Exam 8: Process Costing

Which of the following statements is(are) true? I. For cost control, the FIFO method of process costing is better than the weighted-average method. II. The weighted-average method of process costing assigns more cost to units completed (transferred out) than the FIFO method.

If materials are only added at the beginning of the production process, then the degree of completion for materials in the ending Work-in-Process Inventory will be the same as the degree of completion for the conversion costs.

Process costing assumes all units are homogeneous and follow the same path through the production process.

The following data pertain to the Grinding Department of Dancer Corporation for July. The company uses the FIFO method in its process costing. Percent Complete Units Materials Conversion Work-in-process, July 1 900 60\% 25\% Units started into production during July 6,700 Units completed during July and transferred to the next departrnent 5,700 Work-in-process, July 3 1 1,900 70\% 30\% Required: Compute the equivalent units of production for both materials and conversion costs for the Grinding Department for July using the FIFO method.

Malcom Industries manufactures a silicone paste wax that goes through three processing departments: cracking, blending, and packing. All raw materials are introduced at the start of work in the cracking department, with conversion costs being incurred uniformly in each department. The Work-in-Process inventory account for the cracking department for July contains the following information: $\quad$ $\quad$ $\quad$$\text { Work-in-Process Inventory (Cracking Department) }$ \begin{array}{llr} \text { Work-in-Process Inventory (Cracking Department)} &\\ \text { Balance, July 1 ( 35,000 \mathrm{lbs}, 4 / 5 done)} &\$63,700\\ \text {Direct materials \( (280,000 \mathrm{lbs}) \) } &397,600\\ \text {Conversion costs } &189,700\\ \text { Balance, July 31 (45,000 1bs, 2/3 done)} &??\\ \text { Costs transferred to Blending Dept } &??\\\end{array} The beginning balance inventory consists of $43,400 in materials cost. Malcom uses the first-in, first-out (FIFO) method to account for its operations. Required: (use 4 decimal places for computations) (a) What would be the Cracking Department's inventory balance on July 31? (b) What would be the cost transferred to the Blending Dept. in July?

Martin Enterprises uses three operations in sequence to manufacture an assortment of flower pots. In each operation, the same procedures, time, and costs are used to perform that operation, regardless of the type of pot being produced. During March, a batch of 500 Clay Pots and a batch of 800 Porcelain Pots were put through the first operation. All materials for a batch are introduced at the beginning of the operation for that batch. The costs shown below were incurred in March for the first operation: Direct Labor \4 ,450 Manufacturing Overhead 3,600 Direct Materials: Clay Pots \1 ,200 Porcelain Pots \ 2,400 There were no inventories at the beginning of the month; 400 units of Clay Pots and 600 units of Porcelain Pots were transferred to the next operation. The ending inventories were 30% and 60% complete for Clay and Porcelain, respectively. Required: What is the total cost of the ending inventory in process for operation #1?

Kansas Company uses the weighted-average method in its process costing system. Operating data for the first processing department for the month of June appear below: Percent Complete with Respect to Units Conversion Beginning work-in-process 11,000 50\% inventory Started into production during June 98,000 Ending work-in-process inventory 21,000 80\% According to the company's records, the conversion cost in beginning work-in-process inventory was $46,915 at the beginning of June. Additional conversion costs of $825,183 were incurred in the department during the month. What was the cost per equivalent unit for conversion costs for the month? (Round your answer to 3 decimal places.)

Toxo Chemicals produces a solvent in its Glendale plant. Three chemicals are combined at the start of the process and blended under pressure for a period of time. At the 75% point of completion, an additional chemical is added. The following information has been gathered: Chernical Corversion Mix Additional Chernical Cost Gallons BWIP \ 5,000 -0- \ 3,000 10,000 Added 65,000 15,000 35,000 100,000 Toxo completed 98,000 gallons during the month. The process engineer informs you that the beginning WIP was at the 30% completion point, the ending WIP is at 70%. Toxo uses weighted-average costing. Required: (Use 4 decimal places in your calculations.) a. Compute the equivalent units of production for each input. b. Compute the cost per equivalent unit. c. Compute the cost transferred out to finished goods. d. Compute the ending work-in-process inventory balance.

Everglades Furniture uses a process costing system to account for its chair factory. Beginning inventory consisted of 5,000 units (100% complete as to materials, 55% complete as to conversion) with a cost of $124,800 materials and $104,500 conversion. 58,000 units were started into production during the month with material costs of $1,537,000 and $2,124,375 of conversion costs. The ending inventory of 6,000 chairs was 100% complete as to materials and 40% complete as to conversion. Everglades uses weighted-average costing. Required: (Use 4 decimal places in your calculations.) a. Compute the equivalent units of production for each input. b. Compute the cost per equivalent unit. c. Compute the cost transferred out to finished goods. d. Compute the ending work-in-process inventory balance.

The Marshall Company has a process costing system. All materials are added when the process is first begun. At the beginning of September, there were no units of product in process. During September 50,000 units were started; 5,000 of these were still in process at the end of September and were 3/5 finished. The equivalent units of material in September were:

Which of the following statements concerning a process cost accounting system is false?

Markov Inc. uses the weighted-average method in its process costing system. The following data concern the operations of the company's first processing department, Sculpting, for a recent month. Work-in-process, beginning: Units in process 200 Percent complete with respect to materials 50\% Percent complete with respect to conversion 40\% Units started into production during the month 11,000 Work-in-process, ending: Units in process 500 Percent complete with respect to materials 80\% Percent complete with respect to conversion 10\% Required: Using the weighted-average method, determine the equivalent units of production for materials and conversion costs.

