A. Debit Raw Materials Inventory $87,000; credit Accounts Payable $87,000.
B. Debit Raw Materials Inventory $87,000; credit Finished Goods Inventory $87,000.
C. Debit Cost of Goods Sold $87,000; credit Finished Goods Inventory $87,000.
D. Debit Goods in Process Inventory $87,000; credit Raw Materials Inventory $87,000.
E. Debit Goods in Process Inventory $87,000; credit Cost of Goods Sold $87,000.
106. Embark produces mulch for landscaping use. The following information summarizes
production operations for June. The journal entry to record June production activities for
direct labor usage is:
Direct materials used $87,000
Direct labor used 160,000
Predetermined overhead rate (based on direct labor) 155%
Goods transferred to finished goods 432,000
Cost of goods sold 444,000
Credit sales 810,000
A. Debit Factory Payroll $160,000; credit Cash $160,000.
B. Debit Goods in Process Inventory $160,000; credit Factory Payroll $160,000.
C. Debit Cost of Goods Sold $160,000; credit Factory Payroll $160,000.
D. Debit Goods in Process Inventory $160,000; credit Raw Materials Inventory $160,000.
E. Debit Goods in Process Inventory $160,000; credit Cash $160,000.
20–42
107. Embark produces mulch for landscaping use. The following information summarizes
production operations for June. The journal entry to record June production activities for
overhead allocation is:
Direct materials used $87,000
Direct labor used 160,000
Predetermined overhead rate (based on direct labor) 155%
Goods transferred to finished goods 432,000
Cost of goods sold 444,000
Credit sales 810,000
A. Debit Factory Overhead $248,000; credit Cash $248,000.
B. Debit Goods in Process Inventory $160,000; credit Factory Payroll $160,000.
C. Debit Goods in Process Inventory $248,000; credit Factory Overhead $248,000.
D. Debit Goods in Process Inventory $160,000; credit Factory Overhead $160,000.
E. Debit Goods in Process Inventory $160,000; credit Cash $160,000.
108. Embark produces mulch for landscaping use. The following information summarizes
production operations for June. The journal entry to record June production activities for
goods transfer from production to finished goods is:
Direct materials used $87,000
Direct labor used 160,000
Predetermined overhead rate (based on direct labor) 155%
Goods transferred to finished goods 432,000
Cost of goods sold 444,000
Credit sales 810,000
A. Debit Finished Goods Inventory $432,000; credit Goods in Process Inventory $432,000.
B. Debit Goods in Process Inventory $444,000; credit Finished Goods Inventory $444,000.
C. Debit Goods in Process Inventory $432,000; credit Finished Goods Inventory $432,000.
D. Debit Finished Goods Inventory $444,000; credit Goods in Process Inventory $444,000.
E. Debit Goods in Process Inventory $432,000; credit Cash $432,000.
109. Embark produces mulch for landscaping use. The following information summarizes
production operations and sales activities for June. The journal entry to record June sales is:
Direct materials used $87,000
Direct labor used 160,000
Predetermined overhead rate (based on direct labor) 155%
Goods transferred to finished goods 432,000
Cost of goods sold 444,000
Credit sales 810,000
A. Debit Accounts Receivable $810,000; credit Cost of Goods Sold $810,000.
B. Debit Accounts Receivable $810,000; credit Sales $366,000; credit Finished Goods
Inventory $444,000.
C. Debit Cost of Goods Sold $444,000; credit Sales $444,000.
D. Debit Finished Goods Inventory $444,000; debit Sales $810,000; credit Accounts
Receivable $810,000; credit Cost of Goods Sold $444,000.
E. Debit Accounts Receivable $810,000; credit Sales $810,000; debit Cost of Goods Sold
$444,000; credit Finished Goods Inventory $444,000.
110. During March, the production department of a process manufacturing system completed
a number of units of a product and transferred them to finished goods. Of the units
transferred, 25,000 were in process at the beginning of March and 110,000 were started and
completed in March. March’s beginning inventory units were 100% complete with respect to
materials and 55% complete with respect to labor. At the end of March, 30,000 additional
units were in process in the production department and were 100% complete with respect to
materials and 30% complete with respect to labor. Compute the number of units transferred to
finished goods.
A. 110,000.
B. 135,000.
C. 105,000.
D. 165,000.
E. 144,000.
111. During March, the production department of a process manufacturing system completed
a number of units of a product and transferred them to finished goods. Of the units
transferred, 25,000 were in process at the beginning of March and 110,000 were started and
completed in March. March’s beginning inventory units were 100% complete with respect to
materials and 55% complete with respect to labor. At the end of March, 30,000 additional
units were in process in the production department and were 100% complete with respect to
materials and 30% complete with respect to labor. Compute the number of equivalent units
with respect to both materials and direct labor respectively for March using the weighted-
average method.
