Chapter 4 Systems Design Process Costing

Chapter 4 Systems Design: Process Costing
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.
Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking

AICPA FN: Reporting LO: 1 Level: Easy
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.

AICPA FN: Reporting Appendix: 4A LO: 2,5 Level: Medium
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.
Ans: False AACSB: Analytic AICPA BB: Critical Thinking

AICPA FN: Reporting LO: 2 Level: Hard
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.
Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking

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.

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 4-7

7. In calculating cost per equivalent unit under the weighted-average method, prior
period costs are combined with current period costs.

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.

AICPA FN: Reporting Appendix: 4A LO: 5 Level: Hard
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.

AICPA FN: Reporting Appendix: 4B LO: 8,9 Level: Easy
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.

AICPA FN: Reporting Appendix: 4B LO: 8,9 Level: Medium
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.

AICPA FN: Reporting Appendix: 4B LO: 8 Level: Medium
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.

4-8 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition

13. In a process costing system, direct labor cost combined with manufacturing overhead
cost is known as conversion cost.

14. Process costing is employed in industries that produce basically homogeneous

products such as bricks, flour, or cement but would not be appropriate for assembly-
type operations such as those that manufacture computers.

AICPA FN: Reporting LO: 10 Level: Medium
15. Process costing is used where many different products are produced each period to
customer specifications.

Multiple Choice Questions
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.
Ans: D AACSB: Analytic AICPA BB: Critical Thinking


17. The completion of goods is recorded as a decrease in the work in process inventory
account when using:
Job-order costing Process costing

A) Yes No
B) Yes Yes
C) No Yes
D) No No
Ans: B AACSB: Reflective Thinking AICPA BB: Critical Thinking

AICPA FN: Reporting LO: 1 Level: Easy Source: CPA, adapted
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).
Ans: C AACSB: Reflective Thinking AICPA BB: Critical Thinking

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.
Ans: A AACSB: Analytic AICPA BB: Critical Thinking

AICPA FN: Reporting Appendix: 4A LO: 2,3,5,6 Level: Hard

20. Which of the following are needed to compute equivalent units for conversion costs
under the weighted-average method of process costing?
Percentage completion of Percentage completion of

beginning work in process ending work in process
A) Yes Yes
B) No Yes
C) Yes No
D) No No
Ans: B AACSB: Reflective Thinking AICPA BB: Critical Thinking

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.
Ans: B AACSB: Analytic AICPA BB: Critical Thinking

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.
Ans: C AACSB: Reflective Thinking AICPA BB: Critical Thinking

AICPA FN: Reporting LO: 3 Level: Easy Source: CPA, adapted

23. Which of the following are needed to compute the cost per equivalent unit for
materials under the weighted-average method of process costing?
Material cost assigned to beginning Material cost added to production

work in process last period during the current period
A) Yes Yes
B) No Yes
C) Yes No
D) No No
Ans: A AACSB: Reflective Thinking AICPA BB: Critical Thinking

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.

AICPA FN: Reporting Appendix: 4A LO: 4,7 Level: Hard
Source: CMA, adapted
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.

AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium
Source: CPA, adapted

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

AICPA FN: Reporting Appendix: 4B LO: 8,9 Level: Medium
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.
Ans: A AACSB: Reflective Thinking AICPA BB: Critical Thinking

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


29. Health Beverage Company uses a process costing system to collect costs related to the
production of its celery flavored cola. The cola is first processed in a Mixing
Department at Health and is then transferred out and finished up in the Bottling
Department. The finished cases of cola are then transferred to Finished Goods
Inventory. The following information relates to Health's two departments for the
month of January:
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
Ans: C AACSB: Analytic AICPA BB: Critical Thinking

Solution:
To solve for units transferred:

+ Work in process, beginning................................................. 3,000
+ Units started into production during the month.................. 77,000
− Work in process, ending...................................................... 8,000
= Units completed and transferred out during the month....... 72,000

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:

+ Work in process, beginning............................................. 83,000
+ Units started into production during the month.............. 334,000
− Work in process, ending.................................................. 34,000
=Units completed and transferred out during the month.... 383,000

31. Colby Company has a process costing system in which the weighted-average method
is used. The company adds all materials at the beginning of the process in the Molding
Department, which is the first of two stages of its production process. Information
concerning the materials used in the Molding Department during March is as follows:
Materials
Units Costs
Work in process at March 1............................................. 22,000 $11,000
Units started during March.............................................. 90,000 $46,120
Units completed and transferred to next department
during March................................................................ 97,000
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

AICPA FN: Reporting LO: 2,3 Level: Medium Source: CPA, adapted

Solution:
To solve for ending work in process:

+ Work in process, beginning................................................... 22,000
+ Units started into production during the month.................... 90,000
− Units completed and transferred out during the month........ 97,000
= Work in process, ending........................................................ 15,000
Equivalent units of production

Materials
Transferred to next department........................................... 97,000
Ending work in process (materials: 15,000 units × 100%
complete)......................................................................... 15,000
Equivalent units of production........................................... 112,000
Cost per Equivalent Unit

Materials
Cost of beginning work in process..................................... $11,000
Cost added during the period.............................................. 46,120
Total cost (a)....................................................................... $57,120
Equivalent units of production (b)...................................... 112,000

Cost per equivalent unit, (a) ÷ (b)....................................... $0.51
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
The total cost per equivalent unit for May was:

A) $5.02
B) $5.10
C) $5.12
D) $5.25

AICPA FN: Reporting LO: 2,3 Level: Medium
Solution:

Transferred to next department.......................... 12,000 12,000
Ending work in process (materials: 6,000 units
× 100% complete; conversion: 6,000 units ×
50% complete)............................................... 6,000 3,000
Equivalent units of production........................... 18,000 15,000

Materials Conversion Total
Cost of beginning work in process.................... $13,800 $ 3,740
Cost added during the period............................. 42,000 26,260
Total cost (a)...................................................... $55,800 $30,000
Equivalent units of production (b)..................... 18,000 15,000

Cost per equivalent unit, (a) ÷ (b)...................... $3.10 $2.00 $5.10

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
Units started during April................................................ 100,000 $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


Solution:

+ Work in process, beginning............................................. 12,000
− Units completed and transferred out during the month... 88,000
= Work in process, ending.................................................. 24,000

Materials
complete)......................................................................... 24,000

Materials
Cost of beginning work in process..................................... $ 6,000
Total cost (a)....................................................................... $57,120

Materials
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

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:

