80. Peace Products Inc.
Peace Products Inc. uses process costing. The following information was available for the current year:
Number
of units
Production
Costs
Beginning work-in-process (20% complete)
1,000
$ 5,850
Current period production
40,000
604,500
Ending work-in-process (70% complete)
6,000
Refer to the Peace Products Inc. information above. If Peace uses the first-in, first-out (FIFO) method of computing equivalent units and assigning
product costs, what is the cost of ending work-in-process inventory?
81. Peace Products Inc.
Peace Products Inc. uses process costing. The following information was available for the current year:
Number
of units
Production
Costs
Beginning work-in-process (20% complete)
1,000
$ 5,850
Current period production
40,000
604,500
Ending work-in-process (70% complete)
6,000
Refer to the Peace Products Inc. information above. If Peace uses the first-in, first-out (FIFO) method of computing equivalent units and assigning
product costs, what is the cost of goods manufactured for the year?
82. Nunez Products Inc.
Nunez Products Inc. uses process costing. The following information was available for the current year:
Number
of units
Production
Costs
Beginning work-in-process (20% complete)
400
$ 640
Current period production
20,000
133,760
Ending work-in-process (40% complete)
6,000
Refer to the Nunez Products Inc. information above. If Nunez uses the first-in, first-out (FIFO) method of computing equivalent units and assigning
product costs, what is the cost per equivalent unit? (round to nearest penny)
83. Nunez Products Inc.
Nunez Products Inc. uses process costing. The following information was available for the current year:
Number
of units
Production
Costs
Beginning work-in-process (20% complete)
400
$ 640
Current period production
20,000
133,760
Ending work-in-process (40% complete)
6,000
Refer to the Nunez Products Inc. information above. If Nunez uses the weighted-average method of computing equivalent units and assigning
product costs, what is the cost per equivalent unit? (round to nearest penny)
84. Delaney Products uses process costing. The following information is available for the current year:
Number of units in beginning work-in-process inventory
3,000
Number of units started in the current period
50,000
Number of units in ending work-in-process inventory
9,000
If Delaney has already calculated their cost per equivalent unit to be $18 per unit, what would be the cost of the ending work-in-process inventory
assuming they use the weighted-average method?
85. Bost Products Inc.
Bost Products Inc. manufactures plastic products and uses process costing to account for the cost of products
manufactured. All product costs are added evenly throughout the production process. The following information
was available for the plastic department for the month of December:
Number
of units
Production
Costs
Beginning work-in-process (60% complete)
20,000
$ 72,000
Current period production
300,000
1,809,000
Ending work-in-process (35% complete)
10,000
Refer to the Bost Products Inc. information above. If Bost uses the first-in, first-out (FIFO) method of computing equivalent units and assigning
product costs, what is the cost per equivalent unit? (round to nearest penny)
86. Bost Products Inc.
Bost Products Inc. manufactures plastic products and uses process costing to account for the cost of products
manufactured. All product costs are added evenly throughout the production process. The following information
was available for the plastic department for the month of December:
Number
of units
Production
Costs
Beginning work-in-process (60% complete)
20,000
$ 72,000
Current period production
300,000
1,809,000
Ending work-in-process (35% complete)
10,000
Refer to the Bost Products Inc. information above. If Bost uses the first-in, first-out (FIFO) method of computing equivalent units and assigning
product costs, what is the cost of the ending work-in-process inventory for December?
87. Bost Products Inc.
Bost Products Inc. manufactures plastic products and uses process costing to account for the cost of products
manufactured. All product costs are added evenly throughout the production process. The following information
was available for the plastic department for the month of December:
Number
of units
Production
Costs
Beginning work-in-process (60% complete)
20,000
$ 72,000
Current period production
300,000
1,809,000
Ending work-in-process (35% complete)
10,000
Refer to the Bost Products Inc. information above. If Bost uses the weighted-average method of computing equivalent units and assigning product
costs, what is the cost per equivalent unit for December?
