Professional Documents
Culture Documents
True/False Questions
True/False Questions
True/False Questions
1. In a process costing system, the costs of one processing department become part of the
costs of the next processing department.
2. The equivalent units of production will be the same under the weighted-average and
the FIFO method if there is no beginning work in process inventory.
3. Under the weighted-average method, the equivalent units used to compute the unit
costs of ending inventories relate only to work done during the current period.
4. In order to equitably allocate costs in a process costing system, dissimilar products are
restated in terms of equivalent units by weighting the number of units produced by
their market values.
5. In a process costing system, units transferred to the next processing department are
presumed to be 100% complete with respect to the work performed by the transferring
department.
6. Under a weighted-average process costing system when all materials are added at the
beginning of the production process, the equivalent units for materials is equal to the
units completed and transferred out.
8. The equivalent units of production for a department using the FIFO process costing
method is equal to the number of units completed plus the equivalent units in the
ending inventory.
9. The step-down method of cost allocation is more accurate than the direct method since
the step-down method considers services that service departments provide to each
other.
10. The step-down method and the direct method of cost allocation will result in the same
amount of service department cost being allocated to a given operating department,
although the step-down method is easier to apply than the direct method.
11. The order in which the costs of service departments are allocated will affect the
amounts allocated to an operating department when the direct method is used.
12. The units in beginning work in process inventory plus the units started into production
must equal the units transferred out of the department plus the units in ending work in
process inventory.
13. In a process costing system, direct labor cost combined with manufacturing overhead
cost is known as conversion cost.
15. Process costing is used where many different products are produced each period to
customer specifications.
16. Which of the following statements related to job-order costing and process costing are
true?
A) Under both costing methods, manufacturing overhead costs are included in the
computation of unit product costs.
B) Under both costing methods, the journal entry to record the completion of
production will involve crediting a work in process account.
C) Under both costing methods, the journal entry to record the cost of goods sold
will involve crediting the finished goods account.
D) All of the above are true.
18. In process costing, a separate work in process account is kept for each:
A) individual order.
B) equivalent unit.
C) processing department.
D) cost category (i.e., materials, conversion cost).
19. The weighted-average method of process costing differs from the FIFO method of
process costing in that the weighted-average method:
A) does not consider the degree of completion of beginning work in process
inventory when computing equivalent units of production.
B) considers ending work in process inventory to be fully complete.
C) will always yield a higher cost per equivalent unit.
D) All of the above.
20. Which of the following are needed to compute equivalent units for conversion costs
under the weighted-average method of process costing?
21. Malcolm Company uses a weighted-average process costing system. All materials at
Malcolm are added at the beginning of the production process. The equivalent units
for materials at Malcolm would be the sum of:
A) units in ending work in process and the units started.
B) units in beginning work in process and the units started.
C) units in ending work in process and the units started and completed.
D) units in beginning work in process and the units started and completed.
22. In the computation of costs per equivalent unit, the weighted-average method of
process costing considers:
A) costs incurred during the current period only.
B) costs incurred during the current period plus cost of ending work in process
inventory.
C) costs incurred during the current period plus cost of beginning work in process
inventory.
D) costs incurred during the current period less cost of beginning work in process
inventory.
24. Under which of the following conditions will the FIFO method of process costing
result in the same amount of cost being transferred to the next department as the
weighted-average method?
A) When the beginning and ending inventories are each fifty percent complete.
B) When there is no beginning inventory.
C) When there is no ending inventory.
D) When units in the beginning inventory are all completed and transferred at the
same time.
25. In order to compute equivalent units of production using the FIF0 method of process
costing, work for the period must be broken down into parts:
A) completed during the period and units in ending inventory.
B) completed from beginning inventory, started and completed during the month,
and units in ending inventory.
C) started during the period and units transferred out during the period.
D) processed during the period and units completed during the period.
26. Which of the following methods of allocating service departments take into account
all of the effects of interdepartmental services?
Direct Step-Down
A) Yes Yes
B) Yes No
C) No Yes
D) No No
27. All of the following statements are correct when referring to process costing except:
A) Process costing would be appropriate for a jeweler who makes custom jewelry
to order.
B) A process costing system has the same basic purposes as a job-order costing
system.
C) Units produced are indistinguishable from each other.
D) Costs are accumulated by department.
28. For which of the following would it be best to use an operation costing system?
A) home remodeling
B) automobile production
C) cement used for roadways
D) trash bags used for yard waste
Mixing Bottling
Cases of cola in work in process, January 1.................... 10,000 3,000
Cases of cola completed/transferred out during January. 77,000 ?
Cases of cola in work in process, January 31.................. 4,000 8,000
How many cases of cola were completed and transferred to Finished Goods Inventory
during January?
A) 66,000
B) 71,000
C) 72,000
D) 74,000
Solution:
30. The Assembly Department started the month with 83,000 units in its beginning work
in process inventory. An additional 334,000 units were transferred in from the prior
department during the month to begin processing in the Assembly Department. There
were 34,000 units in the ending work in process inventory of the Assembly
Department.
How many units were transferred to the next processing department during the month?
A) 417,000
B) 285,000
C) 451,000
D) 383,000
Solution:
Materials
Units Costs
22,00
Work in process at March 1............................................. 0 $11,000
90,00
Units started during March.............................................. 0 $46,120
Units completed and transferred to next department 97,00
during March................................................................ 0
What was the materials cost of the work in process inventory at March 31?
A) $11,220
B) $7,500
C) $5,100
D) $7,650
Solution:
Materials
Ending work in process inventory:
Equivalent units of production (materials: 15,000 units ×
100% complete; conversion: 15,000 units × %
complete)......................................................................... 15,000
Cost per equivalent unit...................................................... $0.51
Cost of ending work in process inventory.......................... $7,650
32. Barnett Company uses the weighted-average method in its process costing system.
The company adds materials at the beginning of the process in Department M.
Conversion costs were 75% complete with respect to the 4,000 units in work in
process at May 1 and 50% complete with respect to the 6,000 units in work in process
at May 31. During May, 12,000 units were completed and transferred to the next
department. An analysis of the costs relating to work in process at May 1 and to
production activity for May follows:
Materials Conversion
Work in process 5/1....................... $13,800 $3,740
Costs added during May................ $42,000 $26,260
Solution:
33. Maurice Company uses the weighted-average method in its process costing system.
The company adds materials at the beginning of the process in the Forming
Department, which is the first of two stages of its production process. Information
concerning the materials used in the Forming Department in April follows:
Materials
Units Costs
Work in process at April 1............................................... 12,000 $6,000
100,00
Units started during April................................................ 0 $51,120
Units completed and transferred to next department
during April.................................................................. 88,000
What was the materials cost of the work in process at April 30?
A) $6,120
B) $11,040
C) $12,000
D) $12,240
Materials
Ending work in process inventory:
Equivalent units of production (materials: 24,000 units ×
100% complete).............................................................. 24,000
Cost per equivalent unit...................................................... $0.51
Cost of ending work in process inventory.......................... $12,240
四
34. Destry Company uses the weighted-average method in its process costing system. The
first processing department, the Welding Department, started the month with 10,000
units in its beginning work in process inventory that were 30% complete with respect
to conversion costs. The conversion cost in this beginning work in process inventory
was $19,200. An additional 60,000 units were started into production during the
month. There were 19,000 units in the ending work in process inventory of the
Welding Department that were 70% complete with respect to conversion costs. A total
of $380,060 in conversion costs were incurred in the department during the month.
What would be the cost per equivalent unit for conversion costs for the month?
(Round off to three decimal places.)
A) $6.400
B) $6.334
C) $6.209
D) $4.811
Solution:
35. Limber Company uses the weighted-average method in its process costing system.
Operating data for the first processing department for the month of June appear below:
Percent
Complete with
Respect to
Units Conversion
18,00
Beginning work in process inventory........ 0 80%
81,00
Started into production during June........... 0
17,00
Ending work in process inventory............. 0 80%
According to the company's records, the conversion cost in beginning work in process
inventory was $15,264 at the beginning of June. Additional conversion costs of
$68,208 were incurred in the department during the month.
What was the cost per equivalent unit for conversion costs for the month? (Round off
to three decimal places.)
A) $0.873
B) $0.696
C) $0.842
D) $1.060
36. Roy Company manufactures a product in Departments A and B. Materials are added at
the beginning of the process in Department B. Roy uses the weighted-average method
in its process costing system. Conversion costs for Department B were 50% complete
with respect to the 6,000 units in the beginning work in process and 75% complete
with respect to the 8,000 units in the ending work in process. A total of 12,000 units
were completed and transferred out of Department B during February. An analysis of
the costs in Department B for February follows:
The total cost per equivalent unit during February was closest to:
A) $2.75
B) $2.78
C) $2.82
D) $2.85
Solution:
Materials Conversion
Transferred to next department.......................... 12,000 12,000
Ending work in process:
Materials: 8,000 units × 100% complete........ 8,000
Conversion: 8,000 units × 75% complete....... 6,000
Equivalent units of production........................... 20,000 18,000
Transferred
In Materials Conversion Total
Work in process, beginning... $12,000 $2,500 $1,000
Cost added during the month 29,000 5,500 5,000
Total cost (a).......................... $41,000 $8,000 $6,000
Equivalent units (above) (b). . 20,000 20,000 18,000
Cost per equivalent unit
(a) ÷ (b).............................. $2.05 $0.40 $0.33 $2.78
37. Hammoudi Company uses the weighted-average method in its process costing system.
The first processing department, the Welding Department, started the month with
16,000 units in its beginning work in process inventory that were 90% complete with
respect to conversion costs. The conversion cost in this beginning work in process
inventory was $61,920. An additional 53,000 units were started into production during
the month and 45,000 units were completed in the Welding Department and
transferred to the next processing department. There were 24,000 units in the ending
work in process inventory of the Welding Department that were 70% complete with
respect to conversion costs. A total of $194,340 in conversion costs were incurred in
the department during the month.
What would be the cost per equivalent unit for conversion costs for the month?
(Round off to three decimal places.)
A) $4.300
B) $4.147
C) $2.524
D) $3.667
Solution:
38. Paquet Company uses the weighted-average method in its process costing system. The
Molding Department is the second department in its production process. The data
below summarize the department's operations in January.
Percent
Complete with
Respect to
Units Conversion
Beginning work in process inventory.................... 7,700 40%
Transferred in from the prior.................................
56,00
department during January.................................... 0
Completed and transferred to the next...................
58,40
department during January.................................... 0
Ending work in process inventory......................... 5,300 90%
The accounting records indicate that the conversion cost that had been assigned to
beginning work in process inventory was $16,940 and a total of $347,320 in
conversion costs were incurred in the department during January.
What was the cost per equivalent unit for conversion costs for January in the Molding
Department? (Round off to three decimal places.)
A) $5.500
B) $5.666
C) $5.766
D) $6.202
Solution:
Units transferred out..................................................................... 58,400
Add: equivalent units in the ending inventory (5300 × 90%
complete)................................................................................... 4,770
Equivalent units of production...................................................... 63,170
Solution:
40. Lawton Company produces canned tomato soup in a single processing department and
has a process costing system in which it uses the weighted-average method. The
company sold 250,000 units in the month of January. Data concerning inventories
follow:
Units
Inventory at January 1:
Work in process............................................................ None
75,00
Finished goods.............................................................. 0
Inventory at January 31:
16,00
Work in process (conversion 75% complete)............... 0
60,00
Finished goods.............................................................. 0
What were the equivalent units for conversion costs for January?
A) 235,000
B) 247,000
C) 251,000
D) 253,000
Solution:
Solution:
42. Boswal Company uses the weighted-average method in its process costing system.
The Assembly Department started the month with 6,000 units in its beginning work in
process inventory that were 80% complete with respect to conversion costs. An
additional 52,000 units were transferred in from the prior department during the month
to begin processing in the Assembly Department. There were 18,000 units in the
ending work in process inventory of the Assembly Department that were 20%
complete with respect to conversion costs.
What were the equivalent units for conversion costs in the Assembly Department for
the month?
A) 43,600
B) 40,000
C) 38,800
D) 64,000
Solution:
Conversion
Transferred to next department........................................ 40,000
Ending work in process (18,000 units × 20% complete). 3,600
Equivalent units of production......................................... 43,600
43. Jolly Company uses the weighted-average method in its process costing system.
Operating data for the Painting Department for the month of April appear below:
Percent
Complete
with
Respect to
Units Conversion
Beginning work in process inventory............................. 4,700 90%
Transferred in from the prior department during April. . 59,700
Ending work in process inventory.................................. 7,300 80%
What were the equivalent units for conversion costs in the Painting Department for
April?
