TB Raiborn - Process Costing

Chapter 6Process Costing
LEARNING OBJECTIVES
LO 1 How does process costing differ from job order costing?
LO 2 For what reasons are equivalent units of production used in process costing?
LO 3 How are equivalent units of production unit costs and inventor! values determined
using the weighted average method of process costing?
LO " How are equivalent units of production unit costs and inventor! values determined
using the F#FO method of process costing?
LO $ How can standard costs be used in a process costing s!stem?
LO % &h! would a compan! use a h!brid costing s!stem?
LO ' ()ppendi* 1+ &hat alternative methods can be used to calculate equivalent units of
production?
LO , ()ppendi* 2+ How are normal and abnormal spoilage losses treated in an -./
schedule?
QESTION GRI!
True/False
Difficulty Level Learning Objectives
Easy Moderate Difficult LO 1 LO 2 LO 3 LO 4 LO LO ! LO " LO #
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$o%&letion
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Multi&le $'oice

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('ort)*ns+er
Easy
Moderat
e Difficult LO 1 LO 2 LO 3 LO 4 LO LO ! LO " LO #
1 x x
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,roble%
Easy
Moderat
e Difficult LO 1 LO 2 LO 3 LO 4 LO LO ! LO " LO #
1,3
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1,"
TRE"#ALSE
11 /rocess costing is most appropriate when manufacturing large batches of homogenous products1
)234 5 6#F4 -as! O784 %91
21 :onversion costs include all manufacturing costs other than direct materials
)234 5 6#F4 -as! O784 %91
31 -quivalent units are computed to assign costs to partiall! completed units
)234 5 6#F4 -as! O784 %92
"1 5he weighted average method combines beginning inventor! and current production to compute cost
per unit of production1
)234 5 6#F4 -as! O784 %93
$1 5he F#FO method combines beginning inventor! and current production to compute cost per unit of
production1
)234 F 6#F4 -as! O784 %93
%1 5he weighted average method separates beginning inventor! and current production to compute cost
per unit of production1
)234 F 6#F4 -as! O784 %93
'1 5he F#FO method separates beginning inventor! and current production to compute cost per unit of
production1
)234 5 6#F4 -as! O784 %93
,1 5he numerator in the formula for equivalent units includes all beginning inventor! costs when using
the weighted average costing assumption1
)234 5 6#F4 -as! O784 %92%93
;1 5he numerator in the formula for equivalent units includes all beginning inventor! costs when using
the F#FO costing assumption1
)234 F 6#F4 -as! O784 %92%9"
101 5he weighted average costing method assumes that units in beginning inventor! are the first units
transferred1
)234 F 6#F4 -as! O784 %93
111 5he F#FO costing method assumes that units in beginning inventor! are the first units transferred1
)234 5 6#F4 -as! O784 %9"
1,$
121 3tandard costing is compatible with both F#FO and weighted average methods of costing
)234 F 6#F4 <oderate O784 %9$
131 ) h!brid costing s!stem would be appropriate for a compan! that manufactures ca=e flour1
)234 F 6#F4 -as! O784 %9%
1"1 ) h!brid costing s!stem would be appropriate for a compan! that manufactures several varieties of
jam1
)234 F 6#F4 <oderate O784 %9%
1$1 .sing F#FO costing equivalent units of production (-./+ can be determined b! subtracting -./>s in
7eginning wor= in process from weighted average -./1
)234 5 6#F4 <oderate O784 %9'
1%1 &eighted average equivalent units of production (-./+ can be determined b! adding -./>s in ending
wor= in process to units transferred out1
)234 5 6#F4 <oderate O784 %9'
1'1 :ontinuous production losses are assumed to occur uniforml! throughout the process1
)234 5 6#F4 -as! O784 %9,
1,1 6iscrete production losses are assumed to occur throughout the process1
)234 F 6#F4 -as! O784 %9,
1;1 6iscrete production losses are assumed to occur at the end of a process1
)234 5 6#F4 -as! O784 %9,
201 :ontinuous production losses are assumed to occur at the end of a process
)234 F 6#F4 -as! O784 %9,
211 )bnormal continuous losses are absorbed b! all units in ending inventor! and transferred out on a -./
basis1
)234 F 6#F4 <oderate O784 %9,
221 2ormal continuous losses are absorbed b! all units in ending inventor! and transferred out on a -./
basis1
)234 5 6#F4 <oderate O784 %9,
1,%
231 :osts of normal shrin=age and normal continuous losses in a process costing environment are handled
b! the method of neglect1
)234 5 6#F4 <oderate O784 %9,
2"1 :osts of normal shrin=age and normal continuous losses in a process costing environment are handled
b! the method of accretion1
)234 F 6#F4 <oderate O784 %9,
2$1 ) continuous loss is assumed to occur at a specific point in the production process1
)234 F 6#F4 -as! O784 %9,
2%1 ) discrete loss is assumed to occur at a specific point in the production process1
)234 5 6#F4 -as! O784 %9,
2'1 )bnormal spoilage is alwa!s accounted for on an equivalent unit basis1
)234 5 6#F4 -as! O784 %9,
CO$PLETION
11 )ll manufacturing costs other than direct materials are referred to as ???????????????????????
)234 conversion costs
6#F4 -as! O784 %91
21 5he process costing s!stem that computes equivalent units on beginning wor= in process inventor! as
well as wor= done in the current period is =nown as a ???????????????????????????1
)234 weighted average process costing method
6#F4 -as! O784 %91
31 5he process costing s!stem that computes equivalent units on wor= done in the current period is
=nown as a ???????????????????????????1
)234 F#FO process costing method
6#F4 -as! O784 %91
"1 5he number of completed units that could have been produced from the inputs applied is referred to as
???????????????????????1
)234 equivalent units
6#F4 -as! O784 %92
1,'
$1 5wo methods of accounting for cost flows in process costing are ????????????????? and ?????????1
)234 weighted average@ F#FO
6#F4 -as! O784 %93
%1 ) ?????????????? costing s!stem is appropriate where products manufactured have different direct
materials but similar processing techniques1
)234 h!brid
6#F4 -as! O784 %9%
'1 :osts of normal shrin=age and normal continuous losses in a process costing environment are handled
b! the method of ??????????????1
)234 neglect
6#F4 <oderate O784 %9,
,1 5he ?????????????????????????? report details all manufacturing quantities and costs shows
computation of -./ and indicates cost assignments to goods manufactured1
)234 cost of production
6#F4 -as! O784 %93%9"
$LTIPLE C%OICE
11 &hich cost accumulation procedure is most applicable in continuous mass9production manufacturing
environments?
a1 standard
b1 actual
c1 process
d1 job order
)234 : 6#F4 -as! O784 %91
21 /rocess costing is used in companies that
a1 engage in road and bridge construction1
b1 produce sailboats made to customer specifications1
c1 produce bric=s for sale to the public1
d1 construct houses according to customer plans1
)234 : 6#F4 -as! O784 %91
31 ) producer of ???????? would not use a process costing s!stem1
a1 gasoline
b1 potato chips
c1 blan= videotapes
d1 stained glass windows
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1,,
"1 ) process costing s!stem is used b! a compan! that
a1 produces heterogeneous products1
b1 produces items b! special request of customers1
c1 produces homogeneous products1
d1 accumulates costs b! job1
)234 : 6#F4 -as! O784 %91
$1 &hich is the best cost accumulation procedure to use for continuous mass production of li=e units?
a1 actual
b1 standard
c1 job order
d1 process
)234 6 6#F4 -as! O784 %91
%1 -quivalent units of production are equal to the
a1 units completed b! a production department in the period1
b1 number of units wor=ed on during the period b! a production department1
c1 number of whole units that could have been completed if all wor= of the period had been
used to produce whole units1
d1 identifiable units e*isting at the end of the period in a production department1
)234 : 6#F4 <oderate O784 %92
'1 #n a process costing s!stem using the weighted average method cost per equivalent unit for a given
cost component is found b! dividing which of the following b! -./?
a1 onl! current period cost
b1 current period cost plus the cost of beginning inventor!
c1 current period cost less the cost of beginning inventor!
d1 current period cost plus the cost of ending inventor!
)234 7 6#F4 -as! O784 %92
,1 5he weighted average method is thought b! some accountants to be inferior to the F#FO method
because it
a1 is more difficult to appl!1
b1 onl! considers the last units wor=ed on1
c1 ignores wor= performed in subsequent periods1
d1 commingles costs of two periods1
)234 6 6#F4 <oderate O784 %93
;1 5he first step in determining the cost per -./ per cost component under the weighted average method
is to
a1 add the beginning &or= in /rocess #nventor! cost to the current periodAs production cost1
b1 divide the current periodAs production cost b! the equivalent units1
c1 subtract the beginning &or= in /rocess #nventor! cost from the current periodAs production
cost1
d1 divide the current periodAs production cost into the -./1
)234 ) 6#F4 <oderate O784 %93
1,;
101 5he difference between -./ calculated using F#FO and -./ calculated using weighted average is the
equivalent units
a1 started and completed during the period1
b1 residing in beginning &or= in /rocess #nventor!1
c1 residing in ending &or= in /rocess #nventor!1
d1 uncompleted in &or= in /rocess #nventor!1
)234 7 6#F4 <oderate O784 %93%9"
111 -./ calculations for standard process costing are the same as
a1 the -./ calculations for weighted average process costing1
b1 the -./ calculations for F#FO process costing1
c1 L#FO inventor! costing for merchandise1
d1 the -./ calculations for L#FO process costing1
)234 7 6#F4 <oderate O784 %9$
121 #n a F#FO process costing s!stem which of the following are assumed to be completed first in the
current period?
a1 units started this period
b1 units started last period
c1 units transferred out
d1 units still in process
)234 7 6#F4 -as! O784 %9"
131 5o compute equivalent units of production using the F#FO method of process costing wor= for the
current period must be stated in units
a1 completed during the period and units in ending inventor!1
b1 completed from beginning inventor! units started and completed during the period and
units partiall! completed in ending inventor!1
c1 started during the period and units transferred out during the period1
d1 processed during the period and units completed during the period1
)234 7 6#F4 <oderate O784 %9"
1"1 5he F#FO method of process costing will produce the same cost of goods transferred out amount as the
weighted average method when
a1 the goods produced are homogeneous1
b1 there is no beginning &or= in /rocess #nventor!1
c1 there is no ending &or= in /rocess #nventor!1
d1 beginning and ending &or= in /rocess #nventories are each $0 percent complete1
)234 7 6#F4 -as! O784 %9"
1$1 5he primar! difference between the F#FO and weighted average methods of process costing is
a1 in the treatment of beginning &or= in /rocess #nventor!1
b1 in the treatment of current period production costs1
c1 in the treatment of spoiled units1
d1 none of the above1
)234 ) 6#F4 -as! O784 %93%9"
1;0
1%1 <aterial is added at the beginning of a process in a process costing s!stem1 5he beginning &or= in
/rocess #nventor! for the process was 30 percent complete as to conversion costs1 .sing the F#FO
method of costing the number of equivalent units of material for the process during this period is
equal to the
a1 beginning inventor! this period for the process1
b1 units started this period in the process1
c1 units started this period in the process plus the beginning &or= in /rocess #nventor!1
d1 units started and completed this period plus the units in ending &or= in /rocess #nventor!1
)234 6 6#F4 <oderate O784 %93%9"
1'1 #n a cost of production report using process costing transferred9in costs are similar to the
a1 cost of material added at the beginning of production1
b1 conversion cost added during the period1
c1 cost transferred out to the ne*t department1
d1 cost included in beginning inventor!1
)234 ) 6#F4 -as! O784 %93
1,1 #n a process costing s!stem the journal entr! to record the transfer of goods from 6epartment B2 to
Finished Coods #nventor! is a
a1 debit &or= in /rocess #nventor! B2 credit Finished Coods #nventor!1
b1 debit Finished Coods #nventor! credit &or= in /rocess #nventor! B11
c1 debit Finished Coods #nventor! credit &or= in /rocess #nventor! B21
d1 debit :ost of Coods 3old credit &or= in /rocess #nventor! B21
)234 : 6#F4 -as! O784 %93
1;1 5ransferred9in cost represents the cost from
a1 the last department onl!1
b1 the last production c!cle1
c1 all prior departments1
d1 the current period onl!1
)234 : 6#F4 -as! O784 %93
201 &hich of the following is(are+ the same between the weighted average and F#FO methods of
calculating -./s?
.nits to -./ 5otal cost to
account for calculations account for
a1
no yes no
b1
yes yes yes
c1
yes no no
d1
yes no yes
)234 6 6#F4 -as! O784 %93%9"
211 /rocess costing techniques should be used in assigning costs to products
a1 if a product is manufactured on the basis of each order received1
b1 when production is onl! partiall! completed during the accounting period1
c1 if a product is composed of mass9produced homogeneous units1
d1 whenever standard9costing techniques should not be used1
)234 : 6#F4 -as! O784 %91
1;1
221 )veraging the total cost of completed beginning inventor! and units started and completed over all
units transferred out is =nown as
a1 strict F#FO1
b1 modified F#FO1
c1 weighted average costing1
d1 normal costing1
)234 7 6#F4 <oderate O784 %93
231 ) process costing s!stem
a1 cannot use standard costs1
b1 restates &or= in /rocess #nventor! in terms of completed units1
c1 accumulates costs b! job rather than b! department1
d1 assigns direct labor and manufacturing overhead costs separatel! to units of production1
)234 7 6#F4 -as! O784 %92
2"1 ) process costing s!stem does which of the following?
:alculates -./s )ssigns costs to inventories
a1
no no
b1
no yes
c1
yes yes
d1
yes no
)234 : 6#F4 -as! O784 %93
2$1 ) process costing s!stem
:alculates average cost 6etermines total units to
per whole unit account for
a1
yes yes
b1
no no
c1
yes no
d1
no yes
)234 6 6#F4 -as! O784 %92
