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Exam 5: Process Costing

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Question 21

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Allen Company has the following information for the Assembly Department for October: $\begin{array}{lr}\text { Materials purchased } & \$ 40,000 \\\text { Materials used } & 44,000 \\\text { Direct labour } & 30,000 \\\text { Actual manufacturing overhead } & 56,000 \\\text { Cost of goods completed and transferred to the Finishing Dept. } & 120,000\end{array}$ Overhead rate is 200 percent of direct labour costs. Allen Company uses a process costing system for the Assembly Department. -Refer to the figure.What debit or credit would the journal entry to record goods completed and transferred out of the Assembly Department include?

A) a debit to finished goods inventory for $120,000
B) a credit to materials inventory for $120,000
C) a debit to work in process-Assembly Department for $120,000
D) a debit to work in process-Finishing Department for $120,000

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Question 22

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Ring Company produces two types of product: Small and Large. Two work orders for two batches of the products are shown below, along with some additional cost information: $\begin{array}{lcc}&\text { Small }&\text { Large } \\&\text {Work Order } 10&\text { Work Order } 11\\\hline\text { Direct materials (actual costs) } & \$ 45,000 & \$ 75,000 \\\text { Applied conversion costs: } & & \\\text { Mixing } &?& ? \\\text { Cooking } & \$ 12,000 & \$ 12,000 \\\text { Bottling } & \$ 10,000 & \$ 15,000 \\\\\text { Batch size (bottles) }& 5,000 & 5,000\end{array}$ In the Mixing Department,conversion costs are applied on the basis of direct labour hours.Budgeted conversion costs for the department for the year were $50,000 for labour and $125,000 for overhead.Budgeted direct labour hours were 2,500.It takes three minutes to mix the ingredients needed for each bottle. Small (Work Order 10) and Large (Work Order 11) flow through the Mixing Department first,then through the Cooking and Bottling departments. -Refer to the figure.What are Ring Company's conversion costs applied to Small (Work Order 10) from the Mixing Department for each batch?

A) $35
B) $17,500
C) $35,000
D) $175,000

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Question 23

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The following information is available for Dale, Inc.: $\begin{array}{ll}\text { Direct Materials -Assembly Department } & \$ 10,000 \\\text { Direct Materials -Finishing Department } & 15,000 \\\text { Direct Labour -Assembly Department } & 11,000 \\\text { Direct Labour -Finishing Department } & 20,000 \\\text { Applied Overhead-Assembly Department } & 11,000 \\\text { Applied Overhead-Finishing Department } & 20,000 \\\text { Actual Overhead-Assembly Department } & 12,500 \\\text { Actual Overhead-Finishing Department } & 17,500\end{array}$ -Refer to the figure.What are the conversion costs in the Finishing Department?

The Dodd Company uses a weighted average process costing system. The following information was reported for the Assembly process for July. Materials are added at the beginning of the process and are 100%. $\begin{array}{|l|c|l|}\hline{\text { Units: }} & \text { Units } &{\begin{array}{c}\text { \% Complete for } \\\text { Conversions }\end{array}} \\\hline \text { Work in process, } 7 / 1 & 60,000 & 15 \% \\\hline \text { Started } & 105,000 & \\\hline \text { Work in process, } 7 / 31 & 40,000 & 20 \%\\\hline & & \\\hline \text { Costs: } & & \\\hline & \text { Materials } & \text { Conversion } \\\hline \text { Beginning work in process } & \$ 16,500 & \$ 33,250 \\\hline \text { Current costs } & \$ 643,500 & \$ 332,500\\\hline \end{array}$ -Refer to the figure.What are the equivalent units for conversion?

Which statement is characteristic of a process costing system?

"Total costs to account for" does NOT include which of the following costs?

Pelosi Company manufactures chairs. The following information was given for the company: $\begin{array}{lr}\text { Units, beginning work in process } & 0 \\\text { Units started } & 20,000 \\\text { Units completed } & ?\\\text { Units, ending work in process } & 5,000 \\\text { Cost of direct materials } & \$ 440,000 \\\text { Cost of conversion } & \$ 64,000\end{array}$ Materials in the ending inventory were 100 percent complete and conversion in the ending inventory was 20 percent complete. -Refer to the figure.What cost is assigned to ending work in process?

Quinn Corporation produces a product that passes through two processes. During October, the first department transferred 20,000 units to the second department. The cost of the units transferred was $60,000. Materials are added uniformly in the second process. The following information is provided about the second department’s operations during October: Units, beginning work in process (1/3 complete) $\quad$$\quad$$\quad$ 6,000 Units, ending work in process ( $1 / 2$ complete) $\quad$$\quad$ 4,000 -Refer to the figure.What would be the equivalent units for those transferred in from the prior department using FIFO?

