Test Bank to accompany Jiambalvo Managerial Accounting, 6th Edition
3-34
141. Erie Lake Fishing processes trout for various distributors and uses process costing. The two
departments involved are Cleaning and Packing. The table below summarizes the data related
to trout processed in the Cleaning Department during June:
Pounds of Percent
Trout Complete*
Work in process, June 1 12,000 50%
Started into processing during June 235,000 —
Work in process, June 30 14,000 45%
*Labor and overhead only
All materials are added at the beginning of the process in the Cleaning Department. Prepare a
reconciliation of units and a computation of equivalent units for June for the Cleaning
Department.
Answer
142. Red Mountain Coffee uses process costing. At the start of January, there were 14,000 pounds
of coffee beans in its Roasting Department’s Work in Process account that were 90 percent
complete with respect to material and 25 percent complete with respect to conversion costs.
The cost of the beans totaled $23,040 for material and $31,200 for conversion costs as of
January 1. During the month, production on 120,000 pounds of coffee beans was started by
the Roasting Department and it incurred material costs of $76,000 and labor and overhead
costs of $118,080. The cost per equivalent unit totaled $0.80 for material and $1.20 for labor
and overhead. The cost of items completed was $97,600 for materials and $146,400 for labor
and overhead. The 12,000 pounds in ending Work in Process are 15 percent complete with
respect to material and 20 percent complete with respect to conversion costs.
a. Prepare a reconciliation of units.
b. How much is the cost of ending Work in Process inventory in the Roasting
Department?
Chapter 3 Process Costing
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143. Pest Be Gone uses process costing. Its Mixing Department had 7,500 units in its beginning
June inventory. Associated with these units were $20,200 in direct materials and $25,000 in
conversion costs. During the period, the department incurred $79,800 in direct materials and
$151,800 in conversion costs and started 50,000 units. Ending inventory consisted of 2,000
units that were 100% complete with respect to materials and 60% complete with respect to
conversion costs. For the Mixing Department’s production cost report for the month of June:
a. Calculate the equivalent units for materials and conversion costs.
b. Calculate the cost per equivalent unit for materials and conversion costs.
c. Calculate the cost of units transferred out.
d. Calculate the cost of the ending Work in Process.
Answer
Test Bank to accompany Jiambalvo Managerial Accounting, 6th Edition
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144. Air Tracts produces solar-powered robots in a continuous production process. The company
uses process costing. 85 percent of materials are added at the beginning of production and
the other 15 percent are added immediately before transfer to the finished goods warehouse.
Conversion costs are added evenly throughout the process. At the end of March, there were
10 robots in process, 70 percent complete as to labor and overhead. 95 robots were
completed during the month. The direct materials cost per equivalent unit during March was
$2,000, the labor cost per equivalent unit was $750, and the overhead per equivalent unit was
$1,500.
a. Determine the cost of the ending Work in Process inventory.
b. Determine the cost of items completed and transferred to Finished Goods Inventory.
Answer
145. Ideal Cuisine uses process costing. The balance in the beginning Work in Process inventory
account for its Cooking Department for direct labor was $14,000. During the month of October,
an additional $129,370 of direct labor was incurred, while 15,750 meals were completed and
moved to the Packaging Department. At the end of October, 450 meals were in process that
were 40 percent complete. At the start of October, the company had 200 meals that were 10
percent complete. Calculate the cost per equivalent unit for labor assuming that labor is added
uniformly throughout the production process for October in the Cooking Department.
Answer
Chapter 3 Process Costing
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146. During July, Store-All Containers completed 20,000 units. There were 10,000 units in ending
Work in Process in the Molding Department that were 30 percent complete with respect to
labor and overhead and 100 percent complete with respect to material. During the month of
July, the company incurred $250,000 of material cost, $120,000 of labor cost, and $160,000 of
manufacturing overhead. Costs per equivalent unit for material, labor, and manufacturing
overhead are equal to $10, $6, and $8, respectively. The company uses process costing.
Calculate the amount of material cost, labor cost, and overhead cost in beginning Work in
Process inventory in the Molding Department during July.