+ Work in process, beginning................................................... 10,000
+ Units started into production during the month.................... 60,000
− Work in process, ending........................................................ 19,000
= Units completed and transferred out during the month........ 51,000

Conversion
Transferred to next department......................................... 51,000
Ending work in process (conversion: 19,000 units × 70%
complete)....................................................................... 13,300
Equivalent units of production.......................................... 64,300

Conversion
Cost of beginning work in process.................................... $ 19,200
Cost added during the period............................................ 380,060
Total cost (a)...................................................................... $399,260
Equivalent units of production (b).................................... 64,300

Cost per equivalent unit, (a) ÷ (b)..................................... $6.209

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
Beginning work in process inventory........ 18,000 80%
Started into production during June........... 81,000
Ending work in process inventory............. 17,000 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


Solution:

+ Work in process, beginning........................................................................
18,000
+ Units started into production during the month..........................................
81,000
− Work in process, ending..............................................................................
17,000
= Units completed and transferred out during the month..............................
82,000

Conversion
Ending work in process
(conversion: 17,000 units × 80% complete)................... 13,600

Conversion
Cost of beginning work in process..................................... $15,264
Total cost (a)....................................................................... $83,472


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:
Transferred In Materials Conversion

Work in process, February 1.......... $12,000 $2,500 $1,000
Costs added during February......... $29,000 $5,500 $5,000
The total cost per equivalent unit during February was closest to:
A) $2.75
B) $2.78
C) $2.82
D) $2.85

Solution:
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
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.
A) $4.300
B) $4.147
C) $2.524
D) $3.667

Solution:

Conversion
Transferred to next department....................................................... 45,000
Ending work in process
(conversion: 24,000 units × 70% complete)............................... 16,800
Equivalent units of production....................................................... 61,800

Conversion
Cost of beginning work in process................................................. $ 61,920
Cost added during the period.......................................................... 194,340
Total cost (a)................................................................................... $256,260
Equivalent units of production (b).................................................. 61,800

Cost per equivalent unit, (a) ÷ (b)................................................... $4.147

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..................................
department during January..................................... 56,000
Completed and transferred to the next...................
department during January..................................... 58,400
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
Cost in the beginning inventory.................................................... $ 16,940

Cost added during the month........................................................ 347,320
Total cost....................................................................................... $364,260
$364,260 ÷ 63,170 units = $5.766 per unit

39. Jimmy Company uses the weighted-average method in its process costing system. The
ending work in process inventory consists of 9,000 units. The ending work in process
inventory is 100% complete with respect to materials and 70% complete with respect
to labor and overhead. If the cost per equivalent unit for the period is $3.75 for
material and $1.25 for labor and overhead, what is the balance of the ending work in
process inventory account?
A) $41,625
B) $33,750
C) $45,000
D) $31,500

Solution:

Materials: 9,000 units × 100% complete.... 9,000
Conversion: 9,000 units × 70% complete... 6,300
Ending work in process: Materials Conversion Total

Equivalent units of production............ 9,000 6,300
Cost per equivalent unit...................... $3.75 $1.25
Cost of ending work in process........... $33,750 $7,875 $41,625

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
Finished goods.............................................................. 75,000
Inventory at January 31:
Work in process (conversion 75% complete)............... 16,000
Finished goods.............................................................. 60,000
What were the equivalent units for conversion costs for January?
A) 235,000
B) 247,000
C) 251,000
D) 253,000

AICPA FN: Reporting LO: 2 Level: Medium Source: CPA, adapted
Solution:
To calculate units transferred out:

Units sold 250,000
+ Ending finished goods inventory........... 60,000
− Beginning finished goods inventory...... 75,000
= Units transferred out.............................. 235,000
Units transferred out......................................................... 235,000

Ending work in process (16,000 units × 75% complete).. 12,000

41. Jersey Company has a process costing system in which it uses the weighted-average
method. The equivalent units for conversion costs for the month were 47,500 units.
The beginning work in process inventory consisted of 15,000 units, 60% complete
with respect to conversion costs. The ending work in process inventory consisted of
10,000 units, 75% complete with respect to conversion costs. The number of units
started during the month was:
A) 25,000 units
B) 34,000 units
C) 35,000 units
D) 40,000 units

Solution:
Units transferred out............................................................. 40,000 *

Ending work in process (10,000 units × 75% complete)..... 7,500
Equivalent units for conversion costs.................................. 47,500
* Solve backwards: 47,500 − 7,500 = 40,000
Units in beginning inventory..................... 15,000

+ Units started........................................... 35,000 *
− Units in ending inventory...................... 10,000
* Solve backwards: Units started = 40,000 −15,000 + 10,000 = 35,000

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:

Work in process, beginning................................................ 6,000
− Work in process, ending.................................................. 18,000
= Units completed and transferred out during the month... 40,000
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:
Units in beginning inventory.................... 4,700

+ Units started into production................. 59,700
− Units in ending inventory...................... 7,300
Equivalent units transferred out.................................... 57,100

Add: Equivalent units in the ending work in process
inventory (7,300 units × 80% complete)................... 5,840
Equivalent units for conversion costs........................... 62,940

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:
Equivalent units transferred out..................................... 30,000

inventory (6,500 units × 40% complete).................... 2,600
Equivalent units for conversion costs............................ 32,600

45. Bart Co. adds materials at the beginning of the process in Department M. The
company uses the weighted-average method in its process costing system. The
following information pertains to Department M's work in process during April:
Units
Work in process, April 1 (conversion 60% complete)..... 3,000
Started in April................................................................. 25,000
Completed........................................................................ 20,000
Work in process, April 30 (conversion 75% complete)... 8,000
The equivalent units for conversion cost are:

A) 26,000
B) 25,000
C) 24,200
D) 21,800

Solution:
Equivalent units transferred out.................................... 20,000

inventory (8,000 units × 75% complete)................... 6,000
Equivalent units for conversion costs........................... 26,000

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.
the month?
A) 102,200
B) 100,600
C) 102,000
D) 88,000

Solution:
Equivalent units transferred out...................................... 102,000

inventory (1,000 units × 20% complete)..................... 200
Equivalent units for conversion costs.............................. 102,200

47. Natiello Corporation uses the weighted-average method in its process costing system.
Operating data for the Lubricating Department for the month of October appear
below:
Percent
Complete
with Respect
Units to Conversion
Beginning work in process inventory.............................. 9,100 20%
Transferred in from the prior department during
October......................................................................... 38,500
Completed and transferred to the next department
during October............................................................. 41,000
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:
Units in beginning inventory................... 9,100