A. 165,000; 165,000.
B. 135,000; 119,000.
C. 140,000; 130,250.
D. 165,000; 144,000.
E. 144,000; 144,000.
112. During March, the production department of a process manufacturing system completed
a number of units of a product and transferred them to finished goods. Of the units
transferred, 25,000 were in process at the beginning of March and 110,000 were started and
completed in March. March’s beginning inventory units were 100% complete with respect to
materials and 55% complete with respect to labor. At the end of March, 30,000 additional
units were in process in the production department and were 100% complete with respect to
materials and 30% complete with respect to labor. The production department incurred direct
materials cost of $253,000 and its beginning inventory included materials cost of $93,500.
Compute the direct materials cost per equivalent unit for the department using the weighted-
average method.
A. $1.53.
B. $2.48.
C. $2.10.
D. $2.57.
E. $2.40.
113. During March, the production department of a process manufacturing system completed
a number of units of a product and transferred them to finished goods. Of the units
transferred, 25,000 were in process at the beginning of March and 110,000 were started and
completed in March. March’s beginning inventory units were 100% complete with respect to
materials and 55% complete with respect to labor. At the end of March, 30,000 additional
units were in process in the production department and were 100% complete with respect to
materials and 30% complete with respect to labor. The production department incurred direct
labor cost of $578,900 and its beginning inventory included labor cost of $54,700. Compute
the direct labor cost per equivalent unit for the department using the weighted-average
method.
A. $4.69.
B. $3.84.
C. $4.86.
D. $4.28.
E. $4.40.
20–47
114. During March, the production department of a process manufacturing system completed
a number of units of a product and transferred them to finished goods. Of the units
transferred, 25,000 were in process at the beginning of March and 110,000 were started and
completed in March. March’s beginning inventory units were 100% complete with respect to
materials and 55% complete with respect to labor. At the end of March, 30,000 additional
units were in process in the production department and were 100% complete with respect to
materials and 30% complete with respect to labor. Compute the number of equivalent units
with respect to both materials and direct labor respectively for March using the FIFO method.
A. 165,000; 165,000.
B. 135,000; 119,000.
C. 140,000; 130,250.
D. 165,000; 144,000.
E. 144,000; 144,000.
115. A company uses the weighted average method for inventory costing. During a period, a
production department had 20,000 units in beginning goods in process inventory which were
40% complete; the department completed and transferred 165,000 units. At the end of the
period, 22,000 units were in the ending goods in process inventory and are 75% complete.
Compute the number of equivalent units produced by the department.
A. 181,500.
B. 165,000.
C. 173,500.
D. 145,000.
E. 187,000.
116. A company uses the FIFO method for inventory costing. During a period, a production
department had 20,000 units in beginning goods in process inventory which were 40%
complete; the department completed and transferred 165,000 units. At the end of the period,
22,000 units were in the ending goods in process inventory and are 75% complete. Compute
the number of equivalent units produced by the department.
A. 181,500.
B. 165,000.
C. 173,500.
D. 145,000.
E. 187,000.
20–49
117. A company uses the weighted average method for inventory costing. During a period, a
production department had 20,000 units in beginning goods in process inventory which were
40% complete; the department completed and transferred 165,000 units. At the end of the
period, 22,000 units were in the ending goods in process inventory and are 75% complete. All
of these are with respect to labor. The production department had labor costs in the beginning
goods is process inventory of $99,000 and total labor costs added during the period are
$726,825. Compute the equivalent cost per unit for labor.
A. $4.40.
B. $4.76.
C. $4.19.
D. $4.55.
E. $4.61.
118. A company uses the FIFO method for inventory costing. During a period, a production
department had 20,000 units in beginning goods in process inventory which were 40%
complete; the department completed and transferred 165,000 units. At the end of the period,
22,000 units were in the ending goods in process inventory and are 75% complete. All of
these are with respect to labor. The production department had labor costs in the beginning
goods is process inventory of $99,000 and total labor costs added during the period are
$726,825. Compute the equivalent cost per unit for labor.
A. $4.40.
B. $4.76.
C. $4.19.
D. $4.55.
E. $4.61.
119. A company uses the weighted-average method for inventory costing. At the end of the
period, 22,000 units were in the ending goods in process inventory and are 100% complete for
materials and 75% complete for labor and overhead. The equivalent costs per unit are;
materials, $2.65, labor, $2.15, and overhead, $3.20. Compute the cost that would be assigned
to the ending goods in process inventory for the period.
A. $146,575.
B. $176,000.
C. $87,725.
D. $93,775.
E. $132,000.
120. Match the following terms with the definitions.
__________ (1) Equivalent units of production
__________ (2) Job order cost accounting system
__________ (3) Hybrid manufacturing system
__________ (4) Process manufacturing system
__________ (5) Process cost accounting system
__________ (6) Materials consumption report
__________ (7) Process cost summary
A. Costing system to determine the cost of producing each job or job lot.
B. Document that summarizes the materials a department uses during a reporting period;
replaces materials requisition.