2%1 ) h!brid costing s!stem combines characteristics of
a1 job order and standard costing s!stems1
b1 job order and process costing s!stems1
c1 process and standard costing s!stems1
d1 job order and normal costing s!stems1
)234 7 6#F4 -as! O784 %9%
1;2
2'1 &hen standard costs are used in process costing
a1 variances can be measured during the production period1
b1 total costs rather than current production and current costs are used1
c1 process costing calculations are made simpler1
d1 the weighted average method of calculating -./s ma=es computing transferred9out costs
easier1
)234 6 6#F4 <oderate O784 %9$
2,1 &hich of the following is subtracted from weighted average -./ to derive F#FO -./?
a1 beginning &#/ -./ completed in current period
b1 beginning &#/ -./ produced in prior period
c1 ending &#/ -./ not completed
d1 ending &#/ -./ completed
)234 7 6#F4 -as! O784 %92%9"
2;1 5he cost of abnormal continuous losses is
a1 considered a product cost1
b1 absorbed b! all units in ending inventor! and transferred out on an equivalent unit basis1
c1 written off as a loss on an equivalent unit basis1
d1 absorbed b! all units past the inspection point1
)234 : 6#F4 -as! O784 %9,
301 )bnormal spoilage can be
continuous discrete
a1 !es no
b1 no no
c1 !es !es
d1 no !es
)234 : 6#F4 -as! O784 %9,
311 &hen the cost of lost units must be assigned and those same units must be included in an equivalent
unit schedule these units are considered
a1 normal and discrete1
b1 normal and continuous1
c1 abnormal and discrete1
d1 abnormal and continuous1
)234 6 6#F4 <oderate O784 %9,
321 ) continuous loss
a1 occurs unevenl! throughout a process1
b1 never occurs during the production process1
c1 alwa!s occurs at the same place in a production process1
d1 occurs evenl! throughout the production process1
)234 6 6#F4 -as! O784 %9,
1;3
331 &hich of the following would be considered a discrete loss in a production process?
a1 adding the correct ingredients to ma=e a bottle of =etchup
b1 putting the appropriate components together for a stereo
c1 adding the wrong components when assembling a stereo
d1 putting the appropriate pieces for a bi=e in the bo*
)234 : 6#F4 -as! O784 %9,
3"1 5he method of neglect handles spoilage that is
a1 discrete and abnormal1
b1 discrete and normal1
c1 continuous and abnormal1
d1 continuous and normal1
)234 6 6#F4 <oderate O784 %9,
3$1 5he cost of normal discrete losses is
a1 absorbed b! all units past the inspection point on an equivalent unit basis1
b1 absorbed b! all units in ending inventor!1
c1 considered a period cost1
d1 written off as a loss on an equivalent unit basis1
)234 ) 6#F4 -as! O784 %9,
3%1 5he cost of abnormal continuous losses is
a1 considered a product cost1
b1 absorbed b! all units in ending inventor! and transferred out on an equivalent unit basis1
c1 written off as a loss on an equivalent unit basis1
d1 absorbed b! all units past the inspection point1
)234 : 6#F4 -as! O784 %9,
3'1 2ormal spoilage units resulting from a continuous process
a1 are e*tended to the -./ schedule1
b1 result in a higher unit cost for the good units produced1
c1 result in a loss being incurred1
d1 cause estimated overhead to increase1
)234 7 6#F4 -as! O784 %9,
3,1 &hen the cost of lost units must be assigned and those same units must be included in an equivalent
unit schedule these units are considered
a1 normal and discrete1
b1 normal and continuous1
c1 abnormal and discrete1
d1 abnormal and continuous1
)234 6 6#F4 <oderate O784 %9,
1;"
3;1 &hich of the following accounts is credited when abnormal spoilage is written off in an actual cost
s!stem?
a1 <iscellaneous Devenue
b1 Loss from 3poilage
c1 Finished Coods
d1 &or= in /rocess
)234 6 6#F4 -as! O784 %9,
"01 5he cost of abnormal discrete units must be assigned to
good units lost units
a1 !es !es
b1 no no
c1 !es no
d1 no !es
)234 6 6#F4 -as! O784 %9,
"11 &hich of the following statements is &a'se? 5he cost of rewor= on defective units if
a1 abnormal should be assigned to a loss account1
b1 normal and if actual costs are used should be assigned to material labor and overhead
costs of the good production1
c1 normal and if standard costs are used should be considered when developing the overhead
application rate1
d1 abnormal should be prorated among &or= #n /rocess Finished Coods and :ost of Coods
3old1
)234 6 6#F4 <oderate O784 %9,
"21 #f normal spoilage is detected at an inspection point within the process (rather than at the end+ the cost
of that spoilage should be
a1 included with the cost of the units sold during the period1
b1 included with the cost of the units completed in that department during the period1
c1 allocated to ending wor= in process units and units transferred out based on their relative
values1
d1 allocated to the good units that have passed the inspection point1
)234 6 6#F4 <oderate O784 %9,
"31 5a!lor :o1 has a production process in which the inspection point is at %$ percent of conversion1 5he
beginning inventor! for 8ul! was 3$ percent complete and ending inventor! was ,0 percent complete1
2ormal spoilage costs would be assigned to which of the following groups of units using F#FO
costing?
7eginning -nding .nits 3tarted
#nventor! #nventor! E :ompleted
a1
no yes yes
b1
yes yes yes
c1
no no yes
d1
yes no no
)234 7 6#F4 <oderate O784 %9,
1;$
""1 &hich of the following is not a question that needs to be answered with regard to qualit! control?
a1 &hat happens to the spoiled units?
b1 &hat is the actual cost of spoilage?
c1 How can spoilage be controlled?
d1 &h! does spoilage happen?
)234 ) 6#F4 <oderate O784 %9,
"$1 2ormal spoilage units resulting from a continuous process
a1 are e*tended to the -./ schedule1
b1 result in a higher unit cost for the good units produced1
c1 result in a loss being incurred1
d1 cause estimated overhead to increase1
)234 7 6#F4 -as! O784 %9,
"%1 5he addition of material in a successor department that causes an increase in volume is called
a1 accretion1
b1 rewor=ed units1
c1 comple* procedure1
d1 undetected spoilage1
)234 ) 6#F4 -as! O784 %9,
"'1 Long :ompan! transferred $$00 units to Finished Coods #nventor! during 3eptember1 On 3eptember
1 the compan! had 300 units on hand ("0 percent complete as to both material and conversion costs+1
On 8une 30 the compan! had ,00 units (10 percent complete as to material and 20 percent complete as
to conversion costs+1 5he number of units started and completed during 3eptember was4
a1 $2001
b1 $3,01
c1 $$001
d1 %3001
)234 )
.nits 5ransferred Out $$00
Less4 .nits in 7eginning #nventor! (300+
.nits 3tarted and :ompleted $200
6#F4 -as! O784 %92
1;%
",1 Creen :ompan! started ;000 units in Februar!1 5he compan! transferred out '000 finished units and
ended the period with 3$00 units that were "0 percent complete as to both material and conversion
costs1 7eginning &or= in /rocess #nventor! units were
a1 $001
b1 %001
c1 1$001
d1 20001
)234 :
Beginning (or) in Process *+,--
)dd4 .nits 3tarted ;000
6educt4 .nits 5ransferred Out '000
-nding &or= in /rocess 3$00
6#F4 -as! O784 %92
";1 7ush :ompan! had beginning &or= in /rocess #nventor! of $000 units that were "0 percent complete
as to conversion costs1 F started and completed "2000 units this period and had ending &or= in
/rocess #nventor! of 12000 units1 How man! units were started this period?
a1 "2000
b1 "'000
c1 $"000
d1 $;000
)234 :
7eginning &or= in /rocess $000
A../ nits Starte. ,0+---
6educt4 .nits 5ransferred Out "'000
-nding &or= in /rocess 12000
6#F4 <oderate O784 %92
$01 6i*ie :ompan! uses a weighted average process costing s!stem1 <aterial is added at the start of
production1 6i*ie :ompan! started 13000 units into production and had "$00 units in process at the
start of the period that were %0 percent complete as to conversion costs1 #f 6i*ie transferred out 11'$0
units how man! units were in ending &or= in /rocess #nventor!?
a1 12$0
b1 3000
c1 3$00
d1 $'$0
)234 6
7eginning &or= in /rocess "$00
)dd4 .nits 3tarted 13000
6educt4 .nits 5ransferred Out 11'$0
En.ing (or) in Process ,+1,-
6#F4 -as! O784 %92
1;'
$11 5a!lor :ompan! uses a weighted average process costing s!stem and started 30000 units this month1
5a!lor had 12000 units that were 20 percent complete as to conversion costs in beginning &or= in
/rocess #nventor! and 3000 units that were "0 percent complete as to conversion costs in ending &or=
in /rocess #nventor!1 &hat are equivalent units for conversion costs?
a1 3',00
b1 "0200
c1 "0,00
d1 "2000
)234 7
7eginning &or= in /rocess 12000 20G 2"00
H :ompletion of .nits in /rocess 12000 ,0G ;%00
H .nits 3tarted and :ompleted 2'000 100G 2'000
H -nding &or= in /rocess 3000 "0G 1200
E23i4a'ent nits o& Pro.3ction 0-+5--
6#F4 -as! O784 %92%93
$21 Ierr! :ompan! ma=es small metal containers1 5he compan! began 6ecember with 2$0 containers in
process that were 30 percent complete as to material and "0 percent complete as to conversion costs1
6uring the month $000 containers were started1 )t month end 1'00 containers were still in process
("$ percent complete as to material and ,0 percent complete as to conversion costs+1 .sing the
weighted average method what are the equivalent units for conversion costs?
a1 3"$0
b1 "$%0
c1 "%10
d1 ";10
)234 6
7eginning &or= in /rocess 2$0 "0G 100
H :ompletion of .nits in /rocess 2$0 %0G 1$0
H .nits 3tarted and :ompleted 3300 100G 3300
H -nding &or= in /rocess 1'00 ,0G 13%0
E23i4a'ent nits o& Pro.3ction 0+6*-
6#F4 <oderate O784 %92%93
$31 <ehta :ompan! :o1 uses a F#FO process costing s!stem1 5he compan! had $000 units that were %0
percent complete as to conversion costs at the beginning of the month1 5he compan! started 22000
units this period and had '000 units in ending &or= in /rocess #nventor! that were 3$ percent
complete as to conversion costs1 &hat are equivalent units for material if material is added at the
beginning of the process?
a1 1,000
b1 22000
c1 2$000
d1 2'000
)234 7
5he material is added at the beginning of the process@ therefore there are 22000 equivalent units of
material1
6#F4 -as! O784 %92%9"
1;,
$"1 8ulia :ompan! ma=es fabric9covered hatbo*es1 5he compan! began 3eptember with $00 bo*es in
process that were 100 percent complete as to cardboard ,0 percent complete as to cloth and %0
percent complete as to conversion costs1 6uring the month 3300 bo*es were started1 On 3eptember
30 3$0 bo*es were in process (100 percent complete as to cardboard '0 percent complete as to cloth
and $$ percent complete as to conversion costs+1 .sing the F#FO method what are equivalent units for
cloth?
a1 32;$
b1 33;$
c1 3"$0
d1 3$;$
)234 )
7eginning &or= in /rocess (#gnored for F#FO+ $00 0G 9
H :ompletion of .nits in /rocess $00 20G 100
H .nits 3tarted and :ompleted 2;$0 100G 2;$0
H -nding &or= in /rocess 3$0 '0G 2"$
E23i4a'ent nits o& Pro.3ction 7+56,
6#F4 <oderate O784 %92%9"
Ree. Co8pan9
Deed :ompan!1 has the following information for 2ovember4
7eginning &or= in /rocess #nventor!
('0G complete as to conversion+
6,000 units
3tarted
24,000 units
-nding &or= in /rocess #nventor!
(10G complete as to conversion+
8,500 units
Beginning (IP In4entor9 Costs/
<aterial
$23,400
:onversion
50,607
C3rrent Perio. Costs/
<aterial
$31,500
:onversion
76,956
)ll material is added at the start of the process and all finished products are transferred out1
1;;
$$1 Defer to Deed :ompan!1 How man! units were transferred out in 2ovember?
a1 1$$00
b1 1,000
c1 21$00
d1 2"000
)234 :
7eginning &or= in /rocess %000
A../ nits Starte. 50+---
!e.3ct/ nits Trans&erre. O3t 5*+,--
-nding &or= in /rocess ,$00
6#F4 -as! O784 %92
$%1 Defer to Deed :ompan!1 )ssume that weighted average process costing is used1 &hat is the cost per
equivalent unit for material?
a1 J01$$
b1 J110$
c1 J1131
d1 J11,3
)234 6
<aterial :osts4
7eginning J 23"00
:urrent /eriod 31$00
$";00 K 30000 L : *;<7
units
200
$'1 Defer to Deed :ompan!1 )ssume that F#FO process costing is used1 &hat is the cost per equivalent
unit for conversion?
a1 J31""
b1 J"12"
c1 J$1'1
d1 J'103
)234 7
:onversion :osts4
7eginning (#gnored for F#FO+ J 9
:urrent /eriod '%;$%
J '%;$%
-quivalent .nits
7eginning #nventor! (%000 M
30G+
1,00
3tarted and :ompleted (1$$00+ 1$$00
-nding #nventor! (,$00 M 10G+ ,$0
1,1$0 equivalent units
:ost per equivalent unit J "12"
6#F4 <oderate O784 %9"
%o'i.a9 Co8pan9
5he Holida! :ompan! ma=es wreaths in two departments4 Forming and 6ecorating1 Forming began
the month with $00 wreaths in process that were 100 percent complete as to material and "0 percent
complete as to conversion1 6uring the month %$00 wreaths were started1 )t month end Forming had
2100 wreaths that were still in process that were 100 percent complete as to material and $0 percent
complete as to conversion1 )ssume Forming uses the weighted average method of process costing1
:osts in the Forming 6epartment are as follows4
Beginning (or) in Process Costs/
<aterial
$1,000
:onversion
1,500
C3rrent Costs/
<aterial
$3,200
:onversion
5,045
5he 6ecorating 6epartment had %00 wreaths in process at the beginning of the month that were ,0
percent complete as to material and ;0 percent complete as to conversion1 5he department had 300
units in ending &or= in /rocess that were $0 percent complete as to material and '$ percent complete
as to conversion1 6ecorating uses the F#FO method of process costing and costs associated with
6ecorating are4
201
Beginning (IP In4entor9/
5ransferred #n
$1,170
<aterial
4,320
:onversion
6,210
C3rrent Perio./
5ransferred #n
?
<aterial
$67,745
:onversion
95,820
$,1 Defer to Holida! :ompan!1 How man! units were transferred to 6ecorating during the month?
a1 %00
b1 ";00
c1 $;$0
d1 '000
)234 7
&reaths completed from 7&#/ $00
&reaths started and completed ""00
";00
6#F4 -as! O784 %92
$;1 Defer to Holida! :ompan!1 &hat was the cost transferred out of Forming during the month?
a1 J$3"1
b1 J%"1;
c1 J,2"$
d1 J,330
)234 6
.nits
5ransferred
Out
:ost per
-q1 .nit 5otal
";00 11'0 J,330
%01 Defer to Holida! :ompan!1 )ssume ,000 units were transferred to 6ecorating1 :ompute the number
of equivalent units as to costs in 6ecorating for the transferred9in cost component1
a1 '"00
b1 ''00
c1 ,000
d1 ,%00
)234 :
5he transferred9in cost component is the ,000 units that were transferred in1
202
of equivalent units in 6ecorating for material1
a1 ';'0
b1 ,000
c1 ,330
d1 ,"$0
)234 )
$ateria's/ !ecorating/ #I#O nits =
Co8p'ete
E2i4;
nits
7eginning &or= in /rocess

