Accounting Chapter 17 These Costs Are Incurred Transferring Raw Materials

subject Type Homework Help
subject Pages 9
subject Words 1695
subject Authors Charles T. Horngren, Madhav Rajan, Srikant M. Datar

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59) Pet Products Company uses an automated process to manufacture its pet replica products. For June,
the company had the following activities:
Beginning work in process inventory
4,500 items, 1/4 complete
Units placed in production
15,000 units
Units completed
17,500 units
Ending work in process inventory
2,000 items, 3/4 complete
Cost of beginning work in process
$5,250
Direct material costs, current
$16,500
Conversion costs, current
$23,945
Direct materials are placed into production at the beginning of the process and conversion costs are
incurred evenly throughout the process.
Required:
Prepare a production cost worksheet using the FIFO method.
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60) Four Seasons Company makes snow blowers. Materials are added at the beginning of the process and
conversion costs are uniformly incurred. At the beginning of September, work in process is 40% complete
and at the end of the month it is 60% complete. Other data for the month include:
Beginning work-in-process inventory
Units started
Units placed in finished goods
Conversion costs
Cost of direct materials
Beginning work-in-process costs:
Materials
Conversion
Required:
a. Prepare a production cost worksheet with supporting schedules using the weighted-average method
of process costing.
b. Prepare journal entries to record transferring of materials to processing and from processing to
finished goods.
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61) Shining Star Company uses an automated process to clean and polish its souvenir items. For March,
the company had the following activities:
Beginning work in process inventory
3,000 items, 1/3 complete
Units placed in production
12,000 units
Units completed
9,000 units
Ending work in process inventory
6,000 items, 2/5 complete
Cost of beginning work in process
$2,500
Direct material costs, current
$9,000
Conversion costs, current
$8,320
Direct materials are placed into production at the beginning of the process and conversion costs are
incurred evenly throughout the process.
Required:
Prepare a production cost worksheet using the FIFO method.
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62) What is the difference between a weighted-average method of process costing and a first-in, first-out
method of process costing?
63) High Universal Industries operates a division in Brazil, a country with very high inflation rates.
Traditionally, the company has used the same costing techniques in all countries to facilitate reporting to
corporate headquarters. However, the financial accounting reports from Brazil never seem to match the
actual unit results of the division. Management has studied the problem and it appears that beginning
inventories may be the cause of the unmatched information. The reason for this is that the inventories
have a different financial base because of the severe inflation.
Required:
How can process costing assist in addressing the problem facing Universal Industries?
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Objective 17.5
1) In a process-costing system when goods move from department to department, the accounting for such
transfers is relatively simple under ________.
A) standard costing
B) FIFO costing
C) weighted-average costing
D) operations costing
2) Which of the following best describes transferred-in costs in process costing?
A) These costs are incurred in previous departments that are carried forward to subsequent departments.
B) These costs are transferred in to the company by an external vendor.
C) These costs are incurred in transferring raw materials and labor from the place of availability to the
factory.
D) These costs cannot be controlled by an organization as they are transferred to the organization from
the market participants.
3) Transferred-in costs are treated as if they are ________.
A) conversion costs added at the beginning of the process
B) costs of beginning inventory added at the beginning of the process
C) direct labor costs added at the beginning of the process
D) a separate direct material added at the beginning of the process
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4) Direct Disk Drive Company operates a computer disk manufacturing plant. Direct materials are added
at the end of the process. The following data were for June 20X5:
Work in process, beginning inventory 25,000 units
Transferred-in costs (100% complete)
Direct materials (0% complete)
Conversion costs (90% complete)
Transferred in during current period 165,000 units
Completed and transferred out 185,000 units
Work in process, ending inventory 5,000 units
Transferred-in costs (100% complete)
Direct materials (0% complete)
Conversion costs (65% complete)
How many units must be accounted for during the period?
A) 215,000 units
B) 190,000 units
C) 169,500 units
D) 140,000 units
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5) Direct Disk Drive Company operates a computer disk manufacturing plant. Direct materials are added
at the end of the process. The following data were for August 20X5:
Work in process, beginning inventory 150,000 units
Transferred-in costs (100% complete)
Direct materials (0% complete)
Conversion costs (90% complete)
Transferred in during current period 450,000 units
Completed and transferred out 400,000 units
Work in process, ending inventory 200,000 units
Transferred-in costs (100% complete)
Direct materials (0% complete)
Conversion costs (65% complete)
Calculate equivalent units for conversion costs using the FIFO method.
A) 401,500 units
B) 350,000 units
C) 300,000 units
D) 395,000 units
6) The journal entry for transfer from Department B to finished goods is:
Work in ProcessDepartment B
Finished Goods Control
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7) In a series of interdepartmental transfers, each department is regarded as separate and distinct for
accounting purposes.
8) When calculating the costs to be transferred using the FIFO method, we should not include costs
assigned in the previous period to units that were in process at the beginning of the current period but
are now included in the units transferred.
9) Transferred-in costs are always 100 percent complete at the beginning of the process in the new
department.
10) Transferred-in costs are costs incurred in previous departments that are carried forward as the
product's cost when it moves to a subsequent process in the production cycle.
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11) Otylia Manufacturing Company assembles its product in several departments. It has two departments
that process all units. During February, the beginning work in process in the cutting department was half
completed as to conversion, and complete as to direct materials. The beginning inventory included
$12,000 for materials and $3,000 for conversion costs. Ending work-in-process inventory in the cutting
department was 40% complete. Direct materials are added at the beginning of the process.
Beginning work in process in the finishing department was 75% complete as to conversion. Beginning
inventories included $16,000 for transferred-in costs and $20,000 for conversion costs. Ending inventory
was 25% complete. Additional information about the two departments follows:
Cutting
Finishing
Beginning work-in-process units
20,000
20,000
Units started this period
40,000
50,000
Units transferred this period
50,000
Ending work-in-process units
10,000
20,000
Material costs added
$42,000
$28,000
Direct manufacturing labor
$18,700
$40,000
Other conversion costs
$21,500
$24,000
Required:
Prepare a production cost worksheet using weighted-average for the cutting department.
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12) The Laramie Factory produces expensive boots. It has two departments that process all the items.
During January, the beginning work in process in the tanning department was 40% complete as to
conversion and 100% complete as to direct materials. The beginning inventory included $6,000 for
materials and $18,000 for conversion costs. Ending work-in-process inventory in the tanning department
was 40% complete. Direct materials are added at the beginning of the process.
Beginning work in process in the finishing department was 60% complete as to conversion. Beginning
inventories included $7,000 for transferred-in costs and $10,000 for conversion costs. Ending inventory
was 30% complete.
Additional information about the two departments follows:
Tanning Finishing
Beginning work-in-process units 5,000 4,000
Units started this period 14,000 ?
Units transferred this period 16,000 18,000
Ending work-in-process units ? 2,000
Material costs added $18,000 ?
Conversion costs 32,000 $19,000
Transferred-out cost 50,000 ?
Required:
Prepare a production cost worksheet using weighted-average costing for the finishing department.

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