Deck 4: Process Costing and Hybrid Product-Costing Systems

Question 1

Which of the following statements about similarities between process costing and job-order costing are true?
I) Both systems assign production costs to units of output.
II) Both systems require extensive knowledge of financial accounting.
III) The flow of costs through the manufacturing accounts is essentially the same.

A) I only.
B) I and III.
C) II and III.
D) III only.
E) I, II, and III.

Answer 1

B

Question 2

Hammett has a single production department, and uses a process-costing system. The balance in its Work-in-Process account on January 1 was $68,000. The account was charged with direct materials, direct labor, and manufacturing overhead of $450,000 throughout the year. If a review of the accounting records determined that $86,000 of goods were still in production at year-end, Hammett should make a journal entry on December 31 that includes:

A) a debit to Cost of Goods Sold for $432,000.
B) a debit to Finished-Goods Inventory for $432,000.
C) a debit to Work-in-Process Inventory for $432,000.
D) a debit to Finished-Goods Inventory for $86,000.
E) a credit to Work-in-Process Inventory for $86,000.

Answer 2

B

Question 3

Equivalent-unit calculations are necessary to allocate manufacturing costs between units sold and ending work in process.

Answer 3

False

Question 4

Unit costs in a process-costing system are derived by using:

A) in-process units.
B) completed units.
C) physical units.
D) equivalent units.

Question 5

Barnett, Inc., which uses a process-costing system, transfers completed production from Department no. 1 to Department no. 2 for further work. Which of the following best describes the account that would be credited to record this transfer?

A) Cost of Goods Transferred.
B) Finished-Goods Inventory: Department no. 1.
C) Finished-Goods Inventory: Department no. 2.
D) Work-in-Process Inventory: Department no. 1.
E) Work-in-Process Inventory: Department no. 2.

Question 6

Which of the following statements is false?

A) In job-order costing, costs are accumulated by job order.
B) In process costing, costs are accumulated by department.
C) In process costing, the cost per unit in a department is found by spreading the period's manufacturing costs over the production activity.
D) In process costing, the total cost of each unit is found by dividing the total factory costs by the number of units completed.
E) In job-order costing, the unit cost is found by dividing the job's total cost by the job's total units.

Question 7

Which of the following companies would likely use a process-costing system?

A) Choice A
B) Choice B
C) Choice C
D) Choice D
E) Choice E

Question 8

Which of the following choices correctly shows how costs are accumulated in a process-costing system?

A) Choice A
B) Choice B
C) Choice C
D) Choice D
E) Choice E

Question 9

Griswold, Inc., which uses a process-costing system, transfers completed production from Department no. 1 to Department no. 2 for further work. Which of the following best describes the account that would be debited to record this transfer?

A) Cost of Goods Transferred.
B) Finished-Goods Inventory: Department no. 1.
C) Finished-Goods Inventory: Department no. 2.
D) Work-in-Process Inventory: Department no. 1.
E) Work-in-Process Inventory: Department no. 2.

Question 10

Hamilton, which uses a process-costing system, had a balance in its Work-in-Process account of $68,000 on January 1. The account was charged with direct materials, direct labor, and manufacturing overhead of $450,000 throughout the year. If a review of the accounting records determined that $86,000 of goods were still in production at year-end, Hamilton should make a journal entry on December 31 that includes:

A) a debit to Cost of Goods Sold for $432,000.
B) a credit to Finished-Goods Inventory for $432,000.
C) a credit to Work-in-Process Inventory for $432,000.
D) a debit to Finished-Goods Inventory for $86,000.
E) a credit to Work-in-Process Inventory for $86,000.

Question 11

Operation costing tends to parallel job-order costing with respect to the treatment of conversion cost.

Question 12

Which of the following manufacturers would most likely not use a process-cost accounting system?

A) A producer of computer monitors.
B) A paint manufacturer.
C) A producer of frozen orange juice.
D) A builder of customized yachts.
E) A lumber mill.

Question 13

Barrett Corporation had 6,500 units of work in process on April 1. During April, 19,100 units were completed and as of April 30, 5,100 units remained in production. How many units were started during April?

A) 11,600.
B) 17,700.
C) 20,500.
D) 30,700.
E) None of the other answers are correct.

Question 14

The flow of costs through the manufacturing accounts is essentially the same in both process costing and job-order costing.

Question 15

CFF, Inc. overstated the percentage of work completed with respect to conversion cost on the ending work-in-process inventory. This overstatement caused conversion-cost equivalent units to be overstated.

Question 16

Process costing would likely be used in all of the following industries except:

A) petroleum refining.
B) chemicals.
C) truck tire manufacturing.
D) wood pulp production.
E) automobile repair.

