Question 1

What are physical units?

Accepted Answer

Physical units refer to the actual tangible units that are being accounted for during a period, such as the number of products produced or the amount of raw materials used.

Question 2

Myrna's Manufacturing has 6,000 units in beginning Work in Process, 15% complete as to conversion costs, 15,000 units transferred out to Finished Goods, and 2,000 units in ending Work in Process 10% complete as to conversion costs.Materials are fully added at the beginning of the process.How much are equivalent units for conversion costs if the weighted-average method is used?

Accepted Answer

Equivalent units for conversion costs = Units transferred out + [(Ending WIP units × Percentage complete) + (Beginning WIP units × Percentage complete)]
Equivalent units for conversion costs = 15,000 + [(2,000 × 10%) + (6,000 × 15%)]
Equivalent units for conversion costs = 15,000 + (200 + 900)
Equivalent units for conversion costs = 15,200
Therefore, the best choice is B.

Question 3

Use the following information for questions 
A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process.For the month of January, there were no units in the beginning Work in Process inventory; 10,000 units were started into production in January; and there were 4,000 units that were 60% complete in the ending Work in Process inventory at the end of January.The weighted-average method is used.
-What were the equivalent units of production for materials for the month of January?

Accepted Answer

Since raw materials are added at the beginning of the process, the equivalent units for materials would be the same as the number of units started into production, which is 10,000 units.

Question 4

A process with no beginning Work in Process, completed and transferred out 12,000 units during a period and had 1,000 units in the ending Work in Process that were 30% complete.Materials are added at the beginning of the process and conversion costs are added equally throughout the process.How much is the equivalent units of production for the period for conversion costs if the weighted-average method is used?

Accepted Answer

For conversion costs, the equivalent units of production are calculated as the sum of the units completed and transferred out plus the equivalent units in the ending Work in Process. Here, 12,000 units were completed and transferred out, and the ending Work in Process had 1,000 units that were 30% complete for conversion costs. Therefore, the equivalent units for conversion costs are 12,000 + (1,000 * 30%) = 12,000 + 300 = 12,300 equivalent units.

Question 5

Special J Company had the following department information about physical units and percentage of completion: $\begin{array}{cc}
&\underline{\text { Physical Units}}\
 \text { Work in process, May $ 1(60 \%) $.  } &14,400\
 \text { Completed and transferred out. } &26,000\
 \text {  Work in process Mav $ 31(50 \%) $ } &12,000\
\end{array}$
 Materials are added at the beginning of the production process.Conversion costs are added equally throughout production.What is the total number of equivalent units during May for conversion costs if the weighted-average method is used?

Accepted Answer

The answer of Special J Company had the following department...

Question 6

Use the following information to answer questions 
The mixing department of a company's output during the period consists of 25,000 units completed and transferred out, and 15,000 units in ending Work in Process that were 30% complete as to materials and conversion costs.Beginning inventory was 17,000 units that were 15% complete as to materials and conversion costs.
-Under the weighted-average method, what are the equivalent units of production for materials?

Accepted Answer

To calculate the equivalent units of production for materials under the weighted-average method, we need to calculate the equivalent units of production for the units completed and transferred out and the ending work in process.
For the units completed and transferred out, all the materials have been fully used, so the equivalent units of production for materials is equal to the units completed and transferred out, which is 25,000 units.
For the ending work in process, we need to calculate the equivalent units of production for the materials. The ending work in process is 30% complete as to materials, so the equivalent units of production for materials is 30% * 15,000 units = 4,500 units.
So the total equivalent units of production for materials is 25,000 + 4,500 = 29,500 units. Therefore, the best choice is B.

Question 7

Wind Mill Company had the following department data: $\begin{array}{ll}
\text {Work in process, physical units, August 1 }&72,000\
\text {Completed and transferred out physical units. }&106,000\
\text {Work in process physical units Auqust 31 }&74,000\
\end{array}$
 Materials are added at the beginning of the process.What is the total number of equivalent units for materials in August if the weighted-average method is used?

