energy drinks. Direct materials are added at the beginning of the process and
conversion costs are incurred uniformly throughout the process. Equivalent
units have been calculated to be 19,200 units for materials and 16,000 units
for conversion costs. Beginning inventory consisted of $11,200 in materials
and $6,400 in conversion costs. April costs were $57,600 for materials and
$64,000 for conversion costs. Ending inventory still in process was 6,400 units
(100% complete for materials, 50% for conversion). The total cost per unit
using the weighted average method would be closest to:
B. $6.9091
C. $7.0000
D. $7.2500
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 3: Calculate cost per equivalent unit
3-46
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McGraw-Hill Education.
62. Livingston Co. uses process costing to account for the production of elastic
bands. Direct materials are added at the beginning of the process and
conversion costs are incurred uniformly throughout the process. Beginning
inventory consisted of $14,000 in materials and $8,000 in conversion costs.
April costs were $72,000 for materials and $80,000 for conversion costs.
During April 8,000 units were completed. Ending in process inventory was
4,000 units (100% complete for materials, 50% for conversion). The cost per
equivalent unit for conversion costs using the weighted average method would
be:
A. $8.00
C. $2.20
D. $17.40
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 2: Convert physical units into equivalent units
Topic: Step 3: Calculate cost per equivalent unit
3-47
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McGraw-Hill Education.
63. Livingston Co. uses process costing to account for the production of elastic
bands. Direct materials are added at the beginning of the process and
conversion costs are incurred uniformly throughout the process. Beginning
inventory consisted of $14,000 in materials and $8,000 in conversion costs.
April costs were $72,000 for materials and $80,000 for conversion costs.
During April 8,000 units were completed. Ending in process inventory was
4,000 units (100% complete for materials, 50% for conversion). The equivalent
cost per unit for materials using the weighted average method would be
closest to:
A. $1.8333
B. $6.0000
D. $14.5000
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 2: Convert physical units into equivalent units
Topic: Step 3: Calculate cost per equivalent unit
3-48
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McGraw-Hill Education.
64. Livingston Co. uses process costing to account for the production of elastic
bands. Direct materials are added at the beginning of the process and
conversion costs are incurred uniformly throughout the process. Beginning
inventory consisted of $14,000 in materials and $8,000 in conversion costs.
April costs were $72,000 for materials and $80,000 for conversion costs.
During April 8,000 units were completed. Ending in process inventory was
4,000 units (100% complete for materials, 50% for conversion). The total cost
per unit using the weighted average method would be:
B. $13.8382
C. $14.0000
D. $14.5000
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 2: Convert physical units into equivalent units
Topic: Step 3: Calculate cost per equivalent unit
3-49
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McGraw-Hill Education.
65. Macadam Corp. uses the weighted average method of process costing. Its
cost per equivalent unit for direct materials was $5.00 this period, and it had
25,000 equivalent units for direct materials. Beginning inventory costs were
25% of current costs. How much were current costs?
A. $25,000
B. $75,000
D. $125,000
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 3: Calculate cost per equivalent unit
3-50
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66. To reconcile the total cost of Work in Process Inventory, account for:
during the current period.
B. only beginning Work in Process Inventory.
C. only costs that were added during the period.
AICPA: BB Critical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 4: Reconcile the total cost of work in process inventory
3-51
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McGraw-Hill Education.
67. To determine how much cost should be assigned to ending Work in Process
Inventory:
A. multiply costs per equivalent unit by the number of equivalent units
associated with units completed.
associated with ending Work in Process Inventory.
C. subtract cost of beginning inventory from current period costs.
D. add cost of beginning inventory and current period
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 4: Reconcile the total cost of work in process inventory
3-52
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McGraw-Hill Education.
68. To determine how much cost should be transferred out of Work in Process
Inventory:
associated with units completed.
B. multiply costs per equivalent unit by the number of equivalent units
associated with ending inventory.
C. subtract cost of beginning inventory from current period costs.
D. add cost of beginning inventory and current period
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 4: Reconcile the total cost of work in process inventory
3-53
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69. Stangol Co. uses process costing to account for the production of highlighter
pens. Direct materials are added at the beginning of the process and
conversion costs are incurred uniformly throughout the process. Cost per
equivalent unit has been calculated to be $8.80 for conversion costs and
$7.1667 for materials. 12,000 units were worked on during the period. Ending
inventory still in process was 4,000 units (100% complete for materials, 50%
for conversion). The value of ending inventory using the weighted average
method would be closest to:
A. $31,933.20
C. $63,866.40
D. $130,000.00
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 2: Convert physical units into equivalent units
Topic: Step 4: Reconcile the total cost of work in process inventory
3-54
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McGraw-Hill Education.
70. Stangol Co. uses process costing to account for the production of highlighter
pens. Direct materials are added at the beginning of the process and
conversion costs are incurred uniformly throughout the process. Cost per
equivalent unit has been calculated to be $8.80 for conversion costs and
$7.1667 for materials. 12,000 units were worked on during the period. Ending
inventory still in process was 4,000 units (100% complete for materials, 50%
for conversion). The value of units completed and transferred out using the
weighted average method would be closest to:
B. $130,000.00
C. $152,000.00
D. $159,666.00
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 4: Reconcile the total cost of work in process inventory
3-55
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McGraw-Hill Education.
71. How is the ending balance in Work in Process Inventory calculated for a firm
that uses the weighted average method of process costing?
associated with ending Work in Process Inventory.
B. Subtract the cost of goods finished and the cost of goods sold from total
manufacturing costs.
C. Add the costs of the jobs still in process at the end of the period.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 4: Reconcile the total cost of work in process inventory
3-56
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McGraw-Hill Education.
72. Togo Co. uses process costing to account for the production of picture frames.
Direct materials are added at the beginning of the process and conversion
costs are incurred uniformly throughout the process. Equivalent units have
been calculated to be 12,000 units for materials and 10,000 units for
conversion costs. Beginning inventory consisted of $14,000 in materials and
$8,000 in conversion costs. April costs were $72,000 for materials and
$80,000 for conversion costs. Ending inventory still in process was 4,000 units
(100% complete for materials, 50% for conversion). The value of ending
inventory using the weighted average method would be closest to:
A. $31,933.60
C. $63,866.80
D. $130,000.00
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 2: Convert physical units into equivalent units
Topic: Step 3: Calculate cost per equivalent unit
Topic: Step 4: Reconcile the total cost of work in process inventory
3-57
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McGraw-Hill Education.
73. Hager Co. uses process costing to account for the production of bottled energy
drinks. Direct materials are added at the beginning of the process and
conversion costs are incurred uniformly throughout the process. Equivalent
units have been calculated to be 12,000 units for materials and 10,000 units
for conversion costs. Beginning inventory consisted of $7,000 in materials and
$4,000 in conversion costs. April costs were $36,000 for materials and
$40,000 for conversion costs. Ending inventory still in process was 4,000 units
(100% complete for materials, 50% for conversion). The value of units
completed and transferred out using the weighted average method would be
closest to:
B. $65,000.00
C. $76,000.00
D. $79,833.00
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 3: Calculate cost per equivalent unit
Topic: Step 4: Reconcile the total cost of work in process inventory
3-58
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McGraw-Hill Education.