Question 17

Companies that use a process-cost accounting system would:

A) establish a separate Work-in-Process Inventory account for each manufacturing department.
B) establish a separate Finished-Goods Inventory account for each manufacturing department.
C) pass completed production directly to Cost of Goods Sold.
D) charge goods produced with actual overhead amounts rather than applied overhead amounts.
E) eliminate the need for the Finished-Goods Inventory account.

Question 18

In a process-costing system, manufacturing costs are accumulated by:

A) batch.
B) batch and time period.
C) department.
D) department and time period.
E) department or process, and time period.

Question 19

Companies that use a process-cost accounting system would establish a separate Work-in-Process Inventory account for each manufacturing department.

Question 20

Process costing is used to account for:

A) large numbers of identical products that are produced in a continuous manufacturing environment.
B) small numbers of products that are produced in batches.
C) raw materials that are converted directly to finished goods.
D) finished goods that are refined and processed further.
E) large numbers of products that are produced in a non-repetitive process.

Question 21

Willingham uses a process-costing system for its single product, which is manufactured from Material X and Material Y. X and Y are introduced to the product as follows:
Material X: Added at the beginning of manufacturing
Material Y: Added at the 75% stage of completion
The company started and completed 40,000 units during the period, and had an ending work-in-process inventory amounting to 8,000 units, 20% complete. Which of the following choices correctly expresses the total equivalent units of production for Material X and Material Y?

A) Choice A
B) Choice B
C) Choice C
D) Choice D
E) Choice E

Question 22

Kentucky Corporation uses a process-cost accounting system. The company adds direct materials at the start of its production process; conversion cost, on the other hand, is incurred evenly throughout manufacturing. The firm has no beginning work-in-process inventory; its ending work in process is 40% complete. Which of the following sets of percentages would be used to calculate the correct number of equivalent units in the ending work-in-process inventory?

A) Materials, 40%; conversion cost, 40%.
B) Materials, 40%; conversion cost, 100%.
C) Materials, 100%; conversion cost, 40%.
D) Materials, 100%; conversion cost, 60%.
E) Materials, 100%; conversion cost, 100%.

Question 23

Gregory, which uses a process-costing system, adds all material at the beginning of production and incurs conversion cost evenly throughout manufacturing. The information that follows relates to the period just ended:
Units started and completed: 75,000
Units in ending work-in-process inventory: 15,000, 60% complete
Which of the following choices correctly expresses the total equivalent units of production with respect to material and conversion cost? $\begin{array}{lll}&\text { Material }&\text {Conversion }\\\text { A. } & 75,000 & 75,000 \\\text { B. } & 84,000 & 84,000 \\\text { C. } & 90,000 & 81,000 \\\text { D. } & 90,000 & 84,000 \\\text { E. } & 90,000 & 90,000\end{array}$

A) Choice A
B) Choice B
C) Choice C
D) Choice D
E) Choice E

Question 24

Haskins Textile Co. manufactures a variety of fabrics. All materials are introduced at the beginning of production; conversion cost is incurred evenly through manufacturing. The Weaving Department had 2,000 units of work in process on April 1 that were 30% complete as to conversion costs. During April, 9,000 units were completed and on April 30, 4,000 units remained in production, 40% complete with respect to conversion costs.
The equivalent units of direct materials for April total:

A) 9,000.
B) 13,000.
C) 13,600.
D) 14,400.
E) 15,000.

Question 25

Aglow Company uses a process-cost system for its single product. Material A is added at the beginning of the process; in contrast, material B is added when the units are 50% complete. The firm's ending work-in-process inventory consists of 4,000 units that are 75% complete. Which of the following correctly expresses the equivalent units of production with respect to materials A and B in the ending work-in-process inventory?

A) A, 3,000; B, 0.
B) A, 3,000; B, 3,000.
C) A, 4,000; B, 0.
D) A, 4,000; B, 4,000.
E) A, 4,000; B, 3,000.

Question 26

Majesco, which uses a process-costing system, adds material at the beginning of production and incurs conversion cost evenly throughout manufacturing. The following selected information was taken from the company's accounting records:
Total equivalent units of materials: 5,000
Total equivalent units of conversion: 4,400
Units started and completed during the period: 3,500
On the basis of this information, the ending work-in-process inventory's stage of completion is:

A) 40%.
B) 60%.
C) 70%.
D) 80%.
E) some other percentage not listed.

Question 27

Agora Company uses a process-cost system for its single product. Material A is added at the beginning of the process; in contrast, material B is added when the units are 75% complete. The firm's ending work-in-process inventory consists of 6,000 units that are 80% complete. Which of the following correctly expresses the equivalent units of production with respect to materials A and B in the ending work-in-process inventory?

A) A, 4,800; B, 0.
B) A, 4,800; B, 4,800.
C) A, 6,000; B, 0.
D) A, 6,000; B, 4,800.
E) A, 6,000; B, 6,000.