A) 62,940
B) 62,300
C) 65,540
D) 57,100
Solution:
44. Parks Company uses the weighted-average method in its process costing system. At
the start of the year, the company had 5,000 units in process in Department A that
were 60% complete with respect to conversion costs. At the end of the year, 6,500
units were in process, 40% complete with respect to conversion costs. During the year,
30,000 units were completed and transferred on to the next department. The equivalent
units for conversion costs would be:
A) 32,600 units
B) 29,600 units
C) 33,000 units
D) 30,000 units
Solution:
Units
Work in process, April 1 (conversion 60% complete).... 3,000
25,00
Started in April................................................................ 0
20,00
Completed........................................................................ 0
Work in process, April 30 (conversion 75% complete). . 8,000
Solution:
46. Fatas Corporation uses the weighted-average method in its process costing system.
The Assembly Department started the month with 8,000 units in its beginning work in
process inventory that were 20% complete with respect to conversion costs. An
additional 95,000 units were transferred in from the prior department during the month
to begin processing in the Assembly Department. During the month 102,000 units
were completed in the Assembly Department and transferred to the next processing
department. There were 1,000 units in the ending work in process inventory of the
Assembly Department that were 20% complete with respect to conversion costs.
What were the equivalent units for conversion costs in the Assembly Department for
the month?
A) 102,200
B) 100,600
C) 102,000
D) 88,000
Solution:
Percent
Complete
with Respect
Units to Conversion
Beginning work in process inventory.............................. 9,100 20%
Transferred in from the prior department during 38,50
October......................................................................... 0
Completed and transferred to the next department 41,00
during October............................................................. 0
Ending work in process inventory................................... 6,600 70%
What were the equivalent units for conversion costs in the Lubricating Department for
October?
A) 41,000
B) 43,120
C) 36,000
D) 45,620
Solution:
48. Kew Company uses the weighted-average method in its process costing system. The
company had 3,000 units in work in process at April 1 that were 60% complete with
respect to conversion cost. During April, 10,000 units were completed. At April 30,
4,000 units remained in work in process and they were 40% complete with respect to
conversion cost. Direct materials are added at the beginning of the process. How many
units were started during April?
A) 9,000
B) 9,800
C) 10,000
D) 11,000
Solution:
Materials Conversion
Costs in work in process on March 1.................... $ 2,900 $ 4,680
Costs added to production during March.............. 71,050 131,040
Total cost............................................................... $73,950 $135,720
All materials at Pelican are added at the beginning of the production process.
Conversion costs are incurred uniformly over the production process. What total
amount of cost should be assigned to the units in work in process at the end of March?
A) $14,840
B) $15,420
C) $24,920
D) $25,860
Solution:
50. Kwan Manufacturing Company uses a process costing system. All materials at Kwan
are added at the beginning of the production process. For the month of October,
equivalent units for materials were 40,000 under the weighted-average method and
36,000 under the FIFO method. Kwan's costs for October were as follows:
What are Kwan’s equivalent costs per equivalent unit for October for materials under
both process costing methods?
Weighted-Average FIFO
A) $6.57 $8.00
B) $6.57 $7.30
C) $7.20 $8.00
D) $7.20 $7.30
Solution:
Weighted-Average FIFO
Total cost........................... $288,000 $262,800
÷ Equivalent units............. 40,000 36,000
Cost per equivalent unit.... $7.20 $7.30
51. Safia Corporation uses the weighted-average method in its process costing system.
The Fitting Department is the second department in its production process. The data
below summarize the department's operations in March.
Percent
Complete with
Respect to
Units Conversion
Beginning work in process inventory..................... 3,300 40%
Transferred in from the prior department during
March................................................................... 67,000
Ending work in process inventory........................... 5,600 30%
The Fitting Department's cost per equivalent unit for conversion cost for March was
$4.70.
How much conversion cost was assigned to the units transferred out of the Fitting
Department during March?
A) $330,410.00
B) $314,900.00
C) $304,090.00
D) $297,886.00
Solution:
52. The following data were taken from the accounting records of the Mixing Department
of Kappa Company which uses the weighted-average method in its process costing
system:
Solution:
Materials Conversion
Work in process, beginning....................... $ 4,000 $ 3,000
Current costs added................................... 20,000 16,000
Total costs.................................................. $24,000 $19,000
Equivalent units......................................... 100,000 95,000
Costs per equivalent unit........................... $0.24 $0.20
Goods completed....................................... 90,000 units
Work in process, ending............................ 10,000 units
Material costs are added at the beginning of the process. The ending work in process is
50% complete with respect to conversion costs. How would the costs be distributed?
Ending work in
Goods completed and transferred out process
A) $39,600 $3,400
B) $39,600 $4,400
C) $43,000 $0
D) $44,000 $3,400
Solution:
Materials Conversion
Transferred to next department........... 90,000 90,000
Ending work in process:
Materials: 10,000 units × 100%
complete....................................... 10,000
Conversion: 10,000 units × 50%
complete....................................... 5,000
Equivalent units of production............ 100,000 95,000
Materials Conversion
Work in process, beginning................ $ 4,000 $ 3,000
Cost added during the month.............. 20,000 16,000
Total cost (a)....................................... $24,000 $19,000
Equivalent units (above) (b)............... 100,000 95,000
Cost per equivalent unit (a) ÷ (b)........ $0.24 $0.20
Solution:
55. Bly Company uses the weighted-average method in its process costing system. During
March, Bly Company's Department Y costs per equivalent unit were as follows:
$
Materials................ 1
$
Conversion............. 3
$
Transferred-in........ 5
There were 4,000 units (40% complete with respect to conversion cost and 0%
complete with respect to materials cost) in Work in Process at March 31. The total
costs assigned to the March 31, Work in Process inventory should be:
A) $36,000
B) $28,800
C) $27,200
D) $24,800
Solution:
$74,00
Total cost transferred out during March................ 0
$12,00
Cost in Work in Process, March 1......................... 0
Cost in Work in Process, March 31....................... $5,000
Solution:
57. Rangan Corporation uses the weighted-average method in its process costing system.
The Molding Department is the second department in its production process. The data
below summarize the department's operations in January.
Percent
Complete with
Respect to
Units Conversion
Beginning work in process inventory........ 2,100 50%
Transferred in from the prior department 76,00
during January........................................ 0
Completed and transferred to the next 74,20
department during January..................... 0
Ending work in process inventory............. 3,900 70%
The Molding Department's cost per equivalent unit for conversion cost for January
was $3.91.
How much conversion cost was assigned to the ending work in process inventory in
the Molding Department for January?
A) $10,674.30
B) $15,249.00
C) $4,574.70
D) $4,105.50
Solution:
Conversion
Units Cost
Work in process inventory on May 1.................... 25,000 $22,000
Units started into production, and costs incurred 135,00
during the month................................................ 0 $143,000
Units completed and transferred to finished 100,00
goods during the month...................................... 0
Work in process inventory on May 31.................. 60,000
The amount of conversion cost in the ending work in process inventory was:
A) $33,000
B) $38,100
C) $39,000
D) $45,000
Solution:
Percent complete
Number with respect to
of units conversion costs
Work in process, September 1....... 20,000 20%
Units started into production......... 90,000
Work in process, September 30..... 8,000 75%
What amount of cost should Doofus assign to the units (guitars) in work in process on
September 30?
A) $125,580
B) $303,600
C) $318,780
D) $343,200
Solution:
Solution:
61. Makridakis Corporation uses the FIFO method in its process costing system.
Operating data for the Casting Department for the month of September appear below:
Percent
Complete
with Respect
Units to Conversion
17,00
Beginning work in process inventory.............................. 0 10%
Transferred in from the prior department during 50,00
September.................................................................... 0
17,00
Ending work in process inventory................................... 0 40%
According to the company's records, the conversion cost in beginning work in process
inventory was $3,434 at the beginning of September. Additional conversion costs of
$117,914 were incurred in the department during the month.
What would be the cost per equivalent unit for conversion costs for September?
(Round off to three decimal places.)
A) $2.020
B) $1.811
C) $2.140
D) $2.358
Solution:
62. Krumbly Company uses the FIFO method in its process costing system. At the
beginning of the month, Department D's work in process inventory contained 2,000
units. These units were fully complete with respect to materials and 40% complete
with respect to conversion costs, with a total cost at that point of $3,600. During the
month, conversion costs amounted to $8 per equivalent unit. If all 2,000 units are fully
complete by the end of the month, their total cost by that time will be:
A) $19,600
B) $10,000
C) $13,200
D) $9,000
Solution:
What would be the cost per equivalent unit for conversion costs for the month?
(Round off to three decimal places.)
A) $1.390
B) $1.600
C) $1.409
D) $1.280
64. Qvr Corporation uses the FIFO method in its process costing system. Operating data
for the Cutting Department for the month of March appear below:
Percent Complete
with Respect to
Units Conversion
Beginning work in process inventory.............................. 2,500 60%
45,00
Transferred in from the prior department during March. 0
Completed and transferred to the next department 40,50
during March................................................................ 0
Ending work in process inventory................................... 7,000 70%
According to the company's records, the conversion cost in beginning work in process
inventory was $3,600 at the beginning of March. Additional conversion costs of
$99,477 were incurred in the department during the month.
What would be the cost per equivalent unit for conversion costs for March? (Round
off to three decimal places.)
A) $2.211
B) $2.400
C) $2.170
D) $2.266
Solution:
65. Marston Company uses the FIFO method in its process costing system. The equivalent
units for March for conversion costs totaled 37,500 units. The beginning work in
process inventory in March consisted of 15,000 units, 60% complete with respect to
conversion costs. The ending work in process inventory in March consisted of 10,000
units, 75% complete with respect to conversion costs. The number of units started
during the month was:
A) 41,500 units
B) 34,000 units
C) 25,000 units
D) 72,500 units
Solution:
What were the equivalent units for conversion costs in the Assembly Department for
the month?
A) 48,000
B) 72,000
C) 62,300
D) 65,100
Solution:
67. Kavadias Corporation uses the FIFO method in its process costing system. Operating
data for the Enameling Department for the month of May appear below:
Percent Complete
with Respect to
Units Conversion
Beginning work in process inventory........ 7,400 80%
Transferred in from the prior.....................
department during May............................. 75,200
Ending work in process inventory............. 3,000 90%
What were the equivalent units for conversion costs in the Enameling Department for
May?
A) 79,600
B) 82,300
C) 76,380
D) 70,800
Solution:
Solution:
69. Billings Company uses the FIFO method in its process costing system. On July 1,
Department A had 10,000 units in process that were 80% complete with respect to
conversion. On July 31 the department had 8,000 units in process that were 60%
complete with respect to conversion. The department transferred 40,000 units out
during the month, of which 10,000 units came from the beginning work in process
inventory, and 30,000 units were started and completed during the month. All
materials are added at the beginning of the process in Department A. What are the
equivalent units for the month for materials and conversion, respectively?
A) 38,000 units, and 36,800 units
B) 38,000 units, and 38,000 units
C) 48,000 units, and 44,800 units
D) 48,000 units, and 48,000 units
Solution:
Solution:
71. Outiniki Company uses the FIFO method in its process costing system. Operating data
for the Brazing Department for the month of November appear below:
Percent
Complete with
Respect to
Units Conversion
Beginning work in process inventory.......................... 3,400 30%
Transferred in from the prior department during 54,10
November................................................................. 0
Completed and transferred to the next department 52,60
during November..................................................... 0
Ending work in process inventory............................... 4,900 70%
What were the equivalent units for conversion costs in the Brazing Department for
November?
A) 55,010
B) 55,600
C) 56,030
D) 52,600
Solution:
The cost of units transferred out of the department during the month is:
A) $270,000
B) $242,500
C) $254,500
D) $250,500
Solution:
EU
Total
Total Materials Conversion Cost
Transferred to the next department:
10,00
From beginning work in process*. . 0 0 4,000
From started and completed during 50,00
month.......................................... 0 50,000 50,000
60,00
Total EU this period....................... 50,000 0 54,000
Cost per EU.................................... $2.50 $2.00
Cost from current period (EU ×
Cost per EU)............................... $125,000 $108,000 $233,000
Cost from beginning work in
process......................................... 17,500
Total cost of units transferred out
of the department during current
month.......................................... $250,500
*(Materials=100% complete; 0% needed to complete with respect to materials;
Conversion=60% complete; (1 − 0.6) = 40% × 10,000 units to complete units with
respect to conversion)
四
73. Teboul Corporation uses the FIFO method in its process costing system. Operating
data for the Curing Department for the month of March appear below:
Percent Complete
with Respect to
Units Conversion
Beginning work in process inventory.................... 7,900 20%
Transferred in from the prior department during 40,00
March................................................................. 0
Completed and transferred to the next department 43,90
during March...................................................... 0
Ending work in process inventory......................... 4,000 60%
According to the company's records, the conversion cost in beginning work in process
inventory was $11,850 at the beginning of March. The cost per equivalent unit for
conversion costs for March was $7.40.