74. TryFit Co. uses process costing to account for the production of energy food
bars. Direct materials are added at the beginning of the process and
conversion costs are incurred uniformly throughout the process. Beginning
inventory consisted of $7,000 in materials and $4,000 in conversion costs.
April costs were $36,000 for materials and $40,000 for conversion costs.
During April 8,000 units were completed. Ending in process inventory was
4,000 units (100% complete for materials, 50% for conversion). The value of
ending inventory using the weighted average method would be closest to:
A. $15,966.60
C. $31,933.20
D. $65,000.00
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 2: Convert physical units into equivalent units
Topic: Step 3: Calculate cost per equivalent unit
Topic: Step 4: Reconcile the total cost of work in process inventory
3-59
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McGraw-Hill Education.
75. TryFit Co. uses process costing to account for the production of energy food
bars. Direct materials are added at the beginning of the process and
conversion costs are incurred uniformly throughout the process. Beginning
inventory consisted of $7,000 in materials and $4,000 in conversion costs.
April costs were $36,000 for materials and $40,000 for conversion costs.
During April 8,000 units were completed. Ending in process inventory was
4,000 units (100% complete for materials, 50% for conversion). The value of
units completed and transferred out using the weighted average method would
be closest to:
B. $65,000.00
C. $76,000.00
D. $79,833.00
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 2: Convert physical units into equivalent units
Topic: Step 3: Calculate cost per equivalent unit
Topic: Step 4: Reconcile the total cost of work in process inventory
3-60
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McGraw-Hill Education.
76. Rathburn, Inc. is a service firm that uses process costing. The firm worked on
a total of 1,000 cases this month, 800 of which were completed during the
period. The remaining cases were 40% complete. The firm incurred $180,000
in direct labor and manufacturing overhead costs during the period, and had
$4,800 in direct labor and manufacturing costs in beginning inventory. Using
the weighted average method, what was the total cost of cases still in process
at the end of the period?
B. $17,520
C. $168,000
D. $175,200
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 2: Convert physical units into equivalent units
Topic: Step 3: Calculate cost per equivalent unit
Topic: Step 4: Reconcile the total cost of work in process inventory
3-61
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McGraw-Hill Education.
77. Rathburn, Inc. is a service firm that uses process costing. The firm worked on
a total of 1,000 cases this month, 800 of which were completed during the
period. The remaining cases were 40% complete. The firm incurred $180,000
in direct labor and manufacturing overhead costs during the period, and had
$4,800 in direct labor and manufacturing costs in beginning inventory. Using
the weighted average method, what was the total cost of cases completed
during the period?
A. $16,800
B. $17,520
D. $175,200
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 2: Convert physical units into equivalent units
Topic: Step 3: Calculate cost per equivalent unit
Topic: Step 4: Reconcile the total cost of work in process inventory
3-62
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McGraw-Hill Education.
78. Which of the following is not a step in preparing a production report?
A. Reconcile the number of physical units worked on during the
period
B. Translate the physical units into equivalent units
D. Calculate the cost per equivalent unit
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-04 Prepare a process costing production report using the
weighted-average method.
Topic: Step 5: Prepare a production report
3-63
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79. The manufacturing cost that is transferred from one production process to
another (for example, from production to packaging) is called the:
A. beginning Work in Process Inventory cost.
B. ending Work in Process Inventory cost.
D. accumulated cost of goods.
As a product moves through various departments it accumulates
manufacturing costs. These costs are called "transferred-in costs" because
they are transferred from one department to another as the physical goods
move.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-04 Prepare a process costing production report using the
weighted-average method.
Topic: Accounting for subsequent production departments
3-64
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McGraw-Hill Education.
80. Under the FIFO method, physical units must be broken down into:
A. units completed and ending units in process
B. units started and completed and ending units in process
C. beginning units in process and units started and completed
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-S1 Prepare a process costing production report using the
first-in, first-out (FIFO) method.
Topic: Supplement 3A FIFO method
3-65
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81. Under FIFO, to calculate the number of equivalent units, ask yourself: What
did we do during the ________ period to get beginning inventory from x% to y
% complete and what did we do during the _______ period to get ending
inventory to z% complete?
B. current, prior
C. prior, current
D. prior, prior
AICPA: BB Critical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-S1 Prepare a process costing production report using the
first-in, first-out (FIFO) method.
Topic: Supplement 3A FIFO method
3-66
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82. Middle Co. uses process costing to account for the production of chocolate
candy bars. Direct materials are added at the beginning of the process and
conversion costs are incurred uniformly throughout the process. Cost per
equivalent unit has been calculated to be $4.00 for conversion costs and $3.00
for materials. 3,000 units were in beginning inventory (100% complete for
materials, 80% for conversion). 12,000 units were started and completed
during the period. Ending inventory still in process was 6,000 units (100%
complete for materials, 40% for conversion). The value of ending inventory
using the FIFO method would be:
B. $34,699.80
C. $47,899.80
D. $97,500.00
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-S1 Prepare a process costing production report using the
first-in, first-out (FIFO) method.
Topic: Supplement 3A FIFO method
3-67
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83. Nettle Co. uses process costing to account for the production of rubber balls.
Direct materials are added at the beginning of the process and conversion
costs are incurred uniformly throughout the process. Equivalent units have
been calculated to be 12,000 units for materials and 10,000 units for
conversion costs. Beginning inventory consisted of $14,000 in materials and
$8,000 in conversion costs. April costs were $72,000 for materials and
$80,000 for conversion costs. Ending inventory still in process was 4,000 units
(100% complete for materials, 50% for conversion). The cost per unit for
conversion costs using the FIFO method would be:
B. $8.80
C. $2.20
D. $17.40
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 1 Easy
Learning Objective: 03-S1 Prepare a process costing production report using the
first-in, first-out (FIFO) method.
Topic: Supplement 3A FIFO method
3-68
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84. Nettle Co. uses process costing to account for the production of rubber balls.
Direct materials are added at the beginning of the process and conversion
costs are incurred uniformly throughout the process. Equivalent units have
been calculated to be 12,000 units for materials and 10,000 units for
conversion costs. Beginning inventory consisted of $14,000 in materials and
$8,000 in conversion costs. April costs were $72,000 for materials and
$80,000 for conversion costs. Ending inventory still in process was 4,000 units
(100% complete for materials, 50% for conversion). The cost per unit for
materials using the FIFO method would be closest to:
A. $1.8334
C. $7.1666
D. $14.5000
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 1 Easy
Learning Objective: 03-S1 Prepare a process costing production report using the
first-in, first-out (FIFO) method.
Topic: Supplement 3A FIFO method
3-69
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85. Nettle Co. uses process costing to account for the production of rubber balls.
