Exam 6: Process Costing

A producer of ____ would not use a process costing system.

Chandler Industries has two departments. Department 1 uses FIFO costing and Department 2 uses weighted average. Units are introduced into the process in Department 1 (this is the only material added in Department 1). Spoilage occurs continuously through the department and normal spoilage should not exceed 10 percent of the units started. Department 2 adds material (packaging) at the 75 percent completion point; this material does not cause an increase in the number of units being processed. A quality control inspection takes place when the goods are 80 percent complete. Spoilage should not exceed 5 percent of the units transferred in from Department 1. The following production cost data are applicable for operations for August of the current year:

Department 1 Production Data
Beginning inventory (65% complete)	1,000
Units started	25,000
Units completed	22,000
Units in ending inventory (40% complete)	2,800
Department 1 Cost Data
Beginning inventory:
Material	$ 1,550
Conversion	2,300	$ 3,850
Current period:
Material	$38,080
Conversion	78,645	116,725
Total costs to account for		$120,575
Department 2 Production Data
Beginning inventory (90% complete)	8,000
Units transferred in	22,000
Units completed	24,000
Units in ending inventory (20% complete)	4,500
Department 2 Cost Data
Beginning inventory:
Transferred in	$40,800
Material	24,000
Conversion	4,320	$ 69,120*
Current period:
Transferred in	$113,700
Material	53,775
Conversion	11,079	178,554
Total costs to account for		$247,674

*This may not be the same amount determined for Department 1;ignore any difference and use this figure. Required: a. Compute the equallent units of production in e ach department. b. Determine the cost per equivalent urit in each department and compute the cost transferred out, the cost in ending inventory, and the cost of spoilage ( if necessary).

Abnormal spoilage can be $\text {\underline{ Continuous }}$                           $\text {\underline{ discrete} }$

Which of the following statements is false? The cost of rework on defective units,if

Wright Company Wright Company adds material at the start of production.The following production information is available for September:

Beginning Work in Process Inventory
	(45% complete as to conversion)	10,000 units
Started this period		120,000 units
Ending Work in Process Inventory	80% complete as to conversion)	8,200 units
Beginning Work in Process Inventory Costs:
	Material	$24,500
	Conversion	68,905
Current Period Costs:
	Material	$ 75,600
	Conversion	130,053

Refer to Wright Company.What are the equivalent units for conversion using the weighted average method?

TriCities Corporation TriCities Corporation adds material at the start to its production process and has the following information available for August:

Beginning Work in Process Inventory	(40% complete as to conversion)	7,000 units
Started this period		32,000 units
Ending Work in Process Inventory	(25% complete as to conversion)	2,500 units
Transferred out	?

Refer to TriCities Corporation.Calculate equivalent units of production for material using weighted average.

Process costing is most appropriate when manufacturing large batches of homogenous products.

Which of the following is subtracted from weighted average EUP to derive FIFO EUP?

Wright Company Wright Company adds material at the start of production.The following production information is available for September:

Beginning Work in Process Inventory
	(45% complete as to conversion)	10,000 units
Started this period		120,000 units
Ending Work in Process Inventory	80% complete as to conversion)	8,200 units
Beginning Work in Process Inventory Costs:
	Material	$24,500
	Conversion	68,905
Current Period Costs:
	Material	$ 75,600
	Conversion	130,053

Refer to Wright Company.What is the total cost to account for?

Averaging the total cost of completed beginning work-in-process inventory and units started and completed over all units transferred out is known as

Painter Corporation Painter Corporation has the following information for the current month:

Units started	100,000 units
Beginning Work in Process: (35% complete)	20,000 units
Normal spoilage (discrete)	3,500 units
Abnormal spoilage	5,000 units
Ending Work in Process: (70% complete)	14,500 units
Transferred out	97,000 units
Beginning Work in Process Costs:
	Material                 $15,000
	Conversion            10,000

All materials are added at the start of the production process.Painter Corporation inspects goods at 75 percent completion as to conversion. Refer to Painter Corporation.Assume that the costs per EUP for material and conversion are $1.00 and $1.50,respectively.Using FIFO,what is the total cost assigned to the transferred-out units (rounded to the nearest dollar)?

Stillwater Corporation The following information is available for Stillwater Corporation for the current year: Beginning Watk in Process             Costs of Begiluing Work in                                                                       Process: (75% complete)                      14,500 units            Materil            $\$ 25,100$ Started 75,000 units Conversion 50,000 Ending Work in Process Cumrent Costs: (60\% complete) 16,000 units Material \ 120,000 Abtormal spoilage 2,500 units Conversion 300,000 Normal spoilage (continuous) 5,000 units Tranferred out 66,000 units All materials are added at the start of production. Refer to Stillwater Corporation.What is the cost per equivalent unit for material using weighted average?

Jackson Company transferred 6,000 units to Finished Goods Inventory during August.On August 1,the company had 400 units on hand (35 percent complete as to both material and conversion costs).On August 31,the company had 750 units (20 percent complete as to material and 30 percent complete as to conversion costs).The number of units started and completed during August was:

Saturn Corporation Begining invent ouy (30\% complete as to Material B and $60 \%$ complete for                                   700                                  units conversion Started this cycle                                                                                                                                    2,000                               units Ending inventory (50\% complete as to Material B and $80 \%$ complete for conversion)                      500                                  units Beginuing inventory costs: Material A \ 14,270 Material B 5,950 Conversion 5,640 Current Period costs: Material A \ 40,000 Material B 70,000 Conversion 98,100 Material A is added at the start of production,while Material B is added uniformly throughout the process. Refer to Saturn Corporation Assuming a FIFO method of process costing,compute EUP for conversion.