Question 28

Corruption, Inc. overstated the percentage of work completed with respect to conversion cost on the ending work-in-process inventory. What is the effect of this overstatement on conversion-cost equivalent units and physical units manufactured, respectively?

A) Overstated, overstated.
B) Overstated, understated.
C) Overstated, none.
D) None, overstated.
E) None, none.

Question 29

Haskins Textile Co. manufactures a variety of fabrics. All materials are introduced at the beginning of production; conversion cost is incurred evenly through manufacturing. The Weaving Department had 2,000 units of work in process on April 1 that were 30% complete as to conversion costs. During April, 9,000 units were completed and on April 30, 4,000 units remained in production, 40% complete with respect to conversion costs.
The equivalent units of conversion for April total:

A) 9,000.
B) 10,600.
C) 11,200.
D) 12,000.
E) 12,600.

Question 30

Michaella, Inc. uses a process-costing system. A newly-hired accountant identified the following procedures that must be performed by the close of business on Friday:
1-Calculation of equivalent units
2-Analysis of physical flows of units
3-Assignment of costs to completed units and units still in process
4-Calculation of unit costs
Which of the following choices correctly expresses the proper order of the preceding tasks?

A) 1, 2, 3, 4.
B) 1, 2, 4, 3.
C) 1, 4, 3, 2.
D) 2, 1, 4, 3.
E) 2, 1, 3, 4.

Question 31

When calculating unit costs under the weighted-average process-costing method, the unit cost is based on:

A) only the current period's manufacturing costs.
B) only costs in the period's beginning work-in-process inventory.
C) a summation of the costs in the beginning work-in-process inventory plus costs incurred in the current period.
D) only costs incurred in previous accounting periods.
E) a summation of the costs in the beginning work-in-process inventory plus costs to be incurred in the upcoming period.

Question 32

Muhares, which uses a process-costing system, adds material at the beginning of production and incurs conversion cost evenly throughout manufacturing. The following selected information was taken from the company's accounting records:
Total equivalent units of materials: 8,000
Total equivalent units of conversion: 7,400
Units started and completed during the period: 6,500
On the basis of this information, the ending work-in-process inventory's stage of completion is:

A) 80%.
B) 70%.
C) 60%.
D) 40%.
E) some other percentage

Question 33

Ohio, Inc., which uses a process-cost accounting system, began operations on January 1 of the current year. The company incurs conversion cost evenly throughout manufacturing. If Ohio started work on 3,000 units during the period and these units were 70% of the way through manufacturing, it would be correct to say that the company has:

A) 3,000 physical units in production.
B) 2,100 completed units.
C) 900 in-process units.
D) 900 equivalent units of production.
E) 3,000 equivalent units of production.

Question 34

Yes! Co., had 3,000 units of work in process on April 1 that were 60% complete. During April, 11,000 units were started and as of April 30, 4,000 units that were 40% complete remained in production. How many units were completed during April?

A) 10,000.
B) 9,800.
C) 11,000.
D) 12,200.
E) None of the other answers are correct.

Question 35

Gajewski began operations on January 1 of the current year. The company uses a process-costing system, and conversion cost is incurred evenly throughout manufacturing. By January 31, the firm had completed 56,000 units. Which of the following statements is true about the ending work-in-process inventory if equivalent units for conversion cost totaled 59,000 units?

A) There is no ending work-in-process inventory.
B) The ending work-in-process inventory totaled 3,000 physical units.
C) The ending work-in-process inventory of 10,000 physical units was 30% complete.
D) The ending work-in-process inventory of 20,000 physical units was 85% complete.
E) More than one of the other answers is true.

Question 36

Lester Corporation had 8,200 units of work in process on November 1. During November, 26,800 units were started and as of November 30, 7,900 units remained in production. How many units were completed during November?

A) 16,100.
B) 26,500.
C) 27,100.
D) 42,800.
E) None of the other answers are correct.

Question 37

Xin Co., had 3,000 units of work in process on April 1 that were 60% complete. During April, 10,000 units were completed and as of April 30, 4,000 units that were 40% complete remained in production. How many units were started during April?

A) 8,600.
B) 9,800.
C) 11,000.
D) 12,200.
E) None of the other answers are correct.

Question 38

Fiero Corporation adds all materials at the beginning of production and incurs conversion cost evenly throughout manufacturing. The company completed 70,000 units during the year and had 12,000 units in process at year end, 20% complete with respect to conversion cost. Equivalent units for the year total:

A) materials, 70,000; conversion, 70,000.
B) materials, 70,000; conversion, 2,400.
C) materials, 72,400; conversion, 72,400.
D) materials, 82,000; conversion, 72,400.
E) materials, 82,000; conversion, 82,000.