Accepted Answer

The answer of Wind Mill Company had the following department...

Question 8

Use the following information for questions 
A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process.For the month of January, there were no units in the beginning Work in Process inventory; 10,000 units were started into production in January; and there were 4,000 units that were 60% complete in the ending Work in Process inventory at the end of January.The weighted-average method is used.
-What were the equivalent units of production for conversion costs for the month of January?

Accepted Answer

The equivalent units of production for conversion costs are calculated by adding the fully completed units to the equivalent units in the ending Work in Process inventory. Here, 6,000 units were fully completed (10,000 started - 4,000 still in process), and the 4,000 units in process are 60% complete for conversion costs, equating to 2,400 equivalent units (4,000 units * 60%). Therefore, the total equivalent units for conversion costs are 8,400 (6,000 fully completed + 2,400 from the ending inventory).

Question 9

Conversion costs are typically comprised of what two types of items?

Accepted Answer

Conversion costs are the costs incurred to convert raw materials into finished goods. These costs are typically comprised of direct labor and manufacturing overhead, such as electricity, rent, and salaries of supervisors. Materials costs are not considered part of conversion costs. Management's discretion of certain production expenses is not a relevant factor in determining conversion costs.

Question 10

Which of the following only applies to process costing?

Accepted Answer

Equivalent units of production is a concept unique to process costing. Product cost averaging and pre-determined overhead rates can apply to both job costing and process costing, while individual job activity is specific to job costing.

Question 11

Use the following information to answer questions 
The mixing department of a company's output during the period consists of 25,000 units completed and transferred out, and 15,000 units in ending Work in Process that were 30% complete as to materials and conversion costs.Beginning inventory was 17,000 units that were 15% complete as to materials and conversion costs.
-How many units were started during the period?

Accepted Answer

To find the total number of units started during the period, we need to add the number of units completed and transferred out (25,000) to the number of units in ending Work in Process (15,000). However, we cannot directly add the 15,000 units in ending Work in Process because they are only partially complete. We need to calculate the equivalent number of fully completed units represented by the 15,000 units in ending Work in Process.

To do this, we use the concept of equivalent units. The 15,000 units in ending Work in Process are 30% complete as to materials and conversion costs, so they represent:

15,000 x 0.30 = 4,500 equivalent units

The 17,000 units in beginning inventory are 15% complete as to materials and conversion costs, so they represent:

17,000 x 0.15 = 2,550 equivalent units

Therefore, the total equivalent units for the period are:

25,000 + 4,500 + 2,550 = 32,050 equivalent units

To find the number of units started during the period, we need to subtract the beginning inventory (17,000 units) from the total equivalent units:

32,050 - 17,000 = 15,050 units started during the period

Therefore, the best choice is C) 23,000 units were started during the period (25,000 completed and transferred out + 15,000 in ending Work in Process - 17,000 beginning inventory = 23,000 units started during the period).

Question 12

Cyrprano Company had the following department data: $\begin{array}{ll}
\text {Work in process, physical units, beginning  }&-0-\
\text {Units started }&25,000\
\text {Completed and transferred out physical units  }&20,000\
\text { Work in process physical units ending}&5,000\
\end{array}$
 Materials are added at the beginning of the process.Conversion costs are added evenly throughout the process.The incomplete units are 40% completed as to conversion costs.What is the total number of equivalent units for materials during the period if the weighted-average method is used?

Accepted Answer

The answer of Cyrprano Company had the following department data:...

Question 13

2,000 units are in a process that is 75% complete for conversion costs.To what are these units referred?

Accepted Answer

When a process is only 75% complete for conversion costs, we can assume that the physical units of production are not yet completed. Instead, we use the concept of equivalent units of production to measure the work done so far. In this case, the equivalent units of production for conversion costs would be 1,500 (2,000 units x 75% complete). Therefore, choice A is the correct answer.