How much conversion cost would be assigned to the units completed and transferred
out of the department during March?
A) $325,018
B) $313,168
C) $296,000
D) $324,860
Solution:
74. Koehl Corporation uses the direct method to allocate service department costs to
operating departments. The company has two service departments, Administrative and
Facilities, and two operating departments, Assembly and Wholesaling.
Administrative costs are allocated on the basis of employee hours and Facilities costs
are allocated on the basis of space occupied. The total Wholesaling Department cost
after the allocations of service department costs is closest to:
A) $403,990
B) $396,430
C) $403,642
D) $402,601
Solution:
Operating
Service Department Department
Admin- Facil- Assem- Whole-
istrative ities bly saling Total
Departmental costs
before allocation..... $19,440 $71,340 $185,580 $392,950 $669,310
Allocation:
Administrative costs
(22/36, 14/36) *...... (19,440) 11,880 7,560
Facilities costs
(39/41, 2/41)**....... (71,340) 67,860 3,480
Total cost after
allocation................ $ 0 $ 0 $265,320 $403,990 $669,310
* Based on the employee hours in the two operating departments, which are 22,000
hours + 14,000 hours = 36,000 hours
**Based on the space occupied by the two operating departments, which is 39,000 +
2,000 = 41,000.
75. Behrend Clinic uses the direct method to allocate service department costs to
operating departments. The clinic has two service departments, Personnel and Support,
and two operating departments, Prenatal and Pediatrics.
Personnel Department costs are allocated on the basis of employee hours and Support
Department costs are allocated on the basis of space occupied in square feet. The total
Pediatrics Department cost after the allocations of service department costs is closest
to:
A) $441,260
B) $443,660
C) $433,440
D) $444,471
Solution:
Service Department Operating Department
Personnel Support Prenatal Pediatrics Total
Departmental
costs before
allocation............ $29,200 $55,040 $242,050 $423,200 $749,490
Allocation:
Personnel costs
(26/40, 14/40)* (29,200) 18,980 10,220
Support costs
(35/43, 8/43)** (55,040) 44,800 10,240
Total cost after
allocation............ $ 0 $ 0 $305,830 $443,660 $749,490
* Based on the employee hours in the two operating departments, which are 26,000
hours + 14,000 hours = 40,000 hours
**Based on the space occupied by the two operating departments, which is 35,000 +
8,000 = 43,000.
四
76. Stoltz Corporation uses the direct method to allocate service department costs to
operating departments. The company has two service departments, Data Processing
and Personnel, and two operating departments, Assembly and Finishing.
Operating
Service Department Department
Data
Processing Personnel Assembly Finishing
Departmental costs......... $26,488 $18,630 $188,980 $506,980
Computer workstations... 37 12 45 41
Employees...................... 35 11 46 35
Data Processing Department costs are allocated on the basis of computer workstations
and Personnel Department costs are allocated on the basis of employees. The total
amount of Data Processing Department cost allocated to the two operating
departments is closest to:
A) $23,245
B) $26,488
C) $61,567
D) $16,874
77. The direct method is used by Marrero Publishing, Inc., to allocate service department
costs to operating departments. The company has two service departments,
Information Technology and Personnel, and two operating departments, Prepress and
Printing.
Operating
Service Department Department
Information
Technology Personnel Prepress Printing
Departmental costs........ $27,412 $27,008 $376,940 $530,110
Computer workstations. 28 19 51 38
Employees..................... 27 14 98 30
78. Kolinski Surgical Hospital uses the direct method to allocate service department costs
to operating departments. The hospital has two service departments,
Telecommunications and Administration, and two operating departments, Surgery and
Recovery.
Operating
Service Department Department
Telecomm- Adminis-
unications tration Surgery Recovery
Departmental costs........ $26,344 $27,472 $282,750 $599,690
Telecommunications
ports........................... 31 14 40 34
Employees..................... 30 11 74 27
79. Dainels Corporation uses the step-down method to allocate service department costs to
operating departments. The company has two service departments, General
Management and Physical Plant, and two operating departments, Sales and After-
Sales. Data concerning those departments follow:
Operating
Service Department Department
General Physical After-
Management Plant Sales Sales
Departmental costs...... $36,550 $70,300 $412,500 $492,780
Employee time............. 5,000 2,000 27,000 14,000
Space occupied............ 1,000 1,000 38,000 7,000
General Management Department costs are allocated first on the basis of employee
time and Physical Plant Department costs are allocated second on the basis of space
occupied. The total After-Sales Department cost after allocations is closest to:
A) $516,196
B) $515,880
C) $503,980
D) $513,911
80. Cervetti, Inc., allocates service department costs to operating departments using the
step-down method. The company has two service departments, Administration and
Physical Plant, and two operating departments, Assembly and Testing. Data
concerning those departments follow:
Operating
Service Department Department
Physical
Administration Plant Assembly Testing
Departmental costs. . $26,220 $78,860 $127,160 $737,860
Employee time........ 4,000 1,000 25,000 12,000
Space occupied........ 9,000 1,000 37,000 6,000
Administration Department costs are allocated first on the basis of employee time and
Physical Plant Department costs are allocated second on the basis of space occupied.
The total Testing Department cost after allocations is closest to:
A) $754,279
B) $757,240
C) $748,960
D) $757,368
81. Reddicks Clinic uses the step-down method to allocate service department costs to
operating departments. The clinic has two service departments, Personnel and
Information Technology (IT), and two operating departments, Family Medicine and
Pediatric. Data concerning those departments follow:
Operating
Service Department Department
Family
Personnel IT Medicine Pediatric
Departmental costs. . $86,184 $45,995 $608,130 $316,290
Employees............... 18 26 128 188
PCs.......................... 19 26 125 156
Personnel costs are allocated first on the basis of employees and IT costs are allocated
second on the basis of PCs. The total Pediatric Department cost after allocations is
closest to:
A) $345,462
B) $393,099
C) $392,838
D) $383,307
Solution:
Operating
Service Department Department
Family
Personnel IT Medicine Pediatric Total
Departmental costs
before allocation.......... $86,184 $45,995 $608,130 $316,290 $1,056,599
Allocation:
Personnel costs (26/342,
128/342, 188/342)*..... (86,184) 6,552 32,256 47,376 0
IT costs (125/281,
156/281)**................... (52,547) 23,375 29,172 0
Total costs after
allocation..................... $ 0 $ 0 $663,761 $392,838 $1,056,599
*Based on the employees in IT and the two operating departments, which are 26 + 128
+ 188 = 342.
**Based on PCs of the two operating departments, 125 + 156 = 281.
四
82. Rondo Children's Clinic allocates service department costs to operating departments
using the step-down method. The clinic has two service departments, Administration
and Information Technology (IT), and two operating departments, Prenatal and
Pediatric. Data concerning those departments follow:
Operating
Service Department Department
Administration IT Prenatal Pediatric
Departmental costs. . $54,736 $37,449 $383,270 $259,590
Employees............... 15 21 118 172
PCs.......................... 15 21 102 109
Administration costs are allocated first on the basis of employees and IT costs are
allocated second on the basis of PCs. The total Pediatric Department cost after
allocations is closest to:
A) $311,117
B) $280,845
C) $304,995
D) $311,400
Kota Toy Company manufactures lizard dolls in two departments, Molding and Hairification.
In the Molding Department, plastic is injected into a lizard-shaped mold. The dolls that come
out of the molds are then transferred to the Hairification Department where hair is applied.
Kota uses a weighted-average process cost system to collect costs in both departments.
On January 1, the Molding Department had 4,000 dolls in process. These dolls were 100%
complete with respect to direct materials and 70% complete with respect to conversion cost.
During January, Molding completed 79,000 dolls. On January 31, Molding had 7,000 dolls in
work in process. These dolls were 100% complete with respect to direct materials and 25%
complete with respect to conversion cost.
四
83. How many dolls were started in the Molding Department during January?
A) 75,000
B) 76,000
C) 82,000
D) 86,000
Solution:
84. What account would Kota debit to record the transfer of dolls out of the Molding
Department?
A) Work in Process–Hairification
B) Finished Goods
C) Manufacturing Overhead
D) Work in Process–Molding
Solution:
Materials
Transferred to next department............ 79,000
Ending work in process:
Materials: 7,000 dolls × 100%.......... 7,000
Equivalent units of production............. 86,000
86. What are the Molding Department's equivalent units related to conversion costs for
January?
A) 77,950
B) 80,750
C) 83,750
D) 84,250
Solution:
Conversion
Transferred to next department............ 79,000
Ending work in process:
Conversion: 7,000 dolls × 25%........ 1,750
Equivalent units of production............. 80,750
四
Yoder Company uses the weighted-average method in its process costing system. The
following data pertain to operations in the first processing department for a recent month:
87. How many units were completed and transferred to the next department during the
month?
A) 750,000 units
B) 790,000 units
C) 760,000 units
D) 740,000 units
Solution:
Solution:
89. How much cost, in total, was assigned to the ending work in process inventory?
A) $2,600
B) $4,300
C) $15,000
D) $5,400
Solution:
Onitsha Corporation uses a weighted-average process costing system to collect costs related
to production. The following selected information relates to production for June:
Materials Conversion
Costs in work in process on June 1................ $ 6,720 $ 9,100
Costs added to production during June.......... 57,120 88,400
Total cost........................................................ $63,840 $97,500
All materials at Onitsha are added at the beginning of the production process. Conversion
costs are incurred uniformly over the production process.
90. How many partially completed units were in work in process inventory at the
beginning of June?
A) 3,000
B) 5,000
C) 7,000
D) 8,000
Solution:
Since all materials are added at the beginning of the production process, the
“equivalent units, materials” of 28,000 units represents the number of units that were
in ending work in process inventory plus the units completed transferred out.
Thus:
Beginning work in process inventory.............................. 3,000 *
+ Units started into production........................................... 25,00
0
= Equivalent units............................................................... 28,00
0
91. What total amount of cost should be assigned to the units completed and transferred
out during June?
A) $102,510
B) $108,800
C) $120,600
D) $136,000
Solution:
Materials Conversion
Work in process, beginning................. $ 6,720 $ 9,100
Cost added during the month............... 57,120 88,400
Total cost (a)........................................ $63,840 $97,500
Equivalent units (above) (b)................ 28,000 26,000
Cost per equivalent unit (a) ÷ (b)......... $2.28 $3.75
Aple Corporation uses the weighted-average method in its process costing system. This
month, the beginning inventory in the first processing department consisted of 300 units. The
costs and percentage completion of these units in beginning inventory were:
A total of 8,500 units were started and 8,100 units were transferred to the second processing
department during the month. The following costs were incurred in the first processing
department during the month:
$110,50
Materials costs..................... 0
$153,90
Conversion costs................. 0
The ending inventory was 90% complete with respect to materials and 55% complete with
respect to conversion costs.
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.
四
92. What are the equivalent units for conversion costs for the month in the first processing
department?
A) 385
B) 8,800
C) 8,100
D) 8,485
Solution:
Solution:
94. The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
A) $17.82
B) $19.40
C) $18.14
D) $18.48
Solution:
Solution:
96. The cost of ending work in process inventory in the first processing department
according to the company's cost system is closest to:
A) $19,841
B) $15,313
C) $22,045
D) $12,125
Solution:
Buklin Corporation uses the weighted-average method in its process costing system. This
month, the beginning inventory in the first processing department consisted of 700 units. The
costs and percentage completion of these units in beginning inventory were:
A total of 8,000 units were started and 7,100 units were transferred to the second processing
department during the month. The following costs were incurred in the first processing
department during the month:
$166,50
Materials costs................... 0
Conversion costs................ $96,300
The ending inventory was 75% complete with respect to materials and 15% complete with
respect to conversion costs.
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.
97. How many units are in ending work in process inventory in the first processing
department at the end of the month?
A) 1,600
B) 700
C) 7,300
D) 900
Solution:
98. What are the equivalent units for conversion costs for the month in the first processing
department?
