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Chapter 18(3): Process Cost Systems
Department W had 2,400 units, one-third completed at the beginning of the period; 16,000 units were transferred
to
Department X from Department W during the period; and 1,800 units were one-half completed at the end of the
period. Assume the completion ratios apply to direct materials and conversion costs.
112.
What is the total number of units to be assigned cost on the cost of production report for Department W?
a.
12,000 units
b.
13,600 units
c.
18,500 units
d.
17,800 units
113.
What are the equivalent units of production used to compute unit conversion cost on the cost of production report
for
Department W? Assume the company uses FIFO.
a.
16,100 units
b.
13,600 units
c.
15,000 units
d.
18,500 units
114.
Carolwood Company manufactures widgets and uses process costing. The status of the beginning and
ending
inventory is:
Beginning inventory
30% of the manufacturing process is complete
Ending inventory
55% of the manufacturing process is complete
Direct materials are added to the manufacturing process in stages. None are added when production begins.
Approximately 1/2 of the materials are added when the product is 25% complete. The other half is added when
the
product is 50% complete.
What percentage complete are beginning inventory and ending inventory with respect to direct materials (DM)
and
conversion costs (CC)?
a.
beg. inventory: DM—50%, CC—30%
end. inventory: DM—100%. CC—55%
b.
beg. inventory: DM—50%. CC—30%
end. inventory: DM—55%. CC—55%
c.
beg. inventory: DM—30%. CC—30%
end. inventory: DM—55%. CC—55%
d.
beg. inventory: DM—50%. CC—70%
end. inventory: DM—100%. CC—45%
115.
The Blue Lake Water Company has two departments, Purifying and Bottling. The Bottling Department received
76,000 liters from the Purifying Department. During the period, the Bottling Department completed 74,000 liters,
including 3,000 liters of work in process at the beginning of the period. The ending work in process was 5,000
liters.
How many liters were started and completed during the period?
a. 74,000 b. 69,000
c. 73,000 d. 79,000
Chapter 18(3): Process Cost Systems
Penny, Inc. employs a process costing system. Direct materials are added at the beginning of the process. Here is
information about July’s activities:
On July 1:
Beginning inventories
850 units, 60% complete
Direct materials cost
$5,000
Conversion costs
$4,000
During July:
Number of units started
15,000
Direct materials added
$155,000
Conversion costs added
$83,520
On July 31:
Ending inventories
1,600 units, 40% complete
116.
Using the FIFO method, the number of units started and completed in July was
a. 14,250
b. 15,000
c. 13,400
d. 15,740
117.
Using the FIFO method, the number of equivalent units of conversion costs was
a. 14,400
b. 14,380
c. 14,550
d. 15,850
118.
Using the FIFO method and rounding cost per unit to four decimal places, the cost of goods completed
and
transferred out during July was
a. $227,270
b. $225,060
c. $236,905
d. $228,200
119.
Using the FIFO method, the cost per equivalent unit for materials used during July was
a. $10.78
b. $10.33
c. $9.78
d. $10.65
Chapter 18(3): Process Cost Systems
Department J had no work in process at the beginning of the period; 18,000 units were completed during the
period;
and 2,000 units were 30% completed at the end of the period. The following manufacturing costs were
debited to
the departmental work in process account during the period (Assume the company uses FIFO and
rounds cost per
unit to two decimal places):
Direct materials (20,000 at $5)
$100,000
Direct labor
142,300
Factory overhead
57,200
120.
Assuming that all direct materials are placed in process at the beginning of production, what is the total cost of
the
18,000 units completed during the period?
a. $90,000
b. $193,140
c. $16,438
d. $283,140
121.
Assuming that all direct materials are placed in process at the beginning of production, what is the total cost of
the
departmental work in process inventory at the end of the period?
a. $90,000
b. $283,140
c. $199,500
d. $16,438
Chapter 18(3): Process Cost Systems
Mocha Company manufactures a single product by a continuous process, involving three production
departments.
The records indicate that direct materials, direct labor, and applied factory overhead for Department
1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct
labor, and
applied factory overhead for Department 2 were $55,000, $65,000, and $80,000, respectively. In
addition, work in
process at the beginning of the period for Department 1 totaled $75,000, and work in process at
the end of the
period totaled $60,000.