DriveTrain, Inc. instituted a new process in October 2020. During October, 10,000 units were started in Department A. Of the units started, 8,000 were transferred to Department B, and 2,000 remained in Work-in-Process at October 31, 2020. The Work-in-Process at October 31, 2020, was 100% complete as to material costs and 50% complete as to conversion costs. Material costs of $27,000 and conversion costs of $36,000 were charged to Department A in October. What were the total costs transferred to Department B assuming Department A uses weighted-average process costing?

Dickerson Company uses a process costing system. The following information relates to one month's activity in the company's Mixing Department. Corversion Units Percent Complete Beginning work-in-process inventory 10,000 20\% Units started 21,000 Units cornpleted and transferred out 26,000 Ending work-in-process irventory 5,000 80\% The conversion cost of the beginning inventory was $6,500. During the month, $112,000 in additional conversion cost was incurred. Required: a. Assume that the company uses the FIFO method. Compute: 1. The equivalent units of production for conversion for the month. 2. The cost per equivalent unit for conversion for the month. 3. The total cost transferred out during the month. 4. The cost assigned to the ending work-in-process inventory. b. Assume that the company uses the weighted-average cost method. Compute: 1. The equivalent units of production for conversion for the month. 2. The cost per equivalent unit for conversion for the month. 3. The total cost transferred out during the month. 4. The cost assigned to the ending work-in-process inventory.

Tracker Sports is a manufacturer of sportswear. Tracker produces its products in two departments. The information for the current month for Department #2 is as follows: Beginning work-in-process 20,000 units Units transferred in from Department \#1 40,000 units Units completed 50,000 units Ending work-in-process 10,000 units Beginning WIP (transferred-in costs) \ 50,000 Beginning WIP (direct materials) \ 12,000 Beginning WIP (direct labor) \ 3,200 Beginning WIP (overhead) \ 1,600 Costs transferred in from Department \#1 \ 100,000 Direct materials added during month \ 60,000 Direct labor during month \ 20,000 Manufacturing overhead applied ??? Beginning WIP was half complete as to conversion costs. Direct materials for Department #2 are added when the process is 25% complete. Manufacturing overhead is applied at a rate equal to 50 percent of direct labor. Ending WIP was 60 percent complete. Tracker Sports uses weighted-average costing. Required: (Use 4 decimal places in your calculations.) a. Compute the equivalent units of production for each input. b. Compute the cost per equivalent unit. c. Compute the cost transferred out to finished goods. d. Compute the ending work-in-process inventory balance.

Materials are added at the beginning of a process in a process costing system. The beginning Work-in-Process Inventory was 30% complete as to conversion costs. Using first-in, first-out (FIFO) process costing, the total equivalent units for materials are:

Manning Corporation uses the weighted-average method in its process costing. The following data pertain to its Processing Department for September. Percent Complete Units Materials Conversion Work-in-process, September 1 700 65\% 45\% Units started into production during September 8,300 Units completed during September and transferred to the next department 7,300 Work-in-process, September 30 1,700 90\% 40\% Required: Compute the equivalent units of production for both materials and conversion costs for the Processing Department for September using the weighted-average method.

Haberdashery Company has a beginning Work-in-Process Inventory of 25,000 units (40% complete). During the period, 110,000 units were started and the ending Work-in-Process Inventory consisted of 20,000 units (80% complete). What are the equivalent units for conversion costs using weighted-average process costing?

Which of the following statements regarding first-in, first-out (FIFO) process costing is(are) true? (A) First-in, first-out (FIFO) process costing transfers out the costs in beginning inventory before transferring out the costs associated with units started and completed. (B) First-in, first-out process costing requires one additional step in assigning costs to the units transferred out and the ending Work-in-Process Inventory.

The Safety Chemical Company produces a special kind of body oil that is widely used by professional sports trainers. The oil is produced in three processes: Refining, Blending, and Mixing. Raw oil materials are introduced at the beginning of the refining process. A "mountain-air scent" material is added in the blending process when processing is 50% completed. The following Work-in-Process account for the Refining Department is available for the month of July. The July 1 Work-in-Process balance contains $1,500 in material costs. $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text {Work-in-Process: Refining}$ Beginning balance (5,000,80\% complete ) \ 6,500 Materials (30,000 gal.) 12,300 Direct labor 14,500 Overhead 21,750 Ending balance (6,000 , 2/3 complete ) ?? The following Work-in-Process account for the Blending Department is available for the month of July. The July 1 Work-in-Process balance contains $5,920 in material costs and $1.56/unit in costs transferred in from the Refining Department. $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text {Work-in-Process : Blending}$ \begin{array}{lr}\text { Beginning balance ( 8,000 \mathrm{gal}, 30 \% complete) }&\$22,850\\\text { Costs transferred in from Refining}&???\\\text { Materials } & 20,810 \\\text { Direct labor (725 hours) } & 5,748 \\\text { Overhead } & 11,600 \\\text { Ending balance }(4,000 \text { gal. }, 40 \% \text { complete }) &\end{array} The Safety Chemical Company uses first-in, first-out (FIFO) costing for the Refining Department and weighted-average costing for the Blending Department. Required (use 4 decimal places for computations): Part 1: Refining Department (a) Compute the equivalent units of production for July. (b) Compute the material cost per unit and the conversion cost per unit for July. (c) Compute the costs transferred to the Blending Department for July. (d) Compute the July 31 Work-in-Process Inventory balance. Part 2: Blending Department (e) Compute the equivalent units of production. (f) Compute the unit costs in the Blending Department for the month of July. (g) Compute the costs transferred out for July. (h) Compute the July 31 Work-in-Process Inventory balance.