Exam 8: Process Costing

Department A had no Work-in-Process at the beginning of the period,1,000 units were completed during the period,200 units were 50% completed at the end of the period,and the following manufacturing costs were debited to the departmental Work-in-Process account during the period: Direct materials (1,200 at \ 10) \ 12,000 Direct labor 5,500 Factory overhead 4,400 Assuming that all direct materials are added at the beginning of production and Department A uses weighted-average process costing,what is the total cost of the departmental Work-in-Process Inventory at the end of the period?

Bentwood Corporation uses the FIFO method in its process costing system.Data concerning the first processing department for the most recent month are listed below: Beginning work-in-process inventory: Units in beginning work-in-process inventory 900 Materials costs \ 17,100 Conversion costs \ 10,200 Percent complete with respect to materials 70\% Percent complete with respect to corwersion 25\% Units started into production during the month 7,300 Units transterred to the next department during the month 6,100 Materials costs added during the month \ 148,200 Conversion costs added during the month \ 247,500 Ending work-in-process imentory: Units in ending work-in-process inventory 2,100 Percent complete with respect to materials 80\% Percent complete with respect to corwersion 35\% Note: Your answers may differ from those offered below due to rounding error.In all cases,select the answer that is the closest to the answer you computed.To reduce rounding error,carry out all computations to at least three decimal places.What are the equivalent units for materials for the month in the first processing department?

What would happen to the equivalent units,production cost per unit and costs transferred out for a company using weighted-average if the degree of completion of the ending inventory were underestimated?

The FIFO method provides a major advantage over the weighted-average method in that:

Bentley Enterprises uses process costing to control costs in the manufacture of Dust Sensors for the mining industry.The following information pertains to operations for November.(CMA Exam adapted) The beginning inventory was 60% complete as to materials and 20% complete as to conversion costs.The ending inventory was 90% complete as to materials and 40% complete as to conversion costs.Costs pertaining to November are as follows: Units Work in process, Nowember 1st 16,000 Started in production during Nov ember 100,000 Work in process, Nowember 3 24,000 Beginning inventory: direct materials,$54,560;direct labor,$20,320;manufacturing overhead,$15,240.Costs incurred during the month: direct materials,$468,000;direct labor,$182,880;manufacturing overhead,$391,160.What is the equivalent unit cost for materials assuming Bentley uses first-in,first-out (FIFO)process costing?

The more prices change,the greater the difference between the costs assigned to units transferred out using weighted-average costing and the costs assigned to units transferred out using first-in,first-out (FIFO).

Racquet Master (RM)Sports manufactures and distributes two types of tennis rackets: Dominant Drive (DD)and Major Smash (MS).Both types of rackets go through Operations 1 and 3.MS also goes through Operation 2,which adds a layer of graphite for additional strength.All material is added at the beginning of their respective operations.The following information relates to a work order from Discount Warehouse,Inc.for 30,000 units of DD (Work order #286)and 8,000 units of MS (Work order #354). Direct materials: Work order \#286 Work order A354 Operation 1 \ 120,000 \ 80,000 Operation 2 - 20,000 Operation 3 45,000 30,000 Conversion costs: Operation 1 30,000 15,000 Operation 2 - 25,000 Operation 3 14,793 14,896 Required: Assume that there are 3,000 units of DD and 2,000 units of MS in Operation 3 at the end of the reporting period 45% and 65% complete respectively.Compute the ending inventory for Operation #3.

The Lakeside Company uses a weighted-average process costing system.The following data are available: Beginning inventory -0 Units started in production 20,000 Units finished during the period 16,000 Units in process at the end of the period (complete as to materials, 1/4 complete as to labor and overhead) 4,000 Cost of materials used \ 35,200 Labor and overhead costs \ 37,400 Unit cost of material is:

Everglades Furniture uses a process cost system to account for its chair factory.Beginning inventory consisted of 5,000 units (100% complete as to material,55% complete as to labor)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 labor.Everglades uses first-in,first-out (FIFO)costing.Required: (HINT: use 4 decimal places in your calculations) a.Compute the equivalent units of production for each input.b.Compute the cost per unit.c.Compute the cost transferred out to finished goods.d.Compute the ending work-in-process inventory balance.

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: Chemical Mik Additional Chemical Conversion 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: (HINT: use 4 decimal places in your calculations) a.Compute the equivalent units of production for each input.b.Compute the cost per unit.c.Compute the cost transferred out to finished goods.d.Compute the ending work-in-process inventory balance.

Tori Company uses the FIFO method in its process costing system.The first processing department,the Soldering Department,started the month with 17,000 units in its beginning work-in-process inventory that were 70% complete with respect to conversion costs.The conversion cost in this beginning work-in-process inventory was $101,150.An additional 68,000 units were started into production during the month.There were 23,000 units in the ending work-in-process inventory of the Soldering Department that were 80% complete with respect to conversion costs.A total of $565,125 in conversion costs were incurred in the department during the month.What would be the cost per equivalent unit for conversion costs? (Round off to three decimal places. )

Seaside Company uses the weighted-average method in its process costing system.The Sanding Department started the month with 8,000 units in its beginning work-in-process inventory that were 70% complete with respect to conversion costs.An additional 69,000 units were transferred in from the prior department during the month to begin processing in the Sanding Department.There were 5,000 units in the ending work-in-process inventory of the Sanding Department that were 20% complete with respect to conversion costs.What were the equivalent units for conversion costs in the Sanding Department for the month?

The Lakeside Company uses a weighted-average process costing system.The following data are available: Beginning inventory -0 Units started in production 20,000 Units finished during the period 16,000 Units in process at the end of the period (complete as to materials, 1/4 complete as to labor and overhead) 4,000 Cost of materials used \ 35,200 Labor and overhead costs \ 37,400 Unit cost of labor and overhead is:

Of the following process costing steps,which must be done last?

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 T-account for the cracking department for July is: Work-in-Process I wentoy (Cracking Department) Balance, Juby 1(36,000,4/5 done) \ 63,700 Direct materials ( 280,000) 397,600 Conversion costs 189,700 Balance, Juby 31 (45,000 lbs, 23 done) ?? Costs transterred to Blending Dept ?? 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 inventory balance on July 31? (b)What would be the cost transferred to the Blending Dept.in July?

The Lakeside Company uses a weighted-average process costing system.The following data are available: Beginning inventory -0 Units started in production 20,000 Units finished during the period 16,000 Units in process at the end of the period (complete as to materials, 1/4 complete as to labor and overhead) 4,000 Cost of materials used \ 35,200 Labor and overhead costs \ 37,400 Equivalent units of production for labor and overhead are:

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 Inventory contains $1,500 in material costs.The Safety Chemical Company uses first-in,first-out (FIFO)costing.Required (use 4 decimal places for computations): Work-in-Process: Pefining Beginning balance ( 5,000 gallons, 80\% complete) \ 7,500 Materials ( 30,000 gallons) 12,300 Direct Labor 14,500 Overhead 21,750 Ending balance (6,000 gallons, 2/3 complete) (a)Compute the equivalent units of production for Refining 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.

Galaxy Corporation uses the FIFO method in its process costing.The following data pertain to its Assembly Department for June. Units in process, June 1: materials 55\% complete, conversion 15\% complete 800 Units started into production during June 5,200 Units completed and transterred to the next department 4,300 Units in process, June 30 : materials 50\% complete, conversion 40\% complete 1,700 Required: Determine the equivalent units of production for the Assembly Department for June using the FIFO method.

The Rosa Lee Manufacturing Company produces a single product in a single processing department.The material is added when 25% of the conversion costs have been added.The Work-in-Process Inventory account on April 30^th includes the following information: Beginning balance \ 1,682 (\ 600 is materials) Material 5,325 Labor 10,863 Overhead 15,012 During the month,the company finished and transferred 72,000 units out of the Work-in-Process Inventory.9,000 units were in process at the beginning of the month and were 40% complete.8,000 units were in process at the end of the month,and were 70% complete.The company uses weighted-average process costing.Required (use 4 decimal places for computations): (a)Compute the equivalent units of production (EUP)for materials and conversion costs in April.(b)Compute the unit conversion costs and unit material costs for April.(c)Compute the total cost transferred out of the Work-in-Process Inventory during the month of April.(d)Compute the cost of the ending inventory for April.

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.