122.
The journal entry to record the flow of costs into Department 1 during the period for direct materials is
a. Work in Process—Department 1
Materials
100,000
100,000
b. Work in Process—Department 1
Materials
55,000
55,000
c. Materials
Work in Process—Department 1
100,000
100,000
d. Materials
Work in Process—Department 1
55,000
55,000
123.
The journal entry to record the flow of costs into Department 2 during the period for direct materials is
a. Work in Process—Department 2
Materials
100,000
100,000
b. Work in Process—Department 2
Materials
55,000
55,000
c. Work in Process—Department 2
Materials
150,000
150,000
d. Materials
Work in Process—Department 2
55,000
55,000
124.
The journal entry to record the flow of costs into Department 1 for direct labor is
a. Work in Process—Department 1
Wages Payable
65,000
65,000
b. Wages Payable
Work in Process—Department 1
125,000
125,000
c. Work in Process—Department 1
Wages Payable
125,000
125,000
d. Wages Payable
Work in Process—Department 1
65,000
65,000
125.
The journal entry to record the flow of costs into Department 2 for direct labor is
a. Work in Process—Department 2
Wages Payable
65,000
65,000
b. Wages Payable
Work in Process—Department 2
65,000
65,000
c. Work in Process—Department 2
Wages Payable
125,000
125,000
d. Work in Process—Department 2
Wages Payable
185,000
185,000
126.
The journal entry to record the flow of costs into Department 1 during the period for applied overhead is
a. Factory Overhead—Department 1
Work in Process—Department 1
150,000
150,000
b. Work in Process—Department 1
Factory Overhead—Department 1
125,000
125,000
c. Work in Process—Department 1
Factory Overhead—Department 1
80,000
80,000
d. Work in Process—Department 1
Factory Overhead—Department 1
150,000
150,000
127.
The journal entry to record the flow of costs into Department 2 for applied overhead is
a. Factory Overhead—Department 2
Work in Process—Department 2
80,000
80,000
b. Work in Process—Department 2
Factory Overhead—Department 2
230,000
230,000
c. Work in Process—Department 2
Factory Overhead—Department 2
80,000
80,000
d. Work in Process—Department 2
Factory Overhead—Department 2
150,000
150,000
128.
The journal entry to record the flow of costs from Department 1 into Department 2 is
a. Work in Process—Department 2
Work in Process—Department 1
390,000
390,000
b. Work in Process—Department 2
Work in Process—Department 1
330,000
330,000
c. Work in Process—Department 2
Work in Process—Department 1
215,000
215,000
d. Work in Process—Department 2
Work in Process—Department 1
375,000
375,000
129.
Mocha Company manufactures a single product by a continuous process, involving three production
departments.
The records indicate that direct materials, direct labor, and applied factory overhead for Department
1 were $100,000, $125,000, and $150,000, respectively. Work in process at the beginning of the period for
Department 1
was $75,000, and work in process at the end of the period totaled $60,000. The records indicate
that direct
materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and
$70,000,
respectively. In addition, work in process at the beginning of the period for Department 2 totaled
$75,000, and work
in process at the end of the period totaled $60,000. The journal entry to record the flow of
costs into Department 3
during the period is
a. Work in Process—Department 3
Work in Process—Department 2
585,000
585,000
b. Work in Process—Department 3
Work in Process—Department 2
570,000
570,000
c. Work in Process—Department 3
Work in Process—Department 2
555,000
555,000
d. Work in Process—Department 3
Work in Process—Department 2
165,000
165,000
130.
Mocha Company manufactures a single product by a continuous process, involving three production departments.
The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were
$100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor,
and
applied factory overhead for Department 2 were $50,000, $60,000, and $70,000, respectively. Department 2
has
transferred-in costs of $390,000 for the current period. In addition, work in process at the beginning of the
period
for Department 2 totaled $75,000, and work in process at the end of the period totaled $90,000. The journal
entry to
record the flow of costs into Department 3 during the period is
a. Work in Process—Department 3
Work in Process—Department 2
375,000
375,000
b. Work in Process—Department 3
Work in Process—Department 2
570,000
570,000
c. Work in Process—Department 3
Work in Process—Department 2
490,000
490,000
d. Work in Process—Department 3
Work in Process—Department 2
555,000
555,000
131.