%00 20G
12
0
H .nits 3tarted and :ompleted

''00 100G

''00
H -nding &or= in /rocess

300 $0G

1$0
E23i4a'ent nits o& Pro.3ction

1+61-
of equivalent units in 6ecorating for conversion1
a1 ';2$
b1 ';,$
c1 ,3%0
d1 ,"%$
)234 7
Con4ersion/ !ecorating/
#I#O
nits =
Co8p'ete
E23i4;
nits

%00 10G

%0

''00 100G

''00

300 '$G

22$
E23i4a'ent nits o&
Pro.3ction

1+6<,
203
%31 Defer to Holida! :ompan!1 )ssume that ,000 units were transferred to 6ecorating at a total cost of
J1%0001 &hat is the material cost per equivalent unit in 6ecorating?
a1 J,1$0
b1 J,1%$
c1 J,1,0
d1 J;10"
)234 )
&hen F#FO is used consider onl! current costs1
C3rrent
Costs
E23i4
nits
Cost"
E23i4
nit
J%''"$ ';'0 J,1$0
%"1 Defer to Holida! :ompan!1 )ssume that ,000 units were transferred to 6ecorating at a total cost of
J1%0001 &hat is the conversion cost per equivalent unit in 6ecorating?
a1 J11132
b1 J111"%
c1 J12100
d1 J121',
)234 :
&hen F#FO is used consider onl! current costs1
C3rrent
Costs
E23i4
nits
Cost"
E23i4
nit
J;$,20 ';,$ J12100
%$1 Defer to Holida! :ompan!1 )ssume the material cost per -./ is J,100 and the conversion cost per
-./ is J1$ in 6ecorating1 &hat is the cost of completing the units in beginning inventor!?
a1 J ;%0
b1 J 13,0
c1 J 1,%0
d1 J11;"0
)234 :
Costs to Co8p'ete
Beg In4 nits
Percent to
Co8p'ete
Cost per
nit Tota'
<aterials %00 20G J, J;%0
:onversion %00 10G J1$ J;00
Tota' Costs to Co8p'ete :*+<6-
20"
R9an Co8pan9
D!an :ompan! adds material at the start to its production process and has the following information
available for <arch4
("0G complete as to conversion+
7,000
units
3tarted this period
32,000
units
(2$G complete as to conversion+
2,500
units
5ransferred out
?
%%1 Defer to D!an :ompan!1 :ompute the number of units started and completed in <arch1
a1 2;$00
b1 3"$00
c1 3%$00
d1 3;000
)234 )
.nits started this period 32000
Less4 -nding &or= in /rocess 2$00
.nits started and completed this period 2;$00
%'1 Defer to D!an :ompan!1 :alculate equivalent units of production for material using F#FO1
a1 32000
b1 3%,00
c1 3'12$
d1 3;000
)234 )
<aterials are added at the beginning of the process1 32000 units were started in the current period@
therefore there are 32000 equivalent units for materials1
6#F4 -as! O784 %92%9"
%,1 Defer to D!an :ompan!1 :alculate equivalent units of production for conversion using F#FO1
a1 3012$
b1 3"32$
c1 3'12$
d1 3;000
)234 7
-quivalent .nits
7eginning #nventor! ('000 M %0G+ "200
3tarted and :ompleted (2;$00+ 2;$00
-nding #nventor! (2$00 M 2$G+ %2$
3"32$ equivalent units
6#F4 <oderate O784 %92%9"
20$
%;1 Defer to D!an :ompan!1 :alculate equivalent units of production for material using weighted average1
a1 32000
b1 3"32$
c1 3'12$
d1 3;000
)234 6
-quivalent .nits
7eginning #nventor! ('000 units+ '000
3tarted this /eriod (32000+ 32000
3;000 equivalent units
6#F4 -as! O784 %92%93
'01 Defer to D!an :ompan!1 :alculate equivalent units of production for conversion using weighted
average1
a1 3"32$
b1 3'12$
c1 3,3'$
d1 3;;2$
)234 7
-quivalent .nits
7eginning #nventor! ('000 M 100G+ '000
3tarted and :ompleted (2;$00+ 2;$00
-nding #nventor! (2$00 M 2$G+ %2$
3'12$ equivalent units
6#F4 <oderate O784 %92%93
$a>?e'' Co8pan9
<a*well :ompan! adds material at the start of production1 5he following production information is
available for 8une4
("$G complete as to conversion+
10,000
units
3tarted this period
120,000
units
(,0G complete as to conversion+
8,200
units
Beginning (or) in Process In4entor9 Costs/
<aterial
$24,500
:onversion
68,905
<aterial
$ 75,600
:onversion
130,053
20%
'11 Defer to <a*well :ompan!1 How man! units must be accounted for?
a1 11,200
b1 12,200
c1 130000
d1 13,200
)234 :
7eginning &or= in /rocess 10000
.nits 3tarted 120000
Tota' nits *7-+---
6#F4 -as! O784 %92
'21 Defer to <a*well :ompan!1 &hat is the total cost to account for?
a1 J ;3"0$
b1 J20$%$3
c1 J2'"$$,
d1 J2;;0$,
)234 6
7&#/4 <aterials J 2"$00
7&#/4 :onversion %,;0$
:urrent /eriod4 <aterials '$%00
:urrent /eriod4 :onversion 1300$3
Tota' Costs :566+-,<
6#F4 -as! O784 %92
'31 Defer to <a*well :ompan!1 How man! units were started and completed in the period?
a1 111,00
b1 120000
c1 121,00
d1 130000
)234 )
.nits started this period 120000
Less4 -nding &or= in /rocess ,200
nits starte. an. co8p'ete. this perio. ***+<--
6#F4 -as! O784 %92
20'
'"1 Defer to <a*well :ompan!1 &hat are the equivalent units for material using the weighted average
method?
a1 120000
b1 123,%0
c1 12,3%0
d1 130000
)234 6
-quivalent .nits
7eginning #nventor! (10000 M 100G+ 10000
3tarted and :ompleted (111,00+ 111,00
-nding #nventor! (,200 M 2$G+ ,200
130000 equivalent units
6#F4 -as! O784 %93
'$1 Defer to <a*well :ompan!1 &hat are the equivalent units for material using the F#FO method?
a1 111,00
b1 120000
c1 12$$00
d1 130000
)234 7
-quivalent .nits
7eginning #nventor! (#gnored for F#FO+ 0
3tarted and :ompleted (111,00+ 111,00
-nding #nventor! (,200 M 2$G+ ,200
120000 equivalent units
6#F4 -as! O784 %9"
'%1 Defer to <a*well :ompan!1 &hat are the equivalent units for conversion using the weighted average
method?
a1 120000
b1 123""0
c1 12,3%0
d1 130000
)234 :
7eginning &or= in /rocess 10000 "$G "$00
H :ompletion of .nits in /rocess 10000 $$G $$00
H .nits 3tarted and :ompleted 111,00 100G 111,00
H -nding &or= in /rocess ,200 ,0G %$%0
E23i4a'ent nits o& Pro.3ction *5<+76-
6#F4 <oderate O784 %92%93
20,
''1 Defer to <a*well :ompan!1 &hat are the equivalent units for conversion using the F#FO method?
a1 11,3%0
b1 122,%0
c1 123,%0
d1 12,3%0
)234 :
7eginning &or= in /rocess (ignored+ 10000 0G 9
H :ompletion of .nits in /rocess 10000 $$G $$00
H .nits 3tarted and :ompleted 111,00 100G 111,00
H -nding &or= in /rocess ,200 ,0G %$%0
E23i4a'ent nits o& Pro.3ction *57+<6-
6#F4 <oderate O784 %92%9"
',1 Defer to <a*well :ompan!1 &hat is the material cost per equivalent unit using the weighted average
method?
a1 J1$,
b1 J1%2
c1 J1''
d1 J1,2
)234 :
<aterial :osts4
7eginning J 2"$00
:urrent /eriod '$%00
100100 K 130000 L : -;11
units per unit
';1 Defer to <a*well :ompan!1 &hat is the conversion cost per equivalent unit using the weighted
average method?
a1 J1101
b1 J110$
c1 J11$$
d1 J11%1
)234 7
:onversion :osts4
7eginning J %,;0$
1;,;$, K 12,3%0 L : *;,,
units per unit
20;
,01 Defer to <a*well :ompan!1 &hat is the cost of units completed using the weighted average?
a1 J23'$10
b1 J2%%'"2
c1 J2',"00
d1 J2,2$'%
)234 6
nits Co8p'ete. Costs per E23i4a'ent nit Tota'
121,00 (11$$ H 1''+ L J2132 J2,2$'%
6#F4 6ifficult O784 %93
,11 Defer to <a*well :ompan!1 &hat is the conversion cost per equivalent unit using the F#FO method?
a1 J110$
b1 J1;$
c1 J11%1
d1 J11$$
)234 )
:onversion :osts4
7eginning (#gnored+
1300$3 K 123,%0 L : *;-,
units per unit
,21 Defer to <a*well :ompan!1 &hat is the cost of all units transferred out using the F#FO method?
a1 J20"%2"
b1 J1;12,;
c1 J2,'00"
d1 J2;,02;
)234 :
nits Co8p'ete. Costs per E23i4a'ent nit Tota'
121,00 (110$ H 1%3+ L J11%, J20"%2"
6#F4 6ifficult O784 %9"
210
Cher3@ Co;
7eginning inventor! (30G complete as to <aterial 7
and %0G complete for conversion+
700
units
3tarted this c!cle
2,000
units
-nding inventor! ($0G complete as to <aterial 7 and
,0G complete for conversion+
500
units
Beginning in4entor9 costs/
<aterial )
$14,270
<aterial 7
5,950
:onversion
5,640
C3rrent Perio. costs/
<aterial )
$40,000
<aterial 7
70,000
:onversion
98,100
<aterial ) is added at the start of production while <aterial 7 is added uniforml! throughout the
process1
,31 Defer to :herub :ompan!1 )ssuming a weighted average method of process costing compute -./
units for <aterials ) and 71
a1 2'00 and 22,0 respectivel!
b1 2'00 and 2"$0 respectivel!
c1 2000 and 22"0 respectivel!
d1 22"0 and 2'00 respectivel!
)234 7
(eighte. A4erage $ateria' A $ateria' B
7eginning &or= in /rocess '00 '00
.nits 3tarted and :ompleted 1$00 1$00
-nding &or= in /rocess $00 2$0
EP $ateria's 51-- 50,-
6#F4 -as! O784 %92%93
,"1 Defer to :herub :ompan! )ssuming a F#FO method of process costing compute -./ units for
<aterials ) and 71
a1 2'00 and 22,0 respectivel!
b1 2'00 and 2"$0 respectivel!
c1 2000 and 22"0 respectivel!
d1 2"$0 and 2,,0 respectivel!
)234 :
#I#O $ateria' A $ateria' B
7eginning &or= in /rocess 0 ";0
.nits 3tarted and :ompleted 1$00 1$00
-nding &or= in /rocess $00 2$0
EP $ateria's 5--- 550-
6#F4 <oderate O784 %92%9"
211
,$1 Defer to :herub :ompan! )ssuming a weighted average method of process costing compute -./ for
conversion1
a1 2%00
b1 21,0
c1 2000
d1 2'00
)234 )
(eighte. A4erage
7eginning &or= in /rocess '00
.nits 3tarted and :ompleted 1$00
-nding &or= in /rocess "00
2%00
6#F4 <oderate O784 %92%93
,%1 Defer to :herub :ompan! )ssuming a F#FO method of process costing compute -./ for conversion1
a1 22"0
b1 21,0
c1 22,0
d1 2'00
)234 7
#I#O
7eginning &or= in /rocess ('00 M "0G+ 2,0
.nits 3tarted and :ompleted 1$00
-nding &or= in /rocess ($00 M ,0G+ "00
21,0
6#F4 <oderate O784 %92%9"
,'1 Defer to :herub :ompan! )ssuming a weighted average method of process costing compute the
average cost per unit for <aterial )1
a1 J20110
b1 J20100
c1 J3112$
d1 J31100
)234 )
(eighte. A4erage/ $ateria' A
7eginning J 1"2'0
:urrent /eriod "0000
$"2'0 K 2'00 L : 5-;*-
units per unit
6#F4 <oderate O784 %92%93
212
,,1 Defer to :herub :ompan! )ssuming a F#FO method of process costing compute the average cost per
-./ for <aterial )1
a1 J3112$
b1 J20110
c1 J20100
d1 J31100
)234 :
<aterial ) :osts
(:urrent /eriod+
-quivalent
.nits
)verage :ost
per -./
J"0000 2000 J20100
6#F4 <oderate O784 %92%9"
,;1 Defer to :herub :ompan! )ssuming a F#FO method of process costing compute the average cost per
-./ for <aterial 71
a1 J20110
b1 J3112$
c1 J20100
d1 J31100
)234 7
<aterial 7 :osts
(:urrent /eriod+
-quivalent
.nits
)verage :ost
per -./