88. Bost Products Inc.
Bost Products Inc. manufactures plastic products and uses process costing to account for the cost of products
manufactured. All product costs are added evenly throughout the production process. The following information
was available for the plastic department for the month of December:
Number
of units
Production
Costs
Beginning work-in-process (60% complete)
20,000
$ 72,000
Current period production
300,000
1,809,000
Ending work-in-process (35% complete)
10,000
Refer to the Bost Products Inc. information above. If Bost uses the weighted-average method of computing equivalent units and assigning product
costs, what is the cost of the ending work-in-process inventory in December?
89. Bost Products Inc.
Bost Products Inc. manufactures plastic products and uses process costing to account for the cost of products
manufactured. All product costs are added evenly throughout the production process. The following information
was available for the plastic department for the month of December:
Number
of units
Production
Costs
Beginning work-in-process (60% complete)
20,000
$ 72,000
Current period production
300,000
1,809,000
Ending work-in-process (35% complete)
10,000
Refer to the Bost Products Inc. information above. If Bost uses the weighted-average method of computing equivalent units and assigning product
costs, what is the cost of goods manufactured in December?
90. For each of the following organizations, indicate which type of costing system would be the most
appropriate: job costing (JC), operations costing (OC), or process costing (PC).
hospital
beverage producer
construction company
law firm
clothing manufacturer
drug manufacturer
oil refinery
paint manufacturer
hospital
beverage producer
construction company
law firm
clothing manufacturer
drug manufacturer
oil refinery
paint manufacturer
91. What is the purpose of a job cost report and what are some of the items that should be found on one?
92. You enjoy making cakes and pastries and have decided to open up a small bakery across from campus. You
plan on making a variety of baked items, probably a couple of different batches each day since the processes
differ for each variety. You recall from your managerial accounting class that product costing is important and
that there are a few different choices in determining product costs.
93. Which of the following types of costs would be classified as a product cost in a job order costing system?
Check those that apply.
indirect materials
direct materials
administrative overhead
manufacturing overhead
direct labor
advertising costs
indirect labor
sales commissions
indirect materials
Ö
direct materials
Ö
direct labor
Ö
advertising costs
94. Jason Harmon, an employee with Nelson Products, earned a gross wage of $825 for the 50 hours he worked
last week. Jason earns $15 per hour and is paid time-and-a-half for overtime.
In addition, Nelson paid $100 for Jason’s health insurance. The following chart shows a breakdown of Jason’s
time worked:
95. Explain the term “cost driver” and give several examples.
96. Compare and contrast plantwide versus departmental overhead rates.
97. Why do companies develop estimates for overhead costs? How are estimates developed?
98. What is the formula for calculating the predetermined overhead rate? How is the rate used in product
costing?
99. Samantha’s Sundries Inc. assigns overhead to specific jobs based on machine hours. At the beginning of the
current year, estimated overhead costs were $400,000 and estimated machine hours were 25,000. By the end of
the year, actual overhead costs were calculated to be $375,000 and actual machine hours were 30,000. One of
the jobs worked on during the year was Job #44 which used 10 machine hours.
How much overhead was applied to Job #44?
100. Samantha’s Sundries Inc. assigns overhead to specific jobs based on machine hours. At the beginning of
the current year, estimated overhead costs were $400,000 and estimated machine hours were 25,000. By the end
of the year, actual overhead costs were calculated to be $375,000 and actual machine hours were 30,000.
By how much was overhead under- or overapplied for the year?
101. What does it mean when overhead is over- or underapplied? What costs are affected by this and what are
the two different ways to adjust for the over- or underapplied amount?
102. When is it appropriate to use process costing? Describe how costs are accumulated and assigned to
products.
103. Define the term “equivalent unit” as it relates to process costing along with a simple numerical example of
its calculation.
104. With respect to process costing, what is the difference in how the weighted-average and first-in, first-out
(FIFO) methods treat beginning work-in-process units?
105. Triangle Catering assigns overhead to specific jobs based on direct labor hours. At the beginning of the
current year, estimated overhead costs were $500,000 and estimated direct labor hours were 40,000. By the end
of the year, actual overhead costs were calculated to be $525,000 and actual direct labor hours were 45,000.
Required:
A.
Calculate the predetermined overhead rate.
B.
How much overhead would be applied to a particular catering job that required 15 direct labor hours?
C.
How much total overhead was applied during the year?
D.
By how much was overhead over- or underapplied for the year? Be sure to indicate whether it was over- or underapplied.