Question 14

Zargus Company began the month of June with 1,650 units in beginning Work in Process, 11,400 units started into production, and 500 units in ending Work in Process that are 30% completed.How many units were transferred out during June?

Accepted Answer

The answer of Zargus Company began the month of June...

Question 15

Myrna's Manufacturing has 6,000 units in beginning Work in Process, 15% complete as to conversion costs, 15,000 units transferred out to Finished Goods, and 2,000 units in ending Work in Process 10% complete as to conversion costs.Materials are fully added at the beginning of the process.How much are equivalent units for materials if the weighted-average method is used?

Accepted Answer

To calculate the equivalent units of materials using the weighted-average method, we need to consider the units to be accounted for (beginning WIP + units started during the period) and calculate the total units assuming that the materials were added at the beginning of the process.

Units to be accounted for = Beginning WIP + Units started during the period
Units to be accounted for = 6,000 + 15,000
Units to be accounted for = 21,000

Now, we need to calculate the equivalent units for materials.

Equivalent units for materials = Units to be accounted for x Percentage of completion with respect to materials

For beginning WIP:
Equivalent units for materials = 6,000 x 100% (since materials are fully added at the beginning of the process)
Equivalent units for materials = 6,000

For units started during the period:
Equivalent units for materials = 15,000 x 100% (since materials are fully added at the beginning of the process)
Equivalent units for materials = 15,000

Total equivalent units for materials = Equivalent units for beginning WIP + Equivalent units for units started during the period
Total equivalent units for materials = 6,000 + 15,000
Total equivalent units for materials = 21,000

Therefore, the correct answer is B) 21,000.

Question 16

Macor Manufacturing assigns overhead based on machine hours.Department R logs 500 machine hours and Department W shows 400 machine hours for the period.The overhead rate is $7 per machine hour.What will the entry to assign overhead include?

Accepted Answer

The answer of Macor Manufacturing assigns overhead based on machine...

Question 17

Hace, Inc.began March with 650 units in beginning Work in Process, 11,400 units started into production, and 500 units in ending Work in Process that are 30% completed.How many physical units are to be accounted for?

Accepted Answer

To find out the total physical units to be accounted for, we need to add the units in beginning Work in Process (650) to the units started into production (11,400). This gives us a total of 12,050 units. We also need to add the units in ending Work in Process that are 30% completed. 30% of 500 units is 150 units (500 x 0.30 = 150). Adding 150 to 12,050 gives us a total of 12,200 physical units. However, since the question is asking for the number of physical units to be accounted for, we should exclude the units that are still in ending Work in Process. Therefore, the correct answer is 12,050 physical units.

Question 18

In the Carter Company, there are 15,000 units in beginning Work in Process, 30,000 units started into production, and 7,000 units in ending Work in Process 60% completed.How many physical units are to be accounted for?

Accepted Answer

The total physical units to be accounted for include the units in beginning Work in Process, the units started into production, and do not need to adjust for the completion percentage of the ending Work in Process. Therefore, the calculation is 15,000 (beginning WIP) + 30,000 (started) = 45,000 units.

Question 19

Which one of the following is used most frequently to allocate overhead costs in continuous manufacturing operations?

Accepted Answer

In continuous manufacturing operations, machines are the main source of cost and therefore, machine hours are the most appropriate basis for allocating overhead costs. Direct labour hours or dollars may not be representative of the level of machine usage, and machine maintenance dollars may not always be a reliable indicator of machine usage either.

Question 20

When inventory is sold, where are the related costs transferred to?

Accepted Answer

When inventory is sold, the related costs are transferred to the Cost of Goods Sold account, which is an expense account on the income statement. This account reflects the cost of producing or purchasing the goods that were sold during the accounting period. Choices A, C, and D are not applicable as they are related to different stages of the production process, not the final sale of finished goods.

Quiz 4: Process Cost Accounting