+ Units started into production................... 38,500
− Units in ending inventory........................ 6,600
= Units transferred out................................ 41,000
Equivalent units transferred out.................................. 41,000

inventory (6,600 units × 70% complete)................. 4,620
Equivalent units for conversion costs......................... 45,620

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:
To solve for units started into production:

+ Work in process, ending...................................................... 4,000
+ Units completed and transferred out during the month....... 10,000
− Work in process, beginning................................................. 3,000
= Units started into production during the month................... 11,000

49. Pelican Corporation uses a weighted-average process costing system to collect costs
related to production. The following selected information relates to production for
March:
Units completed and transferred out.......... 5,000

Units in work in process, March 31........... 800
Equivalent units, materials......................... 5,800
Equivalent units, conversion costs............. 5,200
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

AICPA FN: Reporting LO: 3,4 Level: Hard
Solution:

Total cost................................................... $73,950 $135,720
÷ Equivalent units........................................ 5,800 5,200
= Cost per equivalent unit............................ $12.75 $26.10
× Ending inventory
Materials: 800 units × $12.75................ $10,200
Conversion costs: *200 units × $26.10.. $5,220 $15,420
Units in work in process, March 31............................................................... 800

Less: Uncompleted as to conversion (5,800 total − 5,200 equivalent units). 600
Equivalent units in ending work in process: conversion............................... 200

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:
Cost in beginning work in process (October 1)............... $ 25,200

Cost added to production during October........................ 262,800
Total cost.......................................................................... $288,000
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%
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:
Units in beginning inventory................... 3,300

+ Units transferred in.................................. 67,000
− Units in ending inventory........................ 5,600
= Units transferred out................................ 64,700
× Cost per equivalent unit........................... $4.70
$304,090

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:
Beginning work in process inventory:

Cost............................................................................... $19,000
Units............................................................................. 30,000 units
Percentage completion with respect to materials......... 100%
Percentage completion with respect to conversion...... 60%
Units completed and transferred out................................ 82,000 units
Cost per equivalent unit:
Material......................................................................... $1.50
Conversion.................................................................... $0.75
The cost of units transferred out was:

A) $184,500
B) $149,500
C) $167,500
D) $145,000

Solution:
Cost computation for units transferred out:

82,000 units × ($1.50 + $0.75) = $184,500

53. Wit Company uses the weighted-average method in its process costing system.
Information for the month of May concerning Department A, the first stage of the
company's production process follows:
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?
Goods completed and transferred out Ending work in process

A) $39,600 $3,400
B) $39,600 $4,400
C) $43,000 $0
D) $44,000 $3,400


Solution:
Transferred to next department............ 90,000 90,000
Materials: 10,000 units × 100%
complete........................................ 10,000
Conversion: 10,000 units × 50%
complete........................................ 5,000
Equivalent units of production............. 100,000 95,000
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

Units transferred out............................ 90,000 90,000
Cost per equivalent unit....................... $0.24 $0.20
Cost transferred out.............................. $21,600 $18,000 $39,600

Equivalent units of production:
ending work in process..................... 10,000 5,000
Cost of ending work in process............ $2,400 $1,000 $3,400

54. Lap Company uses the weighted-average method in its process costing system. The
beginning work in process inventory in a particular department consisted of 80,000
units, 100% complete with respect to materials and 25% complete with respect to
conversion costs. The total dollar value of this inventory was $226,000. During the
month, 150,000 units were transferred out of the department. The costs per equivalent
unit for the month were $2.00 for materials and $3.50 for conversion costs. The value
of the units completed and transferred out of the department was:
A) $681,000
B) $765,000
C) $821,000
D) $825,000

Solution:
150,000 units × ($2.00 + $3.50) = $825,000
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

AICPA FN: Reporting LO: 4 Level: Hard Source: CPA, adapted
Solution:
Ending work in process: Conversion costs (4,000 × 40%) × $3.... $ 4,800

Transferred in costs (4,000 × $5).................................................... 20,000
Total cost: Work in process, March 31........................................... $24,800

56. The following information was provided by Fystro Corporation for the month of
March. Fystro uses the weighted-average method in its process costing system.
Total cost transferred out during March................. $74,000

Cost in Work in Process, March 1.......................... $12,000
Cost in Work in Process, March 31........................ $5,000
How much cost did Fystro add to production during March?

A) $57,000
B) $62,000
C) $67,000
D) $81,000

Solution:
Work in process, ending....................................................... $ 5,000

+ Cost transferred out during the month.............................. 74,000
− Work in process, beginning.............................................. 12,000
= Cost added to production during the month..................... $67,000

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
Transferred in from the prior department
during January........................................ 76,000
Completed and transferred to the next
department during January..................... 74,200
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:
Equivalent units in ending inventory: 3,900 units × 70% 2,730

complete..............................................................................
× $3.91
Conversion costs in ending work in process inventory........... $10,674.30

58. Merckley Company has a process costing system and uses the FIFO method. For May,
the company's beginning work in process inventory was 80% complete with respect to
conversion, and the ending work in process inventory was 50% complete with respect
to conversion. Information on units processed and conversion costs incurred during
May follow:
Conversion
Units Cost
Work in process inventory on May 1..................... 25,000 $22,000
Units started into production, and costs incurred
during the month................................................ 135,000 $143,000
Units completed and transferred to finished
goods during the month...................................... 100,000
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

AICPA FN: Reporting Appendix: 4A LO: 5,6,7 Level: Medium

Solution:
Equivalent Units of Production

Conversion
To complete beginning work in process (conversion:
25,000 units × 20% complete)....................................... 5,000
Units started and completed during the period (135,000
units started − 60,000 units in ending inventory).......... 75,000
Ending work in process (60,000 units × 50% complete). . 30,000


Conversion
Cost added during the period (a)....................................... $143,000
Cost per equivalent unit (a) ÷ (b)...................................... $1.30
Costs of Ending Work in Process Inventory and Units Transferred Out

Conversion
Cost per equivalent unit.................................................... $1.30
Cost of ending work in process inventory........................ $39,000

59. Doofus Music Company manufactures air guitars and uses a FIFO process costing
system to collect costs related to its production. Doofus only accounts for conversion
costs because the only direct material, air, has no cost. The following information
relates to September production:
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%
Conversion cost in work in process on September 1........... $ 263,120

Conversion cost added to production during September..... 5,262,400
Total cost............................................................................. $5,525,520
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

AICPA FN: Reporting Appendix: 4A LO: 5,6,7 Level: Hard

Solution:

To complete beginning work in process
(materials: 20,000 units × 100%
complete; conversion: 20,000 units ×
80% complete).......................................... 20,000 16,000
Units started and completed during the
period (90,000 units started − 8,000 units
in ending inventory)................................. 82,000 82,000
Ending work in process (materials: 8,000
units × 0% complete; conversion: 8,000
units × 75% complete).............................. 0 6,000
Equivalent units of production..................... 102,000 104,000

Cost added during the period (a).................. $0 $5,262,400
Equivalent units of production (b)............... 102,000 104,000
Cost per equivalent unit (a) ÷ (b)................. $0.00 $50.60
Costs of Ending Work in Process Inventory

and Units Transferred Out
Equivalent units of production..................... 0 6,000
Cost per equivalent unit............................... $0.00 $50.60
Cost of ending work in process inventory.... $0 $303,600 $303,600

60. Edwin Company uses the FIFO method in its process costing system. The first
processing department, the Welding Department, started the month with 22,000 units
in its beginning work in process inventory that were 20% complete with respect to
conversion costs. The conversion cost in this beginning work in process inventory was
$24,200. An additional 96,000 units were started into production during the month.
There were 20,000 units in the ending work in process inventory of the Welding
Department that were 90% complete with respect to conversion costs. A total of
$585,900 in conversion costs were incurred in the department during the month.
What would be the cost per equivalent unit for conversion costs? (Round off to three
decimal places.)
A) $6.103
B) $5.170
C) $5.500
D) $5.250

Solution:

Conversion
To complete beginning work in process (22,000 units × 80%
complete)............................................................................... 17,600
Units started and completed during the period (96,000 units
started − 20,000 units in ending inventory)........................... 76,000
Ending work in process (20,000 units × 90% complete).......... 18,000
Equivalent units of production.................................................. 111,600

Conversion
Cost added during the period (a)............................................... $585,900
Equivalent units of production (b)............................................. 111,600
Cost per equivalent unit (a) ÷ (b).............................................. $5.250

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
September..................................................................... 50,000
inventory was $3,434 at the beginning of September. Additional conversion costs of
What would be the cost per equivalent unit for conversion costs for September?
A) $2.020
B) $1.811
C) $2.140
D) $2.358

Solution:

Conversion
To complete beginning work in process (17,000 units ×
90% complete)............................................................. 15,300
units started − 17,000 units in ending inventory)........ 33,000
Ending work in process (17,000 units × 40% complete) 6,800
Equivalent units of production........................................ 55,100

Conversion
Cost added during the period (a)..................................... $117,914
Equivalent units of production (b).................................. 55,100
Cost per equivalent unit (a) ÷ (b).................................... $2.140

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:
Cost from beginning inventory......................................................................

$ 3,600
Cost to finish beginning inventory: (1 − 40%) = 60% ×
2,000 = 1,200 EU × $8 cost per EU...........................................................
9,600
Total cost of units from beginning inventory.................................................
$13,200

63. Inka Corporation uses the FIFO method in its process costing system. The first
processing department, the Forming Department, started the month with 13,000 units
in its beginning work in process inventory that were 20% complete with respect to
conversion costs. The conversion cost in this beginning work in process inventory was
$4,160. An additional 97,000 units were started into production during the month and
97,000 units were completed and transferred to the next processing department. There
were 13,000 units in the ending work in process inventory of the Forming Department
that were 30% complete with respect to conversion costs. A total of $136,637 in
conversion costs were incurred in the department during the month.
A) $1.390
B) $1.600
C) $1.409
D) $1.280

Solution:

Conversion
To complete beginning work in process (13,000 units × 80% complete). 10,400
Units started and completed during the period (97,000 units started −
13,000 units in ending inventory).......................................................... 84,000
Ending work in process (13,000 units × 30% complete)........................... 3,900
Equivalent units of production................................................................... 98,300

Conversion
Cost added during the period (a)............................................................... $136,637
Equivalent units of production (b)............................................................. 98,300
Cost per equivalent unit (a) ÷ (b)............................................................... $1.390

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
Transferred in from the prior department during March. 45,000
during March................................................................ 40,500
inventory was $3,600 at the beginning of March. Additional conversion costs of
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:

Conversion
complete)................................................................................. 1,000
started − 7,000 units in ending inventory)............................... 38,000
Ending work in process (7,000 units × 70% complete).............. 4,900
Equivalent units of production.................................................... 43,900

Conversion
Cost added during the period (a)................................................. $99,477
Equivalent units of production (b).............................................. 43,900
Cost per equivalent unit (a) ÷ (b)................................................ $2.266

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:
Equivalent Units of Production Calculation:

complete).............................................................................................. 6,000
Units started and completed during the period (? units started − 10,000
units in ending inventory).................................................................... ?
Ending work in process (10,000 units × 75% complete)......................... 7,500
Equivalent units of production................................................................ 37,500
To solve for Units started and completed during the period, solve algebraically:
6,000 + ? + 7,500 = 37,500
? = 24,000
Next:
Units started and completed = units started – 10,000 units from ending inventory
24,000 = units started – 10,000
= 34,000

66. Catin Company uses the FIFO method in its process costing system. The Assembly
Department started the month with 7,000 units in its beginning work in process
inventory that were 40% complete with respect to conversion costs. An additional
60,000 units were transferred in from the prior department during the month to begin
processing in the Assembly Department. There were 19,000 units in the ending work
in process inventory of the Assembly Department that were 90% complete with respect
to conversion costs.
the month?
A) 48,000
B) 72,000
C) 62,300
D) 65,100

Solution:

+ Work in process, beginning................................................ 7,000
+ Units started into production during the month................. 60,000
− Work in process, ending..................................................... 19,000
= Units completed and transferred out during the month..... 48,000

Conversion
complete).............................................................................. 4,200
started − 19,000 units in ending inventory)......................... 41,000
Ending work in process (19,000 units × 90% complete)......... 17,100
Equivalent units of production................................................. 62,300

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
Transferred in from the prior......................
department during May.............................. 75,200
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:


Conversion
complete)................................................................................. 1,480

68. Kale Company uses the FIFO method in its process costing system. At the beginning
of March, the inventory in the Blending Processing Center consisted of 3,000 units,
90% complete with respect to conversion costs. At the end of the month, the inventory
consisted of 2,000 units that were 60% complete with respect to conversion costs. If
10,000 units were transferred to the next processing center during the period, the
equivalent units for conversion costs would be:
A) 8,500 units
B) 11,500 units
C) 10,500 units
D) 9,500 units

Solution:

+ Work in process, ending..................................................... 2,000
+ Units completed and transferred out during the month..... 10,000
− Work in process, beginning................................................ 3,000
= Units started into production during the month................. 9,000

Conversion
complete)................................................................................. 300

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:

+ Units completed and transferred out during the month...... 40,000
− Work in process, beginning................................................ 10,000
= Units started into production during the month.................. 38,000

To complete beginning work in process (materials:
10,000 units × 0% complete; conversion: 10,000
units × 20% complete)................................................. 0 2,000
units started − 8,000 units in ending inventory).......... 30,000 30,000
complete; conversion: 8,000 units × 60% complete). . 8,000 4,800
Equivalent units of production........................................ 38,000 36,800

70. Gadroy Corporation uses the FIFO method in its process costing system. The Grinding
Department started the month with 13,000 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 Grinding Department. During the month 55,000 units were
completed in the Grinding Department and transferred to the next processing
department. There were 10,000 units in the ending work in process inventory of the
Grinding Department that were 70% complete with respect to conversion costs.
What were the equivalent units for conversion costs in the Grinding Department for
the month?
A) 62,000
B) 49,000
C) 55,000
D) 51,600

Solution:

Conversion
complete)............................................................................... 2,600
started − 10,000 units in ending inventory)........................... 42,000
Ending work in process (10,000 units × 70% complete).......... 7,000

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%
November................................................................. 54,100
during November...................................................... 52,600
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:

Conversion
complete)................................................................................. 2,380

72. Steven Company uses the FIFO method in its process costing system. The following
data were taken from the accounting records of a particular department for last month:
Beginning work in process inventory: (10,000 units;

materials 100% complete, conversion 60% complete).......... $17,500
Units completed and transferred out during the month............. 60,000 units
Cost per equivalent unit:
Material.................................................................................. $2.50
Conversion.............................................................................. $2.00
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:
From beginning work in process*. . 10,000 0 4,000
From started and completed during
month.......................................... 50,000 50,000 50,000
Total EU this period........................ 60,000 50,000 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)

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%
March.................................................................. 40,000
during March...................................................... 43,900
Ending work in process inventory......................... 4,000 60%
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:

(materials: 7,900 units × 100% complete;
conversion: 7,900 units × 80% complete)........ 7,900 6,320
Units started and completed during the period
(40,000 units started − 4,000 units in ending
inventory)......................................................... 36,000 36,000
Ending work in process (materials: 4,000 units ×
% complete; conversion: 4,000 units × 60%
complete).......................................................... 0 2,400
Equivalent units of production............................. 43,900 44,720


Cost added during the period (a).......................... $0 $330,928 $330,928
Equivalent units of production (b)....................... 43,900 44,720
Cost per equivalent unit (a) ÷ (b)......................... $0.00 $7.40
Costs of Ending Work in Process Inventory and

Units Transferred Out
Equivalent units of production............................. 0 2,400
Cost per equivalent unit....................................... $0.00 $7.40
Cost of ending work in process inventory........... $0 $17,760 $17,760
Units transferred out:

Cost in beginning inventory................................. $0 $11,850 $ 11,850
Cost to complete the units in beginning
inventory:
Equivalent units of production required to
complete the beginning inventory.................... 7,900 6,320
inventory........................................................... $0 $46,768 46,768
Cost of units started and completed this period:
Units started and completed this period............... 36,000 36,000
Cost of units started and completed this period... $0 $266,400 266,400
Cost of units transferred out................................. $325,018

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.
Service Department Operating Department

Assembl
Administrative Facilities y Wholesaling
Departmental costs....... $19,440 $71,340 $185,580 $392,950
Employee hours........... 4,000 2,000 22,000 14,000
Space occupied............. 3,000 1,000 39,000 2,000
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

AICPA FN: Reporting Appendix: 4B LO: 8 Level: Easy
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 Support Prenatal Pediatrics
Employee hours........... 5,000 1,000 26,000 14,000
Space occupied............. 3,000 2,000 35,000 8,000
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:
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.

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
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


Solution:
Operating
Data
Processing Personnel Assembly Finishing Total
Departmental costs before
allocation............. $26,488 $18,630 $188,980 $506,960 $741,078
Allocation:
Data processing costs (45/86,
41/86)*................. (26,488) 13,860 12,628
Personnel costs (46/81,
35/81)**............... (18,630) 10,580 8,050
Total cost after allocation $ 0 $ 0 $213,420 $527,638 $741,078
* Based on the number of computer workstations in the two operating departments,

which are 45 + 41 = 86
**Based on the number of employees in the two operating departments, which is 46 +
35 = 81

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
Information
Technology Personnel Prepress Printing
Computer workstations... 28 19 51 38
Employees....................... 27 14 98 30
Information Technology Department costs are allocated on the basis of computer

workstations and Personnel Department costs are allocated on the basis of employees.
The total Prepress Department cost after service department allocations is closest to:
A) $406,961
B) $413,326
C) $402,881
D) $410,563


Solution:
Operating
Information
Technology Personnel Prepress Printing Total
allocation........... $27,412 $27,008 $376,940 $530,110 $961,470
Allocation:
Information technology
costs (51/89, 38/89)* (27,412) 15,708 11,704
30/128)**.......... (27,008) 20,678 6,330
Total cost after allocation $ 0 $ 0 $413,326 $548,144 $961,470
* Based on the number of computer workstations in the two operating departments,

which are 51 + 38 = 89
30 = 128

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
Telecomm- Adminis-
unications tration Surgery Recovery
Telecommunications
ports............................. 31 14 40 34
Employees....................... 30 11 74 27
Telecommunications Department costs are allocated on the basis of the number of

telecommunications ports in departments and Administration Department costs are
allocated on the basis of employees. The total Surgery Department cost after service
department allocations is closest to:
A) $317,118
B) $314,853
C) $310,244
D) $305,921


Solution:
Operating
Telecom- Adminis-
munications tration Surgery Recovery Total
Departmental costs
before allocation. . $26,344 $27,472 $282,750 $599,690 $936,256
Allocation:
Telecommunication
costs (40/74,
34/74) *................ (26,344) 14,240 12,104
Administration
costs (74/101,
27/101)**............. (27,472) 20,128 7,344
Total cost after
allocation............. $ 0 $ 0 $317,118 $619,138 $936,256
* Based on the number of telecommunication ports in the two operating departments,

which are 40 + 34 = 74
27 = 101

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
General Physical After-
Management Plant Sales Sales
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


Solution:
Operating
General Physical After-
Mgmt Plant Sales Sales Total
Departmental costs
before allocation....... $36,550 $70,300 $412,500 $492,780 $1,012,130
Allocation:
General costs (2/43,
27/43, 14/43)*.......... (36,550) 1,700 22,950 11,900 0
Physical plant costs
(38/45, 7/45)**......... (72,000) 60,800 11,200 0
Total costs after
allocation.................. $ 0 $ 0 $496,250 $515,880 $1,012,130
*Based on the employee time in Physical Plant and the two operating departments,
which are 2,000 + 27,000 + 14,000 = 43,000.
**Based on the space occupied by the two operating departments, 38,000 + 7,000 =
45,000.