Question 39

Kendra Corporation uses a process-cost accounting system. The company adds direct materials and direct labor at the start of its production process; overhead cost is incurred evenly throughout manufacturing. The firm has no beginning work-in-process inventory; its ending work in process is 40% complete. Which of the following sets of percentages would be used to calculate the correct number of equivalent units in the ending work-in-process inventory?

A) Materials, 100%; labor, 100%; overhead cost, 40%.
B) Materials, 100%; labor, 100%; overhead cost, 100%.
C) Materials, 100%; labor 40%; overhead cost, 40%.
D) Materials, 40%; labor, 40%; overhead cost, 60%.
E) Materials, 40%; labor, 40%; overhead cost, 100%.

Question 40

Which of the following data are needed to calculate total equivalent units under the weighted-average method?

A) Work-to-date on ending work in process, units started during the period.
B) Units completed during the period, work-to-date on ending work in process.
C) Work to complete beginning work in process, work-to-date on ending work in process.
D) Work to complete beginning work in process, units completed, and work done on ending work in process.
E) Units completed, work to complete beginning work in process.

Question 41

Cosby uses a weighted-average process-costing system. All materials are added at the beginning of the process; conversion costs are incurred evenly throughout production. The company finished 40,000 units during the period and had 15,000 units in progress at year-end, the latter at the 40% stage of completion. Total material costs amounted to $220,000; conversion costs were $414,000.
The cost of goods completed is:

A) $312,000.
B) $414,000.
C) $520,000.
D) $634,000.
E) None of the answers is correct.

Question 42

Southern Lake Chemical manufactures a product called Zubek. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 60% complete with respect to conversion; the ending work-in-process inventory is 20% complete. The following data pertain to May: $\begin{array}{lr}&\text { Units }\\\text { Work in process, May 1 } & 15,000 \\\text { Units started during May } & 60,000 \\\text { Units completed and transferred out } & 68,000 \\\text { Work in process, May } 31 & 7,000\end{array}$

$\begin{array}{llll}&& \text { Direct } & \text { Conversion } \\&\text { Total } & \text { Materials } & \text { Costs }\\\text { Work in process, May 1 } & \$ 41,250 & \$ 16,500 & \$ 24,750 \\\text { Costs incurred during May } & \underline{234,630} & \underline{72,000} & \underline{162,630} \\\text { Totals } & \underline{\$ 275,880} & \underline{\underline{\$ 88,500}} & \underline{\$ 187,380} \\\end{array}$ Using the weighted-average method of process costing, the equivalent units of conversion activity total:

A) 60,400.
B) 68,000.
C) 69,400.
D) 74,000.
E) None of the answers is correct.

Question 43

Southern Lake Chemical manufactures a product called Zubek. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 60% complete with respect to conversion; the ending work-in-process inventory is 20% complete. The following data pertain to May: $\begin{array}{lr}&\text { Units }\\\text { Work in process, May 1 } & 15,000 \\\text { Units started during May } & 60,000 \\\text { Units completed and transferred out } & 68,000 \\\text { Work in process, May } 31 & 7,000\end{array}$

$\begin{array}{llll}&& \text { Direct } & \text { Conversion } \\&\text { Total } & \text { Materials } & \text { Costs }\\\text { Work in process, May 1 } & \$ 41,250 & \$ 16,500 & \$ 24,750 \\\text { Costs incurred during May } & \underline{234,630} & \underline{72,000} & \underline{162,630} \\\text { Totals } & \underline{\$ 275,880} & \underline{\underline{\$ 88,500}} & \underline{\$ 187,380} \\\end{array}$ Using the weighted-average method of process costing, the equivalent units of direct materials total:

A) 68,000.
B) 69,400.
C) 74,000.
D) 75,000.
E) None of the answers is correct.

Question 44

Southern Lake Chemical manufactures a product called Zubek. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 60% complete with respect to conversion; the ending work-in-process inventory is 20% complete. The following data pertain to May: $\begin{array}{lr}&\text { Units }\\\text { Work in process, May 1 } & 15,000 \\\text { Units started during May } & 60,000 \\\text { Units completed and transferred out } & 68,000 \\\text { Work in process, May } 31 & 7,000\end{array}$

$\begin{array}{llll}&& \text { Direct } & \text { Conversion } \\&\text { Total } & \text { Materials } & \text { Costs }\\\text { Work in process, May 1 } & \$ 41,250 & \$ 16,500 & \$ 24,750 \\\text { Costs incurred during May } & \underline{234,630} & \underline{72,000} & \underline{162,630} \\\text { Totals } & \underline{\$ 275,880} & \underline{\underline{\$ 88,500}} & \underline{\$ 187,380} \\\end{array}$ Using the weighted-average method of process costing, the cost of goods completed and transferred during May is:

A) $249,560.
B) $250,240.
C) $258,400.
D) $263,840.
E) None of the answers is correct.

