Question 1

The Laramie Factory produces expensive boots. It has two departments that process all the items. During January, the beginning work in process in the tanning department was 40% complete as to conversion and 100% complete as to direct materials. The beginning inventory included $6,000 for materials and $18,000 for conversion costs. Ending work-in-process inventory in the tanning department was 40% complete. Direct materials are added at the beginning of the process.
Beginning work in process in the finishing department was 60% complete as to conversion. Beginning inventories included $7,000 for transferred-in costs and $10,000 for conversion costs. Ending inventory was 30% complete.
Additional information about the two departments follows:
  
Required:
Prepare a production cost worksheet using weighted-average costing for the finishing department.

Accepted Answer

The answer of The Laramie Factory produces expensive boots. It...

Question 2

Lexington Company produces baseball bats and cricket paddles. It has two departments that process all products. During July, the beginning work in process in the cutting department was half completed as to conversion, and complete as to direct materials. The beginning inventory included $40,000 for materials and $60,000 for conversion costs. Ending work-in-process inventory in the cutting department was 40% complete. Direct materials are added at the beginning of the process.
Beginning work in process in the finishing department was 80% complete as to conversion. Direct materials for finishing the units are added near the end of the process. Beginning inventories included $24,000 for transferred-in costs and $28,000 for conversion costs. Ending inventory was 30% complete. Additional information about the two departments follows:
  
Required:
Prepare a production cost worksheet, using FIFO for the finishing department.

Accepted Answer

The answer of Lexington Company produces baseball bats and cricket...

Question 3

Emerging Dock Company manufactures boat docks on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production.

What is the balance in ending work-in-process inventory?

Accepted Answer

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Question 4

A hybrid-costing system is a variant of process-costing that allows it to incorporate benefits of standard costing and activity-based costing.

Accepted Answer

A hybrid-costing system blends characteristics from both job-costing and process-costing systems.

Question 5

Emerging Dock Company manufactures boat docks on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production.

Which of the following journal entries records the Assembly Department's conversion costs at actual costs for the month, assuming conversion costs are 15% higher than expected?

Accepted Answer

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Question 6

Managers find operation costing useful in cost management because it ________.

Accepted Answer

Operation costing focuses on control of physical processes of a given production system, enabling managers to identify cost drivers and improve efficiency in production processes. It helps in identifying areas where costs can be reduced and helps in cost management by optimizing the use of resources. Option A and B are not always true as profit maximization and cost minimization may not always be the ultimate goal. Option D is incorrect as job costing and process costing are two different costing methods and are not used in conjunction in operation costing.

Question 7

Ford Motor Company is said to use a hybrid costing system. What is a hybrid costing system, and what would be the advantage to Ford of such a system?

Accepted Answer

The answer of Ford Motor Company is said to use...

Question 8

Transferred-in costs are costs incurred in previous departments that are carried forward as the product's cost when it moves to a subsequent process in the production cycle.

Accepted Answer

Transferred-in costs are defined as costs incurred in previous departments that are carried forward as the product's cost when it moves to a subsequent process in the production cycle. Therefore, the statement is true.

Question 9

An operation-costing system is a hybrid-costing system applied to batches of similar, but NOT identical, products.

Accepted Answer

An operation-costing system is used when batches of similar products go through a sequence of operations, but each product may not be identical. The costs are allocated to each operation rather than each individual product, making it a hybrid of job costing and process costing.

Question 10

Emerging Dock Company manufactures boat docks on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production.

Which of the following journal entries records the total conversion costs variances of the Assembly Department, assuming that conversion costs are 15% higher than expected?

Accepted Answer

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Question 11

Emerging Dock Company manufactures boat docks on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production.

Which of the following journal entries records the standard costs of direct materials assigned to units worked on and total direct materials variances assuming that the Assembly Department used 15% less materials than expected?

Accepted Answer

48 × $12,000 = $576,000
$576,000 × 0.85 = $489,600

Question 12

When calculating the costs to be transferred using the FIFO method, we should not include costs assigned in the previous period to units that were in process at the beginning of the current period but are now included in the units transferred.

Accepted Answer

When calculating the costs to be transferred using the FIFO method, we should include costs assigned in the previous period to units that were in process at the beginning of the current period but are now included in the units transferred.