Direct materials are added at the beginning of the process and conversion
costs are incurred uniformly throughout the process. Equivalent units have
been calculated to be 12,000 units for materials and 10,000 units for
conversion costs. Beginning inventory consisted of $14,000 in materials and
$8,000 in conversion costs. April costs were $72,000 for materials and
$80,000 for conversion costs. Ending inventory still in process was 4,000 units
(100% complete for materials, 50% for conversion). The total cost per unit
using the FIFO method would be closest to:
A. $15.9666
B. $13.8182
D. $14.5000
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 1 Easy
Learning Objective: 03-S1 Prepare a process costing production report using the
first-in, first-out (FIFO) method.
Topic: Supplement 3A FIFO method
3-70
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86. South Corp. uses a FIFO process costing system in which direct materials are
added at the beginning of the process and conversion costs are incurred
uniformly throughout the process. Beginning inventory for January consisted of
1,000 units that were 40% completed. 10,000 units were started into the
process during January. On January 31, the inventory consisted of 500 units
that were 70% completed. How many units were started and completed during
the period?
B. 10,500
C. 11,000
D. 11,500
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 03-S1 Prepare a process costing production report using the
first-in, first-out (FIFO) method.
Topic: Supplement 3A FIFO method
3-71
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87. Tripper Corp. uses a FIFO process costing system. Beginning inventory for
January consisted of 1,000 units that were 60% completed. 10,000 units were
started into the process during January. During January, 9,500 units were
started and completed. How many units were in ending inventory on January
31?
A. 1,500
B. 1,000
D. 100
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 03-S1 Prepare a process costing production report using the
first-in, first-out (FIFO) method.
Topic: Supplement 3A FIFO method
3-72
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88. Harlow Corp. uses a FIFO process costing system. Beginning inventory for
January consisted of 1,000 units that were 60% completed. During January,
9,500 units were started and completed. On January 31, the inventory
consisted of 500 units that were 70% completed. How many units were started
during January?
A. 9,850
C. 10,250
D. 11,000
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 03-S1 Prepare a process costing production report using the
first-in, first-out (FIFO) method.
Topic: Supplement 3A FIFO method
3-73
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89. Sanger Corp. uses a process costing system in which direct materials are
added at the beginning of the process and conversion costs are incurred
uniformly throughout the process. Beginning inventory for January consisted of
1,000 units that were 40% completed. 10,000 units were started into the
process during January. On January 31, the inventory consisted of 500 units
that were 70% completed. What would be the equivalent units for conversion
cost using the FIFO method?
A. 10,000
C. 10,850
D. 11,000
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-S1 Prepare a process costing production report using the
first-in, first-out (FIFO) method.
Topic: Supplement 3A FIFO method
3-74
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90. Sanger Corp. uses a process costing system in which direct materials are
added at the beginning of the process and conversion costs are incurred
uniformly throughout the process. Beginning inventory for January consisted of
1,000 units that were 40% completed. 10,000 units were started into the
process during January. On January 31, the inventory consisted of 500 units
that were 70% completed. What would be the equivalent units for direct
materials cost using the FIFO method?
B. 10,450
C. 10,850
D. 11,000
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-S1 Prepare a process costing production report using the
first-in, first-out (FIFO) method.
Topic: Supplement 3A FIFO method
3-75
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91. Caston Corp. uses a FIFO process costing system in which direct materials
are added at the beginning of the process and conversion costs are incurred
uniformly throughout the process. Beginning inventory for January consisted of
1,000 units that were 40% completed with respect to conversion costs. 10,000
units were started into the process during January. On January 31, the
inventory consisted of 500 units. Equivalent units for conversion costs were
10,450. What percentage complete was the ending inventory on January 31
with respect to conversion costs?
B. 80%
C. 90%
D. 100%
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-S1 Prepare a process costing production report using the
first-in, first-out (FIFO) method.
Topic: Supplement 3A FIFO method
3-76
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92. Heathcoat Co. uses process costing to account for the production of canned
vegetables. Direct materials are added at the beginning of the process and
conversion costs are incurred uniformly throughout the process. Beginning
inventory consisted of $7,000 in materials and $4,000 in conversion costs.
April costs were $36,000 for materials and $40,000 for conversion costs. On
April 1, there were 2,000 units in beginning inventory (80% complete). During
April 10,000 units were completed. Ending in process inventory was 4,000
units (100% complete for materials, 40% for conversion). The cost per
equivalent unit for conversion costs using the FIFO method would be:
B. $4.40
C. $1.10
D. $8.70
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-S1 Prepare a process costing production report using the
first-in, first-out (FIFO) method.
Topic: Supplement 3A FIFO method
3-77
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93. Heathcoat Co. uses process costing to account for the production of canned
vegetables. Direct materials are added at the beginning of the process and
conversion costs are incurred uniformly throughout the process. Beginning
inventory consisted of $7,000 in materials and $4,000 in conversion costs.
April costs were $36,000 for materials and $40,000 for conversion costs. On
April 1, there were 2,000 units in beginning inventory (80% complete). During
April 10,000 units were completed. Ending in process inventory was 4,000
units (100% complete for materials, 40% for conversion). The cost per
equivalent unit for materials using the FIFO method would be closest to:
A. $0.9167
C. $3.5833
D. $7.2500
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-S1 Prepare a process costing production report using the
first-in, first-out (FIFO) method.
Topic: Supplement 3A FIFO method
3-78
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McGraw-Hill Education.
94. Heathcoat Co. uses process costing to account for the production of canned
vegetables. Direct materials are added at the beginning of the process and
conversion costs are incurred uniformly throughout the process. Beginning
inventory consisted of $7,000 in materials and $4,000 in conversion costs.
April costs were $36,000 for materials and $40,000 for conversion costs. On
April 1, there were 2,000 units in beginning inventory (80% complete). During
April 10,000 units were completed. Ending in process inventory was 4,000
units (100% complete for materials, 40% for conversion). The total cost per
unit using the FIFO method would be closest to:
A. $7.9833
B. $6.9091
D. $7.2500
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-S1 Prepare a process costing production report using the
first-in, first-out (FIFO) method.
Topic: Supplement 3A FIFO method
3-79
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95. The journal entry to record the issuance of direct materials into production
includes:
A. a debit to Raw Materials Inventory.
B. a debit to Finished Goods Inventory.
D. a debit to Cash.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-S2 Prepare journal entries to record the flow of
manufacturing costs in a process cost system.
Topic: Supplement 3B journal entries for process costing
96. The journal entry to record the purchase of direct materials includes:
B. a debit to Finished Goods Inventory.
C. a debit to Work in Process Inventory.
D. a debit to Cash.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
3-80
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McGraw-Hill Education.
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-S2 Prepare journal entries to record the flow of
manufacturing costs in a process cost system.