Question 45

Which of the following are needed under weighted-average process costing to calculate the cost of goods completed during the period?

A) Choice A
B) Choice B
C) Choice C
D) Choice D
E) Choice E

Question 46

Universal Manufacturing uses a weighted-average process-costing system. All materials are introduced at the start of manufacturing, and conversion costs are incurred evenly throughout the process. The company's beginning and ending work-in-process inventories totaled 10,000 units and 15,000 units, respectively, with the latter units being 2/3 complete at the end of the period. Universal started 30,000 units into production and completed 25,000 units. Manufacturing costs follow.
Beginning work in process: Materials, $60,000; conversion cost, $150,000
Current costs: Materials, $180,000; conversion cost, $480,000
Universal's equivalent-unit cost for materials is:

A) $4.50.
B) $6.00.
C) $8.00.
D) $9.60.
E) None of the answers is correct.

Question 47

Chen Corporation, a new company, adds material at the beginning of its production process; conversion cost, in contrast, is incurred evenly throughout manufacturing. During May, the firm completed 15,000 units and had ending work in process of 2,000 units, 60% complete. Equivalent-unit costs were: materials, $15; conversion, $22.
The cost of the company's ending work-in-process inventory is:

A) $26,640.
B) $44,400.
C) $56,400.
D) $74,000.
E) None of the answers is correct.

Question 48

Universal Manufacturing uses a weighted-average process-costing system. All materials are introduced at the start of manufacturing, and conversion costs are incurred evenly throughout the process. The company's beginning and ending work-in-process inventories totaled 10,000 units and 15,000 units, respectively, with the latter units being 2/3 complete at the end of the period. Universal started 30,000 units into production and completed 25,000 units. Manufacturing costs follow.
Beginning work in process: Materials, $60,000; conversion cost, $150,000
Current costs: Materials, $180,000; conversion cost, $480,000
Universal's equivalent-unit cost for conversion cost is:

A) $13.71.
B) $18.00.
C) $21.00.
D) $25.20.
E) None of the answers is correct.

Question 49

Chen Corporation, a new company, adds material at the beginning of its production process; conversion cost, in contrast, is incurred evenly throughout manufacturing. During May, the firm completed 15,000 units and had ending work in process of 2,000 units, 60% complete. Equivalent-unit costs were: materials, $15; conversion, $22.
The cost of Chen's completed production is:

A) $225,000.
B) $330,000.
C) $333,000.
D) $555,000.
E) None of the answers is correct.

Question 50

Gilberto adds materials at the beginning of production and incurs conversion cost uniformly throughout manufacturing. Consider the data that follow. $\begin{array}{ll}&\text { Units }\\\text { Beginning work in process } & 20,000 \\\text { Started in August } & 60,000 \\\text { Production completed } & 55,000 \\\text { Ending work in process, } 40 \% \text { complete } & 25,000\end{array}$ Conversion cost in the beginning work-in-process inventory totaled $120,000, and August conversion cost totaled $270,000. Assuming use of the weighted-average method, which of the following choices correctly depicts the number of equivalent units for materials and the conversion cost per equivalent unit?

A) Choice A
B) Choice B
C) Choice C
D) Choice D
E) Choice E

Question 51

Tesla Corporation, which adds materials at the beginning of production, uses a weighted-average process-costing system. Consider the data that follow. $\begin{array}{llr}&\text { Number of Units }& \text { Cost of Materials }\\\text { Beginning work in process } & 40,000 & \$ 80,600 \\\text { Started in June } & 60,000 & 124,400 \\\text { Production completed } & 75,000 & \\\text { Ending work in process } & 25,000 &\end{array}$ The company's cost per equivalent unit for materials is:

A) $1.24.
B) $1.66.
C) $1.67.
D) $2.05.
E) None of the answers is correct.

Question 52

Southern Lake Chemical manufactures a product called Zubek. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 60% complete with respect to conversion; the ending work-in-process inventory is 20% complete. The following data pertain to May: $\begin{array}{lr}&\text { Units }\\\text { Work in process, May 1 } & 15,000 \\\text { Units started during May } & 60,000 \\\text { Units completed and transferred out } & 68,000 \\\text { Work in process, May } 31 & 7,000\end{array}$

$\begin{array}{llll}&& \text { Direct } & \text { Conversion } \\&\text { Total } & \text { Materials } & \text { Costs }\\\text { Work in process, May 1 } & \$ 41,250 & \$ 16,500 & \$ 24,750 \\\text { Costs incurred during May } & \underline{234,630} & \underline{72,000} & \underline{162,630} \\\text { Totals } & \underline{\$ 275,880} & \underline{\underline{\$ 88,500}} & \underline{\$ 187,380} \\\end{array}$ Using the weighted-average method of process costing, the total costs remaining in work in process on May 31 are:

A) $0.
B) $12,040.
C) $17,480.
D) $25,640.
E) None of the answers is correct.