A) 7,340
B) 8,700
C) 7,100
D) 240
Solution:
Solution:
100. The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
A) $13.12
B) $11.62
C) $14.46
D) $13.77
Solution:
Solution:
102. The cost of ending work in process inventory in the first processing department
according to the company's cost system is closest to:
A) $57,162
B) $42,871
C) $29,648
D) $8,574
Solution:
Cavalerio Corporation uses the weighted-average method in its process costing system. This
month, the beginning inventory in the first processing department consisted of 700 units. The
costs and percentage completion of these units in beginning inventory were:
A total of 7,200 units were started and 6,400 units were transferred to the second processing
department during the month. The following costs were incurred in the first processing
department during the month:
The ending inventory was 80% complete with respect to materials and 70% complete with
respect to conversion costs.
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.
103. How many units are in ending work in process inventory in the first processing
department at the end of the month?
A) 800
B) 1,500
C) 900
D) 6,500
Solution:
104. What are the equivalent units for conversion costs for the month in the first processing
department?
A) 7,900
B) 7,450
C) 6,400
D) 1,050
Solution:
Solution:
106. The total cost transferred from the first processing department to the next processing
department during the month is closest to:
A) $291,900
B) $307,318
C) $248,966
D) $277,400
Solution:
Escoffier Corporation uses the weighted-average method in its process costing system. This
month, the beginning inventory in the first processing department consisted of 500 units. The
costs and percentage completion of these units in beginning inventory were:
A total of 5,000 units were started and 4,400 units were transferred to the second processing
department during the month. The following costs were incurred in the first processing
department during the month:
$112,20
Materials costs................... 0
$178,40
Conversion costs................ 0
The ending inventory was 85% complete with respect to materials and 25% complete with
respect to conversion costs.
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.
107. What are the equivalent units for conversion costs for the month in the first processing
department?
A) 5,500
B) 4,675
C) 4,400
D) 275
Solution:
108. The cost per equivalent unit for materials for the month in the first processing
department is closest to:
A) $22.47
B) $23.17
C) $21.03
D) $20.40
Solution:
Solution:
Fuchs Corporation uses the weighted-average method in its process costing system. This
month, the beginning inventory in the first processing department consisted of 300 units. The
costs and percentage completion of these units in beginning inventory were:
A total of 9,100 units were started and 8,500 units were transferred to the second processing
department during the month. The following costs were incurred in the first processing
department during the month:
$208,00
Materials costs................... 0
$280,30
Conversion costs................ 0
The ending inventory was 85% complete with respect to materials and 15% complete with
respect to conversion costs.
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.
110. The total cost transferred from the first processing department to the next processing
department during the month is closest to:
A) $477,250
B) $527,782
C) $499,300
D) $488,300
Solution:
111. The cost of ending work in process inventory in the first processing department
according to the company's cost system is closest to:
A) $50,532
B) $7,580
C) $22,050
D) $42,952
Solution:
Guerin Corporation uses the weighted-average method in its process costing system. This
month, the beginning inventory in the first processing department consisted of 300 units. The
costs and percentage completion of these units in beginning inventory were:
A total of 5,400 units were started and 4,800 units were transferred to the second processing
department during the month. The following costs were incurred in the first processing
department during the month:
$120,00
Materials costs................... 0
Conversion costs................ $92,500
The ending inventory was 80% complete with respect to materials and 55% complete with
respect to conversion costs.
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.
112. How many units are in ending work in process inventory in the first processing
department at the end of the month?
A) 5,100
B) 300
C) 900
D) 600
Solution:
Solution:
114. What are the equivalent units for conversion costs for the month in the first processing
department?
A) 4,800
B) 5,295
C) 495
D) 5,700
Solution:
Solution:
116. The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
A) $16.61
B) $17.89
C) $18.78
D) $17.47
Solution:
Solution:
118. The cost of ending work in process inventory in the first processing department
according to the company’s cost system is closest to:
A) $25,079
B) $36,379
C) $20,008
D) $29,103
Solution:
Hall Corporation uses the weighted-average method in its process costing system. Data
concerning the first processing department for the most recent month are listed below:
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.
119. What are the equivalent units for materials for the month in the first processing
department?
A) 845
B) 6,745
C) 7,200
D) 5,900
Solution:
120. What are the equivalent units for conversion costs for the month in the first processing
department?
A) 5,900
B) 6,420
C) 7,200
D) 520
Solution:
Equivalent units of production
Conversion
Transferred to next department..................................................... 5,900
Ending work in process (1,300 units × 40% complete)................ 520
Equivalent units of production...................................................... 6,420
121. The cost per equivalent unit for materials for the month in the first processing
department is closest to:
A) $15.08
B) $16.15
C) $16.10
D) $17.24
Solution:
122. The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
A) $20.27
B) $19.30
C) $18.85
D) $17.21
Solution:
Solution:
124. The cost of ending work in process inventory in the first processing department
according to the company's cost system is closest to:
A) $47,503
B) $19,001
C) $24,604
D) $30,877
Solution:
Kumari Corporation uses the weighted-average method in its process costing system. Data
concerning the first processing department for the most recent month are listed below:
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.
四
125. The total cost transferred from the first processing department to the next processing
department during the month is closest to:
A) $491,328
B) $469,900
C) $460,600
D) $454,478
Solution:
Solution:
Loxham Corporation uses the weighted-average method in its process costing system. Data
concerning the first processing department for the most recent month are listed below:
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.
127. What are the equivalent units for materials for the month in the first processing
department?
A) 800
B) 6,400
C) 5,400
D) 6,200
128. The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
A) $39.20
B) $37.33
C) $33.25
D) $36.89
Solution:
129. The cost of ending work in process inventory in the first processing department
according to the company's cost system is closest to:
A) $16,977
B) $56,591
C) $45,273
D) $26,606
Solution:
Doz Corporation uses the weighted-average method in its process costing system. This month,
the beginning inventory in the first processing department consisted of 600 units. The costs
and percentage completion of these units in beginning inventory were:
A total of 5,000 units were started and 4,200 units were transferred to the second processing
department during the month. The following costs were incurred in the first processing
department during the month:
The ending inventory was 75% complete with respect to materials and 35% complete with
respect to conversion costs.
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.
130. How many units are in ending work in process inventory in the first processing
department at the end of the month?
A) 900
B) 800
C) 1,400
D) 4,400
Solution:
131. What are the equivalent units for conversion costs for the month in the first processing
department?
A) 5,600
B) 4,690
C) 4,200
D) 490
Solution:
Solution:
L.A. Company uses the weighted-average method in its process costing system. The
following information for the assembly department was obtained from the accounting records
for September (all materials are added at the beginning of the process):
Labor and
Number Overhead Percent
of Units Complete
Work in process inventory, Sept. 1...... 40,000 25%
Transferred in during the month.......... 100,000
Work in process inventory, Sept. 30.... 20,000 50%
133. The equivalent units for material for the month are:
A) 100,000 units
B) 120,000 units
C) 140,000 units
D) 160,000 units
134. The cost per equivalent unit for labor and overhead for the month is:
A) $0.50
B) $0.125
C) $0.52
D) $0.55
Solution:
Iyer Corporation uses the weighted-average method in its process costing system. Data
concerning the first processing department for the most recent month are listed below:
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.
135. What are the equivalent units for conversion costs for the month in the first processing
department?
A) 8,000
B) 6,290
C) 6,100
D) 190
Solution:
136. The cost per equivalent unit for materials for the month in the first processing
department is closest to:
A) $16.20
B) $17.22
C) $14.46
D) $15.38
Solution:
Jones Corporation uses the weighted-average method in its process costing system. Data
concerning the first processing department for the most recent month are listed below:
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.
137. The cost per equivalent unit for materials for the month in the first processing
department is closest to:
A) $15.51
B) $13.64
C) $15.10
D) $17.18
Solution:
Equivalent units of production
Materials
Transferred to next department......................................... 4,400
Ending work in process (1,400 units × 50% complete).... 700
Equivalent units of production.......................................... 5,100
138. The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
A) $43.71
B) $49.10
C) $46.76
D) $38.86
Solution:
(Appendix 4A) The following data relate to the Mixing Department of Dillard Company for a
recent month:
Percent Complete
with Respect to
Units Processing
10,00
Beginning work in process inventory..... 0 65%
50,00
Units started into production.................. 0
51,00
Units completed and transferred out....... 0
Ending work in process inventory.......... 9,000 30%
139. Assuming that Dillard Company uses the FIFO method, the equivalent units for
materials would be:
A) 47,200
B) 50,000
C) 51,000
D) 59,000
Solution:
Solution:
141. Assuming that Dillard Company uses the weighted-average method, the equivalent
units for materials would be:
A) 50,000
B) 51,000
C) 53,700
D) 60,000
Solution:
142. Assuming that Dillard Company uses the weighted-average method, the equivalent
units for processing would be:
A) 53,700
B) 51,000
C) 50,200
D) 47,200
Solution:
(Appendix 4A) Activities in the Sargent Company's Assembly Department for the month of
March follow:
Percent
Complete with
Respect to
Labor &
Units Materials Overhead
Work-in-process inventory, March 1...... 7,000 70% 35%
66,00
Started into production during March.... 0
Work-in-process inventory, March 31.... 5,000 45% 30%
143. The equivalent units for materials for March, using the weighted-average method,
would be:
A) 66,000
B) 68,000
C) 70,250
D) 71,000
Solution:
144. The equivalent units for labor and overhead for March, using the weighted-average
method, would be:
A) 69,500
B) 68,000
C) 67,500
D) 71,000
Solution:
Solution:
Materials
To complete beginning work in process (7,000 units × 30%)........... 2,100
Units started and completed during the period (66,000 units started
− 5,000 units in ending inventory)................................................. 61,000
Ending work in process (5,000 units × 45% complete)..................... 2,250
Equivalent units of production........................................................... 65,350
四
146. The equivalent units for labor and overhead for March using the FIFO method, would
be:
A) 62,950
B) 65,050
C) 66,000
D) 67,050
Solution:
Bronson Company has a process costing system and uses the weighted-average method. The
company had 6,000 units in work in process on January 1 that were 60% complete with
respect to conversion costs. During January 20,000 units were completed. On January 31,
8,000 units remained in work in process that were 40% complete with respect to conversion
costs. Materials are added at the beginning of the process.
147. The equivalent units for January for conversion costs were:
A) 19,600
B) 22,400
C) 23,200
D) 25,600
Solution:
148. How many units were started into production during January?
A) 18,000
B) 19,600
C) 20,000
D) 22,000
Solution:
The following information relates to the Blending Department of Kedakai Products Company
for the month of May. Kedakai uses a weighted-average process costing system.
149. What are the Blending Department's equivalent units related to materials for May?
A) 260,000
B) 277,000
C) 290,000
D) 307,000
Solution:
Solution:
Bettie Corporation uses a weighted-average process costing system to collect costs related to
production. The following selected information relates to production for October:
Materials Conversion
Units completed and transferred out...................... 50,000 50,000
Equivalent units: work in process, October 31...... 10,000 4,000
Total equivalent units............................................ 60,000 54,000
Materials Conversion
Costs in work in process on October 1.................. $ 9,000 $ 5,400
Costs added to production during October............ 243,000 513,000
Total cost............................................................... $252,000 $518,400
All materials at Bettie are added at the beginning of the production process.
四
151. What total amount of cost should be assigned to the units completed and transferred
out during October?
A) $642,000
B) $677,500
C) $690,000
D) $691,900
Solution:
152. What total amount of cost should be assigned to the units in work in process on
October 31?
A) $78,500
B) $80,400
C) $135,500
D) $138,000
Solution:
(Appendix 4A) Owens Company uses a process costing system. For March, the beginning
work in process inventory consisted of 60,000 units that were 60% complete with respect to
processing. The ending work in process inventory for the month consisted of units that were
20% complete with respect to processing. A summary of unit and cost data for the month
follows:
153. Assuming that Owens Company uses the weighted-average method, which of the
following is closest to the cost per equivalent unit for processing cost for March?
A) $4.08
B) $3.87
C) $3.68
D) $3.50
Solution:
154. Assuming that Owens Company uses the FIFO method, which of the following is
closest to the cost per equivalent unit for processing cost for March?
A) $3.23
B) $3.98
C) $4.02
D) $4.22
The following information relates to the Assembly Department of Jataca Corporation for the
month of November. Jataca uses a weighted-average process costing system. All materials at
Jataca are added at the beginning of the production process.
Percent Complete
Number of with Respect to
Units Conversion
Work in process, November 1....... 4,000 40%
Units started into production......... 317,000
Work in process, November 30..... 10,000 90%
On November 1, the work in process inventory account contained $6,400 of material cost and
$4,400 of conversion cost. Cost per equivalent unit for November was $1.50 for materials and
$2.80 for conversion costs.
四
155. What total amount of cost should be assigned to the units transferred out during
November?