Topic: Supplement 3B journal entries for process costing
97. The journal entry to record the actual (not applied) overhead costs incurred
includes:
B. a debit to Work in Process Inventory.
C. a debit to Finished Goods Inventory.
D. a debit to Cost of Goods Sold.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-S2 Prepare journal entries to record the flow of
manufacturing costs in a process cost system.
Topic: Supplement 3B journal entries for process costing
3-81
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98. The journal entry to record the application of overhead costs to production
includes:
A. a debit to Manufacturing Overhead.
C. a debit to Finished Goods Inventory.
D. a debit to Cost of Goods Sold.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-S2 Prepare journal entries to record the flow of
manufacturing costs in a process cost system.
Topic: Supplement 3B journal entries for process costing
99. The journal entry to record the completion of goods includes:
A. a debit to Conversion Costs.
B. a debit to Work in Process Inventory.
D. a debit to Cost of Goods Sold.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
3-82
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McGraw-Hill Education.
Learning Objective: 03-S2 Prepare journal entries to record the flow of
manufacturing costs in a process cost system.
Topic: Supplement 3B journal entries for process costing
100. The journal entry to record the issuance of direct material into production
includes:
B. a credit to Finished Goods Inventory.
C. a credit to Work in Process Inventory.
D. a credit to Cash.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-S2 Prepare journal entries to record the flow of
manufacturing costs in a process cost system.
Topic: Supplement 3B journal entries for process costing
3-83
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McGraw-Hill Education.
101. The journal entry to record the purchase of direct materials for cash includes:
A. a credit to Raw Materials Inventory.
B. a credit to Finished Goods Inventory.
C. a credit to Work in Process Inventory.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-S2 Prepare journal entries to record the flow of
manufacturing costs in a process cost system.
Topic: Supplement 3B journal entries for process costing
102. The journal entry to record the sale of goods includes:
A. a credit to Conversion Costs.
B. a credit to Work in Process Inventory.
D. a credit to Cost of Goods Sold.
When goods are sold, the cost is debited to Cost of Goods Sold and credited
to Finished Goods Inventory. (The receipt of revenue is recorded as well,
generally with a debit to cash or accounts receivable and a credit to revenue.)
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
3-84
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McGraw-Hill Education.
Difficulty: 2 Medium
Learning Objective: 03-S2 Prepare journal entries to record the flow of
manufacturing costs in a process cost system.
Topic: Supplement 3B journal entries for process costing
103. The journal entry to record the application of overhead costs to production
includes:
B. a credit to Work in Process Inventory.
C. a credit to Finished Goods Inventory.
D. a credit to Cost of Goods Sold.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-S2 Prepare journal entries to record the flow of
manufacturing costs in a process cost system.
Topic: Supplement 3B journal entries for process costing
3-85
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McGraw-Hill Education.
104. The journal entry to record the completion of goods includes:
A. a credit to Conversion Costs.
C. a credit to Finished Goods Inventory.
D. a credit to Cost of Goods Sold.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-S2 Prepare journal entries to record the flow of
manufacturing costs in a process cost system.
Topic: Supplement 3B journal entries for process costing
105. The production report includes information about the number of physical units,
plus _____________ equivalent units.
A. the number, but not the cost of
B. the cost, but not the number of
D. neither the number nor cost of
AICPA: BB Critical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
3-86
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McGraw-Hill Education.
Difficulty: 1 Easy
Learning Objective: 03-04 Prepare a process costing production report using the
weighted-average method.
Learning Objective: 03-S1 Prepare a process costing production report using the
first-in, first-out (FIFO) method.
Topic: Step 5: Prepare a production report
106. At its highest level, the production report provides what?
accounting period
B. Information about the direct and indirect materials that were part of the
production process
C. A reconciliation of the budget to GAAP reporting
D. Information about the physical units contained in the production process of
AICPA: BB Critical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-04 Prepare a process costing production report using the
weighted-average method.
Learning Objective: 03-S1 Prepare a process costing production report using the
first-in, first-out (FIFO) method.
Topic: Step 5: Prepare a production report
Essay Questions
3-87
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McGraw-Hill Education.
107. Complete the following chart by reconciling the number of physical units for
each department.
Beginni
ng
Units in
Process
Units
Start
ed
Units
Complet
ed
Endin
g
Units
in
Proce
ss
Dep
t. A 3,000 a. 15,000 2,000
Dep
t. B 4,000 12,00
011,000 b.
Dep
t. C c. 18,00
016,000 6,000
Dep
t. D 5,000 d. 16,000 4,000
Dep
t. E 2,000 9,000 e. 3,000
Dep
t. F 4,000 17,00
0f. 10,000
AICPA: FN Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 03-02 Reconcile the number of physical units using the
weighted-average method.
Topic: Reconcile the number of physical units
3-89
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McGraw-Hill Education.
3-90
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McGraw-Hill Education.
108. Complete the following chart by reconciling the number of physical units. The
months listed are sequential, and for the same department.
Beginn
ing
Units
in
Invent
ory
Unit
s
Start
ed
Units
Comple
ted
Endin
g
Units
in
Invent
ory
Janua
ry 3,000 a. 15,000 2,000
Febru
ary b. 12,0
00 11,000 c.
March d. 18,0
00 e. f.
April 5,000 g. 16,000 4,000
May h. i. 9,000 3,000
June j. 17,0
00 10,000 k.
AICPA: FN Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 03-02 Reconcile the number of physical units using the
weighted-average method.
Topic: Reconcile the number of physical units
3-92
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McGraw-Hill Education.
3-93
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McGraw-Hill Education.
109. Hamilton, Inc. manufactures units in two processes: Production and Finishing.
All direct materials are added at the beginning of the Production process, while
conversion costs are incurred evenly throughout the period for both Production
and Finishing. Hamilton employs three inspectors: Kelsey, Chad, and Lexi.
Kelsey inspects direct materials before they are added to Production (two
pieces of direct materials per unit). Chad inspects units when the Production
process is finished, after which they are immediately transferred to Finishing.
Lexi inspects units at the end of the Finishing process. During the current
period, none of the materials or units failed inspection. At the beginning of the
period, 5,000 units had only "Inspected by Kelsey" tags on them (these units
were 70% complete), and 2,000 units had "Inspected by Kelsey" and
"Inspected by Chad" tags on them (these units were 60% complete). At the
end of the period, 7,000 units had only "Inspected by Kelsey" tags on them
(these units were 50% complete). 1,000 units had only "Inspected by Kelsey"
and "Inspected by Chad" tags on them (these units were 90% complete), and
19,000 units had tags from all three inspectors on them (these units were
100% complete).
Required:
Determine the number of physical units:
a. in beginning Work in Process in Production during the period.
b. started in Production during the period.
c. transferred from Production to Finishing during the period.
d. in ending Work in Process in Production during the period.
e. in beginning Work in Process in Finishing during the period.
f. in ending Work in Process in Finishing during the period.
g. completed in Finishing during the period.
AICPA: FN Measurement
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-02 Reconcile the number of physical units using the
weighted-average method.
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Learning Objective: 03-04 Prepare a process costing production report using the
weighted-average method.