Question 53

Cosby uses a weighted-average process-costing system. All materials are added at the beginning of the process; conversion costs are incurred evenly throughout production. The company finished 40,000 units during the period and had 15,000 units in progress at year-end, the latter at the 40% stage of completion. Total material costs amounted to $220,000; conversion costs were $414,000.
The cost of the ending work in process is:

A) $54,000.
B) $78,000.
C) $114,000.
D) $195,000.
E) None of the answers is correct.

Question 54

Forest Company, which uses a weighted-average process-costing system, had 7,000 units in production at the end of the current period that were 60% complete. Material A is introduced at the beginning of the process; material B is introduced at the end of the process; and conversion cost is introduced evenly throughout manufacturing. Equivalent-unit production costs follow.
Material A: $12.50
Material B: $2.00
Conversion cost: $6.60
The cost of the company's ending work-in-process inventory is:

A) $88,620.
B) $115,220.
C) $123,620.
D) $147,700.
E) None of the answers is correct.

Question 55

Southern Lake Chemical manufactures a product called Zubek. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 60% complete with respect to conversion; the ending work-in-process inventory is 20% complete. The following data pertain to May: $\begin{array}{lr}&\text { Units }\\\text { Work in process, May 1 } & 15,000 \\\text { Units started during May } & 60,000 \\\text { Units completed and transferred out } & 68,000 \\\text { Work in process, May } 31 & 7,000\end{array}$

$\begin{array}{llll}&& \text { Direct } & \text { Conversion } \\&\text { Total } & \text { Materials } & \text { Costs }\\\text { Work in process, May 1 } & \$ 41,250 & \$ 16,500 & \$ 24,750 \\\text { Costs incurred during May } & \underline{234,630} & \underline{72,000} & \underline{162,630} \\\text { Totals } & \underline{\$ 275,880} & \underline{\underline{\$ 88,500}} & \underline{\$ 187,380} \\\end{array}$ Using the weighted-average method of process costing, the cost per unit of direct materials is:

A) $1.17.
B) $1.18.
C) $1.20.
D) $1.28.
E) None of the answers is correct.

Question 56

Southern Lake Chemical manufactures a product called Zubek. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 60% complete with respect to conversion; the ending work-in-process inventory is 20% complete. The following data pertain to May: $\begin{array}{lr}&\text { Units }\\\text { Work in process, May 1 } & 15,000 \\\text { Units started during May } & 60,000 \\\text { Units completed and transferred out } & 68,000 \\\text { Work in process, May } 31 & 7,000\end{array}$

$\begin{array}{llll}&& \text { Direct } & \text { Conversion } \\&\text { Total } & \text { Materials } & \text { Costs }\\\text { Work in process, May 1 } & \$ 41,250 & \$ 16,500 & \$ 24,750 \\\text { Costs incurred during May } & \underline{234,630} & \underline{72,000} & \underline{162,630} \\\text { Totals } & \underline{\$ 275,880} & \underline{\underline{\$ 88,500}} & \underline{\$ 187,380} \\\end{array}$ Using the weighted-average method of process costing, the cost per unit of conversion activity is:

A) $2.50.
B) $2.53.
C) $2.70.
D) $2.76.
E) None of the answers is correct.

Question 57

Equivalent-unit calculations are necessary to allocate manufacturing costs between:

A) units completed and ending work in process.
B) beginning work in process and units completed.
C) units sold and ending work in process.
D) cost of goods manufactured and beginning work in process.
E) cost of goods manufactured and cost of goods sold.

Question 58

Peach Company uses a weighted-average process-costing system. Company records disclosed that the firm completed 40,000 units during the month and had 10,000 units in process at month-end, 20% complete. Conversion costs associated with the beginning work-in-process inventory amounted to $231,000, and amounts that relate to the current month totaled $966,000. If conversion is incurred uniformly throughout manufacturing, Peach's equivalent-unit cost is:

A) $23.00.
B) $23.94.
C) $24.15.
D) $28.50.
E) None of the answers is correct.

Question 59

When computing the conversion cost per equivalent unit under the weighted-average method of process costing, all of the following information would be needed except:

A) the number of units completed during the current accounting period.
B) the conversion work performed during the current period on the ending work-in-process inventory.
C) the conversion work performed during the current period on the beginning work-in-process inventory.
D) the conversion cost in the beginning work-in-process inventory.
E) the conversion cost incurred during the current accounting period.

Question 60

Which of the following are needed to calculate the total cost of the ending work-in-process inventory under the weighted-average process-costing method?