J'0000 22"0 J3112$
6#F4 <oderate O784 %92%9"
;01 Defer to :herub :ompan! )ssuming a weighted average method of process costing compute the
average cost per -./ for <aterial 71
a1 J20100
b1 J3112$
c1 J20110
d1 J31100
)234 6
<aterial 7 :osts
(7eginning
#nventor! and
:urrent /eriod+
-quivalent
.nits
)verage :ost
per -./
J'$;$0 2"$0 J31100
6#F4 <oderate O784 %92%93
213
;11 Defer to :herub :ompan! )ssuming a F#FO method of process costing compute the average cost per
-./ for conversion1
a1 J"$1$0
b1 J"$100
c1 J"3103
d1 J"'1$;
)234 7
:onversion :osts
(:urrent /eriod+
-quivalent
.nits
)verage :ost
per -./
J;,100 21,0 J"$100
6#F4 <oderate O784 %92%9"
;21 Defer to :herub :ompan! )ssuming a weighted average method of process costing compute the
average cost per -./ for conversion1
a1 J3;1;0
b1 J"$100
c1 J"3103
d1 J"'1$;
)234 )
:onversion :osts
(7eginning &#/ and
:urrent /eriod+
-quivalent
.nits
)verage :ost
per -./
J;,100 H J$%"0 2%00 J3;1;0
6#F4 <oderate O784 %92%93
Ta'8i.ge Co8pan9
5he following information is available for 5almidge :ompan! for the current !ear4
7eginning &or= in /rocess Costs o& Beginning (or) in Process/
('$G complete+
14,500 units
<aterial
$25,100
3tarted
75,000 units
:onversion
50,000
-nding &or= in /rocess C3rrent Costs/
(%0G complete+
16,000 units
<aterial
$120,000
)bnormal spoilage
2,500 units
:onversion
300,000
2ormal spoilage
(continuous+
5,000 units
5ransferred out
66,000 units
)ll materials are added at the start of production1
21"
;31 Defer to 5almidge :ompan!1 .sing weighted average what are equivalent units for material?
a1 ,2000
b1 ,;$00
c1 ,"$00
d1 '0000
)234 :
$ateria's/ (eighte. A4erage nits = Co8p'ete E2; nits
7eginning &or= in /rocess 1"$00 100G 1"$00
H .nits 3tarted and :ompleted $1$00 100G $1$00
H -nding &or= in /rocess 1%000 100G 1%000
H )bnormal 3poilage 2$00 100G 2$00
E23i4a'ent nits o& Pro.3ction <0+,--
6#F4 -as! O784 %92%93%9,
;"1 Defer to 5almidge :ompan!1 .sing weighted average what are equivalent units for conversion costs?
a1 ,0%00
b1 ',100
c1 ,3100
d1 '$%00
)234 7
Con4ersion/ (eighte. A4erage nits = Co8p'ete E2 nits
7eginning &or= in /rocess 1"$00 100G 1"$00
H -nding &or= in /rocess 1%000 %0G ;%00
E23i4a'ent nits o& Pro.3ction 1<+*--
6#F4 -as! O784 %92%93%9,
;$1 Defer to 5almidge :ompan!1 &hat is the cost per equivalent unit for material using weighted average?
a1 J11'2
b1 J11%2
c1 J11''
d1 J210'
)234 )
(eighte. A4erage/ $ateria's
7eginning J 2$100
:urrent /eriod 120000
1"$100 K ,"$00 L : *;15
units per unit
6#F4 <oderate O784 %92%93
21$
;%1 Defer to 5almidge :ompan!1 &hat is the cost per equivalent unit for conversion costs using weighted
average?
a1 J"1%2
b1 J"121
c1 J"1",
d1 J"13"
)234 :
(eighte. A4erage/ Con4ersion
7eginning J $0000
3$0000 K ',100 L : 0;0<
units per unit
6#F4 <oderate O784 %92%93
;'1 Defer to 5almidge :ompan!1 &hat is the cost assigned to normal spoilage using weighted average?
a1 J31000
b1 J1$$00
c1 J30,$0
d1 2one of the responses are correct
)234 6
2o costs are assigned to normal continuous spoilage1 Higher costs are assigned to good units
produced1
6#F4 -as! O784 %9,
;,1 Defer to 5almidge :ompan!1 )ssume that the cost per -./ for material and conversion are J11'$ and
J"1$$ respectivel!1 &hat is the cost assigned to ending &or= in /rocess?
a1 J100,00
b1 J,'"30
c1 J1031,0
d1 J'1%,0
)234 6
E23i4a'ent
nits
Cost per
E23i4a'ent nit
Tota'
1%000 J11'$ J2,000
;%00 J"1$$ J"3%,0
:1*+6<-
6#F4 -as! O784 %92%93
21%
;;1 Defer to 5almidge :ompan!1 .sing F#FO what are equivalent units for material?
a1 '$000
b1 '2$00
c1 ,"$00
d1 '0000
)234 6
$ateria's/ #I#O
7eginning &or= in /rocess 9 0G 9
H -nding &or= in /rocess 1%000 100G 1%000
E23i4a'ent nits o& Pro.3ction 1-+---
6#F4 -as! O784 %92%9"%9,
1001 Defer to 5almidge :ompan!1 .sing F#FO what are equivalent units for conversion costs?
a1 '222$
b1 %'22$
c1 %;'2$
d1 ',100
)234 7
Con4ersion/ #I#O
7eginning &or= in /rocess 1"$00 2$G 3%2$
H -nding &or= in /rocess 1%000 %0G ;%00
E23i4a'ent nits o& Pro.3ction 61+55,
6#F4 -as! O784 %92%93%9,
1011 Defer to 5almidge :ompan!1 .sing F#FO what is the cost per equivalent unit for material?
a1 J11"2
b1 J11%%
c1 J11'1
d1 J11%0
)234 :
#I#O/ $ateria's
:urrent /eriod J 120000
120000 K '0000 L : *;1*
units per unit
6#F4 -as! O784 %92%9"
21'
1021 Defer to 5almidge :ompan!1 .sing F#FO what is the cost per equivalent unit for conversion costs?
a1 J"1"%
b1 J"11$
c1 J"130
d1 J31,"
)234 )
#I#O/ Con4ersion
300000 K %'22$ L : 0;06
units per unit
6#F4 -as! O784 %92%9"
1031 Defer to 5almidge :ompan!1 )ssume that the F#FO -./ cost for material and conversion are J11$0
and J"1'$ respectivel!1 .sing F#FO what is the total cost assigned to the units transferred out?
a1 J"1"1;"
b1 J33;0;"
c1 J""$"""
d1 J3;%;'$
)234 )
Trans&erre. O3t nits/ #I#O E23i4
nits
Cost per
E23i4 nit
Tota'
7eginning &or= in /rocess '$100
H :ompletion of 7eginning #nventor! (1"$00 M 2$G+ 3%2$ "1'$ 1'21;
H.nits 3tarted and :ompleted $1$00 %12$ 321,'$
E23i4a'ent nits o& Pro.3ction 0*0+*60
6#F4 6ifficult O784 %92%9"
Bo?8an Co8pan9
7owman :ompan! has the following information for 8ul!4
.nits started
100,000
units
7eginning &or= in /rocess4 (3$G complete+
20,000
units
2ormal spoilage (discrete+
3,500
units
)bnormal spoilage
5,000
units
-nding &or= in /rocess4 ('0G complete+
14,500
units
5ransferred out
97,000
units
7eginning &or= in /rocess :osts4
<aterial
$15,000
:onversion
10,000
)ll materials are added at the start of the production process1 7owman :ompan! inspects goods at '$
percent completion as to conversion1
21,
10"1 Defer to 7owman :ompan!1 &hat are equivalent units of production for material assuming F#FO?
a1 100000
b1 ;%$00
c1 ;$000
d1 120000
)234 )
$ateria's/ #I#O
H .nits 3tarted and :ompleted ''000 100G ''000
H 2ormal 3poilage996iscrete 3$00 100G 3$00
H )bnormal 3poilage $000 100G $000
H -nding &or= in /rocess 1"$00 100G 1"$00
E23i4a'ent nits o& Pro.3ction *--+---
6#F4 <oderate O784 %92%9"%9,
10$1 Defer to 7owman :ompan!1 &hat are equivalent units of production for conversion costs assuming
F#FO?
a1 10,;00
b1 103;00
c1 10,%$0
d1 10%$2$
)234 6
Con4ersion/ #I#O
7eginning &or= in /rocess 20000 %$G 13000
H2ormal 3poilage996iscrete 3$00 '$G 2%2$
H )bnormal 3poilage $000 '$G 3'$0
H -nding &or= in /rocess 1"$00 '0G 101$0
E23i4a'ent nits o& Pro.3ction *-6+,5,
6#F4 <oderate O784 %92%9"%9,
10%1 Defer to 7owman :ompan!1 )ssume that the costs per -./ for material and conversion are J1100 and
J11$0 respectivel!1 &hat is the amount of the period cost for 8ul! using F#FO?
a1 J0
b1 J;3'$
c1 J10%2$
d1 J12$00
)234 :
)bnormal spoilage is a period cost1
<aterials $000 M J1100Nunit J$000
:onversion :osts 3'$0 M J11$0Nunit $%2$
5otal )bnormal 3poilage J10%2$
6#F4 <oderate O784 %92%9,
21;
10'1 Defer to 7owman :ompan!1 )ssume that the costs per -./ for material and conversion are J1100 and
J11$0 respectivel!1 .sing F#FO what is the total cost assigned to the transferred9out units (rounded to
the nearest dollar+?
a1 J2"$'$0
b1 J2"""3,
c1 J23'000
d1 J22";3,
)234 7
Trans&erre. O3t nits/ #I#O
7eginning &or= in /rocess 2$000
H :ompletion of 7eginning #nventor! (20000 M %$G+ 13000 11$0 1;$00
H .nits 3tarted and :ompleted ''000 21$0 1;2$00
H2ormal 3poilage996iscrete9<aterials 3$00 1100 3$00
H2ormal 3poilage996iscrete9:onversion 2%2$ 11$0 3;3,
E23i4a'ent nits o& Pro.3ction 500+07<
6#F4 6ifficult O784 %92%9"%9,
10,1 Defer to 7owman :ompan!1 &hat are equivalent units of production for material assuming weighted
average is used?
a1 10'000
b1 11%$00
c1 120000
d1 11$000
)234 :
$ateria's/ (eighte. A4erage
H 2ormal 3poilage996iscrete 3$00 100G 3$00
H )bnormal 3poilage $000 100G $000
H -nding &or= in /rocess 1"$00 100G 1"$00
E23i4a'ent nits o& Pro.3ction *5-+---
6#F4 -as! O784 %92%93%9,
10;1 Defer to 7owman :ompan!1 &hat are equivalent units of production for conversion costs assuming
weighted average is used?
a1 113$2$
b1 11""00
c1 11"''$
d1 11$%$0
)234 )
Con4ersion/ (eighte. A4erage
H2ormal 3poilage996iscrete 3$00 '$G 2%2$
H )bnormal 3poilage $000 '$G 3'$0
H -nding &or= in /rocess 1"$00 '0G 101$0
E23i4a'ent nits o& Pro.3ction **7+,5,
6#F4 -as! O784 %92%93%9,
220
1101 Defer to 7owman :ompan!1 )ssume that the costs per -./ for material and conversion are J1100 and
J11$0 respectivel!1 &hat is the cost assigned to normal spoilage using weighted average and where is
it assigned?
Oalue )ssigned 5o
a1 J'"3'1$0 .nits transferred out and -nding #nventor!
b1 J'"3'1$0 .nits transferred out
c1 J,'$0100 .nits transferred out and -nding #nventor!
d1 J,'$0100 .nits transferred out
)234 7
-quivalent
.nits
:ost per
-quivalent .nit
5otal
3$00 J1100 J3$00100
2%2$ J11$0 3;3'1$0
J'"3'1$0
5his amount is transferred out1
6#F4 -as! O784 %92%93%9,
1111 Defer to 7owman :ompan!1 )ssume that the costs per -./ for material and conversion are J1100 and
J11$0 respectivel!1 )ssuming that weighted average is used what is the cost assigned to ending
inventor!?
a1 J2;'2$100
b1 J3'1%21$0
c1 J3,"'$100
d1 J3%2$0100
)234 )
En.ing In4entor9/ (eighte.
A4erage
<aterials 1"$00 J1100 J 1"$00100
:onversion (1"$00 M '0G+ 101$0 11$0 1$22$100
Tota' : 56+15,;--
6#F4 -as! O784 %92%93
221
Jones Co8pan9
5he following information is available for 8ones :ompan! for )pril4
3tarted this month
80,000
units
7eginning &#/
("0G complete+
7,500
units
2ormal spoilage (discrete+
1,100
units
)bnormal spoilage
900
units
-nding &#/
('0G complete+
13,000
units
5ransferred out
72,500
units
<aterial
$10,400
:onversion
13,800
:urrent :osts4
<aterial
$120,000
:onversion
350,000
)ll materials are added at the start of production and the inspection point is at the end of the process1
1121 Defer to 8ones :ompan!1 &hat are equivalent units of production for material using F#FO?
a1 ,0000
b1 ';100
c1 ',;00
d1 ,'$00
)234 )
$ateria's/ #I#O