Topic: Accounting for subsequent production departments
Topic: Reconcile the number of physical units
110. Kramer Corp. began the period with 5,200 units in process that were 100%
complete for materials and 60% complete for conversion, and ended the
period with 26,000 units completed and 6,500 units still in process. Work in
process was 100% complete for materials and 70% complete for conversion
costs.
Required:
Using the weighted average method, compute the equivalent units of
production for materials and conversion for the period.
111. Trout, Inc. prepared the following production report:
Trout, Inc.
Process Costing Production Report
(Weighted Average Method)
UNITS Step
1:
Units to
be
accoun
ted for:
Physi
cal
Units
Beginn
ing
Work in
Proces
s
3,000
Starte
d into
Product
ion
a.
Total
units
7,0
00 Step 2
Equivalent Units
Units
accoun
ted for
as
follows:
Materi
als
Conver
sion
Compl
eted
and
transfer
red
2,000 2,000 b.
Ending
Work in
Proces
s
5,00
0
5,00
0 c.
Total
units
7,00
0
7,00
0 5,500
COSTS Step 3: Cost per
Equivalent Unit
Materi
als
Conver
sion
Total
Cost
3-97
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McGraw-Hill Education.
Cost of
beginni
ng
invento
ry
$18,0
00 $14,000 $32,0
00
Curren
t period
costs
122,0
00
206,00
0
$328,
000
Total
cost of
units in
proces
s
$140,
000
$220,00
0
$360,
000
Equival
ent
units
7,000 5,500
Cost
per
equival
ent unit
d. $40.00 e.
Step 4: Reconcile
Work in Process
Cost to
be
accoun
ted for:
Materi
als
Conver
sion
Total
Cost
Beginn
ing
Work in
Proces
s
$18,0
00 $14,000 $32,0
00
Curren
t period
costs
122,
000
206,00
0
328,
000
Total
costs $140,
000
$220,0
00
$360,
000
Cost
accoun
ted for
as
follows:
Units
comple
f. $80,000 g.
3-98
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McGraw-Hill Education.
ted and
transfer
red
Ending
invento
ry
h. 140,0
00 i.
$140,
000
$220,0
00
$360,
000
Additional information: Trout adds direct materials at the beginning of the
process, while conversion costs are incurred uniformly throughout the process.
At the beginning of the period, Work in Process Inventory was 40% complete.
At the end of the period, Work in Process Inventory was 70% complete.
Required:
Fill in the missing amounts.
AICPA: FN Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 03-02 Reconcile the number of physical units using the
weighted-average method.
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Learning Objective: 03-04 Prepare a process costing production report using the
3-99
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McGraw-Hill Education.
weighted-average method.
Topic: Step 5: Prepare a production report
3-100
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McGraw-Hill Education.
3-101
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McGraw-Hill Education.
112. Trout, Inc. prepared the following production report:
Trout, Inc.
Process Costing Production Report
(Weighted Average Method)
UNITS Step
1:
Units
to be
accoun
ted for:
Phys
ical
Units
Begin
ning
Work
in
Proces
s
3,000
Starte
d into
Produc
tion
a.
Total
units
7,0
00 Step 2
Equivalent Units
Units
accoun
ted for
as
follows:
Materi
als
Conver
sion
Compl
eted
and
transfe
rred
2,000 b. c.
Endin
g Work
in
Proces
s
d.
e
. f.
Total
units
7,00
0
g
. h.
COST
S Step 3: Cost per
Equivalent Unit
3-102
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McGraw-Hill Education.
Materi
als
Conver
sion
Total
Cost
Cost
of
beginni
ng
invento
ry
$18,00
0$14,000 $32,00
0
Curren
t period
costs
122,0
00
206,0
00
$328
,000
Total
cost of
units in
proces
s
$140,0
00
$220,00
0
$360,0
00
Equival
ent
units
g.
h.
Cost
per
equival
ent unit
i.
j. k.
Step 4: Reconcile
Work in Process
Cost to
be
accoun
ted for:
Materi
als
Conver
sion
Total
Cost
Begin
ning
Work
in
Proces
s
$18,00
0$14,000 $32,00
0
Curren
t period
costs
122,
000
206,00
0
328,
000
Total
costs $140,
000
$220,0
00
$360,
000
Cost
accoun
ted for
3-103
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McGraw-Hill Education.
as
follows:
Units
comple
ted and
transfe
rred
l. m. n.
Endin
g
invento
ry
o.
p.
q.
$140,
000
$220,0
00
$360,
000
Additional information: Trout adds direct materials at the beginning of the
process, while conversion costs are incurred uniformly throughout the process.
At the beginning of the period, Work in Process Inventory was 40% complete.
At the end of the period, Work in Process Inventory was 70% complete.
Required:
Fill in the missing amounts.
AICPA: FN Measurement
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-02 Reconcile the number of physical units using the
weighted-average method.
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Learning Objective: 03-04 Prepare a process costing production report using the
weighted-average method.
Topic: Step 5: Prepare a production report
3-105
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McGraw-Hill Education.
3-106
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McGraw-Hill Education.
113. Trout, Inc. prepared the following production report:
Trout, Inc.
Process Costing Production Report
(Weighted Average Method)
UNITS Step
1:
Units to
be
account
ed for:
Physi
cal
Units
Beginn
ing
Work in
Process
3,000
Started
into
Product
ion
a.
Total
units
7,00
0Step 2
Equivalent Units
Units
account
ed for
as
follows:
Materi
als
Conver
sion
Compl
eted
and
transfer
red
2,000 b. c.
Ending
Work in
Process
d
.
e
. f.
Total
units g
. h.
COSTS Step 3: Cost per
Equivalent Unit
Materi
als
Conver
sion
Total
Cost
Cost of $18,00 $14,000
3-107
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beginni
ng
inventor
y
0
Curren
t period
costs
122,0
00
206,0
00
Total
cost of
units in
process
Equival
ent
units
Cost
per
equival
ent unit
i.
j. k.
Step 4: Reconcile
Work in Process
Cost to
be
account
ed for:
Materi
als
Conver
sion
Total
Cost
Beginn
ing
Work in
Process
$18,00
0$14,000
Curren
t period
costs
122,0
00 206,000
Total
costs
Cost
account
ed for
as
follows:
Units
complet
ed and
transfer
red
l. m. n.
3-108
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Ending
inventor
y
o. p.
q.
Additional information: Trout adds direct materials at the beginning of the
process, while conversion costs are incurred uniformly throughout the process.
At the beginning of the period, Work in Process Inventory was 40% complete.
At the end of the period, Work in Process Inventory was 70% complete.
Required:
Fill in the missing amounts.
AICPA: FN Measurement
Blooms: Apply
Difficulty: 3 Hard
3-109
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McGraw-Hill Education.
Learning Objective: 03-02 Reconcile the number of physical units using the
weighted-average method.
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Learning Objective: 03-04 Prepare a process costing production report using the
weighted-average method.