A) Choice A
B) Choice B
C) Choice C
D) Choice D
E) Choice E

Question 61

Edge Company had a beginning work-in-process inventory of 30,000 units on June 1. These units contained $120,000 of direct materials and $272,000 of conversion cost. The following data relate to activity during June:
Edge uses a weighted-average process-costing system. All materials are added at the start of manufacturing; in contrast, conversion cost is incurred evenly throughout production.
Required:
A. Compute the total equivalent units for direct material and conversion cost.
B. Compute the cost per equivalent unit of direct material and conversion cost.
C. Determine the cost of completed production.
D. Determine the cost of the June 30 work in process.

Question 62

Operation costing might be used to determine the cost of all of the following products except:

A) sweaters.
B) automobiles.
C) living-room sofas.
D) dishwashing detergent.
E) high-definition (HD) and surround-sound cables.

Question 63

Levitt Corporation, which uses an operation-costing system, has three processing departments. All units pass through Department no. 1; upon completion, 70% of the goods are sent to Department no. 2 and 30% are sent to Department no. 3. Additional data follow.
• Forty thousand units were manufactured during the year.
• Conversion cost in each department was: No. 1, $380,000; no. 2, $196,000; and no. 3, $150,000.
• Batch no. 67, which consisted of 500 units, was sent to Department no. 3 for its additional processing. Direct materials of $23,500 and $11,900 were introduced to this batch in Department nos. 1 and 3, respectively.
Levitt assigns conversion cost to goods manufactured on the basis of units produced.
Required:
A. Determine the conversion cost per unit in Department no. 1, Department no. 2, and Department no. 3.
B. Compute the total cost of batch no. 67.
C. Operation costing is sometimes referred to as a hybrid costing system. Briefly explain.

Question 64

Manhattan, Inc., uses a weighted-average process-costing system. All materials are introduced at the beginning of production; conversion cost is incurred evenly throughout manufacturing. The following information pertains to April:
The company's accountant has already computed the cost per equivalent unit, as follows: materials, $5; conversion, $14.
Required:
Calculate the cost of goods completed during April and the cost of the ending work-in-process inventory.

Question 65

Which of the following best describes the procedures used in operation costing to assign direct-material and conversion costs to production?

A) Choice A
B) Choice B
C) Choice C
D) Choice D
E) Choice E

Question 66

Marcellus Corporation, which uses the weighted-average method of process costing, reported the following as of February 1:
Conversations with the production supervisor revealed that materials are introduced at the start of the process and conversion cost is incurred evenly throughout manufacturing. The company started 29,000 units during the month. Goods in process at the beginning and end of February totaled 3,000 units and 5,000 units, respectively, the latter batch being 60% complete.
Just prior to leaving on vacation, a trusted staff assistant was asked to compute the cost of February's ending work-in-process inventory. Her calculations showed a huge rise in unit cost when compared with the February 1 figures, soaring to $250 [($470,000 + $280,000) ÷ 3,000 units (5,000 units × 60%)].
Required:
A. Did the staff assistant make any errors in her calculations? Explain.
B. Analyze the company's production volume and determine the proper equivalent-unit figures for February.
C. Calculate the proper unit costs for February.
D. Calculate the cost of the February 28 work-in-process inventory.

Question 67

Which of the following statements about operation costing is(are) true?
I) Conversion costs are accumulated by department.
II) Direct material costs are accumulated by batch.
III) Operation costing is a hybrid product-costing system.

A) I only.
B) I and II.
C) I and III.
D) II and III.
E) I, II, and III.

Question 68

All of the following statements about an operation-costing system are true except:

A) direct material and conversion costs are traced to each batch of product produced.
B) direct-material cost is traced to each batch produced.
C) conversion costs are applied to products on a departmental basis using a predetermined application rate.
D) batches of product pass sequentially through the same processes.
E) conversion activities are similar across product lines but direct materials differ significantly.

Question 69

When determining the cost of a manufactured good under an operation-costing system, a company would:

A) trace direct-material cost and actual conversion cost to each product produced.
B) trace direct-material cost to each product produced and use a predetermined application rate for conversion cost.
C) trace actual conversion cost to each product produced and use a predetermined application rate for direct material.
D) use a predetermined application rate for both direct-material cost and conversion cost.
E) often switch to a job-costing system to simplify recordkeeping procedures.

Question 70

Which of the following is true concerning cost drivers for the predetermined overhead rate in a process-costing system?

A) Predetermined overhead rates are not used in a process-costing system.
B) If direct material cost is the cost driver, direct labor and direct materials may be combined into the single element of prime cost.
C) If direct labor hours is the cost driver, direct labor and manufacturing overhead may be combined into the single element of conversion cost.
D) If direct labor cost is the cost driver, direct labor and manufacturing overhead may be combined into the single element of conversion cost.
E) Cost drivers are irrelevant in process-costing systems.