9 0G 9
%$
000 100G

%$000
13
000 100G

13000
H 2ormal 3poilage (discrete+
1
100 100G

1100
H )bnormal 3poilage

;00 100G ;00
E23i4a'ent nits o& Pro.3ction <-+---
6#F4 <oderate O784 %92%9"%9,
1131 Defer to 8ones :ompan!1 &hat are equivalent units of production for conversion costs using F#FO?
a1 ';'00
b1 ';$00
c1 ,1100
d1 ,0%00
)234 6
Con4ersion/ #I#O =
222
nits Co8p'ete EP
'
$00 %0G

"$00
%$
000 100G

%$000
13
000 '0G

;100
1
100 100G

1100
H )bnormal 3poilage

;00 100G ;00
E23i4a'ent nits o& Pro.3ction <-+6--
6#F4 <oderate O784 %92%9"%9,
11"1 Defer to 8ones :ompan!1 &hat are equivalent units of production for material using weighted average?
a1 ,%%00
b1 ,'$00
c1 ,%"00
d1 ,$$00
)234 7
$ateria's/ (eighte. A4erage nits =
Co8p'ete
EP

'$00 100G
'
$00
%$
000 100G

%$000
13
000 100G

13000
1
100 100G

1100
H )bnormal 3poilage

;00 100G ;00
E23i4a'ent nits o& Pro.3ction <1+,--
6#F4 -as! O784 %92%93%9,
223
11$1 Defer to 8ones :ompan!1 &hat are equivalent units of production for conversion costs using weighted
average?
a1 ,3%00
b1 ,2'00
c1 ,2$00
d1 ,1%00
)234 )
Con4ersion/ #I#O
nits
=
Co8p'ete EP
'
$00 100G