Topic: Step 5: Prepare a production report
114. Each of the following statements describes preparing a production report using
either the FIFO Method or the Weighted Average Method. List the letters that
correspond to the statements that accurately describe the FIFO Method.
a. Separates units in beginning inventory from those that were started during
the current period.
b. Combines the cost of beginning inventory with the costs that were incurred
during the period.
c. Averages the cost of units in beginning inventory with the costs of units that
were started during the period.
d. Assumes the units in beginning inventory were completed before any new
units were started.
e. Combines the units in beginning inventory with the units that were started
during the period.
f. Is the simpler method and more frequently used in practice.
g. May be a less accurate method, particularly for companies that hold
significant inventory.
h. More closely matches the actual flow of costs in many industries.
AICPA: BB Critical Thinking
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-04 Prepare a process costing production report using the
weighted-average method.
3-110
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McGraw-Hill Education.
Learning Objective: 03-S1 Prepare a process costing production report using the
first-in, first-out (FIFO) method.
Topic: Supplement 3A FIFO method
115. Swan Corp. began work on 4,200 units this period. Work in Process Inventory
was 700 at the beginning of the period (60% complete) and 1,400 at the end of
the period (50% complete). Swan uses the weighted average method of
process costing. Direct materials are added at the beginning of the process,
and conversion costs are incurred evenly throughout the period.
Required:
Using the weighted average method:
a. How many units were completed during the period?
b. Determine the number of equivalent units for direct materials.
c. Determine the number of equivalent units for conversion costs.
AICPA: FN Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 03-02 Reconcile the number of physical units using the
weighted-average method.
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 1: Reconcile the number of physical units
Topic: Step 2: Convert physical units into equivalent units
3-111
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3-112
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McGraw-Hill Education.
116. Hamilton, Inc. manufactures units in two processes: Production and Finishing.
All direct materials are added at the beginning of the Production process, while
conversion costs are incurred evenly throughout the period for both Production
and Finishing. Hamilton employs three inspectors: Kasey, Chad, and Lexi.
Kasey inspects direct materials before they are added to Production (two
pieces of direct materials per unit). Chad inspects units when the Production
process is finished, after which they are immediately transferred to Finishing.
Lexi inspects units at the end of the Finishing process. This period, none of the
materials or units failed inspection. At the beginning of the period, 5,000 units
had only "Inspected by Kasey" tags on them (these units were 70% complete),
and 2,000 units had "Inspected by Kasey" and "Inspected by Chad" tags on
them (these units were 60% complete). At the end of the period, 7,000 units
had only "Inspected by Kasey" tags on them (these units were 50% complete).
1,000 units had only "Inspected by Kasey" and "Inspected by Chad" tags on
them (these units were 90% complete), and 19,000 units had tags from all
three inspectors on them (these units were 100% complete).
Required:
Determine the number of physical units using the weighted average method:
a. in beginning Work in Process in Production during the period.
b. started in Production during the period.
c. transferred from Production to Finishing during the period.
d. in ending Work in Process in Production during the period.
e. in beginning Work in Process in Finishing during the period.
f. in ending Work in Process in Finishing during the period.
g. completed in Finishing during the period.
Determine the number of equivalent units
h. for direct materials for Production
i. for conversion for Production
j. for direct materials for Finishing
k. for conversion for Finishing
AICPA: FN Measurement
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-02 Reconcile the number of physical units using the
weighted-average method.
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Accounting for subsequent production departments
Topic: Step 1: Reconcile the number of physical units
Topic: Step 2: Convert physical units into equivalent units
3-114
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117. Kramer Corp. began the current period with 4,000 units in process that were
100% complete as to materials and 60% complete as to conversion. Costs of
$7,500 in direct materials and $4,700 in conversion costs were incurred in
manufacturing those units in the previous period. Kramer ended the current
period with 20,000 units completed and 5,000 units still in process. Work in
process was 100% complete as to materials and 70% complete as to
conversion costs. Kramer incurred $67,500 in direct materials costs, $7,000 in
direct labor costs, and $40,000 in manufacturing overhead costs during the
period.
Required:
Using the weighted average method, compute the following:
a. Equivalent units of production for materials.
b. Equivalent units of production for conversion.
c. Cost per equivalent unit for materials.
d. Cost per equivalent unit for conversion.
e. Cost assigned to ending Work in Process Inventory
f. Cost assigned to goods completed and transferred out
AICPA: FN Measurement
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-02 Reconcile the number of physical units using the
weighted-average method.
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 2: Convert physical units into equivalent units
Topic: Step 3: Calculate cost per equivalent unit
3-115
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Topic: Step 4: Reconcile the total cost of work in process inventory
118. Kramer Corp. began the current period with 4,000 units in process that were
100% complete as to materials and 60% complete as to conversion. Costs of
$7,500 in direct materials and $4,700 in conversion costs were incurred in
manufacturing those units in the previous period. Kramer ended the current
period with 20,000 units completed and 5,000 units still in process. Work in
process was 100% complete as to materials and 70% complete as to
conversion costs. Kramer incurred $67,500 in direct materials costs, $7,000 in
direct labor costs, and $40,000 in manufacturing overhead costs during the
period.
Required:
Using the weighted average method, compute the following:
a. Equivalent units of production for materials.
b. Equivalent units of production for conversion.
c. Cost per equivalent unit for materials.
d. Cost per equivalent unit for conversion.
AICPA: FN Measurement
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-02 Reconcile the number of physical units using the
weighted-average method.
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 2: Convert physical units into equivalent units
Topic: Step 3: Calculate cost per equivalent unit
3-116
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119. For Salcido, Inc., the value of beginning Work in Process Inventory was
$100,000, 25% of which was direct materials cost. During the period, Salcido
completed work on 42,500 units, only completed 80% of the work on another
10,000 units, and incurred $80,000 in direct materials cost and $177,500 in
conversion costs. Salcido adds direct materials at the beginning of their
production process, and incurs conversion costs evenly throughout the
process.
Required:
Calculate the following using the weighted average method for process
costing.
a. Equivalent units for direct materials
b. Equivalent units for conversion costs
c. Cost per equivalent unit for direct materials
d. Cost per equivalent unit for conversion costs
e. Cost assigned to ending Work in Process Inventory
f. Cost assigned to goods completed and transferred out
AICPA: FN Measurement
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-02 Reconcile the number of physical units using the
weighted-average method.
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 2: Convert physical units into equivalent units
Topic: Step 3: Calculate cost per equivalent unit
Topic: Step 4: Reconcile the total cost of work in process
3-117
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120. Swan Corp. began work on 3,000 units this period. Work in Process Inventory
was 500 at the beginning of the period (60% complete) and 1,000 at the end of
the period (50% complete). Beginning inventory costs were $3,000 for
conversion costs and $7,000 for direct materials. During the period, Swan
incurred $75,000 for conversion costs and $52,500 for direct materials. Swan
uses the weighted average method of process costing. Direct materials are
added at the beginning of the process, and conversion costs are incurred
evenly throughout the period.