Question 71

Orville Knitters manufactures sweaters and uses an operation-costing system. All sweaters are processed through Department no. 1, with subsequent processing taking place in Department no. 2 or Department no. 3 depending on the type of fabric used. Twenty thousand sweaters were produced during the year; there was no beginning or ending work in process. Sixty percent of the goods were sent to Department no. 2 for manufacturing.
Conversion cost incurred in the three departments totaled $504,000, subdivided as follows: Department no. 1, $360,000; Department no. 2, $60,000; and Department no. 3, $84,000.
Data pertaining to two representative orders, nos. 545 and 567, were:
Required:
A. Explain the nature of operation costing.
B. Determine the cost of order nos. 545 and 567.

Question 72

On May 1, Dawdle Company had a work-in-process inventory of 10,000 units. The units were 100% complete for material and 30% complete for conversion, with respective costs of $30,000 and $1,850.
During the month, 150,000 units were completed and transferred to finished goods. The May 31 ending work-in-process inventory consisted of 10,000 units that were 100% complete with respect to materials and 80% complete with respect to conversion.
Costs added during the month were $330,000 for materials and $503,750 for conversion.
Required:
Using the weighted-average method, calculate:
A. total equivalent units for material and conversion.
B. the cost per equivalent unit for material and conversion.
C. the cost transferred to finished goods.
D. the cost of ending work in process.

Question 73

Operation costing:

A) tends to parallel job-order costing with respect to the treatment of conversion cost.
B) tends to parallel process costing with respect to the treatment of conversion cost.
C) tends to parallel process costing with respect to the treatment of direct materials.
D) would likely be used by a manufacturing plant that produces one model of a single product.
E) is commonly known as a joint-costing system.

Question 74

Which of the following is a key document in a typical process-costing system?

A) Departmental production report.
B) Master schedule.
C) Production budget.
D) Sequential product report.
E) Materials requirement report.

Question 75

Colonial Products employs a process-costing system for its manufacturing operations. All materials are added at the beginning of the process, and conversion costs are incurred uniformly throughout production. The information that follows relates to September.
Required:
A. Calculate equivalent units of direct material for September.
B. Calculate equivalent units of conversion activity for September.

Question 76

Fedora, Inc., uses a weighted-average process-costing system and has one production department. All materials are introduced at the start of manufacturing; in contrast, conversion cost is incurred uniformly throughout production. The company had respective work-in-process inventories on May 1 and May 31 of 62,000 units and 70,000 units, the latter of which was 40% complete. The production supervisor noted that Federal completed 100,000 units during the month.
Costs in the May 1 work-in-process inventory were subdivided as follows: materials, $40,000; conversion, $90,000. During May, Fedora charged production with $300,000 of material and $710,000 of conversion, resulting in a material cost per equivalent unit of $2.
Required:
A. Determine the number of units that Fedora started during May.
B. Compute the number of equivalent units with respect to conversion cost.
C. Determine the conversion cost per equivalent unit.
D. Compute the cost of the May 31 work-in-process inventory.
E. What account would have been credited to record Fedora's completed production?

Question 77

Portofina Manufacturing uses a weighted-average process-costing system. The following figures pertain to July:
All materials are introduced at the start of the process, and conversion cost is incurred evenly throughout production. The company used direct materials that cost $640,000; conversion amounted to $8 per equivalent unit.
Required:
A. Calculate the direct materials cost per equivalent unit.
B. Calculate the cost of units completed and transferred.
C. What percentage of conversion work will be performed on the 40,000-unit ending work-in-process inventory during August?
D. In all likelihood, were all of the 120,000 completed units begun in July? Explain.

Question 78

EnviroSmart Chemical Company refines a variety of petrochemical products. The following data pertain to the firm's Baton Rouge plant:
Required:
Compute the equivalent units of direct materials and conversion for August.

Question 79

Starling Chemical uses a weighted-average process-costing system. The following data relate to May:
Required:
A. Calculate the number of pounds completed during May.
B. Calculate equivalent units of materials and conversion for May.
C. Does Starling introduce all of its direct materials at the very beginning of production? Explain your answer.

Question 80

Baxley Products manufactures office furniture by using an assembly-line process. All direct materials are introduced at the start of the process, and conversion cost is incurred evenly throughout manufacturing. An examination of the company's Work-in-Process account for August revealed the following selected information:
Debit side-
August 1 balance: 600 units, 40% complete; cost, $44,600*
Production started: 1,800 units
Direct materials used during August: $90,000
August conversion cost: $51,400
Credit side-
Production completed: 1,400 units
*Supplementary records disclosed direct material cost of $30,000 and conversion cost of $14,600.
Conversations with manufacturing personnel revealed that the ending work in process was 80% complete.
Required:
A. Determine the number of units in the August 31 work-in-process inventory.
B. Calculate the cost of goods completed during August, and prepare the appropriate journal entry to record completed production.
C. Determine the cost of the August 31 work-in-process inventory.