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
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


Solution:
Operating
Admini- Physical
stration Plant Assembly Testing Total
Departmental costs
before allocation........ $26,220 $78,860 $127,160 $737,860 $970,100
Allocation:
Administration costs
(1/38, 25/38, 12/38)*. (26,220) 690 17,250 8,280 0
Physical plant costs
(37/43, 6/43)**.......... (79,550) 68,450 11,100 0
Total costs after
allocation................... $ 0 $ 0 $212,860 $757,240 $970,100
*Based on the employee time in Physical Plant and the two operating departments,
which are 1,000 + 25,000 + 12,000 = 38,000.
**Based on the space occupied by the two operating departments, 37,000 + 6,000 =
43,000.

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
Family
Personnel IT Medicine Pediatric
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
Family
Personnel IT Medicine Pediatric Total
Departmental costs
before allocation.......... $86,184 $45,995 $608,130 $316,290 $1,056,599
Allocation:
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.

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
Administration IT Prenatal Pediatric
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


Solution:
Operating
Admini-
stration IT Prenatal Pediatric Total
Departmental costs
before allocation......... $54,736 $37,449 $383,270 $259,590 $735,045
Allocation:
(21/311, 118/311,
172/311)*................... (54,736) 3,696 20,768 30,272 0
IT costs (102/211,
109/211)**................. (41,145) 19,890 21,255 0
Total costs after
allocation.................... $ 0 $ 0 $423,928 $311,117 $735,045
*Based on the employee time in IT and the two operating departments, which are 21 +
118 + 172 = 311.
**Based on the number of PCs of the two operating departments, 102 + 109 = 211.
Use the following to answer questions 83-86:
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.

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:
Beginning work in process inventory... 4,000

+ Units started into production............. 82,000 *
− Units completed and transferred........ 79,000
= Ending work in process inventory..... 7,000
* 4000 + Units started into production − 79,000 = 7,000

Units started into production = 82,000
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


85. What are the Molding Department's equivalent units related to materials for January?
A) 79,000
B) 86,000
C) 89,000
D) 93,000

Solution:
Materials
Transferred to next department............ 79,000
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
Conversion: 7,000 dolls × 25%......... 1,750
Equivalent units of production............. 80,750

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:
Work in process, beginning:

Units in process............................................................ 40,000
Percent complete with respect to materials.................. 70%
Percent complete with respect to conversion............... 60%
Costs in the beginning inventory:
Materials cost............................................................ $8,600
Conversion cost......................................................... $4,800
Units started into production during the month............... 750,000
Units completed and transferred out during the month... ?
Costs added to production during the month:
Materials cost................................................................ $223,000
Conversion cost............................................................ $149,000
Work in process, ending:
Units in process............................................................ 30,000
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:

+ Work in process, beginning............................................... 40,000
− Work in process, ending.................................................... 30,000

88. What was the cost per equivalent unit for materials during the month?
A) $0.30
B) $0.25
C) $0.20
D) $0.15

Solution:


Materials
Transferred to next department.............................................. 760,000
Ending work in process (30,000 units × 40% complete)....... 12,000
Equivalent units of production.............................................. 772,000

Materials
Cost of beginning work in process........................................ $ 8,600
Cost added during the period................................................. 223,000
Total cost (a).......................................................................... $231,600
Equivalent units of production (b)......................................... 772,000

Cost per equivalent unit, (a) ÷ (b).......................................... $0.30

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:


Transferred to next department................................. 760,000 760,000
complete; conversion: 30,000 units × 30% complete) 12,000 9,000
Equivalent units of production................................. 772,000 769,000

Cost of beginning work in process........................... $ 8,600 $ 4,800
Cost added during the period.................................... 223,000 149,000
Total cost (a)............................................................. $231,600 $153,800
Equivalent units of production (b)............................ 772,000 769,000

Cost per equivalent unit, (a) ÷ (b)............................ $0.30 $0.20

Equivalent units of production (materials: 30,000 units × 40%
Cost per equivalent unit............................................ $0.30 $0.20
Cost of ending work in process inventory................ $3,600 $1,800 $5,400

Onitsha Corporation uses a weighted-average process costing system to collect costs related
to production. The following selected information relates to production for June:
Units started into production.......................... 25,000

Units completed and transferred out............... 20,000
Equivalent units, materials............................. 28,000
Equivalent units, conversion costs................. 26,000
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........................................... 25,000
= Equivalent units............................................................... 28,000
* Beginning work in process inventory + 25,000 = 28,000

Beginning work in process inventory = 3,000

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:
Total cost (a)......................................... $63,840 $97,500


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:
Cost Percent Complete

Materials costs................... $3,100 70%
Conversion costs................ $2,900 50%
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:
Materials costs..................... $110,500

Conversion costs.................. $153,900
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.

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:

+ Work in process, beginning................................................ 300
− Units completed and transferred out during the month..... 8,100
= Work in process, ending..................................................... 700

Conversion
Transferred to next department............................................. 8,100
Ending work in process (materials: 700 units × 90%
complete; conversion: 700 units × 55% complete)............. 385
Equivalent units of production............................................. 8,485

93. The cost per equivalent unit for materials for the month in the first processing
department is closest to:
A) $12.91
B) $12.66
C) $12.56
D) $13.01

Solution:


Materials
Transferred to next department......................................... 8,100
complete; conversion: 700 units × 55% complete)....... 630

Materials
Cost added during the period............................................ 110,500
Total cost (a)...................................................................... $113,600


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:

+ Work in process, beginning.............................................. 300
+ Units started into production during the month............... 8,500
− Units completed and transferred out during the month.... 8,100
= Work in process, ending................................................... 700

Conversion
Transferred to next department....................................... 8,100
Ending work in process (700 units × 55% complete).... 385
Equivalent units of production....................................... 8,485

Conversion
Cost of beginning work in process................................. $ 2,900
Cost added during the period.......................................... 153,900
Total cost (a)................................................................... $156,800
Equivalent units of production (b).................................. 8,485