Required:
Using the weighted average method:
a. How many units were completed during the period?
b. Determine the number of equivalent units for direct materials.
c. Determine the number of equivalent units for conversion costs.
d. Calculate the cost per equivalent unit for direct materials.
e. Determine the cost per equivalent unit for conversion costs.
AICPA: FN Measurement
Blooms: Apply
Difficulty: 3 Hard
3-118
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McGraw-Hill Education.
Learning Objective: 03-02 Reconcile the number of physical units using the
weighted-average method.
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 1: Reconcile the number of physical units
Topic: Step 2: Convert physical units into equivalent units
Topic: Step 3: Calculate cost per equivalent unit
3-119
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121. Swan Corp. began work on 3,000 units this period. Work in Process Inventory
was 500 at the beginning of the period (60% complete) and 1,000 at the end of
the period (50% complete). Beginning inventory costs were $3,000 for
conversion costs and $7,000 for direct materials. During the period, Swan
incurred $75,000 for conversion costs and $52,500 for direct materials. Swan
uses the weighted average method of process costing. Direct materials are
added at the beginning of the process, and conversion costs are incurred
evenly throughout the period.
Required:
Using the weighted average method, compute:
a. How many units were completed during the period?
b. Determine the number of equivalent units for direct materials.
c. Determine the number of equivalent units for conversion costs.
d. Calculate the cost per equivalent unit for direct materials.
e. Determine the cost per equivalent unit for conversion costs.
f. Determine the cost assigned to ending Work in Process Inventory.
g. Determine the cost assigned to goods completed and transferred out.
AICPA: FN Measurement
Blooms: Apply
Difficulty: 3 Hard
3-120
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McGraw-Hill Education.
Learning Objective: 03-02 Reconcile the number of physical units using the
weighted-average method.
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 1: Reconcile the number of physical units
Topic: Step 2: Convert physical units into equivalent units
Topic: Step 3: Calculate cost per equivalent unit
Topic: Step 4: Reconcile the total cost of work in process
3-121
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3-122
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McGraw-Hill Education.
122. Sierra Co. has provided the following information:
Work in Process: Feb
125,000 units
(100% complete for
materials, 60%
complete for
conversion)
Materials $35,000
Conversion $43,000
Units started 80,000 units
February costs
Materials $120,000
Conversion $234,000
Work in Process: Feb
28 15,000 units
(100% complete for
materials, 20%
complete for
conversion)
Using the weighted average method of process costing, complete each of the
following:
a. How many units were completed and transferred to Finished Goods?
b. Calculate equivalent units.
c. Calculate cost per equivalent unit. Round your answers to four decimal
places.
d. What is the dollar amount transferred to Finished Goods? Round your
answer to a whole dollar amount.
e. Calculate the cost of the ending Work in Process. Round your answer to a
whole dollar amount.
15,00
goods
4.4547
e. Materials
15,000
×
1.4762
= $22,143
Conversion 3,000 ×
2.9785 = $8,936
Total ending
WIP $31,079
Feedback: Beginning units in process + units started = units completed +
ending units in process. Equivalent units = physical units × percentage of
completion. Cost per equivalent unit = total manufacturing cost/equivalent
units. Costs are assigned by multiplying the appropriate equivalent units by
cost per equivalent unit.
AACSB: Analytical Thinking
AICPA: FN Measurement
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-02 Reconcile the number of physical units using the
weighted-average method.
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 1: Reconcile the number of physical units
Topic: Step 2: Convert physical units into equivalent units
Topic: Step 3: Calculate cost per equivalent unit
Topic: Step 4: Reconcile the total cost of work in process
3-124
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McGraw-Hill Education.
3-125
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McGraw-Hill Education.
123. Vista Co. has provided the following information:
Work in Process:
March 1 14,000 units
(100% complete for
materials, 70%
complete for
conversion)
Materials $44,700
Conversion $23,000
Units started 60,000 units
February costs
Materials $190,740
Conversion $144,000
Work in Process:
March 31 11,000 units
(80% complete for
materials, 40%
complete for
conversion)
Using the weighted average method of process costing, complete each of the
following:
a. How many units were completed and transferred to Finished Goods?
b. Calculate equivalent units.
c. Calculate cost per equivalent unit. Round your answers to four decimal
places.
d. What is the dollar amount transferred to Finished Goods? Round your
answer to a whole dollar amount.
e. Calculate the cost of the ending Work in Process. Round your answer to a
whole dollar amount.
Goods
5.7569
e. Materials 8,800 ×
3.2791 = $28,856
Conversion 4,400 ×
2.4778 = $10,902
Total ending
WIP $39,758
Feedback: Beginning units in process + units started = units completed +
ending units in process. Equivalent units = physical units × percentage of
completion. Cost per equivalent unit = total manufacturing cost/equivalent
units. Costs are assigned by multiplying the appropriate equivalent units by
cost per equivalent unit.
AACSB: Analytical Thinking
AICPA: FN Measurement
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-02 Reconcile the number of physical units using the
weighted-average method.
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 1: Reconcile the number of physical units
Topic: Step 2: Convert physical units into equivalent units
Topic: Step 3: Calculate cost per equivalent unit
Topic: Step 4: Reconcile the total cost of work in process
3-127
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McGraw-Hill Education.
3-128
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McGraw-Hill Education.
124. Ridgeway Co. has provided the following information:
Work in Process: April
14,000 units
(100% complete for
materials, 90%
complete for
conversion)
Materials $16,700
Conversion $17,000
Units started 81,000 units
February costs
Materials $349,650
Conversion $375,375
Work in Process: April
30 11,000 units
(70% complete for
materials, 10%
complete for
conversion)
Using the weighted average method of process costing, complete each of the
following:
a. How many units were completed and transferred to Finished Goods?
b. Calculate equivalent units.
c. Calculate cost per equivalent unit. Round your answers to four decimal
places.
d. What is the dollar amount transferred to Finished Goods? Round your
answer to a whole dollar amount.
e. Calculate the cost of the ending Work in Process. Round your answer to a
whole dollar amount.
Goods
9.7088
e. Materials 7,700 ×
4.4841 = $34,528
Conversion 1,100 ×
5.2247 = $5,747
Total ending
WIP $40,275
Feedback: Beginning units in process + units started = units completed +
ending units in process. Equivalent units = physical units × percentage of
completion. Cost per equivalent unit = total manufacturing cost/equivalent
units. Costs are assigned by multiplying the appropriate equivalent units by
cost per equivalent unit.
AACSB: Analytical Thinking
AICPA: FN Measurement
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-02 Reconcile the number of physical units using the
weighted-average method.
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Topic: Step 1: Reconcile the number of physical units
Topic: Step 2: Convert physical units into equivalent units
Topic: Step 3: Calculate cost per equivalent unit
Topic: Step 4: Reconcile the total cost of work in process
3-130
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McGraw-Hill Education.