Answer
147. Ranger Toys uses process costing. On November 1, Ranger Toys’ Packaging Department had
Work in Process inventory of 6,000 units that were 75% complete with respect to materials
and 30% complete with respect to conversion costs. Ranger uses process costing. The cost of
the beginning units was $93,525, of which $60,000 was transferred-in from previous
departments, $26,775 in materials, and $6,750 in labor and overhead. During November,
125,000 units were transferred into the Packaging Department. These units had accumulated
costs in previous departments of $1,218,560. The Packaging Department incurred costs of
$756,225 for materials and $488,010 for conversion costs in November and transferred
130,000 units out of the department. The 1,000 units remaining in ending inventory are 50%
complete with respect to materials and 20% complete with respect to conversion costs.
a. Calculate the cost per equivalent unit for transferred-in costs, material, and conversion
costs in the Packaging Department for November.
b. Calculate the cost of the units transferred out of the Packaging Department for
November..
c. Calculate the cost of the ending Work in Process inventory in the Packaging
Department for November.
Answer
Test Bank to accompany Jiambalvo Managerial Accounting, 6th Edition
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148. Sunny Green Tea manufactures loose green tea that it packages into 8-ounce bags sold to
retail stores. It uses a process costing system. At the start of September, there were 7,000
pounds of tea in the Drying Department that were 100 percent complete with respect to direct
material and 30 percent complete with respect to conversion costs (labor and overhead).
During the month, the company began production of 215,000 units. Ending Work in Process
Inventory consisted of 5,000 pounds of tea that were 100 percent complete with respect to
material and 60 percent complete with respect to conversion costs. Costs for the Drying
Department follow for September:
Beginning Work
in Process Costs Added
Direct material $ 2,800 $ 46,040
Direct labor 4,000 85,000
Manufacturing overhead 5,000 71,000
Total $11,800 $202,040
a. Calculate the cost per equivalent unit for materials and conversion costs, respectively
for September.
b. Calculate the cost of items completed in September and the cost of ending Work in
Process.
Answer
Chapter 3 Process Costing
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149. Capstone Readers started its production operations on April 1 and implemented a process
costing system . During April, the Printing Department completed 8,000 books. There were
4,400 books in process in the Printing Department on April 30 that were 85% complete with
respect to materials and 10% complete with respect to conversion costs. During April, the
department accumulated materials costs of $55,765 and conversion costs of $80,180.
a. Calculate the cost of the goods transferred out of the Printing Department during April.
b. What is the value of the ending Work in Process inventory in the Printing Department
at April 30?
Answer
Test Bank to accompany Jiambalvo Managerial Accounting, 6th Edition
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150. Bamboo Tiles is a producer of bamboo tiles used in flooring. The company uses process
costing. The bamboo is softened, cut, sanded, and treated prior to sale. Material is added in
the beginning of the Softening Department and conversion costs are added evenly throughout
processing.
Bamboo Tiles began the month of August with 14,000 linear feet of bamboo in process
that were 100 percent complete as to materials and 60 percent complete as to labor and
overhead. The production workers started 120,000 linear feet into production during the month
of August, and 8,000 remained in Work in Process inventory at August 31 that were 50
percent complete as to conversion costs. The cost data are as follows:
Beginning Work in Process:
Direct materials $ 74,000
Direct labor 31,000
Manufacturing overhead 41,000
Costs added during August:
Direct materials $ 86,800
Direct labor 215,000
Manufacturing overhead 233,000
Prepare a complete production cost report for the month of August for the Softening
Department..
Answer
Chapter 3 Process Costing
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151. On August 1, Candle World’s Packaging Department had Work in Process inventory of 8,620
units, which had been transferred in from the Finishing Department. Candle World uses
process costing. These units had accumulated costs of $211,621 in previous departments.
During August, 27,000 units were transferred into the Packaging Department. These
units had accumulated costs of $677,098 in the previous departments. The Packaging
Department incurred $51,389 in conversion costs during the month. 900 units remained in
ending inventory on August 31. These units were 80% complete with respect to conversion
costs. Calculate the cost per equivalent unit for transferred-in costs and for conversion costs,
respectively, for the Packaging Department for August.