A) $1,337,300
B) $1,348,100
C) $1,369,500
D) $1,380,300
Solution:
Materials Conversion
Solution:
(Appendix 4A) Moureaux Corporation uses the FIFO method in its process costing system.
Data concerning the first processing department for the most recent month are listed below:
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.
157. What are the equivalent units for materials for the month in the first processing
department?
A) 910
B) 5,520
C) 6,300
D) 4,400
Solution:
158. What are the equivalent units for conversion costs for the month in the first processing
department?
A) 520
B) 6,300
C) 4,400
D) 5,220
Solution:
159. The cost per equivalent unit for materials for the month in the first processing
department is closest to:
A) $20.00
B) $14.67
C) $16.74
D) $18.48
Solution:
Solution:
161. The total cost transferred from the first processing department to the next processing
department during the month is closest to:
A) $270,900
B) $252,400
C) $239,726
D) $298,557
Solution:
162. The cost of ending work in process inventory in the first processing department
according to the company's cost system is closest to:
A) $61,607
B) $24,643
C) $31,171
D) $43,125
Solution:
(Appendix 4A) Prochino Corporation uses the FIFO method in its process costing system.
Data concerning the first processing department for the most recent month are listed below:
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.
163. What are the equivalent units for materials for the month in the first processing
department?
A) 1,680
B) 9,605
C) 10,700
D) 7,700
Solution:
164. The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
A) $18.22
B) $16.63
C) $15.34
D) $16.11
Solution:
Solution:
Equivalent Units of Production
Materials Conversion
To complete beginning work in process
(materials: 900 units × 25% complete;
conversion: 900 units × 75% complete)........ 225 675
Units started and completed during the period
(9,800 units started − 2,100 units in ending
inventory)...................................................... 7,700 7,700
Ending work in process (materials: 2,100 units
× 80% complete; conversion: 2,100 units ×
45% complete)............................................... 1,680 945
Equivalent units of production.......................... 9,605 9,320
(Appendix 4A) Malmedy Company uses the FIFO method in its process costing system. The
following data pertain to operations in the first processing department for a recent month:
166. How many units were in the beginning work in process inventory?
A) 600 units
B) 1,000 units
C) 800 units
D) 1,400 units
Solution:
+ Work in process, ending.................................................... 2,000
+ Units completed and transferred out during the month..... 24,000
− Units started into production during the month................. 25,200
= Work in process, beginning............................................... 800
四
167. What was the cost per equivalent unit for materials during the month?
A) $3.95
B) $4.50
C) $2.00
D) $5.00
Solution:
(Appendix 4A) Quochang Corporation uses the FIFO method in its process costing system.
Data concerning the first processing department for the most recent month are listed below:
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.
四
168. How many units were started AND completed during the month in the first processing
department?
A) 5,200
B) 4,800
C) 6,100
D) 5,700
Solution:
Since there were 400 units in beginning work in process, these were not started AND
completed, so the 400 should be subtracted from the total units completed and
transferred out during the month (5,200 – 400 = 4,800) to arrive at the total units
which were both started and completed during the month.
169. The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
A) $46.69
B) $46.65
C) $44.43
D) $49.29
Solution:
Conversion
To complete beginning work in process (400 units × 65%
complete)................................................................................. 260
Units started and completed during the period (5,700 units
started − 900 units in ending inventory).................................. 4,800
Ending work in process (900 units × 45% complete)................. 405
Equivalent units of production.................................................... 5,465
(Appendix 4A) Noguti Corporation uses the FIFO method in its process costing system. Data
concerning the first processing department for the most recent month are listed below:
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.
170. What are the equivalent units for materials for the month in the first processing
department?
A) 250
B) 7,500
C) 7,110
D) 6,800
Solution:
171. The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
A) $26.25
B) $25.66
C) $24.44
D) $24.94
Solution:
(Appendix 4A) Outinki Corporation uses the FIFO method in its process costing system. Data
concerning the first processing department for the most recent month are listed below:
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.
四
172. What are the equivalent units for conversion costs for the month in the first processing
department?
A) 6,910
B) 425
C) 8,500
D) 6,100
Solution:
Solution:
(Appendix 4A) Sumptuous Beer Company manufactures beer in two departments, Fermenting
and Bottling. In the Fermenting Department, ingredients are placed in a large vat and
fermented for three days. The beer is then transferred over to Bottling where it is further
purified and bottled. Sumptuous uses a FIFO process cost system to collect costs in both
departments.
On May 1, the Fermenting Department had 32,000 gallons (units) in process. These gallons
were 100% complete with respect to materials (ingredients) and 80% complete with respect to
conversion cost. During May, Fermenting started an additional 460,000 gallons into
production. On May 31, Fermenting had 18,000 gallons in work in process. These gallons
were 100% complete with respect to materials and 60% complete with respect to conversion
cost.
四
174. What are the Fermenting Department's equivalent units (gallons) of production related
to materials for May?
A) 442,000
B) 460,000
C) 474,000
D) 492,000
Solution:
175. What are the Fermenting Department's equivalent units (gallons) of production related
to conversion costs for May?
A) 459,200
B) 474,800
C) 477,200
D) 478,400
Solution:
(Appendix 4A) Lahania Corporation uses a FIFO process costing system to collect costs
related to production. The following selected information relates to production for April:
Materials Conversion
Costs in work in process on April 1...................... $ 50,400 $126,000
Costs added to production during April................ 169,600 529,200
Total cost............................................................... $220,000 $655,200
All materials at Lahania are added at the beginning of the production process. Conversion
costs are incurred uniformly over the production process. During April, Lahania completed
44,000 units.
176. What total amount of cost should be assigned to the units completed and transferred
out during April?
A) $642,830
B) $819,230
C) $833,360
D) $1,009,760
Solution:
177. What total amount of cost should be assigned to the units in work in process on April
30?
A) $55,970
B) $71,300
C) $151,520
D) $179,930
Solution:
(Appendix 4A) The following information relates to the Cutting Department of Kittina
Corporation for the month of February. Kittina uses a FIFO process costing system. All
materials at Kittina are added at the beginning of the production process.
Percentage complete
Number of with respect to
units conversion
Work in process, February 1.......... 18,000 10%
Units started into production......... 160,000
Work in process, February 28........ 7,000 40%
On February 1, the work in process inventory account contained $55,620 of material cost and
$123,120 of conversion cost. Cost per equivalent unit for February was $3.10 for materials
and $7.50 for conversion costs.
四
178. What total amount of cost should be assigned to the units completed and transferred
out during February?
A) $1,743,300
B) $1,812,600
C) $1,814,040
D) $1,922,040
Solution:
179. What total amount of cost should be assigned to the units in work in process on
February 28?
A) $29,680
B) $42,700
C) $44,520
D) $53,200
Solution:
(Appendix 4B) Zorn Company has a Custodial Services department which services the
company's Maintenance department and its two operating departments. Costs of the Custodial
Services department are allocated to other departments on the basis of square feet of space
occupied. The amount of space occupied by each department is given below:
180. If Zorn Company uses the step-down method and allocates the Custodial Services
costs first, the amount of this cost allocated to the Maintenance department would be
closest to:
A) $3,512
B) $3,600
C) $9,000
D) $0
Solution:
Solution:
(Appendix 4B) Kahuna Financial Services Corporation has two service departments and two
operating departments. Selected information on the four departments for last year are as
follows:
Number of
CPU Hours Employees
Service departments:
Data Processing.............. – 15
Cafeteria......................... 1,000 –
Operating departments:
Investments..................... 15,000 114
Loans.............................. 9,000 171
Kahuna allocates Data Processing cost first on the basis of CPU hours. Kahuna then allocates
Cafeteria cost on the basis of the number of employees. Operating costs in Data Processing
for last year were $870,000. Operating costs in Cafeteria for last year were $200,000. No
distinction is made between variable and fixed costs.
182. If service department costs are allocated using the direct method, how much service
cost will be allocated from Data Processing to Investments?
A) $435,000
B) $522,000
C) $528,000
D) $543,750
Solution:
Operating
Service Department Department
Data Invest-
Processing Cafeteria ments Loans Total
Departmental costs
before allocation..... $870,000 $200,000 $1,070,000
Allocation:
Data processing costs
(15/24, 9/24)*......... (870,000) $543,750 $326,250 0
Cafeteria costs
(114/285,
171/285)**............. (200,000) 80,000 120,000 0
Total costs after
allocation................ $ 0 $ 0 $623,750 $446,250 $1,070,000
*Data processing costs are allocated on the basis of CPU hours: 15 + 9 = 24.
**Cafeteria costs are allocated on the basis of the number of employees: 114 + 171 =
285.
四
183. If service department costs are allocated using the step-down method, how much
service cost will be allocated from Data Processing to Loans?
A) $313,200
B) $316,800
C) $326,250
D) $330,000
Solution:
Operating
Service Department Department
Data Invest-
Processing Cafeteria ments Loans Total
Departmental costs
before allocation............. $870,000 $200,000 $1,070,000
Allocation:
Data processing costs
(1/25, 15/25, 9/25)*........ (870,000) 34,800 $522,000 $313,200 0
Cafeteria costs (114/285,
171/285)**..................... (234,800) 93,920 140,880 0
Total costs after
allocation........................ $ 0$ 0 $615,920 $454,080 $1,070,000
*Data processing costs are allocated on the basis of CPU hours: 15 + 9 + 1 = 25.
**Cafeteria costs are allocated on the basis of the number of employees: 114 + 171 =
285.
(Appendix 4B) Greek Corporation has two service departments (Sigma and Delta) that
provide service to each other and to two operating departments (Chi and Omega). Sigma
provides 25% of its service to Delta, 15% of its service to Chi, and 60% of its service to
Omega. Delta provides 8% of its service to Sigma, 69% of its service to Chi, and 23% of its
service to Omega. Operating costs in Sigma are $90,000. Operating costs in Delta are
$50,000. Cost allocations are made starting with Sigma. No distinction is made between
variable and fixed costs.
184. If service department costs are allocated using the direct method, what is the total
amount of service cost that will be allocated to Omega?
A) $84,500
B) $70,675
C) $72,125
D) $73,075
Solution:
Service Operating
Department Department
Sigma Delta Chi Omega Total
Departmental costs before
allocation $90,000 $50,000 $140,000
Allocation:
Sigma costs (15/75, 60/75)* (90,000) $18,000 $72,000 0
Delta costs (69/92, 23/92)** (50,000) 37,500 12,500 0
Total costs after allocation $ 0 $ 0 $55,500 $84,500 $140,000
185. If service department costs are allocated using the step-down method, what is the total
amount of service cost that will be allocated to Chi?
A) $48,000
B) $67,875
C) $63,525
D) $64,125
Solution:
Service Operating
Department Department
Sigma Delta Chi Omega Total
Departmental costs before
allocation................................ $90,000 $50,000 $140,000
Allocation:
Sigma costs (25%, 15%,
60%)*..................................... (90,000) 22,500 $13,500 $54,000 0
Delta costs (69/92, 23/92)**. . . (72,500) 54,375 18,125 0
Total costs after allocation...... $ 0 $ 0 $67,875 $72,125 $140,000
(Appendix 4B) Seidell Corporation has two service departments, Administrative and
Facilities, and two operating departments, Assembly and Customer Solutions.
The company uses the direct method to allocate service department costs to operating
departments. Administrative costs are allocated on the basis of employee hours and Facilities
costs are allocated on the basis of space occupied.
186. The total amount of Administrative Department cost allocated to the Assembly
Department is closest to:
A) $26,730
B) $25,568
C) $42,414
D) $23,522
Solution:
Service Operating
Department Department
Customer
Admin. Facilities Assembly Solutions Total
Departmental costs before
allocation......................... $43,560 $54,720 $561,960 $253,030 $913,270
Allocation:
Admin. costs (27/44,
17/44)*............................. (43,560) 26,730 16,830 0
Facilities costs (37/38,
1/38)**............................. (54,720) 53,280 1,440 0
Total costs after allocation $ 0 $ 0 $641,970 $271,300 $913,270
187. The total Customer Solutions Department cost after the allocations of service
department costs is closest to:
A) $269,175
B) $254,470
C) $270,593
D) $271,300
Solution:
Service
Department Operating Department
Customer
Admin. Facilities Assembly Solutions Total
Departmental costs before
allocation......................... $43,560 $54,720 $561,960 $253,030 $913,270
Allocation:
Admin. costs (27/44,
17/44)*............................ (43,560) 26,730 16,830 0
Facilities costs (37/38,
1/38)**............................ (54,720) 53,280 1,440 0
Total costs after allocation. $ 0 $ 0 $641,970 $271,300 $913,270
(Appendix 4B) Maute Clinic has two service departments, Administrative and Support, and
two operating departments, Adult Medicine and Pediatrics.
