Question 1

Star, Inc., manufactures a product that passes through two processes: mixing and packaging. All manufacturing costs are added uniformly in the mixing department.
Information for the mixing department for June follows: Work in progress, June 1 :
$\begin{array}{ll}
\text { Units }(30 \% \text { complete) } & 15,000 \
\text { Direct materials } & £ 4,000 \
\text { Direct labour } & £ 3,000 \
\text { Overhead } & £ 2,376
\end{array}$ During June, 100,000 units were completed and transferred to packaging.
The following costs were incurred by the mixing department during June: $\begin{array}{lr}
\text { Direct materials } & £ 50,000 \
\text { Direct labour } & 30,000 \
\text { Overhead } & 12,000
\end{array}$ At June 30, 8,000 units that were 70 per cent complete remained in the mixing department.
Use the weighted average method, and round unit costs to two decimal places. 
a.Determine equivalent units of production for June.
b.Determine June's total costs to account for.
c.Determine total cost per equivalent unit of production.
d.Determine the cost of goods transferred to the packaging department.
e.Determine the cost of June's ending work in progress for the mixing department.

Accepted Answer

The answer of Star, Inc., manufactures a product that passes...

Question 2

Urban Company manufactures a product through a continuous single-step process. All materials are added at the beginning of processing. Production and cost data for the company for February 2011 are as follows: Production data:
$\begin{array}{ll}
\text { In process, beginning of month ( } 20 \% \text { converted) } & 1,000 \text { units } \
\text { Started during February } & 5,000 \text { units } \
\text { Completed and trans ferred to finished goods } & 4,500 \text { units } \
\text { In process, end of month ( } 60 \% \text { converted) } & 1,500 \text { units }
\end{array}$
Manufacturing costs:
$\begin{array}{lr}
\text { Work in progress, beginning } & £ 14,730 \
\text { Materials } & £ 45,000 \
\text { Direct labour cost } & £ 102,960 \
\text { Factory overhead cost } & £ 51,480
\end{array}$

Accepted Answer

The answer of Urban Company manufactures a product through a...

Question 3

Figure 5-11
Gill Ltd. adds raw materials to production at the beginning of the process in the Assembly Department. Materials data for this department for March 2004 are as follows: 
$\begin{array}{lrrr}
&&\text { Costs }\
&\text { Units } & \text { Materials } & \text { Conversion } \
\text { Work in progress, March 1 } & 25,000 & £ 68,750 & £ 167,650 \
\text { Started during March } & 100,000 & 300,000 & 903,350 \
\text { Work in nrogress March } 31 & 10000 & &
\end{array}$ Beginning inventory was 70 per cent complete. Ending inventory was 40 per cent complete.
-Refer to Figure 5-11. How many equivalent units for materials would there be for Gill Ltd. in March using the FIFO method?

Accepted Answer

The answer of Figure 5-11
Gill Ltd. adds raw materials to...

Question 4

Royal, Inc., manufactures products that pass through two or more processes. The company uses the weighted average method to compute unit costs. During April, equivalent units were computed as follows: $\begin{array}{lcc}
&\text { Materials }&\text { Conversion Cost }\
\text { Units completed } & 90,000 & 90,000 \
\text { Units in EWIP } \times \text { Fraction complete: } & & \
\text { Materials }(4,000 \times 100 \%) & 4,000 & \
\text { Conversion }(4,000 \times 30 \%) && \underline{1,200} \
\text { Equivalent units of output } & \overline{94,000} & 91,200
\end{array}$
 The unit cost was computed as follows: $\begin{array}{ll}
\text { Materials } & £ 5.00 \
\text { Conver sion cost } & \
\text { Total cost per unit } & £ 8.00 \
\end{array}$ 
a.Determine the cost of the goods transferred out.
b.Determine the cost of ending work in progress.

Accepted Answer

The answer of Royal, Inc., manufactures products that pass through...

Question 5

Figure 5-10
The following information is available: $\begin{array}{lr}
\text { Units in process at the beginning of the month } & 2,000 \
\text { Units in process at the end of the month } & 4,000 \
\text { Units started during the month } & 30,000
\end{array}$ Materials are added at the beginning of the process.
-Refer to Figure 5-10. Beginning and ending units were 60 per cent complete as to conversion costs. What is the number of units started and completed?

Accepted Answer

To find the number of units started and completed, we calculate the total units accounted for and subtract the units still in process at the end of the period. Units started during the month are 30,000. Units in process at the beginning (2,000) were completed and an additional 28,000 units were started and completed during the month (30,000 total started - 2,000 beginning units = 28,000). However, since there are 4,000 units in process at the end of the month, we subtract these from the total units started during the month to find the units that were both started and completed: 30,000 - 4,000 = 26,000 units.