'$00
%$
000 100G

%$000
13
000 '0G

;100
1
100 100G

1100
H )bnormal 3poilage

;00 100G ;00
E23i4a'ent nits o& Pro.3ction <7+6--
6#F4 -as! O784 %92%93%9,
11%1 Defer to 8ones :ompan!1 &hat is cost per equivalent unit for material using F#FO?
a1 J11%3
b1 J113'
c1 J11$0
d1 J11$%
)234 :
#I#O/
$ateria's
120000 K ,0000 L : *;,-
units per unit
6#F4 -as! O784 %92%9"
11'1 Defer to 8ones :ompan!1 &hat is cost per equivalent unit for conversion costs using F#FO?
a1 J"100
b1 J"11;
c1 J"13"
d1 J"13,
)234 :
#I#O/ Con4ersion
:urrent /eriod J 3$0000
3$0000 K ,0%00 L : 0;70
units per unit
6#F4 -as! O784 %92%9"
22"
11,1 Defer to 8ones :ompan!1 &hat is cost per equivalent unit for material using weighted average?
a1 J11";
b1 J11%3
c1 J11$%
d1 J11""
)234 )
(eighte. A4erage/
$ateria's
7eginning J 10"00
130"00 K ,'$00 L : *;06
units per unit
6#F4 -as! O784 %92%93
11;1 Defer to 8ones :ompan!1 &hat is cost per equivalent unit for conversion costs using weighted
average?
a1 J"11;
b1 J"1"1
c1 J"1$$
d1 J"13$
)234 6
(eighte. A4erage/
Con4ersion
7eginning J 13,00
3%3,00 K ,3%00 L : 0;7,
units per unit
6#F4 -as! O784 %92%93
1201 Defer to 8ones :ompan!1 &hat is the cost assigned to ending inventor! using F#FO?
a1 J'$;20
b1 J$,;;"
c1 J$%"20
d1 J$31""
)234 7
En.ing In4entor9/ #I#O
<aterials