Cost per equivalent unit, (a) ÷ (b).................................. $18.48

95. The total cost transferred from the first processing department to the next processing
department during the month is closest to:
A) $264,400
B) $277,138
C) $270,400
D) $255,093

Solution:


Transferred to next department............................. 8,100 8,100
complete; conversion: 700 units × 55% complete) 630 385
Equivalent units of production.............................. 8,730 8,485

Cost of beginning work in process........................ $ 3,100 $ 2,900
Cost added during the period................................. 110,500 153,900
Total cost (a).......................................................... $113,600 $156,800
Equivalent units of production (b)......................... 8,730 8,485

Cost per equivalent unit, (a) ÷ (b)......................... $13.01 $18.48

Units transferred to the next department............... 8,100 8,100
Cost per equivalent unit......................................... $13.01 $18.48
Cost of units transferred out.................................. $105,402 $149,685 $255,087

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:


Transferred to next department............................. 8,100 8,100
Ending work in process (materials: 700 units × 90% complete;
conversion: 700 units × 55% complete).............. 630 385

Cost of beginning work in process........................ $3,100 $2,900
Total cost (a).......................................................... $113,600 $156,800


Equivalent units of production (materials: 700 units × 90%
Cost of ending work in process inventory............. $8,198 $7,115 $15,313

Buklin Corporation uses the weighted-average method in its process costing system. This

Materials costs................... $15,700 85%
Materials costs................... $166,500

Conversion costs................ $96,300
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:

+ Units started into production during the month................ 8,000
= Work in process, ending................................................... 1,600

department?
A) 7,340
B) 8,700
C) 7,100
D) 240

Solution:


Conversion
Ending work in process (1,600 units × 15% complete)...... 240
Equivalent units of production............................................ 7,340

A) $21.95
B) $20.94
C) $19.14
D) $20.06

Solution:


Materials
Ending work in process (1,600 units × 75% complete)...... 1,200

Materials
Cost of beginning work in process...................................... $ 15,700
Total cost (a)....................................................................... $182,200


is closest to:
A) $13.12
B) $11.62
C) $14.46
D) $13.77

Solution:


Conversion
Ending work in process (1,600 units × 15% complete)...... 240

Conversion
Cost of beginning work in process...................................... $ 4,800
Total cost (a)....................................................................... $101,100


A) $310,816
B) $262,800
C) $283,300
D) $253,655

Solution:


Transferred to next department............................... 7,100 7,100
complete; conversion: 1,600 units × 15% complete) 1,200 240
Equivalent units of production................................ 8,300 7,340

Cost of beginning work in process.......................... $ 15,700 $ 4,800
Cost added during the period.................................. 166,500 96,300
Total cost (a)........................................................... $182,200 $101,100
Equivalent units of production (b).......................... 8,300 7,340

Cost per equivalent unit, (a) ÷ (b)........................... $21.952 $13.774

Units transferred to the next department................. 7,100 7,100
Cost per equivalent unit.......................................... $21.95 $13.77
Cost of units transferred out.................................... $155,858 $97,794 $253,652

A) $57,162
B) $42,871
C) $29,648
D) $8,574

Solution:



Total cost (a)............................................................. $182,200 $101,100



Cavalerio Corporation uses the weighted-average method in its process costing system. This

Materials costs................... $9,100 80%
Materials costs................... $96,700

A) 800
B) 1,500
C) 900
D) 6,500

Solution:

= Work in process, ending..................................................... 1,500

department?
A) 7,900
B) 7,450
C) 6,400
D) 1,050

Solution:


Conversion
Equivalent units of production............................................... 7,450

A) $12.72
B) $13.92
C) $13.39
D) $12.24

Solution:


Materials

Materials
Cost of beginning work in process......................................... $ 9,100
Total cost (a).......................................................................... $105,800


A) $291,900
B) $307,318
C) $248,966
D) $277,400

Solution:



Total cost (a)........................................................... $105,800 $186,100



Escoffier Corporation uses the weighted-average method in its process costing system. This

Materials costs................... $11,400 80%
Materials costs................... $112,200

department?
A) 5,500
B) 4,675
C) 4,400
D) 275

Solution:

Conversion
Ending work in process (1,100 units × 25% complete)....... 275

A) $22.47
B) $23.17
C) $21.03
D) $20.40

Solution:

Materials
Transferred to next department.......................................... 4,400
Ending work in process (1,100 units × 85% complete).... 935

Materials
Cost added during the period............................................. 112,200
Total cost (a)...................................................................... $123,600
Equivalent units of production (b)..................................... 5,335


A) $304,200
B) $290,600
C) $271,916
D) $339,895

Solution:

complete; conversion: 1,100 units × 25% complete) 935 275

Total cost (a)........................................................... $123,600 $180,600


Fuchs Corporation uses the weighted-average method in its process costing system. This

Materials costs................... $4,800 65%
Materials costs................... $208,000


A) $477,250
B) $527,782
C) $499,300
D) $488,300

AICPA FN: Reporting LO: 2,3,4 Level: Medium
Solution:

Transferred to next department.............................. 8,500 8,500

Total cost (a).......................................................... $212,800 $286,500

Cost of Ending Work in Process Inventory and Units

Transferred Out
Units transferred to the next department............... 8,500 8,500
Cost of units transferred out.................................. $195,229 $282,021 $477,250

A) $50,532
B) $7,580
C) $22,050
D) $42,952

Solution:

conversion: 900 units × 15% complete)................ 765 135

Total cost (a)........................................................... $212,800 $286,500


Transferred Out
Cost of ending work in process inventory.............. $17,571 $4,479 $22,050

Guerin Corporation uses the weighted-average method in its process costing system. This

Materials costs................... $4,400 55%
Materials costs................... $120,000

A) 5,100
B) 300
C) 900
D) 600

Solution:


113. What are the equivalent units for materials for the month in the first processing
department?
A) 4,800
B) 5,700
C) 720
D) 5,520

Solution:


Materials
Ending work in process (900 units × 80% complete)............ 720

department?
A) 4,800
B) 5,295
C) 495
D) 5,700

Solution:


Conversion

A) $21.05
B) $21.82
C) $22.54
D) $21.74

Solution:


Materials

Materials
Total cost (a).......................................................................... $124,400


is closest to:
A) $16.61
B) $17.89
C) $18.78
D) $17.47

Solution:


Conversion
Transferred to next department..................................... 4,800
complete; conversion: 900 units × 55% complete).... 495
Equivalent units of production...................................... 5,295