Question 6

Figure 5-10
The following information is available: $\begin{array}{lr}
\text { Units in process at the beginning of the month } & 2,000 \
\text { Units in process at the end of the month } & 4,000 \
\text { Units started during the month } & 30,000
\end{array}$ Materials are added at the beginning of the process.
-Refer to Figure 5-10. Beginning and ending units were 60 per cent converted. How many equivalent units for materials would there be using the FIFO method?

Accepted Answer

Under the FIFO method, equivalent units for materials are based on the units started and completed during the period. Since materials are added at the beginning of the process, all units started during the month (30,000 units) would have received materials, regardless of their stage of completion at the end of the month. Therefore, the equivalent units for materials are 30,000.

Question 7

Figure 5-11
Gill Ltd. adds raw materials to production at the beginning of the process in the Assembly Department. Materials data for this department for March 2004 are as follows: 
$\begin{array}{lrrr}
&&\text { Costs }\
&\text { Units } & \text { Materials } & \text { Conversion } \
\text { Work in progress, March 1 } & 25,000 & £ 68,750 & £ 167,650 \
\text { Started during March } & 100,000 & 300,000 & 903,350 \
\text { Work in nrogress March } 31 & 10000 & &
\end{array}$ Beginning inventory was 70 per cent complete. Ending inventory was 40 per cent complete.
-Refer to Figure 5-11. How many equivalent units for conversion costs would there be for Gill Ltd. in March using the FIFO method?

Accepted Answer

To calculate the equivalent units using the FIFO method, we need to first calculate the equivalent units for the units completed and transferred out and then for the ending inventory.

Units completed and transferred out = (Units started and completed - Ending inventory in process) + Beginning inventory in process
Units started and completed = 80,000
Ending inventory in process = 20,000 * 40% = 8,000
Beginning inventory in process = 70% * 10,000 = 7,000
Units completed and transferred out = (80,000 - 8,000) + 7,000 = 79,000

Equivalent units for conversion costs for units completed and transferred out = Units completed and transferred out * Conversion costs percentage
Conversion costs percentage = 100% - Direct materials percentage = 100% - 60% = 40%
Equivalent units for conversion costs for units completed and transferred out = 79,000 * 40% = 31,600

Equivalent units for conversion costs for ending inventory = Ending inventory in process * Conversion costs percentage
Equivalent units for conversion costs for ending inventory = 8,000 * 40% = 3,200

Total equivalent units for conversion costs = Equivalent units for conversion costs for units completed and transferred out + Equivalent units for conversion costs for ending inventory
Total equivalent units for conversion costs = 31,600 + 3,200 = 34,800

Therefore, the answer is D) 101,500 units.

Question 8

Barr, Inc., manufactures a product that passes through two processes: mixing and packaging. All manufacturing costs are added uniformly in the mixing department.
Information for the mixing department for June follows: Work in progress, June 1
$\begin{array}{lr}
\text { Units ( } 60 \% \text { complete) } & 5,000 \
\text { Direct materials } & £ 20,000 \
\text { Direct labour } & £ 24,000 \
\text { Overhead } & £ 4,000
\end{array}$ During June, 80,000 units were completed and transferred to packaging.
The following costs were incurred by the mixing department during June: $\begin{array}{lr}
\text { Direct materials } & £ 180,000 \
\text { Direct labour } & 200,000 \
\text { Overhead } & 59,200
\end{array}$ At June 30, 12,000 units that were 10 per cent complete remained in the mixing department.
Use the weighted average method, and round unit costs to two decimal places. 
a.Determine equivalent units of production for June.
b.Determine June's total costs to account for.
c.Determine total cost per equivalent unit of production.
d.Determine the cost of goods transferred to the packaging department.
e.Determine the cost of June's ending work in progress for the mixing department.

Accepted Answer

The answer of Barr, Inc., manufactures a product that passes...

Question 9

Beginning inventory consisted of 1,000 units with costs of £21,000. All materials and 60 per cent of labour and overhead were added in the prior period. In addition, another 8,000 units were started and completed. Unit costs are materials, £6.00; labour, £15.00; overhead, £9.00. What is the total cost of goods transferred out using FIFO?

Accepted Answer

The answer of Beginning inventory consisted of 1,000 units with...