3-131
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McGraw-Hill Education.
125. Hamilton, Inc. manufactures units in two processes: Production and Finishing.
All direct materials are added at the beginning of the Production process, while
conversion costs are incurred evenly throughout the period for both Production
and Finishing. Hamilton employs three inspectors: Kasey, Chad, and Lexi.
Kasey inspects direct materials before they are added to Production (two
pieces of direct materials per unit). Chad inspects units when the Production
process is finished, after which they are immediately transferred to Finishing.
Lexi inspects units at the end of the Finishing process. This period, none of the
materials or units failed inspection. At the beginning of the period, 5,000 units
had only "Inspected by Kasey" tags on them (these units were 70% complete),
and 2,000 units had "Inspected by Kasey" and "Inspected by Chad" tags on
them (these units were 60% complete). At the end of the period, 7,000 units
had only "Inspected by Kasey" tags on them (these units were 50% complete).
1,000 units had only "Inspected by Kasey" and "Inspected by Chad" tags on
them (these units were 90% complete), and 19,000 units had tags from all
three inspectors on them (these units were 100% complete). In the Finishing
Department, Hamilton incurred $38,000 in direct materials costs and $76,000
in conversion costs in the current period. Beginning Work in Process Inventory
for the Finishing Department carried a value of $4,000 in direct materials and
$3,600 in conversion costs.
Required:
Using the weighted average method, determine the number of physical units:
a. in beginning Work in Process in Production during the period.
b. started in Production during the period.
c. transferred from Production to Finishing during the period.
d. in ending Work in Process in Production during the period.
e. in beginning Work in Process in Finishing during the period.
f. in ending Work in Process in Finishing during the period.
g. completed in Finishing during the period.
Using the weighted average method, determine the number of equivalent
units:
h. for direct materials for Production
i. for conversion for Production
j. for direct materials for Finishing
k. for conversion for Finishing
Using the weighted average method, determine the cost per equivalent unit:
l. for direct materials for Finishing
m. for conversion for Finishing
3-132
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McGraw-Hill Education.
AICPA: FN Measurement
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-02 Reconcile the number of physical units using the
weighted-average method.
Learning Objective: 03-03 Calculate the number of equivalent units using the
weighted-average method.
Learning Objective: 03-04 Prepare a process costing production report using the
weighted-average method.
Topic: Accounting for subsequent production departments
Topic: Step 1: Reconcile the number of physical units
Topic: Step 2: Convert physical units into equivalent units
Topic: Step 3: Calculate cost per equivalent unit
3-133
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McGraw-Hill Education.
3-134
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McGraw-Hill Education.
126. Sierra Co. has provided the following information:
Work in Process: Feb
125,000 units
(100% complete for
materials, 60%
complete for
conversion)
Materials $35,000
Conversion $43,000
Units started 80,000 units
February costs
Materials $120,000
Conversion $234,000
Work in Process: Feb
28 15,000 units
(100% complete for
materials, 20%
complete for
conversion)
Using the FIFO method of process costing, complete each of the following:
a. How many units were completed and transferred to Finished Goods?
b. Calculate equivalent units.
c. Calculate cost per equivalent unit.
d. What is the dollar amount transferred to Finished Goods?
e. Calculate the cost of the ending Work in Process.
15,0
on
3.00
Started
&
finished
65,00
0 ×
4.50
= 292,500
Transfer
red to
Finished
Goods
400,500
e
.
Material
s
15,00
0 ×
1.50
= 22,500
Conversi
on
3,000
×
3.00
= 9,000
Total
ending
WIP
31,500
Feedback: Beginning units in process + units started = units completed +
ending units in process. Before we can calculate equivalent units for FIFO, we
must break down completed units into those from beginning inventory and
those started and completed. Equivalent units = physical units x percentage of
completion. Cost per equivalent unit = total manufacturing cost / equivalent
units. Costs are assigned by multiplying the appropriate equivalent units by
cost per equivalent unit.
3-136
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McGraw-Hill Education.
AACSB: Analytical Thinking
AICPA: FN Measurement
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-S1 Prepare a process costing production report using the
first-in, first-out (FIFO) method.
Topic: FIFO Method
3-137
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McGraw-Hill Education.
3-138
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McGraw-Hill Education.
127. Prepare the journal entries to record each of the following transactions for
Jason Co.
a. Purchased $40,000 of raw materials on credit.
b. Issued $37,600 of raw materials into production.
c. Paid $28,000 cash in production labor costs.
d. Incurred $30,000 of actual overhead costs, paid in cash.
e. Applied $27,000 of overhead cost.
f. Completed 6,600 units with a cost of $13.50 per unit.
g. Sold on account 6,000 units at $18.00 per unit. The cost of the units sold
was $(fill in)___________.
h. Disposed of any over- or under-applied overhead cost.
Cost of Goods
AICPA: FN Measurement
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-S2 Prepare journal entries to record the flow of
manufacturing costs in a process cost system.
Topic: Supplement 3B journal entries for process costing
3-140
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3-141
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128. Prepare the journal entries to record the following transactions for Viking Co.,
a company that produces Viking helmets for sale to tourists.
a. Purchased $80,000 of steel (8,000 tons) in cash.
b. Issued $75,000 of steel (7,500 tons) into production.
c. Paid $15,000 cash in production labor costs.
d. Applied overhead at the predetermined rate of $5 per ton of steel.
e. Incurred $40,000 of actual overhead costs, paid in cash. (Assume any
difference between actual and applied overhead costs is adjusted directly to
cost of goods sold.)
f. Completed 25,000 helmets. (Approximately $27,500 of inventory remains in
process, so the cost of each helmet is approximately $______.)
g. Sold 22,000 helmets at $24.00 per unit. (All proceeds were collected in
cash.)
h. Disposed of any over- or under-applied overhead cost.
AICPA: FN Measurement
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-S2 Prepare journal entries to record the flow of
manufacturing costs in a process cost system.
Topic: Supplement 3B journal entries for process costing
3-143
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129. Prepare the journal entries to record the following transactions for Kilts &
More, a company that produces hand-sewn kilts to Americans celebrating at
Irish Festivals around the country.
a. Purchased $140,000 of material (3,500 yards) in cash.
b. Issued $120,000 of material (3,000 yards) into production.
c. Paid $45,000 cash in production labor costs.
d. Applied overhead at the predetermined rate of $12 per yard.
e. Incurred $42,000 of actual overhead costs, paid in cash. (Assume any
difference between actual and applied overhead costs is adjusted directly to
cost of goods sold.)
f. Completed 5,000 kilts. (Approximately $51,000 of inventory remains in
process, so the cost of each helmet is approximately $______.)
g. Sold 4,500 kilts at $80.00 per unit. (All proceeds were collected in cash.)
h. Disposed of any over- or under-applied overhead cost.
AICPA: FN Measurement
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-S2 Prepare journal entries to record the flow of
manufacturing costs in a process cost system.
Topic: Supplement 3B journal entries for process costing
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