The clinic uses the direct method to allocate service department costs to operating
departments. Administrative Department costs are allocated on the basis of employee hours
and Support Department costs are allocated on the basis of space occupied in square feet.
四
188. The total amount of Administrative Department cost allocated to the Adult Medicine
Department is closest to:
A) $13,636
B) $14,610
C) $20,382
D) $15,340
Solution:
Service Operating
Department Department
Adult
Admin. Support Medicine Pediatrics Total
Departmental costs before
allocation........................... $23,600 $51,480 $259,690 $288,790 $623,560
Allocation:
Admin. costs (26/40,
14/40)*............................... (23,600) 15,340 8,260 0
Support costs (38/44,
6/44)**............................... (51,480) 44,460 7,020 0
Total costs after allocation. . $ 0 $ 0 $319,490 $304,070 $623,560
Solution:
Service Operating
Department Department
Adult
Admin. Support Medicine Pediatrics Total
Departmental costs before
allocation........................... $23,600 $51,480 $259,690 $288,790 $623,560
Allocation:
Admin. costs (26/40,
14/40)*............................... (23,600) 15,340 8,260 0
Support costs (38/44,
6/44)**............................... (51,480) 44,460 7,020 0
Total costs after allocation. . $ 0 $ 0 $319,490 $304,070 $623,560
(Appendix 4B) Ockey Corporation uses the direct method to allocate service department costs
to operating departments. The company has two service departments, Information Technology
and Personnel, and two operating departments, Fabrication and Customization.
Information Technology Department costs are allocated on the basis of computer workstations
and Personnel Department costs are allocated on the basis of employees.
190. The total amount of Information Technology Department cost allocated to the two
operating departments is closest to:
A) $26,880
B) $15,929
C) $58,119
D) $21,943
Solution:
All of the Information Technology Department cost will be allocated to the two
operating departments.
191. The total Fabrication Department cost after service department allocations is closest
to:
A) $270,110
B) $277,969
C) $280,623
D) $274,308
Solution:
Operating
Service Department Department
Info.
Tech. Personnel Fabrication Custom. Total
Departmental costs before
allocation.......................... $26,880 $21,525 $251,210 $447,000 $746,615
Allocation:
Info. Tech. costs (43/80,
37/80)*............................. (26,880) 14,448 12,432 0
Personnel costs (73/105,
32/105)**......................... (21,525) 14,965 6,560 0
Total costs after allocation $ 0 $ 0 $280,623 $465,992 $746,615
(Appendix 4B) Romain Surgical Hospital uses the direct method to allocate service
department costs to operating departments. The hospital has two service departments,
Information Technology and Administration, and two operating departments, Surgery and
Recovery.
Information Technology Department costs are allocated on the basis of computer workstations
and Administration Department costs are allocated on the basis of employees.
192. The total amount of Information Technology Department cost allocated to the two
operating departments is closest to:
A) $18,019
B) $109,015
C) $21,587
D) $25,956
Solution:
All of the Information Technology Department cost will be allocated to the two
operating departments.
193. The total Surgery Department cost after service department allocations is closest to:
A) $598,249
B) $608,636
C) $602,727
D) $605,827
Solution:
Service Operating
Department Department
Info.
Tech. Admin. Surgery Recovery Total
Departmental costs before
allocation.......................... $25,956 $36,356 $563,640 $588,200 $1,214,152
Allocation:
Info. Tech. costs (54/84,
30/84)*............................. (25,956) 16,686 9,270 0
Administration costs
(95/122, 27/122)**........... (36,356) 28,310 8,046 0
Total costs after allocation $ 0$ 0 $608,636 $605,516 $1,214,152
(Appendix 4B) Strzelecki Corporation uses the step-down method to allocate service
department costs to operating departments. The company has two service departments,
Service Department A and Service Department B, and two operating departments, Operating
Department X and Operating Department Y. Data concerning those departments follow:
Service Department A costs are allocated first on the basis of allocation base A and Service
Department B costs are allocated second on the basis of allocation base B.
194. In the first step of the allocation, the amount of Service Department A cost allocated to
the Operating Department X is closest to:
A) $24,360
B) $21,924
C) $16,948
D) $24,914
Solution:
Operating
Service Department Department
Service Service Oper. Oper.
Dept. A Dept. B Dept. X Dept.Y Total
Departmental costs
before allocation............. $37,800 $45,780 $247,360 $304,330 $635,270
Allocation:
Serv. Dept. A costs (1/45,
29/45, 15/45)*................ (37,800) 840 24,360 12,600 0
Serv. Dept. B costs
(39/42, 3/42)**............... (46,620) 43,290 3,330 0
Total costs after
allocation........................ $ 0 $ 0 $315,010 $320,260 $635,270
195. The total Operating Department Y cost after allocations is closest to:
A) $320,486
B) $318,473
C) $320,260
D) $307,660
Solution:
Service Operating
Department Department
Service Service Oper. Oper.
Dept. A Dept. B Dept. X Dept.Y Total
Departmental costs before
allocation............................ $37,800 $45,780 $247,360 $304,330 $635,270
Allocation:
Serv. Dept. A costs (1/45,
29/45, 15/45)*..................... (37,800) 840 24,360 12,600 0
Serv. Dept. B costs (39/42,
3/42)**................................ (46,620) 43,290 3,330 0
Total costs after allocation... $ 0 $ 0 $315,010 $320,260 $635,270
(Appendix 4B) Yamane Corporation, a manufacturer, uses the step-down method to allocate
service department costs to operating departments. The company has two service departments,
Administration and Facilities, and two operating departments, Assembly and Finishing. Data
concerning those departments follow:
Administration Department costs are allocated first on the basis of labor hours and Facilities
Department costs are allocated second on the basis of space occupied.
四
196. In the first step of the allocation, the amount of Administration Department cost
allocated to the Assembly Department is closest to:
A) $4,476
B) $12,838
C) $11,310
D) $12,180
Solution:
Service Operating
Department Department
Admin. Facilities Assembly Finishing Total
Departmental costs before
allocation........................... $22,620 $67,440 $105,520 $427,780 $623,360
Allocation:
Admin. costs (2/39, 21/39,
16/39)*............................... (22,620) 1,160 12,180 9,280 0
Facilities costs (32/35,
3/35)**............................... (68,600) 62,720 5,880 0
Total costs after allocation. . $ 0 $ 0 $180,420 $442,940 $623,360
Solution:
Service Operating
Department Department
Admin. Facilities Assembly Finishing Total
Departmental costs before
allocation.............................. $22,620 $67,440 $105,520 $427,780 $623,360
Allocation:
Admin. costs (2/39, 21/39,
16/39)*.................................. (22,620) 1,160 12,180 9,280 0
Facilities costs (32/35,
3/35)**.................................. (68,600) 62,720 5,880 0
Total costs after allocation..... $ 0 $ 0 $180,420 $442,940 $623,360
(Appendix 4B) Muckenfuss Clinic uses the step-down method to allocate service department
costs to operating departments. The clinic has two service departments, Personnel and
Information Technology (IT), and two operating departments, Family Medicine and Geriatric
Medicine. Data concerning those departments follow:
Personnel costs are allocated first on the basis of employees and IT costs are allocated second
on the basis of PCs.
198. In the first step of the allocation, the amount of Personnel Department cost allocated to
the Family Medicine Department is closest to:
A) $23,920
B) $58,405
C) $23,049
D) $26,366
Solution:
Service Operating
Department Department
Family Geriatric
Personnel IT Medicine Medicine Total
Departmental costs before
allocation........................... $66,930 $11,678 $563,940 $82,310 $724,858
Allocation:
Personnel costs (27/291,
104/291, 160/291)*........... (66,930) 6,210 23,920 36,800 0
IT costs (85/172, 87/172)** (17,888) 8,840 9,048 0
Total costs after allocation. . $ 0 $ 0 $596,700 $128,158 $724,858
*Personnel costs are allocated on the basis of employees: 27 + 104 + 160 = 291.
**IT costs are allocated on the basis of number of PCs: 85 + 87 = 172.
四
199. The total Geriatric Medicine Department cost after allocations is closest to:
A) $122,608
B) $128,781
C) $128,158
D) $91,358
Solution:
Service Operating
Department Department
Family Geriatric
Personnel IT
Medicine Medicine Total
Departmental costs before
allocation.......................... $66,930 $11,678 $563,940 $82,310 $724,858
Allocation:
Personnel costs (27/291,
104/291, 160/291)*.......... (66,930) 6,210 23,920 36,800 0
IT costs (85/172, 87/172)**
.......................................... (17,888) 8,840 9,048 0
Total costs after allocation $ 0 $ 0 $596,700 $128,158 $724,858
*Personnel costs are allocated on the basis of employees: 27 + 104 + 160 = 291.
**IT costs are allocated on the basis of number of PCs: 85 + 87 = 172.
Use the following to answer questions 200-201:
(Appendix 4B) Blondell Legal Services, LLC, uses the step-down method to allocate service
department costs to operating departments. The firm has two service departments, Personnel
and Information Technology (IT), and two operating departments, Family Law and Corporate
Law. Data concerning those departments follow:
Personnel costs are allocated first on the basis of employees and IT costs are allocated second
on the basis of PCs.
四
200. In the first step of the allocation, the amount of Personnel Department cost allocated to
the Family Law Department is closest to:
A) $32,248
B) $70,252
C) $36,336
D) $33,396
Solution:
Service Operating
Department Department
Family Corporate
Personnel IT Law Law Total
Departmental costs before
allocation.......................... $85,284 $29,703 $883,360 $189,010 $1,187,357
Allocation:
Personnel costs (25/309,
121/309, 163/309)*.......... (85,284) 6,900 33,396 44,988 0
IT costs (112/249,
137/249)**....................... (36,603) 16,464 20,139 0
Total costs after allocation $ 0 $ 0 $933,220 $254,137 $1,187,357
*Personnel costs are allocated on the basis of employees: 25 + 121 + 163 = 309.
**IT costs are allocated on the basis of number of PCs: 112 + 137 = 249.
201. The total Corporate Law Department cost after allocations is closest to:
A) $254,137
B) $246,630
C) $254,301
D) $209,149
Solution:
Service Operating
Department Department
Family Corporate
Personnel IT Law Law Total
Departmental costs before
allocation.......................... $85,284 $29,703 $883,360 $189,010 $1,187,357
Allocation:
Personnel costs (25/309,
121/309, 163/309)*.......... (85,284) 6,900 33,396 44,988 0
IT costs (112/249,
137/249)**....................... (36,603) 16,464 20,139 0
Total costs after allocation $ 0 $ 0 $933,220 $254,137 $1,187,357
*Personnel costs are allocated on the basis of employees: 25 + 121 + 163 = 309.
**IT costs are allocated on the basis of number of PCs: 112 + 137 = 249.
四
Essay Questions
202. Bayas Corporation uses processing costing. A number of transactions that occurred in
November are listed below.
(1) Raw materials that cost $39,800 are withdrawn from the storeroom for use in the
Mixing Department. All of these raw materials are classified as direct labor.
(2) Direct labor costs of $16,100 are incurred, but not yet paid, in the Mixing
Department.
(3) Manufacturing overhead of $45,700 is applied in the Mixing Department using the
department's predetermined overhead rate.
(4) Units with a carrying cost of $87,600 finish processing in the Mixing Department
and are transferred to the Drying Department for further processing.
(5) Units with a carrying cost of $111,300 finish processing in the Drying Department,
the final step in the production process, and are transferred to the finished goods
warehouse.
(6) Finished goods with a carrying cost of $98,200 are sold.
Required:
Ans:
(1
) Work in Process-Mixing Department $39,800
Raw Materials $39,800
(2
) Work in Process-Mixing Department $16,100
Salaries and Wages Payable $16,100
(3
) Work in Process-Mixing Department $45,700
Manufacturing Overhead $45,700
(4
) Work in Process-Drying Department $87,600
Work in Process-Mixing Department $87,600
(5 $111,30
) Finished Goods 0
$111,30
Work in Process-Drying Department 0
(6
) Cost of Goods Sold $98,200
Finished Goods $98,200
203. During August, the following transactions were recorded at Goyer Corporation. The
company uses processing costing.
(1) Raw materials that cost $24,500 are withdrawn from the storeroom for use in the
Assembly Department. All of these raw materials are classified as direct labor.
(2) Direct labor costs of $29,000 are incurred, but not yet paid, in the Assembly
Department.