Question 10

Figure 5-9
The following information is available for Department Z for the month of July: $\begin{array}{lcc}
&\text { Units }&\text {Cost }\
\text { Work in progress, July } 1 \text { (70\% complete) } & 5,000 \
 \text { Direct materials } &&£ 6,000 \
 \text { Direct labour } &&3,000 \
 \text { Manufacturing overhead } &&4,000 \
 \text { Total work in progress, July } 1 &&£ 13,000 \
\
 \text { Started in production during July}&20,000\
\
 \text { Costs added:}\
 \text { Direct materials}&&£ 18,000\
 \text { Direct labour}&&8,000\
 \text { Manufacturing overhead}&&10,000\
 \text { Total costs added during July}&&£ 36,000\
\
 \text { Work in progress, July 31 , ( $ 80 \% $ complete)}&2,000\
\end{array}$ Materials are added at the beginning of the process. (Round unit costs to two decimal places.)
-Refer to Figure 5-9. Department Z's cost of goods transferred out using the FIFO method would be

Accepted Answer

The FIFO method assumes that the first units started are the first units completed. Therefore, the cost of goods transferred out would be the cost of the units started in July plus the cost of the units completed from the beginning inventory.The cost of the units started in July is £36,000. The cost of the units completed from the beginning inventory is £13,000 x 70% = £9,100. Therefore, the total cost of goods transferred out is £36,000 + £9,100 = £45,100.

Question 11

Lee Company began making lipstick in October 2011 using a single-step process. Lee incurred £42,000 for materials and £48,640 for conversion during the month. There were 21,000 cases of lipstick started in October and 3,000 cases unfinished (40 per cent complete) at the end of the period. All materials were added at the beginning of the production process. What is the unit cost for materials for Lee using the FIFO method?

Accepted Answer

The unit cost for materials using the FIFO method is calculated by dividing the total materials cost by the number of units started and completed. Since all materials are added at the beginning, the cost is £42,000/21,000 = £2.00 per unit.

Question 12

What system would a manufacturer of unique special orders or batch processes most likely use to accumulate costs?

Accepted Answer

A manufacturer of unique special orders or batch processes would most likely use job-order costing to accumulate costs, as it allows for the tracking of costs on a per-job basis. This method is ideal for situations where each product or batch is unique and requires specific materials, labor, and overhead costs. Job-order costing is also common in industries such as construction, furniture manufacturing, and custom jewelry production.

Question 13

Davidson Company manufactures a product that passes through two processes. The following information is available for the first department for October.
All materials are added at the beginning of the process.
Beginning work in progress consisted of 20,000 units that were 80 per cent complete with respect to conversion.
Ending work in progress consisted of 15,000 units that were 40 per cent complete with respect to conversion.
During the month, 90,000 units were started in process.
a.Prepare a physical flow schedule.
b.Compute equivalent units using the FIFO method.

Accepted Answer

The answer of Davidson Company manufactures a product that passes...

Question 14

If beginning inventory contained 2,000 units of product that were judged to be 40 per cent complete as to labour, the equivalent units of production for labour during the current period under the FIFO method for these 2,000 units are

Accepted Answer

The equivalent units of production for labour are calculated by multiplying the number of units by the percentage complete for labour. 
For the beginning inventory: 
2,000 units x 40% complete = 800 equivalent units 
Therefore, the total equivalent units of production for labour would be 800 units for the beginning inventory.

Question 15

The following information pertains to Jones Company: 
$\begin{array}{ll}&\text { Units }\
\text { Work-in-progress inventory, March } 1 \text { (30\% complete) } & 20,000 \
\text { Units transferred in } & 50,000 \
\text { Work-in-progress inventory, March } 31(60 \% \text { complete }) & 16,000
\end{array}$
Materials are added at the start of the progress.
How many equivalent units for conversion costs would there be using the FIFO method?

Accepted Answer

Under the FIFO method, equivalent units for conversion costs are calculated by considering the work needed to complete the beginning inventory, the units started and completed, and the work done on the ending inventory. The calculation is as follows: - Complete the beginning inventory: 20,000 units * (100% - 30%) = 14,000 units- Units started and completed: 50,000 units - 16,000 units = 34,000 units- Work done on ending inventory: 16,000 units * 60% = 9,600 unitsTotal equivalent units = 14,000 + 34,000 + 9,600 = 57,600 units.

Question 16

Unit cost of materials for a department using the FIFO method of process costing is found by taking the total cost of materials issued to the department during the year divided by

Accepted Answer

In the FIFO method of process costing, the equivalent units manufactured are used to determine the unit cost of materials for a department. This is because the FIFO method assumes that the first units in are the first units out, which means that the costs of the materials used will be based on the units that have been completed and transferred out of the department, as well as the units that are still in process. Therefore, the unit cost of materials is found by taking the total cost of materials issued to the department during the year divided by the equivalent units manufactured.

Quiz 5: Process Costing

What system would a manufacturer of unique special orders or batch processes most likely use to accumulate costs?

If beginning inventory contained 2,000 units of product that were judged to be 40 per cent complete as to labour, the equivalent units of production for labour during the current period under the FIFO method for these 2,000 units are

Unit cost of materials for a department using the FIFO method of process costing is found by taking the total cost of materials issued to the department during the year divided by