Kent Company adds materials to production at the beginning of the process in the Production Department.It uses a single-step process.Data on material for this department for October are as follows: $\begin{array}{ll}\text { Production data (units) : }\\\text { In process, beginning of October } & 10,000 \\\text { Started during October } & 60,000 \\\text { Completed and transferred out during October } & 55,000\\\text { Manufacturing cost: } &\\ \text { Work in process, beginning} &\$39,000\\ \text { Materials used in October } &\$186,000\end{array}$ The company uses the FIFO inventory method. What is the materials cost in work in process on October 31?

Bill Berry, CPA, prepares tax returns. The production costs and the number of tax returns prepared for the month of August are as follows: $\begin{array}{lr}\text { Direct materials } & 100 \\\text { CPA staff salaries } & 2,000 \\\text { Overhead } & 900 \\\text { Total } & \$ 3,000\end{array}$ Number of tax returns 200 -Refer to the figure.What is the unit cost per tax return?

Pelosi Company manufactures chairs. The following information was given for the company: $\begin{array}{lr}\text { Units, beginning work in process } & 0 \\\text { Units started } & 20,000 \\\text { Units completed } & ?\\\text { Units, ending work in process } & 5,000 \\\text { Cost of direct materials } & \$ 440,000 \\\text { Cost of conversion } & \$ 64,000\end{array}$ Materials in the ending inventory were 100 percent complete and conversion in the ending inventory was 20 percent complete. -Refer to the figure.What are the units started and completed?

Champ Inc. manufactures a product that passes through two processes: mixing and moulding. All manufacturing costs are added uniformly in the Mixing Department. Information for the Mixing Department for October follows: $\begin{array}{llr}\text { Wark in pracess, Octaber 1 : } &\\\text { Units ( 35 \% complete) } &7,500\\ \text { Direct materials} &\$36,000\\ \text { Direct labour} &\$45,000\\ \text { Overhead } &\$15,000\end{array}$ During October,26,750 units were completed and transferred to the Moulding Department.The following costs were incurred by the Mixing Department during October: $\begin{array}{lr}\text { Direct materials } & \$ 133,050 \\\text { Direct labour } & 180,000 \\\text { Overhead (applied) } & 45,000\end{array}$ -Refer to the figure.What is the cost of October's ending work in process for the Mixing Department using the FIFO method?

When products and their costs are moved from one process to the next process,what is the term for these costs?

Ely Company had the following data for the current year: $\begin{array}{llr} \text {Units in process at the begmning of the month } &4,000\\ \text { Units in process at the end of the month } &10,000\\ \text { Units started during the month} &40,000\end{array}$ Materials are added at the beginning of the process. Beginning work in process was 40 percent complete as to conversion. Ending work in process was 70 percent complete as to conversion. -What unit-costing method excludes prior-period work and costs in computing current-period unit work and costs?

-Refer to the figure.What are Department A's equivalent units of production for materials using the weighted average method?

JIT firms are usually structured so they can use a particular type of costing system to determine product costs.What is the system?

Speakeasy Co. manufactures podiums. Production consists of three processes: cutting, assembly, and finishing. The following costs are given for May: $\begin{array} { | l | c | c | c | } \hline & \text { Cuttine } & \text { Assembly } & \text { Finishine } \\\hline \text { Direct materials } & \mathbf {\$ 7 , 0 0 0 } & \mathbf { 1 0 , 0 0 0 } & \mathbf { \$ 3 , 0 0 0 } \\\hline \text { Direct labour } & 3,000 & 14,000 & 2,000 \\\hline \text { Applied averhead } & 4,000 & 5,000 & 6,000 \\\hline\end{array}$ There were no work in process inventories and 1,000 podiums were produced. -Refer to the figure.What is the cost transferred out of the Assembly department?

Peck Corporation produces a product that passes through two processes. During October, the first department transferred 20,000 units to the second department. The cost of the units transferred was $30,000. Materials are added uniformly in the second process. The following information is provided about the second department’s operations during October: Units, beginning work in process $\quad$$\quad$ 4,000 Units, ending work in process $\quad$$\quad$$\quad$ 5,500 -Refer to the figure.What is the number of units completed in the second department during October?

The following information is available: $\begin{array}{llr} \text { Unts in process, November 1 ( 60 \% converted) } &2,000 \text {units}\\ \text {Units in process, November 30 ( \( 60 \% \) converted) } &4,000 \text {units}\\ \text { Units started during the month} &30,000 \text {units}\end{array}$ Materials are added at the beginning of the process. How many equivalent units for conversion would there be in November using the weighted average method?

What is the term for a unit-costing method that merges prior-period work and costs with current-period work and costs?