Mocha Company manufactures a single product by a continuous process, involving three production
departments.
The records indicate that direct materials, direct labor, and applied factory overhead for Department
2 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct
labor, and
applied factory overhead for Department 3 were $50,000, $60,000, and $70,000, respectively. In
addition, work in
process at the beginning of the period for Department 3 totaled $75,000, and work in process at
the end of the
period totaled $60,000. The journal entry to record the flow of costs into Department 3 during the
period for direct
materials is
a. Work in Process—Department 3
Materials
100,000
100,000
b. Work in Process—Department 3
Materials
125,000
125,000
c. Work in Process—Department 3
Materials
50,000
50,000
d. Work in Process—Department 3
Materials
70,000
70,000
132.
Which of the following is not a use of the cost of production report?
a.
to help managers control operations
b.
to help managers isolate problems
c.
to project production
d.
to help managers improve operations
133.
Which of the following measures would not help managers to control and improve operations?
a.
units produced per time period
b.
cost trends of a product
c.
yield trends
d.
commissions paid per time period
134.
Just-in-time processing is a business philosophy that focuses on reducing time and cost and eliminating poor quality.
This is accomplished in manufacturing and nonmanufacturing processes by
a.
moving a product from process to process as each function is completed
b.
combining processing functions into work centers and cross-training workers to perform more than
one
function
c.
having production supervisors attempt to enter enough materials into manufacturing to keep all
manufacturing
departments operating
d.
having workers typically perform one function on a continuous basis
135.
When a firm adopts a just-in-time operating environment,
a.
new, more efficient machinery and equipment must be purchased and installed in the original layout
b.
machinery and equipment are moved into small autonomous production lines called manufacturing cells
c.
new machinery and equipment must be purchased from franchised JIT dealers
d.
employees are retrained on different equipment but the plant layout generally stays unchanged
136.
Which of the following best describes the effect on direct labor when management adopts a just-in-
time
environment?
a.
Workers typically perform one function.
b.
The environment becomes more labor intensive.
c.
Each employee runs a single machine.
d.
Workers are often cross-trained to perform more than one function.
137.
According to the just-in-time philosophy,
a.
finished goods should always be available in case a customer wants something
b.
employees should be expert at one function rather than be cross-trained for multiple functions
c.
movement of the product and material is reduced
d.
the product moves from process to process until completion
138.
Just-in-time operations attempt to significantly reduce
a.
profits
b.
inventory needed to produce products
c.
waste and simplify the production process
d.
processing time
The debits to Work in Process—Assembly Department for April, together with data concerning production, are as
follows:
April 1, work in process:
Materials cost, 3,000 units $ 7,500
Conversion costs, 3,000 units, 80% completed 6,000
Materials added during April, 10,000 units 29,000
Conversion costs during April 35,000
Goods finished during April, 11,500 units —
April 30 work in process, 1,500 units, 60% completed —
All direct materials are placed in process at the beginning of the process and the average cost method is used to
cost inventories.
139.
The materials cost per equivalent unit (to the nearest cent) for April is
a. $2.60
b. $2.81
c. $3.02
d. $2.26
140.
The conversion cost per equivalent unit (to the nearest cent) for April is
a. $2.70
b. $2.53
c. $3.31
d. $5.60
Department E had 4,000 units in Work in Process that was 40% completed at the beginning of the period at a
cost
of $12,500. 14,000 units of direct materials were added during the period at a cost of $28,700. 15,000 units
were
completed during the period, and 3,000 units were 75% completed at the end of the period. All materials
are added
at the beginning of the process. Direct labor was $32,450 and factory overhead was $18,710.
141.
The number of equivalent units of production for the period for conversion if the average cost method is used
to
cost inventories was
a. 15,650
b. 14,850
c. 18,000
d. 17,250
142.
The number of equivalent units of production for the period for materials if the average cost method is used to
cost
inventories was
a. 15,650
b. 18,000
c. 17,250
d. 17,700
Chapter 18(3): Process Cost Systems
Department F had 4,000 units in Work in Process that were 40% completed at the beginning of the period at a
cost
of $12,500. Of the $12,500, $8,000 was for material and $4,500 was for conversion costs. 14,000 units of
direct
materials were added during the period at a cost of $28,700. 15,000 units were completed during the
period, and
3,000 units were 75% completed at the end of the period. All materials are added at the beginning of
the process.