Question 13

Otylia Manufacturing Company assembles its product in several departments. It has two departments that process all units. During February, the beginning work in process in the cutting department was half completed as to conversion, and complete as to direct materials. The beginning inventory included $12,000 for materials and $3,000 for conversion costs. Ending work-in-process inventory in the cutting department was 40% complete. Direct materials are added at the beginning of the process.
Beginning work in process in the finishing department was 75% complete as to conversion. Beginning inventories included $16,000 for transferred-in costs and $20,000 for conversion costs. Ending inventory was 25% complete. Additional information about the two departments follows:
  
Required:
Prepare a production cost worksheet using weighted-average for the cutting department.

Accepted Answer

The answer of Otylia Manufacturing Company assembles its product in...

Question 14

An operation is a standardized method or technique performed repetitively, often on different materials, resulting in different finished goods.

Accepted Answer

An operation is a standardized method or technique performed repeatedly on various materials, resulting in different finished goods, making the statement true.

Question 15

A golf shoe manufacturer makes and sells thousands of golf shoes each year through two channels: wholesale to sporting good stores and direct to consumers through it's custom portal. Customers can specify modifications to 6 basic golf shoe models including spiked or spikeless, traditional or casual, even laced or other closures. From there, customers can specify many details to their preferred model such as size and width (different for each foot), favorite colors for the base, saddle, accents and laces. A customer can choose to embroidered a name or initials or include the logo of their favorite MLB, NFL, NHL or NCAA team. Which of the following costing systems would make the most sense for the custom golf shoe operation and the main product operation (not customized/wholesale)?

Accepted Answer

The answer of A golf shoe manufacturer makes and sells...

Question 16

Transferred-in costs are treated as if they are 100 percent complete at the beginning of the process in the new department.

Accepted Answer

Transferred-in costs are costs that have been incurred in previous departments and are now being transferred to a new department. They are treated as if they are 100 percent complete at the beginning of the process in the new department because they have already been incurred and completed in previous stages of production.

Question 17

Which of the following entries is used to record the standard costs of direct materials assigned to units worked on and total direct materials variances?

Accepted Answer

The correct entry to record the standard costs of direct materials assigned to units worked on and the total direct materials variances is: Work in Process (at standard costs) is debited for the standard cost of the materials, Direct Materials Variances account is debited or credited with the variance amount (difference between standard and actual costs), and Direct Materials Control is credited for the actual cost of the materials used. This entry reflects the application of standard costing in accounting for direct materials.

Question 18

In hybrid-costing systems, managers use process costing to account for the conversion costs and job costing for the material and customizable components.

Accepted Answer

Hybrid-costing systems combine elements of both process costing and job costing, using process costing for conversion costs and job costing for materials and customization.

Question 19

Which of the following companies is most likely to use an operation-costing system?

Accepted Answer

Operation-costing is a hybrid costing system used in manufacturing goods that have some common characteristics and some individual characteristics. Choice C, a company that makes suits with a basic design but allows for variations in each batch, fits this description because it combines elements of both process costing (for the common design) and job costing (for the individual specifications).

Question 20

When there are multiple support departments within an organization, it is common to use journal entries to transfer-in costs from one department to another. What are some of the points to remember about these costs?

Accepted Answer

The answer of When there are multiple support departments within...

Quiz 17: Process Costing

A hybrid-costing system is a variant of process-costing that allows it to incorporate benefits of standard costing and activity-based costing.

Managers find operation costing useful in cost management because it ________.

Ford Motor Company is said to use a hybrid costing system. What is a hybrid costing system, and what would be the advantage to Ford of such a system?

Transferred-in costs are costs incurred in previous departments that are carried forward as the product's cost when it moves to a subsequent process in the production cycle.

An operation-costing system is a hybrid-costing system applied to batches of similar, but NOT identical, products.

When calculating the costs to be transferred using the FIFO method, we should not include costs assigned in the previous period to units that were in process at the beginning of the current period but are now included in the units transferred.

An operation is a standardized method or technique performed repetitively, often on different materials, resulting in different finished goods.

Transferred-in costs are treated as if they are 100 percent complete at the beginning of the process in the new department.

Which of the following entries is used to record the standard costs of direct materials assigned to units worked on and total direct materials variances?

In hybrid-costing systems, managers use process costing to account for the conversion costs and job costing for the material and customizable components.

Which of the following companies is most likely to use an operation-costing system?

When there are multiple support departments within an organization, it is common to use journal entries to transfer-in costs from one department to another. What are some of the points to remember about these costs?