(3) Manufacturing overhead of $58,900 is applied in the Assembly Department using
the department's predetermined overhead rate.
(4) Units with a carrying cost of $101,200 finish processing in the Assembly
Department and are transferred to the Painting Department for further processing.
(5) Units with a carrying cost of $106,100 finish processing in the Painting
Department, the final step in the production process, and are transferred to the
finished goods warehouse.
(6) Finished goods with a carrying cost of $95,100 are sold.
Required:
Ans:
(1
) Work in Process-Assembly Department $24,500
Raw Materials $24,500
(2
) Work in Process-Assembly Department $29,000
Salaries and Wages Payable $29,000
(3
) Work in Process-Assembly Department $58,900
Manufacturing Overhead $58,900
(4 $101,20
) Work in Process-Painting Department 0
$101,20
Work in Process-Assembly Department 0
(5 $106,10
) Finished Goods 0
$106,10
Work in Process-Painting Department 0
(6
) Cost of Goods Sold $95,100
Finished Goods $95,100
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting
LO: 1 Level: Easy
四
204. Kamp Company uses the weighted-average method in its process costing. Information
about units processed during a recent month in the Curing Department follow:
Conversion Percent
Units Completion
Beginning work in process inventory........ 10,000 30%
150,00
Units started into production..................... 0
140,00
Units completed and transferred out.......... 0
Ending work in process inventory............. 20,000 40%
The beginning work in process inventory had $4,600 in conversion cost. During the
month, the Department incurred an additional $210,000 in conversion cost.
Required:
a. Determine the equivalent units of production for conversion for the month.
b. Determine the cost per equivalent unit of production for conversion for the month.
c. Determine the total conversion cost transferred out during the month.
d. Determine the conversion cost assigned to the ending work in process inventory.
Ans:
b
. Cost in the beginning inventory............................. $ 4,600
Cost added during the month................................. 210,000
$214,60
Total cost................................................................ 0
$214,600 ÷ 148,000 units = $1.45 per unit
Required:
Ans:
a. Materials Conversion
Transferred to next department............ 22,200 22,200
Ending work in process:
Materials: 1,000 units × 80%............ 800
Conversion: 1,000 units × 60%........ 600
Equivalent units of production............. 23,000 22,800
b. Materials Conversion
Work in process, beginning................. $ 8,400 $ 7,200
Cost added during the month............... 97,400 129,600
Total cost (a)........................................ $105,800 $136,800
Equivalent units (above) (b)................ 23,000 22,800
Cost per equivalent unit (a) ÷ (b)......... $4.60 $6.00
Required:
Ans:
a. Materials Conversion
Units transferred to next department....... 10,100 10,100
Ending work in process:
Materials: 800 units × 90%.................. 720
Conversion: 800 units × 20%............... 160
Equivalent units of production............. 10,820 10,260
b
. Materials Conversion
Cost of beginning work in process.......... $ 6,768 $ 3,186
Cost added during the month.................. 97,104 356,940
Total cost................................................. $103,872 $360,126
Equivalent units....................................... 10,820 10,260
Cost per equivalent unit........................... $9.60 $35.10
d
. Materials Conversion Total
Units completed and transferred out....... 10,100 10,100
Cost per equivalent unit........................... $9.60 $35.10
$451,47
Cost of units transferred out.................... $96,960 $354,510 0
Required:
Ans:
Weighted-average method:
a. Materials Conversion
Units transferred to next department....... 21,800 21,800
Ending work in process:
Materials: 500 units × 50%.................. 250
Conversion: 500 units × 20%............... 100
Equivalent units of production............. 22,050 21,900
b
. Materials Conversion
Cost of beginning work in process.......... $ 342 $ 4,518
Cost added during the month.................. 45,963 538,602
Total cost................................................. $46,305 $543,120
Equivalent units....................................... 22,050 21,900
Cost per equivalent unit........................... $2.10 $24.80
d
. Materials Conversion Total
Units completed and transferred out....... 21,800 21,800
Cost per equivalent unit........................... $2.10 $24.80
$586,42
Cost of units transferred out.................... $45,780 $540,640 0
Required:
a. How many units were transferred to the next department during the month?
b. What were the equivalent units of production for materials and for conversion
costs for the month?
c. What were the costs per equivalent unit of production for materials and for
conversion costs for the month?
d. What was the cost of the ending work in process inventory in the department at the
end of the month?
四
Ans:
Weighted-average method:
a. Units in beginning inventory...................... 10
+ Units started into production................. 150
− Units in ending inventory...................... 20
= Units transferred out.............................. 140
b
. Materials Conversion
Transferred to next department.................. 140 140
Work in process, ending............................. 8 4
Equivalent units of production................... 148 144
c. Materials Conversion
Work in process, beginning....................... $ 1,200 $ 3,000
Cost added during the month..................... 42,460 137,400
Total cost (a).............................................. $43,660 $140,400
Equivalent units (above) (b)....................... 148 144
Cost per equivalent unit (a) ÷ (b)............... $295 $975
d
. Materials Conversion Total
Ending work in process equivalent units... 8 4
Cost per equivalent unit............................. $295 $975
$6,26
Cost of ending work in process.................. $2,360 $3,900 0
Percent Complete
Units Materials Conversion
Work in process, November 1................... 800 55% 10%
Units started into production during 8,20
November............................................... 0
Units completed during November and 7,30
transferred to the next department......... 0
1,70
Work in process, November 30................. 0 75% 25%
Required:
Compute the equivalents units of production for both materials and conversion costs
for the Assembly Department for November using the weighted-average method.
Ans:
Weighted-average method:
Materials Conversion
Units transferred to the next department......... 7,300 7,300
Work in process, November 30:
1,700 units × 75%......................................... 1,275
1,700 units × 25%......................................... 425
Equivalent units of production........................ 8,575 7,725
210. The following data have been provided by Cutts Corporation, which uses the
weighted-average method in its process costing. The data are for the company's
Shaping Department for February.
Percent Complete
Units Materials Conversion
Work in process, February 1.................... 300 50% 10%
Units started into production during 5,20
February................................................ 0
Units completed during February and 4,80
transferred to the next department........ 0
Work in process, February 28.................. 700 50% 40%
Required:
Compute the equivalents units of production for both materials and conversion costs
for the Shaping Department for February using the weighted-average method.
Ans:
Weighted-average method:
Materials Conversion
Units transferred to the next department............... 4,800 4,800
Work in process, February 28:
700 units × 50%.................................................. 350
700 units × 40%.................................................. 280
Equivalent units of production........................... 5,150 5,080
Required:
Using the weighted-average method, determine the equivalent units of production for
materials and conversion costs.
Ans:
Weighted-average method:
Materials Conversion
Transferred to next department.......... 19,800 19,800
Work in process, ending:
Materials: 800 units × 80%............. 640
Conversion: 800 units × 50%.......... 400
Equivalent units of production........ 20,440 20,200
212. Poirrier Corporation uses process costing. The following data pertain to its Assembly
Department for May.
Required:
Determine the equivalent units of production for the Assembly Department for May
using the weighted-average method.
Ans:
Weighted-average method:
Materials Conversion
Transferred to next department............ 4,600 4,600
Work in process, ending:
Materials: 1,600 units × 85%............ 1,360
Conversion: 1,600 units × 65%........ 1,040
Equivalent units of production......... 5,960 5,640
Required:
Determine the equivalent units of production for the Materials Preparation Department
for March using the weighted-average method.
Ans:
Weighted-average method:
Materials Conversion
Transferred to next department............ 6,300 6,300
Work in process, ending:
Materials: 900 units × 55%............... 495
Conversion: 900 units × 10%........... 90
Equivalent units of production......... 6,795 6,390
214. Jahncke Inc. uses the weighted-average method in its processing costing. The
following data concern the company's Assembly Department for the month of April.
Materials Conversion
Work in process, April 1.................................. $3,600 $1,902
Cost added to production in the Assembly
Department during April.............................. $103,882 $278,010
Equivalent units of production for April......... 8,810 8,720
Required:
Compute the costs per equivalent unit for the Assembly Department for April.
Ans:
Weighted-average method:
Materials Conversion
Work in process, April 1........................................ $ 3,600 $ 1,902
Cost added during the month in the Assembly
Department......................................................... 103,882 278,010
Total cost............................................................... $107,482 $279,912
Equivalent units of production.............................. 8,810 8,720
Cost per equivalent unit......................................... $12.20 $32.10
Materials Conversion
Work in process, December 1.......................................... $7,530 $8,528
Cost added to production in the Mixing Department
during December.......................................................... $225,900 $283,632
Equivalent units of production for December................. 9,300 8,800
Required:
Compute the cost per equivalent unit for materials and conversion for the Mixing
Department in December.
Ans:
Weighted-average method:
Materials Conversion
Work in process, December 1.......................................... $ 7,530 $ 8,528
Cost added during the month in the Mixing Department 225,900 283,632
Total cost......................................................................... $233,430 $292,160
Equivalent units of production........................................ 9,300 8,800
Cost per equivalent unit................................................... $25.10 $33.20
216. Hutchcroft Corporation uses the weighted-average method in its processing costing.
The following data concern the company's Assembly Department for the month of
December.
Materials Conversion
Cost per equivalent unit................................................... $24.30 $27.10
Equivalent units in ending work in process..................... 630 225
During the month, 6,200 units were completed and transferred from the Assembly
Department to the next department.
Required:
Determine the cost of ending work in process inventory and the cost of units
transferred out of the department during December using the weighted-average
method.
Ans:
Weighted-average method:
Transferred to the next department:
$318,68
6,200 units at $51.40 per unit....................................... 0
Work in process, December 31:
Materials, 630 EUs at $24.30 per EU........................... $15,309
Conversion, 225 EUs at $27.10 per EU....................... 6,098
Total work in process, December 31............................ $21,407
Materials Conversion
Cost per equivalent unit......................................... $8.10 $28.50
Equivalent units in ending work in process........... 1,330 1,235
During the month, 7,400 units were completed and transferred from the Assembly
Department to the next department.
Required:
Determine the cost of ending work in process inventory and the cost of units
transferred out of the department during June using the weighted-average method.
Ans:
Weighted-average method:
Transferred to the next department:
$270,84
7,400 units × $36.60 per unit........................... 0
Work in process, June 30:
Materials, 1,330 EUs at $8.10 per EU............. $10,773
Conversion, 1,235 EUs at $28.50 per EU....... 35,198
Total work in process, June 30........................ $45,971
218. Dalsace Inc. uses the FIFO method in its process costing system. The following data
concern the operations of the company's first processing department for a recent
month.
Required:
FIFO method:
a. Materials Conversion
To complete the beginning work in process:
Materials: 400 units × (100% − 60%).................... 160
Conversion: 400 units × (100% − 40%)................ 240
Units started and completed (14,500 − 400)............. 14,100 14,100
Ending work in process:
Materials: 900 units × 90%.................................... 810
Conversion: 900 units × 40%................................. 360
Equivalent units of production............................... 15,070 14,700
b
. Materials Conversion
Cost added during the month.................................... $119,053 $418,950
Equivalent units of production.................................. 15,070 14,700
Cost per equivalent unit............................................ $7.90 $28.50
d
. Materials Conversion Total
Cost from the beginning inventory........................... $1,944 $4,512 $6,456
Cost to complete the units in beginning inventory:
Equivalent units to complete.................................. 160 240
Cost per equivalent unit......................................... $7.90 $28.50
Cost to complete.................................................... $1,264 $6,840 $8,104
Cost of units started and completed:
Units started and completed................................... 14,100 14,100
Cost per equivalent unit......................................... $7.90 $28.50
$513,24
Cost of units started and completed....................... $111,390 $401,850 0
$527,80
Total cost of units transferred out............................. 0
219. Engsbye Inc. uses the FIFO method in its process costing system. The following data
concern the operations of the company's first processing department for a recent
month.
Required:
FIFO method:
a. Materials Conversion
To complete the beginning work in process:
Materials: 200 units × (100% − 80%)......... 40
Conversion: 200 units × (100% − 10%)...... 180
Units started and completed (20,000 − 200). . 19,800 19,800
Ending work in process:
Materials: 200 units × 80%......................... 160
Conversion: 200 units × 50%...................... 100
Equivalent units of production....................... 20,000 20,080
b
. Materials Conversion
Cost added during the month.......................... $96,000 $413,648
Equivalent units of production....................... 20,000 20,080
Cost per equivalent unit.................................. $4.80 $20.60
d
. Materials Conversion Total
Cost from the beginning inventory......... $800 $406 $1,206
Cost to complete the units in beginning
inventory:
Equivalent units to complete................ 40 180
Cost per equivalent unit....................... $4.80 $20.60
Cost to complete.................................. $192 $3,708 $3,900
Cost of units started and completed:
Units started and completed................. 19,800 19,800
Cost per equivalent unit....................... $4.80 $20.60
$502,92
Cost of units started and completed..... $95,040 $407,880 0
$508,02
Total cost of units transferred out........... 6
220. Lenning Corporation uses the FIFO method in its process costing. The following data
pertain to its Assembly Department for July.