Answer
152. Harry’s Sandwich Shop uses a process costing system for its foot-long sub sandwiches and
carries no beginning or ending Work in Process inventories. During 2017, the company
produced and sold 5,000 subs and incurred the following costs:
Total Per equivalent unit
Direct material $ 5,600 $1.12
Direct labor 8,800 1.76
Manufacturing overhead 7,200 1.44
Total $21,600 $4.32
The current selling price is $6.25 per sub and the gross profit for 2017 was ($6.25 × 5,000) ‒
($4.32 × 5,000) = $9,650. Sales projections for 2018 at the current price look flat, but the
manager believes that if the sales price is reduced to $5.80, sales volume would increase by
600 units. Assume that direct material and direct labor are variable costs and that
manufacturing overhead costs are primarily fixed. Should Harry’s Sandwich Shop lower the
selling price?
Answer
Test Bank to accompany Jiambalvo Managerial Accounting, 6th Edition
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CHALLENGE EXERCISES
153. Tiny Trains produces wooden toy trains and uses process costing. Each train passes through
three processes—cutting, assembly, and finishing. In the Assembly Department, materials are
added when the trains are 60% complete, and conversion costs are added evenly throughout
the process. Production information for the Assembly Department for July follows:
Ending Work in Process, conversion costs
40% complete
Beginning Work in Process, conversion costs
70% complete
Units started during July
41,000
Units in Work in Process, July 1
5,200
Units in Work in Process, July 31
7,000
Conversion costs in beginning Work in Process
$31,000
Transferred-in costs in beginning Work in Process
$16,820
Cost of direct materials in beginning WIP
$11,280
Conversion costs added during July
$21,500
Direct material cost added during July
$24,000
Transferred-in costs added during July
$34,000
a. Calculate the equivalent units for the Assembly Department for July.
b. Identify the nature of ‘transferred–in’ costs and how these costs differ from costs in the
beginning Work in Process inventory as it relates to the Assembly Department.
Answer
Chapter 3 Process Costing
3-43
154. Wiseman Toys produces paint guns and uses process costing. The paint guns pass through
three processes—molding, assembly, and testing. In the Assembly Department, materials are
added when the guns are 10% complete, and conversion costs are added evenly throughout
the process. Production information for July in the Assembly Department follows:
Ending Work in Process, conversion costs
30% complete
Beginning Work in Process, conversion costs
60% complete
Units started during July
6,200
Units in Work in Process, July 1
1,100
Units in Work in Process, July 31
1,800
Conversion costs in beginning Work in Process
$31,048
Transferred-in costs in beginning Work in
Process
$11,820
Cost of direct materials in beginning WIP
$11,280
Conversion costs added during July
$21,500
Direct material cost added during July
$23,760
Transferred-in costs added during July
$34,170
a. Calculate the following for Weisman Toys for the Assembly Department for July:
1. Equivalent units
2. Total cost to account for
3. Cost per unit assigned to units transferred out to the Testing Department
b. Identify which of Wiseman Toys’ three departments will not have any transferred–in
costs. Explain why.
Answer
Beginning inventory
Cost added
Cost to account for
+
+
Test Bank to accompany Jiambalvo Managerial Accounting, 6th Edition
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SHORT-ANSWER ESSAYS
155. What is meant by the statement, “Process costing is essentially a system of averaging?”
Answer
156. What are transferred-in costs? Which departments will never have transferred-in costs?
Answer
157. Why is it necessary to use equivalent units in a process costing system?
Answer
158. List the four basic steps in preparing the production cost report.
Answer
159. What are conversion costs? What are the characteristics of the costs that make up conversion
costs?
Answer
Chapter 3 Process Costing
3-45
160. The production cost report may contain as many as four cost per equivalent unit calculations.
What are the components of total cost for which the cost per equivalent unit may be
calculated?
Answer
161. What caution must be considered when using process costing information in incremental
analysis, and why?
Answer