106. Pioria Products assigns overhead to specific jobs based on machine hours. At the beginning of the current
year, estimated overhead costs were $2,150,000 and estimated machine hours were 500,000. By the end of the
year, actual overhead costs were calculated to be $1,900,000 and actual machine hours were 475,000.
Required:
A.
Calculate the predetermined overhead rate.
B.
How much overhead would be applied to a particular job that required 315 machine hours?
C.
How much total overhead was applied during the year?
D.
By how much was overhead over- or underapplied for the year? Be sure to indicate whether it was over- or underapplied.
A.
Predetermined rate = $2,150,000 ¸ 500,000 = $4.30 per direct labor hour
B.
$1,354.50 ($4.30 ´ 315 direct labor hours)
C.
Total applied overhead was $2,042,500 (475,000 ´ $4.30)
D.
$142,500 overapplied. The difference between actual and applied was $37,500 ($2,042,500 vs. $1,900,000). Overhead was overapplied.
A.
Predetermined rate = $500,000 ¸ 40,000 = $12.50 per direct labor hour
B.
$187.50 ($12.50 ´ 15 direct labor hours)
C.
Total applied overhead was $562,500 (45,000 ´ $12.50).
D.
$37,500 overapplied. The difference between actual and applied was $37,500 ($562,500 vs. $525,000). Overhead was overapplied.
107. J & J Products uses operational costing. One of their customers has requested 1,000 units of an identical
product. J & J estimates the following will be incurred to fulfill the customer order:
Total direct materials
$2,000
Total direct labor hours
50 hours
Direct labor cost per hour
$20 per hour
In addition, J & J allocates overhead based on direct labor cost. At the beginning of this year, they estimated overhead costs would total $800,000 and
direct labor would cost a total of $3,200,000.
Required:
A.
What will be the predetermined overhead rate used during the year?
B.
What will be the total manufacturing costs for the above customer’s order?
(or 25% of direct labor cost)
Direct material
$2,000
Direct labor (50 ´ $20)
1,000
Applied overhead ($.25 ´ $1,000)
250
Total product cost
$3,250
108. Greenlaw Products uses job order costing and applies overhead to products using direct labor hours.
Greenlaw has determined that their predetermined overhead is $4.00 per direct labor hour when an estimated
200,000 direct labor hours are incurred.
During 2009 Greenlaw actually incurred a total of 215,000 direct labor hours and actual overhead costs ended
up being $900,000.
Greenlaw has no ending work-in-process or finished goods inventories.
Required:
A.
What were Greenlaw’s estimated total overhead costs for the year?
B.
By how much was overhead over or under-applied?
C.
Assuming that cost of goods sold was $3,000,000 prior to the adjustment for over- or underapplied overhead, what will be the cost of
goods sold amount after the year-end adjustment?
109. Collins Inc. applies overhead using direct labor hours. The following data are available for the year:
Estimated direct labor hours
1,000,000
Actual direct labor hours
900,000
Overhead applied
$3,600,000
Actual overhead
$2,950,000
What predetermined overhead rate did Collins use?
A.
$800,000 calculated as follows: $4.00 = x ¸ 200,000 x = $800,000
Underapplied by $40,000 [$900,000 – (215,000 hours ´ $4)]
$3,040,000 $3,000,000 + $40,000 underapplied = $3,040,000
110. Sherrell Inc. applies overhead using direct labor hours. The following data are available for the year:
Estimated direct labor hours
190,000
Actual direct labor hours
130,000
Actual overhead
$600,000
At the end of the year, it was determined that overhead was over-applied by $50,000.
Required:
A.
What was the total applied overhead for the year?
B.
What was the predetermined overhead rate?
111. Hudson Manufacturing uses process costing. The following information was available for the current year:
Number of units in beginning work-in-process inventory
5,000
Number of units started in the current period
60,000
Number of units in ending work-in-process inventory
8,000
Required:
A.
If Hudson uses the first-in, first-out (FIFO) method, calculate total equivalent units for the year.
B.
If Hudson uses the weighted-average method, calculate total equivalent units for the year.
FIFO total equivalent units = 60,800
Beginning inventory (5,000 ´ 80%)
4,000
Units started and completed in the current year
52,000
Ending inventory (8,000 ´ 60%)
4,800
Total equivalent units
60,800
B.
Weighted average equivalent units = 61,800
Units started and completed in the current year
57,000
Ending inventory (8,000 ´ 60%)
4,800
Total equivalent units
61,800
A.
Applied overhead must have been $650,000. x – 600,000 = 50,000
B.
$5.00 per direct labor hour calculated as follows:
Applied overhead = Actual cost driver units ´ predetermined overhead rate
$650,000 = 130,000 ´ predetermined overhead rate
predetermined rate = $5.00
112. Koole Products Inc. uses the first-in, first-out (FIFO) method of process costing. The following
information was available for the current year:
Number
of units
Production
Costs
Beginning work-in-process (80% complete)
1,000
$ 6,400
Current period production
70,000
548,800
Ending work-in-process (60% complete)
4,000
Required:
A.
How many total equivalent units were completed during the year?
B.
What was the cost per equivalent unit?
C.
What is the cost allocated to the ending work-in-process units?
D.
What is cost of goods manufactured for the year?
A.
Total equivalent units = 68,600
(1,000 ´ 20%) + 66,000 + (4,000 ´ 60%) = 68,600
B.
Cost per equivalent unit = $8.00 ($548,800 ¸ 68,600)
C.
Cost of ending work-in-process = $19,200 (4,000 ´ 60% ´ $8.00)
D.
Cost of goods manufactured = $536,000 ($6,400 + $548,800 – $19,200)
113. Harrelson Products uses the first-in, first-out (FIFO) method of process costing. The following information
was available for the current year:
Number
of units
Production
Costs
Beginning work-in-process (40% complete)
10,000
$ 60,000
Current period production
200,000
2,730,000
Ending work-in-process (20% complete)
30,000
Required:
A.
How many total equivalent units were completed during the year?
B.
What was the cost per equivalent unit?
C.
What is the cost allocated to the ending work-in-process units?
D.
What is cost of goods manufactured for the year?
A.
Total equivalent units = 182,000
(10,000 ´ 60%) + 170,000 + (30,000 ´ 20%) = 182,000
B.
Cost per equivalent unit = $15.00 ($2,730,000 ¸ 182,000)
C.
Cost of ending work-in-process = $90,000 (30,000 ´ 20% ´ $15.00)
D.
Cost of goods manufactured = $2,700,000 ($60,000 + 2,730,000 – $90,000)
114. Robinson Products uses the weighted-average method of process costing. The following information was
available for the current year:
Number of
units
Production
Costs
Beginning work-in-process (10% complete)
5,000
$ 1,500
Current period production
90,000
279,900
Ending work-in-process (40% complete)
2,000
Required:
A.
How many total equivalent units were completed during the year?
B.
What was the cost per equivalent unit?
C.
What is the cost allocated to the ending work-in-process units?
D.
What is cost of goods manufactured for the year?
A.
Total equivalent units = 93,800
93,000 + (2,000 ´ 40%) = 93,800
B.
Cost per equivalent unit = $3.00 [($1,500 + $279,900) ¸ 93,800]
C.
Cost of ending work-in-process = $2,400 (2,000 ´ 40% ´ $3)
D.
Cost of goods manufactured = $279,000 ($1,500 + $279,900 – $2,400)
115. Aster Manufacturing uses the weighted-average method of process costing. The following information was
available for the current year:
Number
of units
Production
Costs
Beginning work-in-process (90% complete)
100,000
$ 540,000
Current period production
1,500,000
9,036,000
Ending work-in-process (90% complete)
40,000
Required:
A.
How many total equivalent units were completed during the year?
B.
What was the cost per equivalent unit?
C.
What is the cost allocated to the ending work-in-process units?
D.
What is cost of goods manufactured for the year?
A.
Total equivalent units = 1,596,000
1,560,000 + (40,000 ´ 90%) = 1,596,000
B.
Cost per equivalent unit = $6.00 [($540,000 + 9,036,000) ¸ 1,596,000]
C.
Cost of ending work-in-process = $216,000 (40,000 ´ 90% ´ $6)
D.
Cost of goods manufactured = $9,360,000 ($540,000 + $9,036,000 – $216,000)