C. Report of costs charged to a department, its equivalent units of production achieved, even
the costs assigned to its output.
D. A manufacturing system that contains features of both process and job order systems.
E. Number of units that would be completed if all effort during a period had been applied to
units that were started and finished.
F. System of assigning direct materials, direct labor, and overhead to specific processes; total
costs associated with each process are then divided by the number of units passing through
that process to determine cost per equivalent unit.
G. Process of products in a continuous flow of steps.
121. What is meant by equivalent units of production, and why are they important when a
process cost accounting system is used?
122. What are the four steps in accounting for production activity in a period?
123. Why is the Process Cost Summary important to management and how does the Process
Cost Summary accomplish its purposes?
124. Briefly explain the conditions under which job order cost accounting systems and
process cost accounting systems are commonly applied.
125. Job order manufacturing and process manufacturing are two major costing systems used
in manufacturing. Briefly contrast the characteristics of these two systems.
126. What is a hybrid costing system? When is a hybrid costing system appropriate for a
manufacturer?
127. Describe the flow of materials in a process cost accounting system, including accounts
used.
128. Describe the flow of labor in a process cost accounting system, including accounts used.
20–55
129. Describe the flow of overhead costs in a process cost accounting system, including
accounts used.
Problems
130. A company’s January 1 goods in process inventory contained 30,000 units that were 25%
complete with respect to direct labor. The beginning inventory was completed this year and
another 120,000 units were started. Of those started, 80,000 were finished and the remaining
40,000 were left 20% complete. Calculate the equivalent units of production for the year
using the weighted average method.
131. The following data is available for Osman Corp. for the current year:
Beginning inventory of goods in process 12,000 units, 60% completed
Ending inventory of goods in process 18,000 units, 30% completed
Units completed and transferred to
finished goods during the year 144,000 units
Calculate the equivalent units of production for the year using the weighted average
method.
132. A company uses a process cost accounting system and the weighted average method for
inventory costs. The following information is available regarding direct labor for the current
year:
Goods in process, January 1 5,500 units, 80% complete
Goods in process, December 31 8,800 units, 40% complete
Units completed and transferred to
finished goods 46,900 units
Direct labor costs during the year $266,300
(a) Calculate the equivalent units of production for direct labor for the year.
(b) Calculate the average cost per equivalent unit for direct labor (round to the nearest cent).
133. Refer to the following information about the Painting Department in the Richardson
Factory for the month of June. Richardson Factory uses the FIFO method of inventory
costing.
Beginning goods in process inventory:
Physical units…………………………………………… 5,000 units
% complete for materials………………………………. 70%
% complete for labor and overhead……………………. 25%
Materials cost from May……………………………….. $7,350
Labor and overhead cost from May……………………. $3,125
Product started and completed:
Physical units…………………………………………… 40,000 units
Ending goods in process inventory:
Physical units……………………………………………. 4,000 units
% complete for materials………………………………. 40%
% complete for labor and overhead……………………. 10%
Manufacturing costs for June:
Materials………………………………………………… $96,975
Labor and overhead……………………………………… $79,470
Compute equivalent units for direct materials, direct labor and overhead for June.
20–58
134. Refer to the following information about the Painting Department in the Richardson
Factory for the month of June. Richardson Factory uses the FIFO method of inventory
costing.
Beginning goods in process inventory:
Physical units……………………………………………………………… 5,000 units
% complete for materials …………………………………………….. 70%
% complete for labor and overhead ………………………………. 25%
Materials cost from May ……………………………………………… $7,350
Labor and overhead cost from May ……………………………….. $3,125
Product started and completed:
Physical units……………………………………………………………… 40,000 units
Ending goods in process inventory:
Physical units……………………………………………………………… 4,000 units
% complete for materials …………………………………………….. 40%
% complete for labor and overhead ……………………………….. 10%
Manufacturing costs for June:
Materials ……………………………………………………………………. $96,975
Labor and overhead………………………………………… $79,470
Compute the equivalent cost per unit for direct materials, direct labor and overhead for June.
20–59
135. Refer to the following information about the Painting Department in the Richardson
Factory for the month of June. Richardson Factory uses the FIFO method of inventory
costing.
Beginning goods in process inventory:
Physical units……………………………………………………………… 5,000 units
% complete for materials …………………………………………….. 70%
% complete for labor and overhead ………………………………. 25%
Materials cost from May ……………………………………………… $7,350
Labor and overhead cost from May ……………………………….. $3,125
Product started and completed:
Physical units……………………………………………………………… 40,000 units
Ending goods in process inventory:
Physical units……………………………………………………………… 4,000 units
% complete for materials …………………………………………….. 40%
% complete for labor and overhead ……………………………….. 10%
Manufacturing costs for June:
Materials ……………………………………………………………………. $96,975
Labor and overhead………………………………………… $79,470
Compute the total cost of all units that were completed and transferred to finished goods
during June. Compute the total cost of the ending goods in process inventory.