Exam 4: Process Costing and Hybrid Product-Costing Systems

Texas Tees Company uses a process-cost accounting system. The company adds direct materials at the start of its production process; conversion cost, on the other hand, is incurred evenly throughout manufacturing. The firm has no beginning work-in-process inventory; its ending work in process is 30% complete. Which of the following sets of percentages would be used to calculate the correct number of equivalent units in the ending work-in-process inventory?

St. Lawrence River Chemical manufactures a product called Spec. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 80% complete with respect to conversion; the ending work-in-process inventory is 30% complete. The following data pertain to March: Work in process, March 1 20,000 Units started during March 70,000 Units completed and transferred out 73,000 Work in process, March 31 17,000 Direct Conversion Total Materials Costs Costs: Work in process, March 1 \ 50,283 \ 23,400 \ 26,883 Costs incurred during March 234,900 72,000 162,900 Totals \ 285,183 \ 95,400 \ 189,783 Using the weighted-average method of process costing, the equivalent units of conversion activity total:

When calculating unit costs under the weighted-average process costing method, the unit cost is based on:

Which of the following is a key document in a typical process-costing system?

Daphne's Desktops Inc., which uses a process-costing system, passes completed production from Department A to Department B for further manufacturing. The journal entry to record completed production in Department A requires:

Michael-Inc. uses a process-costing system. A newly hired accountant has identified the following procedures that must be performed by the close of business on Friday: 1-Calculation of equivalent units 2-Analysis of physical flows of units 3-Assignment of costs to completed units and units still in process 4-Calculation of unit costs Which of the following choices correctly expresses the proper order of the preceding tasks?

Dome Company, which uses a process-costing system, began operations on January 1 of the current year. The company incurred conversion cost evenly throughout manufacturing. If Dome started work on 3,000 units during the period and these units were 70% of the way through manufacturing, it would be correct to say that the company has:

First Corporation adds all materials at the beginning of production and incurs conversion costs evenly throughout the manufacturing process. The company completed 70,000 units during the year and had 12,000 units in process at December 31, 20% complete with respect to conversion cost. Calculate the equivalent units of direct materials and conversion for the year.

Wanda Window Panes Inc. uses a process-costing system for its single product, which is manufactured from Material X. Material X is introduced to the production at the beginning of the manufacturing process whereas conversion activities occur uniformly throughout the process. The company started and completed 40,000 units during the period, and had an ending work-in-process inventory amounting to 8,000 units, 20% complete with respect to conversion activity. Which of the following choices correctly expresses the total equivalent units of production for Material X and conversion activities respectively?

Professor Jones is concerned that her students do not understand the concept of equivalent units. She has therefore prepared the following questions, to appear on an upcoming examination: Equivalent units are used in a process-costing accounting system. A. Equivalent units are needed as a measure of production volume. At the end of the period, manufacturing costs must be spread over the units produced, and it is incorrect to combine fully completed units with those that are still in production (akin to adding apples and oranges). Separate totals are needed because materials are often introduced at specific points in production whereas conversion is often introduced uniformly throughout manufacturing. A. Explain the need for equivalent units and why separate equivalent-unit totals are calculated for direct materials and conversion cost. B. If an examination of goods in production at the end of the period revealed 12,000 units that are, on average, 75% complete, would it be correct to say that 9,000 units were finished during the period? Why? Required: Prepare a complete answer key that can be used in grading the examination questions. B. No. The units are still in production, so none of them are fully completed. It would be correct to say that the firm has done the work equivalent to manufacturing 9,000 finished units.

Water Canada Inc. uses a process-cost system for its single product. Material A is added at the beginning of the process; in contrast, material B is added when the units are 50% complete. The firm's ending work-in-process inventory consists of 6,000 units that are 90% complete with respect to conversion activity. Which of the following correctly expresses the equivalent units of production with respect to materials A and B in the ending work-in-process inventory?

Which of the following is (are) needed to calculate the total cost of the ending work-in-process inventory under the weighted-average process-costing method? 1 Yes Yes 2 Yes No 3 No Yes 4 No No 5 Yes Yes, but only in specialized cases

Gorski ltd. began operations on January 1 of the current year. The company uses a process-costing system, and conversion costs are incurred evenly throughout the manufacturing process. By January 31, the firm had completed 56,000 units. Which of the following statements could be true about the ending work-in-process inventory if equivalent units for conversion cost totalled 59,000 units?

Which of the following best describes the procedures used in operation costing to assign direct material and conversion costs to production? Direct Material Costs Conversion Costs 1 Similar to those in job costing Similar to those in job costing 2 Similar to those in job costing Similar to those in process costing 3 Similar to those in process costing Similar to those in job costing 4 Similar to those in process costing Similar to those in process costing 5 Similar to those in job costing Similar to those in actual costing

Bing Manufacturing uses a weighted-average process-costing system. All materials are introduced at the start of manufacturing, and conversion costs are incurred evenly throughout the process. The company's beginning and ending work-in-process inventories totaled 30,000 units and 35,000 units, respectively, with the latter units being 40% complete at the end of the period. Bing started 30,000 units into production and completed 25,000 units. Manufacturing costs were as follows: Beginning work in process: Materials, $100,000; conversion cost, $200,000 Current work in process: Materials, $160,000; conversion cost, $450,000. Bing's equivalent-unit cost for materials is:

Which of the following statements is false?

Majestic ltd, which uses a process-costing system, adds material at the beginning of production and incurs conversion costs evenly throughout manufacturing process. The following selected information was taken from the company's accounting records: Total equivalent units of materials: 5,000 Total equivalent units of conversion: 4,400 Units started and completed during the period: 3,500 On the basis of this information, the ending work-in-process inventory's stage of completion with respect to conversion cost is:

Bing Manufacturing uses a weighted-average process-costing system. All materials are introduced at the start of manufacturing, and conversion costs are incurred evenly throughout the process. The company's beginning and ending work-in-process inventories totaled 30,000 units and 35,000 units, respectively, with the latter units being 40% complete at the end of the period. Bing started 30,000 units into production and completed 25,000 units. Manufacturing costs were as follows: Beginning work in process: Materials, $100,000; conversion cost, $200,000 Current work in process: Materials, $160,000; conversion cost, $450,000. Bing's equivalent-unit cost for conversion cost is:

Operation costing might be used to determine the cost of all of the following products except:

Shawinigan Inc. uses a weighted-average process-costing system. All materials are introduced at the beginning of production; conversion costs are incurred evenly throughout the manufacturing process. The following information pertains to April: Beginning work in process ( 80\% complete) 9,000 units Goods completed during April 53,000 units Ending work in process ( 30\% complete) 12,000 units The company's accountant has already computed the cost per equivalent unit, as follows: materials, $5; conversion, $14. Required: Calculate the cost of goods completed during April and the cost of the ending work-in-process inventory.