Direct labor was $32,450 and factory overhead was $18,710.
143.
If the average cost method is used, the materials cost per unit (to the nearest cent) would be
a. $2.04
b. $1.59
c. $1.91
d. $2.00
144.
If the average cost method is used, the conversion cost per unit (to the nearest cent) would be
a. $3.71
b. $2.84
c. $2.97
d. $3.23
145.
Job order manufacturing and process manufacturing are two major costing systems used in manufacturing.
Briefly
contrast the characteristics of these two systems.
146.
Explain the concept of equivalent units. Give an example to validate your explanation.
147.
Which of the following businesses would normally use job order costing systems and which would normally
use
process costing systems?
Tax consultant
Paint manufacturer
Nail manufacturer
Videographer
Lotions and cosmetics
manufacturer
Web design
148.
The Mountain Springs Water Company has two departments, Purifying and Bottling. The Bottling Department
received 67,000 liters from the Purifying Department. During the period, the Bottling Department completed
65,000
liters, including 3,000 liters of work in process at the beginning of the period. The ending work in process
was 5,000
liters. How many liters were started and completed during the period?
149.
The Mountain Springs Water Company has two departments, Purifying and Bottling. The Bottling Department
received 58,000 liters from the Purifying Department. During the period, the Bottling Department completed
56,000
liters, including 4,000 liters of work in process at the beginning of the period. The ending work in process
was 6,000
liters. How many liters were started and completed during the period?
150.
The Mountain Springs Water Company has two departments, Purifying and Bottling. The Bottling Department
had
3,000 liters in beginning work in process inventory (30% complete). During the period 71,000 liters were
completed.
The ending work in process was 5,000 liters (70% completed). What are the total equivalent units for
direct
materials (using the FIFO method) if materials were added at the beginning of the process?
151.
The Mountain Springs Water Company has two departments, Purifying and Bottling. The Bottling Department
had
8,000 liters in beginning work in process inventory (60% complete). During the period 70,000 liters were
completed.
The ending work in process was 3,000 liters (60% completed). What are the total equivalent units for
direct
materials under the FIFO method if materials were added at the beginning of the process?
152.
The Bottling Department of Mountain Springs Water Company had 5,000 liters in beginning work in process
inventory (20% complete). During the period, 58,000 liters were completed. The ending work in process
inventory
was 3,000 liters (90% complete). What are the equivalent units for conversion costs under the FIFO
method?
153.
The Bottling Department of Mountain Springs Water Company had 4,000 liters in beginning work in process
inventory (40% complete). During the period, 66,000 liters were completed. The ending work in process
inventory
was 3,000 liters (70% complete). Using the FIFO method, what are the equivalent units for
conversion costs?
154.
The cost of direct materials transferred into the Bottling Department of the Mountain Springs Water Company is
$27,225. The conversion cost for the period in the Bottling Department is $7,596. The total equivalent units for
direct materials and conversion are 60,500 and 63,300, respectively. Determine the direct materials and
conversion
cost per equivalent unit. Round answers to nearest cent.
155.
The cost of direct materials transferred into the Bottling Department of the Mountain Springs Water Company is
$28,072. The conversion cost for the period in the Bottling Department is $10,275. The total equivalent units for
direct materials and conversion are 63,800 and 68,500, respectively. Determine the direct materials and
conversion
cost per equivalent unit. Round answers to nearest cent.
156.
The cost per equivalent units of direct materials and conversion in the Bottling Department of Mountain
Springs
Water Company is $0.45 and $0.12, respectively. The equivalent units to be assigned costs are as
follows.
Direct Materials
Conversion
Inventory in process, beginning of period
0
3,500
Started and completed during the period
57,000
57,000
Transferred out of Bottling (completed)
57,000
60,500
Inventory in process, end of period
3,500
1,800
Total units and costs to be assigned
60,500
62,300
The beginning work in process inventory had a cost of $2,200. Determine the cost of completed and transferred
out
production, and the ending work in process inventory.
