Exam 6: Process Costing

Miramar, Inc. uses a weighted-average process costing system which recognizes normal spoilage as 5% of good output. During the current period, 14,000 units were started and 10,000 units completed. Materials are added at the beginning of the process, conversion costs occur uniformly, and the inspection point is at the 70% point. Beginning work in process was 6,000 units, 40% complete, and ending work in process 9,000 units, 80% complete. The cost per equivalent unit for material was $1.00 and for conversion costs $3.00. The cost of abnormal spoilage was:

Beginning work in process consists of 7,000 units, 55% complete. 50,000 units were started and ending work in process is 5,000 units, 25% complete. Normal spoilage is equal to 10% of the units inspected. The inspection point occurs at the 20% point and 7,000 units were rejected. Direct materials are added at the 50% point, direct labour at 30% and overhead is applied uniformly. The costs per equivalent unit are: direct material $1.00; direct labour $1.50; overhead $2.00. The cost of abnormal spoilage is:

Direct materials are added at the beginning of the process. There are 10,000 units in ending WIP inventory that are 75% complete with regard to conversion costs. The equivalent units in ending WIP are: Direct Materials Conversion Costs a) 10,000 7,500 b) 7,500 7,500 c) 10,000 10,000 d) 7,500 10,000

In calculating the cost per equivalent unit using FIFO costing, the appropriate formula is current period costs / equivalent units for work performed this period.

Direct materials are added at the beginning of the process. This period began with 5,000 units in beginning inventory that are 25% complete. What are the equivalent units for beginning work in process under the FIFO method? Direct Materials Conversion Costs a) 5,000 1,250 b) 5,000 3,750 c) 0 1,250 d) 0 3,750

Assume a company's beginning work in process consists of 20,000 units, 40% complete. Materials are added at the beginning of the process. During the month, 90,000 units are transferred in. The ending work in process consists of 10,000 units, 50% complete. Using the weighted average method, the equivalent units of production for the month are: Transferred In Materials Conversion Costs

Assume there were 6,000 units in beginning work in process, 60% complete. 20,000 units were completed during the month. Ending work in process is 40% complete, which is equivalent to 3,200 units for conversion costs. Materials are added at the beginning of the process. The FIFO method is used. The number of units started this month is:

The weighted average method:

The accountant for Whirly Manufacturing Inc. gathered the following information for the month of November: Beginning WIP 16,000 units Started production 100,000 Completed production 92,000 Ending WIP 24,000 The beginning inventory was 60% complete for materials and 20% complete for conversion costs. The ending inventory was 90% complete for materials and 40% complete for conversion costs. Costs pertaining to the month of November are as follows: Beginning inventory costs are: Materials \ 54,560 Direct labour 20,320 Factory overhead 15,240 Costs incurred during November include: Materials \ 468,000 Direct labour 182,880 Factory overhead 391,160 Using the FIFO method, the equivalent unit conversion cost for November is:

Tong, Inc. is a manufacturing company that uses a process costing system. All direct material is added at the start of the process, and spoilage is discovered at the end. During the first period of operations 15,000 units of material were placed into production at a cost of $20 each (ignore conversion costs for this process). Ending work in process was 2,000 units, good units completed totalled 11,000 units, and normal spoilage is 15% of the units surviving inspection. Inspection takes place after the units are completed. The unit cost assigned to the normal spoilage is:

Hendrix, Inc. employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities: On July 1: Beginning inventories = 750 units, 60% complete Direct materials cost = $5,925 Conversion costs = $4,095 During July: 15,000 units started Direct materials added = $150,000 Conversion costs added = $83,520 On July 31: Ending inventories = 1,500 units, 40% complete Using the FIFO method, the number of units started and completed in July was:

Normal spoilage includes:

Xeno, Inc. operates a process costing system and uses the FIFO method. Beginning work in process consists of 1,000 units, 30% complete. Ending work in process is 15% complete, and direct materials are added at the 20% point. The equivalent units of production for materials are 14,000 and for conversion costs are 18,000. The number of units in ending work in process was:

Equivalent whole units of production: