Question 1

Myrna's Manufacturing has 6,000 units in beginning Work in Process, 15% complete as to conversion costs, 15,000 units transferred out to Finished Goods, and 2,000 units in ending Work in Process 10% complete as to conversion costs.Materials are fully added at the beginning of the process.How much are equivalent units for materials if the weighted-average method is used?

Accepted Answer

Equivalent units for materials = Units transferred out + Units in ending Work in Process (since materials are added at the beginning, all units are 100% complete for materials). Therefore, 15,000 units transferred out + 2,000 units in ending WIP = 17,000 equivalent units for materials.

Question 2

Use the following information to answer questions 
The output of a company's mixing department during the period consists of 25,000 units completed and transferred out, and 15,000 units in ending Work in Process that were 30% complete as to materials and conversion costs.Beginning inventory was 17,000 units that were 15% complete as to materials and conversion costs.
-Under the weighted-average method, what are the equivalent units of production for materials?

Accepted Answer

To calculate the equivalent units of production for materials using the weighted-average method, we first need to calculate the equivalent units of production for both completed and ending Work in Process inventory.

For completed units, all the material and conversion costs have been fully incurred, so the equivalent units of production for materials is simply the number of units completed and transferred out, which is 25,000.

For ending Work in Process inventory, we need to calculate the equivalent units of production based on the degree of completion. The ending Work in Process inventory consists of 15,000 units that are 30% complete as to materials. Therefore, the equivalent units of production for materials in the ending Work in Process inventory is:

15,000 units × 30% = 4,500 equivalent units

To calculate the total equivalent units of production for materials, we add the equivalent units of production for completed units and ending Work in Process inventory:

25,000 + 4,500 = 29,500 equivalent units

Therefore, the best choice is B.

Question 3

Which of the following only applies to process costing?

Accepted Answer

The answer of Which of the following only applies to...

Question 4

Conversion costs are typically comprised of what two types of items?

Accepted Answer

Conversion costs are the costs incurred to convert raw materials into finished goods. These costs include direct labour and manufacturing overhead costs. Direct labour includes wages and benefits paid to employees working directly on the production process, while manufacturing overhead includes all other indirect manufacturing costs such as rent, utilities, and supervisory salaries. Therefore, the two types of items that comprise conversion costs are direct labour and manufacturing overhead.

Question 5

There are no units in process at the beginning of the period, 500 units in process at the end of the period that are 30% complete, and 3,000 units transferred out during the period.Based on this information, how many units were started during the period under the weighted-average method?

Accepted Answer

Under the weighted-average method, units started during the period are calculated by adding the units transferred out to the ending work in process inventory and then subtracting the beginning inventory. Since there are no units at the beginning, the calculation is 3,000 (transferred out) + 500 (ending inventory) = 3,500 units started.

Question 6

In the Carter Company, there are 15,000 units in beginning Work in Process, 30,000 units started into production, and 7,000 units in ending Work in Process 60% completed.How many physical units are to be accounted for?

Accepted Answer

The total physical units to be accounted for include the units in beginning Work in Process, the units started into production, and do not need to adjust for the completion percentage of the ending Work in Process. Therefore, the calculation is 15,000 (beginning WIP) + 30,000 (started) = 45,000 units.

Question 7

Hace, Inc.began March with 650 units in beginning Work in Process, 11,400 units started into production, and 500 units in ending Work in Process that are 30% completed.How many physical units are to be accounted for?

Accepted Answer

Beginning WIP = 650 units
Units started into production = 11,400 units
Total units to be accounted for = Beginning WIP + Units started into production = 650 + 11,400 = 12,050 units.
Ending WIP = 500 units, which are 30% completed. So, actual fully completed units in ending WIP = 500 x 0.3 = 150 units.
Therefore, total physical units to be accounted for = 12,050 - 150 = 11,900 units. Hence, the answer is option C.

Question 8

Which one of the following will appear as a credit in the Work in Process account of a first department in a two stage production process?

Accepted Answer

The cost of products transferred into the second department is the amount that the first department is transferring out of its Work in Process account and into the second department's Work in Process account. This would appear as a credit in the first department's Work in Process account. Materials used and overhead applied would appear as debits in the Work in Process account, while cost of goods sold would be recorded after the products are completed and transferred out of the second department's Work in Process account.

Question 9

Why are materials requisition forms used less frequently in process costing?

Accepted Answer

In process costing, materials are usually added in larger quantities and are consumed throughout the production process. As a result, materials requisition forms are used less frequently because fewer orders are needed.

Question 10

2,000 units are in a process that is 75% complete for conversion costs.To what are these units referred?

Accepted Answer

These units are referred to as equivalent units of production because they are partially completed and need to be converted to their finished state. The fact that the process is 75% complete means that only 75% of the work to convert these units to their finished state has been done. Therefore, the equivalent units of production would be 75% of the 2,000 physical units, or 1,500.

Question 11

Zargus Company began the month of June with 1,650 units in beginning Work in Process, 11,400 units started into production, and 500 units in ending Work in Process that are 30% completed.How many units were transferred out during June?

Accepted Answer

Units started into production + Beginning Work in Process - Ending Work in Process = Units transferred out11,400 + 1,650 - 500 = 12,550

Question 12

A product requires processing in two departments, Department 22 and then Department 23, before it is completed.What happens to costs transferred out of Department 22?

Accepted Answer

Costs transferred out of Department 22 are still part of the Work in Process inventory, but they are now assigned to Department 23. Therefore, they should be debited to Work in Process-Department 23. Option A is incorrect as Finished Goods Inventory is the final inventory account that is credited, not debited. Option B is incorrect as Cost of Goods Sold is the expense account that is debited only after the finished product is sold. Option D is incorrect as Manufacturing Overhead is a separate account for indirect costs incurred in the manufacturing process, and is not affected by the transfer of costs between departments.

Question 13

Use the following information to answer questions 
The output of a company's mixing department during the period consists of 25,000 units completed and transferred out, and 15,000 units in ending Work in Process that were 30% complete as to materials and conversion costs.Beginning inventory was 17,000 units that were 15% complete as to materials and conversion costs.
-How many units were started during the period?

Accepted Answer

We can use the following formula to determine the number of units started during the period: 
Units started = Units in beginning WIP + Units started and completed - Units in ending WIP
Substituting the given values, we get: 
Units started = (17,000 x 15%) + 25,000 - (15,000 x 30%)
Units started = 2,550 + 25,000 - 4,500
Units started = 22,050
Therefore, the answer is choice C) 23,000 units.

Question 14

Swick Industries uses a process cost system.The company assigned manufacturing overhead costs to production.What transaction was recognized?

Accepted Answer

Assigning manufacturing overhead costs to production is a recognition of cost incurred, and thus, reduces the Manufacturing Overhead account.

Question 15

Which of the following is not correct?

Accepted Answer

The weighted-average method does not assume that products are at the same point of completion for both materials and conversion costs. It averages the costs of the work done in the current period with the costs of work done in previous periods, without making assumptions about the uniformity of completion levels across different cost categories.

Question 16

Macor Manufacturing assigns overhead based on machine hours.Department R logs 500 machine hours and Department W shows 400 machine hours for the period.The overhead rate is $7 per machine hour.What will the entry to assign overhead include?

Accepted Answer

The answer of Macor Manufacturing assigns overhead based on machine...

Question 17

Myrna's Manufacturing has 6,000 units in beginning Work in Process, 15% complete as to conversion costs, 15,000 units transferred out to Finished Goods, and 2,000 units in ending Work in Process 10% complete as to conversion costs.Materials are fully added at the beginning of the process.How much are equivalent units for conversion costs if the weighted-average method is used?

Accepted Answer

To calculate equivalent units using the weighted-average method, we need to combine the units in beginning Work in Process with the units added during the period and calculate the equivalent units for both materials and conversion costs.
Equivalent units for conversion costs:
Units in beginning WIP = 6,000 x 15% = 900
Units started and completed during the period = 15,000
Units in ending WIP = 2,000 x 10% = 200
Equivalent units for conversion costs = 900 + 15,000 + 200 = 15,100
However, since the ending Work in Process is not 100% complete, we need to adjust this calculation by multiplying the ending WIP units by their percentage of completion for conversion costs:
Adjustment for ending WIP = 2,000 x 10% = 200
Equivalent units for conversion costs = 15,100 + 200 = 15,300
Therefore, the answer is B) 15,200.

Question 18

What are physical units?

Accepted Answer

Physical units refer to the actual units of a product that are being accounted for during a certain period, which can be used to calculate the cost of goods produced, inventory values, and other financial metrics. This definition aligns with option A.

Question 19

When inventory is sold, where are the related costs transferred to?

Accepted Answer

The costs associated with inventory are transferred to the Cost of Goods Sold (COGS) account when the inventory is sold. This includes the direct materials, direct labor, and manufacturing overhead costs that were used to produce the goods. COGS is an expense account that is recognized on the income statement and reduces the company's gross profit.

Question 20

Which one of the following is used most frequently to allocate overhead costs in continuous manufacturing operations?

Accepted Answer

In continuous manufacturing operations, machines are used extensively for a prolonged period of time. Therefore, the most appropriate way to allocate overhead costs is by using machine hours as a cost driver. This method ensures that costs are allocated based on the actual use of the machines, which is the main activity in this type of manufacturing process. Allocation based on direct labor dollars or hours may not be appropriate as labor may not be directly related to the use of machines in this type of operation. Allocation based on machine maintenance dollars may not be appropriate either, as maintenance costs may not necessarily reflect actual machine usage.

Quiz 4: Process Costing