13000 J 11$0 J 1;$00100
:onversion (13000 M '0G+
;1
00

"13" 3;";"100
Tota' : ,<+660;--
6#F4 <oderate O784 %92%9"
22$
1211 Defer to 8ones :ompan!1 &hat is the cost assigned to abnormal spoilage using F#FO?
a1 J13$0
b1 J3;0%
c1 J$2$%
d1 J%"2"
)234 :
A@nor8a'
Spoi'e. nits
Price per
E23i4a'ent
nit Tota'
;00 J$1," J$2$%
6#F4 <oderate O784 %92%9"%9,
1221 Defer to 8ones :ompan!1 &hat is the cost assigned to normal spoilage and how is it classified using
weighted average?
a1 J%1;3 allocated between &#/ and 5ransferred Out
b1 J%"2" allocated between &#/ and 5ransferred Out
c1 J%1;3 assigned to loss account
d1 J%"2" assigned to units 5ransferred Out
)234 6
Nor8a'
Spoi'e.
nits
Price per
E23i4a'ent
nit Tota'
1100 J$1," J%"2"
5ransferred
Out
6#F4 <oderate O784 %92%9"%9,
1231 Defer to 8ones :ompan!1 &hat is the total cost assigned to goods transferred out using weighted
average?
a1 J"3$0,0
b1 J"2;,2"
c1 J"2,%$%
d1 J"23"00
)234 7
Goo.s
Trans&erre. O3t
Price per
E23i4a'ent
nit Tota'
'3%00 J$1," J"2;,2"
6#F4 6ifficult O784 %92%93
22%
S%ORT ANS(ER
11 6iscuss how spoilage is treated in -./ computations1
)234
#f spoilage is normal and continuous the calculations for -./ do not include this spoilage (method of
neglect+ and the good units simpl! absorb the cost of such spoilage1 #f spoilage is normal and discrete
the equivalent units are used in the -./ calculations and the spoilage cost is assigned to all units that
passed through the inspection point during the current period1 #f the spoilage is abnormal and either
discrete or continuous the equivalent units are used in -./ calculations and costed at the cost per
-./@ the total cost is then assigned to a loss account1
21 6iscuss the assignment of costs to transferred9out inventories in both process costing methods1
)234
5he assignment of costs in a process costing s!stem first involves determining total production costs1
5hese costs are then assigned to units completed and transferred out during the period and to the units
in &or= in /rocess #nventor! at the end of the period1 5o assign costs the cost per equivalent unit must
be established using either the F#FO or weighted average method1 5he cost per -./ is then multiplied
b! the number of equivalent units in the component being costed1 5ransferred9out costs using the
weighted average method are computed as the number of units transferred times the total price per
equivalent unit1 &hen using F#FO transferred9out units are computed as follows4 the costs in
beginning &#/ are added to the current period costs to complete the units which sums to the total cost
of beginning &#/@ the units started and completed are priced at current period costs@ the total of the
costs of beginning inventor! and units started and completed are then transferred out1
6#F4 <oderate O784 %93%9"
31 6iscuss process costing in a multi9department atmosphere1
)234
&hen a business has more than one department in its production process products are transferred from
6epartment ) to 6epartment 7 and so on1 )s the products are transferred from department to
department so too must the costs be transferred1 &hen products are transferred the units and costs
are treated as input material in the ne*t department1 5he new department ma! add additional material
or ma! simpl! add conversion costs and finish the products1 5he total cost of the products is a
cumulative total from all departments within the process1
"1 6iscuss standard costing as used in conjunction with process costing1
)234
&hen standard costing is used in conjunction with process costing the costing procedure is simplified1
3tandard costing eliminates the calculation in each new period of a new production cost because the
standards are established as on going norms for (at least+ a one9!ear period of time1 3tandard costing in
a process costing s!stem is essentiall! a F#FO s!stem that permits variances to be recogniPed during
the period1
6#F4 <oderate O784 %9$
22'
$1 &hat are two alternative calculations that can be used to either chec= an equivalent units answer or to
obtain the answer initiall!?
)234
One alternative method of calculating equivalent units for weighted average is to determine units
transferred out and add to that the equivalent units of ending wor= in process1 )nother alternative
method of calculating equivalent units for F#FO is to determine equivalent units of production under
weighted average and subtract the beginning wor= in process equivalent units that were completed in
the last period1 7oth of these methods ma! be used to Qchec=Q original answers1
6#F4 <oderate O784 %9'
%1 6iscuss how spoilage is treated in -./ computations1
)234
#f spoilage is normal and continuous the calculations for -./ do not include this spoilage (method of
neglect+ and the good units simpl! absorb the cost of such spoilage1 #f spoilage is normal and discrete
the equivalent units are used in the -./ calculations and the spoilage cost is assigned to all units that
passed through the inspection point during the current period1 #f the spoilage is abnormal and either
discrete or continuous the equivalent units are used in -./ calculations and costed at the cost per
-./@ the total cost is then assigned to a loss account1
'1 6iscuss wh! units are lost during production1
)234
#n most production processes losses are anticipated to a certain degree1 Losses ma! be classified as
normal and abnormal depending on managementAs e*pectations1 ) normal loss is one that is e*pected
while an abnormal loss is one that e*ceeds the normal loss1 5he losses ma! result in spoiled or
defective units1 3poiled units cannot be economicall! rewor=ed@ defective units can be1 Losses can
occur on a continuous or a discrete basis1 Rualit! control points are established at the end of andNor
within the process to inspect goods and remove from further processing those units that are either
spoiled or defective1
22,
PROBLE$
Lan.ers Co8pan9
Landers :ompan! has the following information available for <a!4
(2$G complete as to conversion+
10,000
units
3tarted
120,000
units
(30G complete as to conversion+
30,000
units
Beginning (or) in Process In4entor9 Costs/
<aterial
$ 2,100
:onversion
2,030
<aterial
$ 33,000
:onversion
109,695
)ll material is added at the start of production and all products completed are transferred out1
11 Defer to Landers :ompan!1 /repare an equivalent units schedule using the (a+ F#FO and (b+ weighted
average method1
)234
Landers :ompan!
3chedule of -quivalent .nits for
Fifo and &eighted )verage
<a! 31 20F$
#I#O (eighte. A4erage
7eginning &or= #n /rocess
10,000
7eginning &or= #n
/rocess
10,000
.nits 3tarted
120,000
.nits 3tarted
120,000
.nits to )cct1 For
130,000
.nits to )cct1 For
130,000
7eginning &or= #n /rocess
10,000
5ransferred Out
100,000
3tarted E :ompleted
90,000
-nding &or= in
/rocess
30,000
-nding &or= in /rocess
30,000
.nits )ccounted For
130,000
.nits )ccounted For
130,000
(a+ #I#O (b+ (eighte. A4erage
<at1 :: <at1 ::
7&#/
0 7,500
3 E :
90,000 90,000
5O
100,000 100,000
-&#/
30,000 9,000
-#
30,000 9,000
-./
120,000 106,500
-./
130,000 109,000
6#F4 <oderate O784 %93%9"
22;
21 Defer to Landers :ompan!1 /repare a schedule showing the computation for cost per equivalent unit
assuming the (a+ F#FO and (b+ weighted average method1
)234
Landers :ompan!
3chedule of )verage :ost /er .nit
F#FO and &eighted )verage
<a! 31 20F$
(a+ #I#O (b+ (eighte. A4erage
<at1 :: <at1 ::
:osts J33000 J10;%;$ J 3$100 J111'2$
-q .nits 120000 10%$00 130000 10;000
J12'$Neq unit J 1103Neq
unit
J 12'Neq
unit
J 1102$Neq
unit
Tota' cost"e2; 3nit : *;7-,"e2
3nit
: *;56,"e2
3nit
6#F4 <oderate O784 %93%9"
31 Defer to Landers :ompan!1 /repare a schedule showing the assignment of costs assuming the (a+ F#FO
and (b+ weighted average method1
)234
Landers :ompan!
3chedule of )ssigned :osts
F#FO and &eighted )verage
<a! 31 20F$
(a+ F#FO
$ 4,130
5o complete ('$00 * J1103+ L
7,725
$ 11,855
3tarted and :ompleted
;0000 * J1130$ L
117,450
5otal costs transferred out
$129,305
30000 * J 12'$ L
$ 8,250
;000 * J1103 L
9,270
$ 17,520
5otal costs accounted for
$146,825
(b+ &eighted )verage
:ompleted
100000 * J112;$ L
$129,500
30000 * J 12' L
$ 8,100
;000 * J1102$ L
9,225
$ 17,325
$146,825
6#F4 6ifficult O784 %93%9"
230
"1 5he 3weet 5emptations :ompan! has two processing departments :oo=ing and /ac=aging1
#ngredients are placed into production at the beginning of the process in :oo=ing where the! are
formed into various shapes1 &hen finished the! are transferred into /ac=aging where the cand! is
placed into heart and tu*edo bo*es and covered with foil1 )ll material added in /ac=aging is
considered as one material for convenience1 3ince the bo*es contain a variet! of candies the! are
considered partiall! complete until filled with the appropriate assortment1 5he following information
relates to the two departments for Februar! 20F'4
Coo)ing !epart8ent/
7eginning &#/ (30G complete as to conversion+
4,500
units
.nits started this period
15,000
units
-nding &#/ (%0G complete as to conversion+
2,400
units
Pac)aging !epart8ent/
7eginning &#/ (;0G complete as to material ,0G complete as
to conversion+
1,000
units
.nits started during period
?
-nding &#/ (,0G complete as to material and ,0G complete as
to conversion+
500
units
a1 6etermine equivalent units of production for both departments using the weighted average method1
b1 6etermine equivalent units of production for both departments using the F#FO method1
)234
a1 Coo)ing !epart8ent
<aterials :onversion
:osts
5ransferred Out
17,100 17,100
2,400 1,440
5O5)L -./
19,500 18,540
Pac)aging !epart8ent
5ransferred
#n
<aterials1 :onversion
:osts
5ransferred Out
17,600 17,600 17,600
500 400 400
5O5)L -./
18,100 18,000 18,000
b1 Coo)ing !epart8ent
:osts
0 3,150
5ransferred from :oo=ing
12,600 12,600
2,400 1,440
5O5)L -./
15,000 17,190
Pac)aging !epart8ent
5ransferred
#n
:osts
0 100 200
5ransferred from :oo=ing
16,600 16,600 16,600
500 400 400
5O5)L -./
17,100 17,100 17,200
6#F4 6ifficult O784 %93%9"
231
$1 5he following costs were accumulated b! 6epartment 2 of Hughes :ompan! during )pril4
:ost 5ransferred
from 6ept1 1 <aterial :onversion
:osts
5otal
7eginning #nventor!
$ 17,050 $ 5,450 $ 22,500
:urrent /eriod :ost
184,000 $ 34,000 104,000 322,000
$ 201,050 $ 34,000 $ 109,450 $344,500
/roduction for )pril in 6epartment 2 (in units+4
&#/9)pril 1 2000 %0G complete
:omplete period transferred 20000
&#/9)pril 30 $000 "0G complete
<aterials are not added in 6epartment 2 until the ver! end of processing 6epartment 21
Re23ire./ :ompute the cost of units completed and the value of ending &#/ for4
a1 &eighted average inventor! assumption
b1 F#FO inventor! assumption
)234
a1 &eighted average inventor!
assumption
6ept 1 <)5 ::
:omplete
20,000 20,000 20,000
-q9-nd &#/
5,000 0 2,000
-/9&)
25,000 20,000 22,000
.nit J2010$0 L J,10"2 J3"000 L J11'0 J10;"$0 L J"1;'$ L J1"1'1'
:ost 2$000 20000 22000
-nd &#/ 6ept 1 L $000 * J,10"2
= $40,210
:: L 2000 units * J"1;'$
= 9,950
$50,160
:OC< L J3""$00 9 J$01%0 L J2;"3"0
b1 F#FO inventor! assumption
6ept 1 <)5 ::
:omplete
20,000 20,000 20,000
-q9-nd &#/
5,000 0 2,000
9 -q97egin
(2,000) 0 (1,200
)
-/9&)
23,000 20,000 20,800
232
.nit J1,"000 L J,100 J3"000 L J11'0 J10"000 L J$100 L J1"1'0
:ost 23000 20000 20,00
-nd &#/ 6ept 1 L $000 units * J,100
= $40,000
:: L 2000 units * J$100
= 10,000
$50,000
:OC< L J3""$00 9 J$0000 L J2;"$00
6#F4 <oderate O784 %93%9"
%1 5he formula for a chemical compound requires one pound of :hemical F and one pound of :hemical
S1 #n the simplest sense one pound of :hemical F is processed in 6epartment ) and transferred to
6epartment 7 for further processing where one pound of :hemical S is added when the process is $0
percent complete1 &hen the processing is complete in 6epartment 7 the finished compound is
transferred to finished goods1 5he process is continuous operating 2" hours a da!1
2ormal spoilage occurs in 6epartment )1 Five percent of material is lost in the first few seconds of
processing1 2o spoilage occurs in 6epartment 71
5he following data are available for the month of )ugust 20F%4
6ept1 ) 6ept1 7
.nits in process )ugust 1
8,000 10,000
3tage of completion of beginning inventor!
3/4 3/10
.nits started or transferred in
50,000 ?
.nits transferred out
46,500 ?
.nits in process )ugust 31
? ?
3tage of completion of ending inventor!
1/3 1/5
.nits of :hemical S added in 6epartment 7
44,500
Re23ire./
a1 /repare a schedule showing finished equivalents for :hemical F and for conversion cost for
6epartment ) using the F#FO method1
b1 6etermine for 6epartment 7 the number of units of good product completed during )ugust and
the number of units in process on )ugust 311
c1 /repare a schedule for 6epartment 7 showing finished equivalents for preceding department
cost cost of :hemical S and conversion cost using the F#FO method1
233
)234
a1 c1
:osts
/6 <at ::
46,500 46,500 44,500 44,500 44,500
9,000 3,000 12,000 0 2,400
(8,000) (6,000) (10,000) 0 (3,000)
47,500 43,500 46,500 44,500 43,900
b1 3ince the material in the second department goes in at the $0 percent point and the ending &#/
inventor! is onl! at the 20 percent point units complete is the same as the equivalents of
material ""$00 given that units started plus units in beginning &#/ are equal to units complete
plus ending &#/ 10000 H "%$00 9 ""$00 L 12000 units in ending &#/1
6#F4 <oderate O784 %93%9"
'1 Ruigle! :ompan! manufactures a specialiPed product1 6epartment 2 adds new material to the units
received from 6epartment 1 at the end of process1 ) normal loss occurs earl! in processing1
/roduction and cost data for 6epartment 2 for the month of 3eptember are as follows4
/roduction record (in units+4
#n process 3eptember 19'$G complete for processing cost
4,000
Deceived from 6epartment 1
20,000
:ompleted and transferred to finished goods
16,000
Lost in processing (normal+
2,000
#n process 3eptember 3092N3 complete for process cost
6,000
:ost Decord4
&or= in process inventor! 3eptember 14
/receding department cost
$ 620
/rocessing cost
2,000 $2,620
:ost from preceding department in 3eptember
1,800
<aterial cost for 3eptember
4,800
/rocessing cost for 3eptember
10,200
Re23ire./ 6etermine the following for 6epartment 2 under (a+ weighted average the method of
costing and (b+ the F#FO method of costing4 (1+ unit costs for each cost component (2+ cost of
production transferred to finished goods (3+ cost of wor= in process inventor! of 3eptember 301
)234
-quivalent production 5# <aterial :onv1 cost
.nits complete
16,000 16,000 16,000
H -quiv1 ending &#/
6,000 0 4,000
L -quiv1 prod1 average
22,000 16,000 20,000
9 -quiv1 begin1 &#/
(4,000) 0 (3,000)
L -quiv1 prod1 F#FO
18,000 16,000 17,000
.nit :ost )verage .nit :ost F#FO
TI = $620 + 1,800 TI = $1,800
23"
22,000 = $0.11 18,000 = $0.10
<at L
$4,800
<at = $4,800
16,000 = $0.30 16,000 = $0.30
:: L $2,000 + 10,200 :: L $10,200
20,000 = $0.61 17,000 = $0.60
-nd1 &#/9&) -nd1 &#/9F#FO
/6
6,000 x $0.11 = $ 660.00 6,000 x $0.10 = $ 600.00
::
4,000 x $0.61 = 2,440.00 4,000 x $0.60 = 2,400.00
$3,100.00 $3,000.00
:ost of Coods :omplete
&) F#FO
$19,420 3,100 = $16,320.00 $19,420 3,000 = $16,420.00
6#F4 <oderate O784 %93%9" <3:4 1$920 min
,1 :opperfield <anufacturing emplo!s a weighted average process costing s!stem for its products1 One
product passes through three departments (<olding )ssembl! and Finishing+ during production1 5he
following activit! too= place in the Finishing 6epartment during )pril 20*%1
.nits in beginning inventor!
4,200
.nits transferred in from )ssembl!
42,000
.nits spoiled
2,100
Cood units transferred out
33,600
5he costs per equivalent unit of production for each cost failure area as follows4
:ost of prior departments
$5.00
Daw material
1.00
:onversion
3.00
5otal cost per -./
$9.00
Daw material is added at the beginning of the Finishing process without changing the number of units
being processed1 &or= in process inventor! was "0 percent complete as to conversion on )pril 301 )ll
spoilage was discovered at final inspection1 Of the total units spoiled 1%,0 were within normal limits1
Re23ire./
a1 :alculate the equivalent units of production
b1 6etermine the cost of units transferred out of Finishing
c1 6etermine the cost of ending &or= in /rocess #nventor!
d1 5he portion of the total transferred in cost associated with beginning &or= in /rocess #nventor!
amounted to J1,;001 &hat is the current period cost that was transferred in from )ssembl! to
Finishing?
e1 6etermine the cost associated with abnormal spoilage for the month1
23$
)234
a1
5# <at ::
:omplete
33,600 33,600 33,600
H -quiv &#/
10,500 10,500 4,200
H 2ormal 3p
1,680 1,680 1,680
H )bnor 3p
420 420 420
46,200 46,200 39,900
b1 33%00 * J;
$302,400
5: L "%200 * J$
$231,000
1%,0 * J;
15,120
"%200 * J1
46,200
$317,520
3;;00 * J3
119,700
$396,900
c1 10$00 * J$
$52,500
10$00 * J1
10,500
"200 * J3
12,600
$75,600
:OC< L J3;%;00 9 '$%00 9 3',0 L J31'$20
d1 J$ L J1,;00 H F
"%200
F L J231000 9 1,;00 L J212100
e1 )72 L "20 * J; L J3',0
"20 * J; L J3',0
6#F4 <oderate O784 %93%9,
23%
;1 )shcroft #ndustries manufactures wood furniture1 #n the Lamination 6epartment varnish is added
when the goods are %0 percent complete as to overhead1 5he units that are spoiled during processing
are found upon inspection at the end of production1 3poilage is considered discrete1
Pro.3ction !ata &or $a9 5-A<
7eginning inventor! (,0G complete as to labor '0G complete as to
overhead+
1,000
units
5ransferred in during month
7,450
units
-nding inventor! ("0G complete as to labor 20G complete as to overhead+
1,500
units
2ormal spoilage (found during final qualit! inspection+
100
units
)bnormal spoilage9found at 30G completion of direct labor and 1$G of
conversion@ the sanding machine was misaligned and scarred the chairs
200
units
)ll other units were transferred to finished goods
Cost !ata &or $a9 5-A<
7eginning wor= in process inventor!4
/rior department costs
$7,510
Oarnish
950
6irect labor
2,194
Overhead
5,522 $ 16,176
:urrent period costs4
/rior department costs
$68,540
Oarnish
7,015
6irect labor
23,000
Overhead
56,782 155,337
5otal costs to account for
$171,513
Re23ire./ 6etermine the proper disposition of the <a! 20F, costs for the Laminating 6epartment
using the weighted average method1
23'
)234
5# <)5 6L <OH
:omplete
6,650 6,650 6,650 6,650
H end
1,500 0 600 300
H normal
100 100 100 100
H abnormal
200 0 60 30
8,450 6,750 7,410 7,080
.nit :ost
-nd &#/
6L %00 * J31"0 L
$ 2,040
<OH 300 * J,1,0 L
2,640
5# 1$00 * J;100 L
13,500