Percent Complete
Units Materials Conversion
Work in process, July 1............................. 300 75% 10%
6,10
Units started into production during July. . 0
Units completed during July and 5,60
transferred to the next department......... 0
Work in process, July 31........................... 800 90% 85%
Required:
Compute the equivalent units of production for both materials and conversion costs for
the Assembly Department for July using the FIFO method.
Ans:
FIFO method:
Materials Conversion
Work in process, July 1:
300 units × (100% − 75%)..................... 75
300 units × (100% − 10%)..................... 270
Units started and completed in July........... 5,300 5,300
Work in process, July 31:
800 units × 90%...................................... 720
800 units × 85%...................................... 680
Equivalent units of production.................. 6,095 6,250
Percent Complete
Units Materials Conversion
Work in process, June 1............................. 800 80% 35%
9,40
Units started into production during June.. 0
Units completed during June and 8,30
transferred to the next department......... 0
1,90
Work in process, June 30........................... 0 75% 40%
Required:
Compute the equivalents units of production for both materials and conversion costs
for the Milling Department for June using the FIFO method.
Ans:
FIFO method:
Materials Conversion
Work in process, June 1:
800 units × (100% − 80%)........................................... 160
800 units × (100% − 35%)........................................... 520
Units started and completed in June................................ 7,500 7,500
Work in process, June 30:
1,900 units × 75%......................................................... 1,425
1,900 units × 40%......................................................... 760
Equivalent units of production........................................ 9,085 8,780
222. Fuchs Inc. uses the FIFO method in its process costing system. The following data
concern the operations of the company's first processing department for a recent
month.
Required:
Using the FIFO method, determine the equivalent units of production for materials and
conversion costs.
Ans:
FIFO method:
Materials Conversion
To complete the beginning work in process:
Materials: 800 units × (100% − 70%)................ 240
Conversion: 800 units × (100% − 10%)............. 720
Units started and completed (14,000 − 800).......... 13,200 13,200
Ending work in process:
Materials: 800 units × 60%................................. 480
Conversion: 800 units × 40%............................. 320
Equivalent units of production.............................. 13,920 14,240
Required:
Determine the equivalent units of production for the Assembly Department for August
using the FIFO method.
Ans:
FIFO method:
Materials Conversion
To complete the beginning work in process:
Materials: 700 units × (100% − 85%)............. 105
Conversion: 700 units × (100% − 20%).......... 560
Units started and completed (8,300 – 700)......... 7,600 7,600
Ending work in process:
Materials: 1,800 units × 90%........................... 1,620
Conversion: 1,800 units × 60%....................... 1,080
Equivalent units of production........................... 9,325 9,240
224. The following data have been provided by Corby Corporation for the Circuit Prep
Department. The company uses the FIFO method in its process costing.
Required:
Determine the equivalent units of production for the Circuit Prep Department for May
using the FIFO method.
Ans:
FIFO method:
Materials Conversion
To complete the beginning work in process:
Materials: 500 units × (100% − 60%)................ 200
Conversion: 500 units × (100% − 45%)............. 275
Units started and completed.................................. 7,800 7,800
Ending work in process:
Materials: 1,100 units × 80%.............................. 880
Conversion: 1,100 units × 40%.......................... 440
Equivalent units of production.............................. 8,880 8,515
Materials Conversion
Work in process, July 1............................. $4,761 $5,365
Cost added to production in the Assembly
Department during July.......................... $26,496 $34,040
Equivalent units of production for July..... 2,070 1,850
Required:
Compute the costs per equivalent unit for the Assembly Department for July using the
FIFO method.
Ans:
FIFO method:
Materials Conversion
Cost added during July.............................. $26,496 $34,040
Equivalent units of production.................. 2,070 1,850
Cost per equivalent unit............................. $12.80 $18.40
226. Rauzman Corporation uses the FIFO method in its processing costing. The following
data concern the company's Mixing Department for the month of August.
Materials Conversion
Work in process, August 1................................. $25,641 $15,300
Cost added to production in the Mixing
Department during August.............................. $170,940 $179,775
Equivalent units of production for August......... 7,770 7,650
Required:
Compute the cost per equivalent unit for materials and conversion for the Mixing
Department for August using the FIFO method.
Ans:
FIFO method:
Materials Conversion
Cost added during the month......... $170,940 $179,775
Equivalent units............................. 7,770 7,650
Cost per equivalent unit................. $22.00 $23.50
$1,92
Cost in beginning work in process inventory........ 0
Units started and completed this month................ 3,130
Materials Conversion
Cost per equivalent unit......................................... $9.50 $20.40
Equivalent units required to complete the units in
beginning work in process inventory................. 360 140
Equivalent units in ending work in process
inventory............................................................ 330 264
Required:
Determine the cost of ending work in process inventory and the cost of units
transferred out of the department during October using the FIFO method.
Ans:
FIFO method:
Transferred to the next department:
From the beginning work in process inventory:
Cost in beginning work in process inventory............ $ 1,920
Cost to complete these units:
Materials, 360 EUs at $9.50 per EU....................... 3,420
Conversion, 140EUs at $20.40 per EU.................. 2,856
Total cost from beginning inventory......................... 8,196
Units started and completed this month, 3,130 units at
$29.90 per unit.......................................................... 93,587
$101,78
Total cost transferred to the next department............... 3
228. The following data has been provided by Glasco Inc., a company that uses the FIFO
method in its processing costing system. The data concern the company's Shaping
Department for the month of June.
$1,69
Cost in beginning work in process inventory.................. 0
Units started and completed this month.......................... 4,110
Materials Conversion
Cost per equivalent unit....................................... $12.50 $45.70
Equivalent units required to complete the units
in beginning work in process inventory........... 460 260
Equivalent units in ending work in process
inventory........................................................... 220 176
Required:
Determine the cost of ending work in process inventory and the cost of the units
transferred out of the department during June using the FIFO method.
Ans:
FIFO method:
Transferred to the next department:
From the beginning work in process inventory:
$ 1,69
Cost in beginning work in process inventory. . 0
Cost to complete these units:
Materials, at 460 EUs $12.50 per EU........... 5,750
Conversion, at 260 EUs $45.70 per EU........ 11,882
Total cost from beginning inventory............... 19,322
Units started and completed this month, 4,110
units at $58.20 per unit.................................... 239,202
$258,52
Total cost transferred to the next department..... 4
229. Central Medical Clinic has two service departments, Building Services and Energy,
and three operating departments, Pediatrics, Geriatrics, and Surgery. Central allocates
the cost of Building Services on the basis of square feet and Energy on the basis of
patient days. No distinction is made between variable and fixed costs. Budgeted
operating data for the year just completed follow:
Service
Departments Operating Departments
Building
Services Energy Pediatrics Geriatrics Surgery
Budgeted costs $10,00 $100,00
before allocation. $20,000 0 $90,000 $60,000 0
Square feet............. 1,000 4,000 6,000 18,000 12,000
Patient days............ 0 0 5,500 7,700 8,800
Required:
a. Direct Method:
Building
Services Energy Pediatrics Geriatrics Surgery
Budgeted costs $100,00
before allocation $20,000 $10,000 $90,000 $60,000 0
Allocation of
Building
Services: (20,000)
Pediatrics:
6,000/36,000 ×
$20,000............ 3,333
Geriatrics:18,000
/36,000 ×
$20,000............ 10,000
Surgery:
12,000/36,000
× $20,000........ 6,667
Allocation of
Energy: (10,000)
Pediatrics:
5,500/22,000 ×
$10,000............ 2,500
Geriatrics:
7,700/22,000 ×
$10,000............ 3,500
Surgery:
8,800/22,000 ×
$10,000............ 4,000
Costs after $110,66
allocation............ $0 $0 $95,833 $73,500 7
四
b. Step Method
Building
Services Energy Pediatrics Geriatrics Surgery
Budgeted costs $100,00
before allocation. $20,000 $10,000 $90,000 $60,000 0
Allocation of
Building
Services: (20,000)
Energy:
4,000/40,000 ×
$20,000............ 2,000
Pediatrics:
6,000/40,000 ×
$20,000............ 3,000
Geriatrics:
18,000/40,000
× $20,000........ 9,000
Surgery:
12,000/40,000
× $20,000........ 6,000
Allocation of
Energy: (12,000)
Pediatrics:
5,500/22,000 ×
$12,000............ 3,000
Geriatrics:
7,700/22,000 ×
$12,000............ 4,200
Surgery:
8,800/22,000 ×
$12,000............ 4,800
Costs after $110,80
allocation............ $0 $0 $96,000 $73,200 0
Administrative Department costs are allocated on the basis of employee hours and
Facilities Department costs are allocated on the basis of space occupied.
Required:
Allocate the service department costs to the operating departments using the direct
method.
Ans:
231. Sandven Corporation uses the direct method to allocate its two service department
costs to its two operating departments. Data concerning those departments follow:
Service Department A costs are allocated on the basis of allocation base A and Service
Department B costs are allocated on the basis of allocation base B.
Required:
Allocate the service department costs to the operating departments using the direct
method.
Ans:
Operating
Service Departments Departments
Information
Technology Personnel Pediatrics Prenatal
$688,22
Departmental costs $34,650 $31,356 $566,960 0
Computers.............. 22 17 44 46
Employees............. 15 15 75 42
Information Technology costs are allocated on the basis of computers and Personnel
costs are allocated on the basis of employees.
Required:
Allocate the service department costs to the operating departments using the direct
method.
Ans:
233. Mercik Consultancy uses the direct method to allocate its service department costs to
its operating departments. The company has two service departments, Information
Technology and Administration, and two operating departments, Corporate Practice
and Government Practice. Data concerning those departments follow:
Information Technology Department costs are allocated on the basis of computers and
Administration Department costs are allocated on the basis of employees.
Required:
Allocate the service department costs to the operating departments using the direct
method.
Ans:
The company uses the step-down method to allocate service department costs to
operating departments. Service Department A costs are allocated first on the basis of
allocation base A and Service Department B costs are allocated second on the basis of
allocation base B.
Required:
Allocate the service department costs to the operating departments using the step-
down method.
Ans:
235. Coakley Corporation uses the step-down method to allocate service department costs
to operating departments. The company has two service departments, Administration
and Facilities, and two operating departments, Assembly and Finishing.
Operating
Service Department Department
Administration Facilities Assembly Finishing
Departmental costs. $22,260 $69,130 $137,520 $900,750
Employee time....... 4,000 1,000 25,000 16,000
Space occupied....... 6,000 1,000 34,000 9,000
Administration Department costs are allocated first on the basis of employee time and
Facilities Department costs are allocated second on the basis of space occupied.
Required:
Allocate the service department costs to the operating departments using the step-
down method.
Ans:
Admini-
stration Facilities Assembly Finishing
Departmental costs............... $22,260 $69,130 $137,520 $900,750
Administration costs............. (22,260) 530 13,250 8,480
Facilities costs....................... (69,660) 55,080 14,580
Total costs after allocation.... $ 0 $ 0 $205,850 $923,810
Administration Department costs are allocated first on the basis of employees and IT
Department costs are allocated second on the basis of computers.
Required:
Allocate the service department costs to the operating departments using the step-
down method.
Ans:
Admini- Emergency Intensive
stration IT Room Care
Departmental costs........ $13,340 $15,805 $597,700 $396,240
Administration costs...... (13,340) 290 8,236 4,814
IT costs.......................... (16,095) 9,425 6,670
Total costs after
allocation................... $ 0 $ 0 $615,361 $407,724
237. Lester Natal Clinic uses the step-down method to allocate service department costs to
operating departments. The clinic has two service departments, Administration and
Information Technology (IT), and two operating departments, Prenatal Care and
Postnatal Care.
Administration Department costs are allocated first on the basis of employees and IT
Department costs are allocated second on the basis of computers.
Required:
Allocate the service department costs to the operating departments using the step-
down method.
Ans:
Admini- Prenatal Postnatal
stration IT Care Care
Departmental costs............ $20,448 $22,506 $570,720 $369,880
Administration costs.......... (20,448) 288 12,576 7,584
IT costs.............................. (22,794) 11,790 11,004
Total costs after allocation. $0 $0 $595,086 $388,468