$18,180
)bnormal Loss %0 * J31"0 L
$ 204
6L 30 * J,1,0 L
264
<OH 200 * J;100 L
1,800
5#
$ 2,268
:OC< L J1'1$13 9 1,1,0 9 22%, L J1$10%$
6#F4 <oderate O784 %93%9,
23,
101 :onsider the following data for a coo=ing department for the month of 8anuar!4
/h!sical
.nits
&or= in process beginning inventor!M
11,000
3tarted during current period
74,000
5o account for
85,000
Cood units completed and transferred out during current
period4
From beginning wor= in process
11,000
3tarted and completed
50,000
Cood units completed
61,000
3poiled units
8,000
&or= in process ending inventor!T
16,000
)ccounted for
85,000
M6irect material 100G complete@ conversion costs 2$G complete
T6irect material 100G complete@ conversion costs '$G complete
#nspection occurs when production is 100 percent completed1 2ormal spoilage is 11 percent of good
units completed and transferred out during the current period1
5he following cost data are available4
&or= in process beginning inventor!4
6irect material
$220,000
:onversion costs
30,000 $ 250,000
:osts added during current period4
6irect material
1,480,000
:onversion costs
942,000
:osts to account for
$2,672,000
Re23ire./ /repare a detailed cost of production report1 .se the F#FO method1 6istinguish between
normal and abnormal spoilage1
23;
)234
2ormal 3p L 11G * %1000 L %'10 units F#FO
)bnormal 3p L ,000 9 %'10 L 12;0 units
<at :: <at L
$1,480,000 = $22.00
67,290
:omplete
61,000 61,000
H -nd
16,000 12,000
H )b 3p
1,290 1,290
:: L
$942,000 = 13.17
9 )ve
78,290 74,290 71,540 $35.17
9 7eg
(11,000) (2,750)
F#FO
67,290 71,540
&#/
<aterial
16,000 x
$22.00
$352,000
::
12,000 x
$13.17
158,040
$510,040
Loss L 1,290 x $35.17
45,369
:OC< L J2%'2000 9 $100"0 9 "$3%; L J211%$;1
6#F4 <oderate O784 %93%9,
2"0
111 Lumberton #ndustries has two departments1 6epartment 1 uses F#FO costing and 6epartment 2 uses
weighted average1
.nits are introduced into the process in 6epartment 1 (this is the onl! material added in 6epartment
1+1 3poilage occurs continuousl! through the department and normal spoilage should not e*ceed 10
percent of the units started1
6epartment 2 adds material (pac=aging+ at the '$ percent completion point@ this material does not
cause an increase in the number of units being processed1 ) qualit! control inspection ta=es place
when the goods are ,0 percent complete1 3poilage should not e*ceed $ percent of the units transferred
in from 6epartment 11
5he following production cost data are applicable for operations for )ugust 20F'4
!epart8ent * Pro.3ction !ata
7eginning inventor! (%$G complete+
1,000
.nits started
25,000
.nits completed
22,000
.nits in ending inventor! ("0G complete+
2,800
!epart8ent * Cost !ata
7eginning inventor!4
<aterial
$ 1,550
:onversion
2,300 $ 3,850
:urrent period4
<aterial
$38,080
:onversion
78,645 116,725
$120,575
!epart8ent 5 Pro.3ction !ata
7eginning inventor! (;0G complete+
8,000
.nits transferred in
22,000
.nits completed
24,000
.nits in ending inventor! (20G complete+
4,500
!epart8ent 5 Cost !ata
7eginning inventor!4
5ransferred in
$40,800
<aterial
24,000
:onversion
4,320 $ 69,120!
:urrent period4
5ransferred in
$113,700
<aterialU
53,775
:onversion
11,079 178,554
$247,674
M5his ma! not be the same amount determined for 6epartment 1@ ignore an! difference and use this
figure1
Re23ire./
a1 :ompute the equivalent units of production in each department1
b1 6etermine the cost per equivalent unit in each department and compute the cost transferred out
the cost in ending inventor! and the cost of spoilage (if necessar!+1
2"1
)234
a1
*
<at :: <at L
$38,080 = $ 1.60
23,800
:omplete
22,000 22,000
H -nd &#/
2,800 1,120 (2,800
x 4)
:: L
$78,645 = $ 3.50
24,800 23,120 22,470
9 7eg &#/
(1,000) (650) (1,000
x .65)
-nd
&#/ L
2,800 x
$1.60
= $ 4,480
23,800 22,470 1,120 x
$3.50
3.920
$ 8,400
:OC< L J120$'$ 9 ,"00 $112,175
b1
5
5# <at :: <at L
$ 77,775 = $ $3.05
25,500
:omplete
24,000 24,000 24,000
H -nd &#/
4,500 0 900
:: L
$ 15,399 = $ $0.59
H 2ormal
1,100 1,120 880 26,100
H )bnormal
400 400 320
30,000 25,500 26,100
5# L
$154,500 = $ 5.15
30,000
-nd &#/ )bn Loss
"$00 * J$11$
$23,175
"00 * J310$
$1,220
;00 * J01$;
531
320 * J01$;
189
$23,706
"00 * J$11$
2,060
$3,469
:OC< L J2"'%'" 9 23'0% 9 3"%; L J220";;
6#F4 <oderate O784 %93 %9,
2"2
121 Orange :ompan! manufactures a single product1 )ll material is added at the beginning of the process1
:osts <aterial :onversion 5otal
7eginning inventor!
$ 30,000 $ 3,600 $ 33,600
:urrent period
885,120 335,088 1,220,208
5otal costs
$915,120 $338,688 $1,253,808
.2#53
7eginning inventor! (30G complete9
conversion+
6,000
units
3tarted
180,000
units
:ompleted
152,000
units
-nding inventor! ('0G complete9conversion+
20,000
units
2ormal spoilage
4,800
units
Re23ire./ Find ending &#/ inventor! abnormal loss and :OC<1 )ssume that for conversion costs
abnormal shrin=age is %0 percent1
)234
<at ::
.nits :omplete
152,000 152,000
H -quivalents -nding &#/
20,000 14,000
H )bnormal Loss
9,200 5,520
(;200 * 1%+
L -quivalent /roduction9&)
181,200 171,520
L -quivalent 7egin &#/
(6,000) (1,800)
L -quivalent /roduction9F#FO
175,200 169,720
.nit :osts4
&) F#FO
<at J;1$120 L J$10$ <at J,,$120 L J$10$
1,1200 1'$200
:: J33,%,, L J11;' :: J33$0,, L J11;'
1'1$20 1%;'20
En.ing (IP
<aterial 20000 * J$10$
$101,000
:: 1"000 * J11;'
27,580
$128,580
A@nor8a' Spoi'age
<aterial ;200 * J$10$
$ 46,460
:: $$20 * J11;'
10,874
$ 57,334
Cost o& Goo. Trans&erre.
12$3,0, 9 12,$,0 9 $'33" L J10%',;"
6#F4 <oderate O784 %93%9,
2"3
131 6elightful Sogurt :ompan! produces !ogurt in two departments9<i*ing and Finishing1 #n <i*ing all
ingredients e*cept fruit are added at the start of production1 #n Finishing fruit is added and then the
mi*ture is placed into containers1 )dding the fruit to the basic !ogurt mi*ture increases the volume
transferred in b! the number of gallons of fruit added1 )n! spoilage that occurs is in the Finishing
6epartment1 3poilage is detected just before the !ogurt is placed into containers or at the ;, percent
completion point1 )ll spoilage is abnormal1
#inishing !epart8ent
7&#/ (100G fruit 0G container 30G ::+
5,000
gallons
Callons transferred in
5,500
Callons of fruit added
1,200
-&#/ (100G fruit 0G container %0G ::+
1,700
gallons
Callons transferred out
9,000
)bnormal spoilage
1,000
B(IP Costs/
5ransferred #n
$ 9,700
Fruit
10,500
::
15,000
C3rrent Costs/
5ransferred #n
12,400
Fruit
54,000
:ontainers
11,000
::
98,000
5otal :osts
$ 210,600
/repare a cost of production report for October 20F$1 5he compan! uses weighted average1
)234
6elightful Sogurt :ompan!
:ost Deport
October 31 20F$
7&#/
5,000
5rans1 #n
5,500
Fruit
1,200
)cctble1 For
11,700
5# Fruit :ontainer ::
5ransferred Out
9,000 9,000 9,000 9,000
-&#/
1,700 1,700 0 1,020
)bnormal 3poilage
1,000 1,000 0 980
11,700 11,700 9,000 11,000
:osts4
5# Fruit :ontainer ::
7&#/
$ 9,700 $10,500 $ 0 $ 15,000
:urrent
12,400 54,000 11,000 98,000
$22,100 $64,500 $11,000 $113,000
-./
11,700 11,700 9,000 11,000
/er unit
$1.89 $5.51 $1.22 $10.27
2""
:ost )ssignment4
-&#/
1'00 * J11,; L
$ 3,213
1'00 * J$1$1 L
9,367
1020 * J1012' L
10,475 $ 23,055
3poilage
1000 * J11,; L
$ 1,890
1000 * J$1$1 L
5,510
;,0 * J1012' L
10,065 17,465
5ransferred Out
J210%00 9 230$$ 9 1'"%$ L
170,080
5otal accounted for
$210,600
6#F4 <oderate O784 %93%9,
2"$
%oc)ing Co8pan9
5he following information is available for Hoc=ing :ompan! for <arch 20F,1 )ll materials are added
at the start of production1
7eginning &or= in /rocess4 (,0G complete+
8,000
units
3tarted
35,000
units
2ormal spoilage (continuous+
6,000
units
)bnormal spoilage
2,500
units
-nding &or= in /rocess4 ($$G complete+
15,000
units
5ransferred out
19,500
units
<aterial
$ 14,000
:onversion
45,000
:urrent :osts4
<aterial
50,000
:onversion
175,000
5otal :osts
$ 284,000
1"1 Defer to Hoc=ing :ompan!1 /repare a cost of production report for <arch using F#FO1
)234
7# ,000 H 3tarted 3$000 L )ccountable for "3000
Hoc=ing :ompan!
:ost Deport
<arch 31 20F,
<aterial ::
7&#/
8,000 0 1,600
3 E :
11,500 11,500 11,500
-&#/
15,000 15,000 8,250
2orm
6,000 0 0
)bnorm1
2,500 2,500
)cctd1 For
43,000 29,000 23,850
<aterial4 J$0000N2;000 L J11'2
:onversion :osts4 J1'$000N23,$0 L J'13"
Cost Assign8ent/
1$000 * J11'2 L
$ 25,800
,2$0 * J'13" L
60,555 $ 86,355
)bnormal 3poilage
2$00 * J;10% L
22,650
:ost 5ransferred Out
J2,"000 9 ,%3$$ 9 22%$0 L
174,995
$ 284,000
6#F4 <oderate O784 %9"%9,
2"%
1$1 Defer to Hoc=ing :ompan!1 /repare the cost of production report assuming the weighted average
method1
)234
7# ,000 H 3tarted 3$000 L )ccountable for "3000
Hoc=ing :ompan!
:ost Deport
<arch 31 20F,
<aterial ::
5ransferred Out
19,500 19,500 19,500
-nding &or= #n /rocess
15,000 15,000 8,250
2ormal 3poilage
6,000 0 0
)bnormal 3poilage 2$00
2,500 2,500
)ccounted For
43,000 37,000 30,250
<aterial4 J%"000N3'000 L J11'3
:onversion :osts4 J220000N302$0 L J '12'
Cost Assign8ent/
1$000 * J11'3 L
$25,950
,2$0 * J'12' L
59,978 $ 85,928
)bnormal 3poilage
2$00 * J;100 L
22,500
5ransferred Out
J2,"000 9 ,$;2, 9 22$00 L
175,572
$ 284,000
6#F4 <oderate O784 %93%9,
2"'

TB Raiborn - Process Costing

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Chapter 6Process Costing

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