Conversion
Cost of beginning work in process................................ $ 2,200
Cost added during the period........................................ 92,500
Total cost (a)................................................................. $94,700
Equivalent units of production (b)................................ 5,295

Cost per equivalent unit, (a) ÷ (b)................................. $17.88

A) $25,079
B) $36,379
C) $20,008
D) $29,103

Solution:


Material Conversio
s n
Transferred to next department............................ 4,800 4,800

Material Conversio
s n
Cost of beginning work in process....................... $ 4,400 $ 2,200
Cost added during the period............................... 120,000 92,500
Total cost (a)........................................................ $124,400 $94,700

Cost per equivalent unit, (a) ÷ (b)........................ $22.54 $17.88
Material Conversio
s n Total
Units transferred to the next department.............. 4,800 4,800

Cost of units transferred out................................. $108,174 $85,847 $194,021

according to the company’s cost system is closest to:
A) $25,079
B) $36,379
C) $20,008
D) $29,103

Solution:

Material
s Conversion
conversion: 900 units × 55% complete)................ 720 495

Material
s Conversion
Total cost (a)........................................................... $124,400 $94,700


Transferred Out
Material Conversio
s n Total



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:

Units in beginning work in process inventory...................... 500
Materials costs...................................................................... $7,700
Conversion costs................................................................... $2,900
Percent complete with respect to materials........................... 75%
Percent complete with respect to conversion........................ 25%
Units started into production during the month....................... 6,700
Units transferred to the next department during the month..... 5,900
Materials costs added during the month.................................. $108,600
Conversion costs added during the month............................... $121,000
Units in ending work in process inventory........................... 1,300
department?
A) 845
B) 6,745
C) 7,200
D) 5,900

Solution:

Materials
Transferred to next department.................................................... 5,900
Ending work in process (1,300 units × 65% complete)............... 845

department?
A) 5,900
B) 6,420
C) 7,200
D) 520

Solution:
Conversion
Transferred to next department..................................................... 5,900
Ending work in process (1,300 units × 40% complete)................ 520
A) $15.08
B) $16.15
C) $16.10
D) $17.24

Solution:

Materials
Transferred to next department................................................ 5,900
Ending work in process (1,300 units × 65% complete).......... 845
Equivalent units of production................................................ 6,745

Materials
Cost of beginning work in process.......................................... $ 7,700
Cost added during the period................................................... 108,600
Total cost (a)............................................................................ $116,300
Equivalent units of production (b)........................................... 6,745

Cost per equivalent unit, (a) ÷ (b)........................................... $17.24

is closest to:
A) $20.27
B) $19.30
C) $18.85
D) $17.21

Solution:

Conversion
Transferred to next department................................................. 5,900
Ending work in process (1,300 units × 40% complete)............ 520

Conversion
Cost of beginning work in process............................................ $ 2,900
Cost added during the period.................................................... 121,000
Total cost (a)............................................................................. $123,900
Equivalent units of production (b)............................................ 6,420

Cost per equivalent unit, (a) ÷ (b)............................................. $19.30

A) $240,200
B) $263,095
C) $215,592
D) $229,600

Solution:


Total cost (a)........................................................... $116,300 $123,900



A) $47,503
B) $19,001
C) $24,604
D) $30,877

Solution:

Ending work in process (materials: 1,300 units × 65% complete;
conversion: 1,300 units × 40% complete)............. 845 520

Total cost (a)........................................................... $116,300 $123,900



Kumari Corporation uses the weighted-average method in its process costing system. Data

Materials costs...................................................................... $2,900
Percent complete with respect to materials.......................... 85%
Percent complete with respect to conversion....................... 70%
Units in ending work in process inventory........................... 600

A) $491,328
B) $469,900
C) $460,600
D) $454,478

Solution:

Ending work in process (materials: 600 units ×
60% complete; conversion: 600 units × 35%
complete)............................................................. 360 210
Equivalent units of production............................... 7,760 7,610

Cost of beginning work in process......................... $ 2,900 $ 6,400
Total cost (a)........................................................... $130,900 $339,000


Units transferred to the next department................ 7,400 7,400
Cost of units transferred out................................... $124,827 $329,645 $454,473

A) $15,428
B) $36,850
C) $22,110
D) $12,897

Solution:

Transferred to next department.............................. 7,400 7,400
Ending work in process (materials: 600 units ×
60% complete; conversion: 600 units × 35%
complete)........................................................... 360 210

Total cost (a).......................................................... $130,900 $339,000


Ending work in process inventory:........................
Equivalent units of production (materials: 600
units × 60% complete; conversion: 600 units ×
35% complete)................................................... 360 210
Cost of ending work in process inventory............. $6,073 $9,355 $15,428

Loxham Corporation uses the weighted-average method in its process costing system. Data

Units in beginning work in process inventory.................... 400
Materials costs..................................................................... $6,900
Conversion costs................................................................. $2,500
Percent complete with respect to materials......................... 80%
Percent complete with respect to conversion...................... 15%
Units started into production during the month..................... 6,000
Units transferred to the next department during the month. . . 5,400
Materials costs added during the month................................. $112,500
Conversion costs added during the month............................. $210,300
Units in ending work in process inventory......................... 1,000
Percent complete with respect to materials......................... 80%
Percent complete with respect to conversion...................... 30%
department?
A) 800
B) 6,400
C) 5,400
D) 6,200


Solution:

Materials
complete; conversion: 1,000 units × 30% complete)..... 800
is closest to:
A) $39.20
B) $37.33
C) $33.25
D) $36.89

Solution:

Conversion

Conversion
Total cost (a)...................................................................... $212,800


A) $16,977
B) $56,591
C) $45,273
D) $26,606

Solution:

80% complete; conversion: 1,000 units × 30%
complete).............................................................. 800 300

Total cost (a)............................................................. $119,400 $212,800


Equivalent units of production (materials: 1,000
units × 80% complete; conversion: 1,000 units ×
30% complete)...................................................... 800 300

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:

Materials costs................... $3,700 60%
Materials costs................... $39,000

A) 900
B) 800
C) 1,400
D) 4,400

Solution:


department?
A) 5,600
B) 4,690
C) 4,200
D) 490

Solution:


Conversio
n
Ending work in process (1,400 units × 35% complete)....... 490

A) $7.43
B) $6.96
C) $8.13
D) $7.63

Solution:


Materials
Ending work in process (1,400 units × 75% complete).... 1,050

Materials
Total cost (a)...................................................................... $42,700


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%
Transferred Labor and

In Materials Overhead
Beginning work in process inventory. . $80,000 $37,600 $5,000
Cost added during the month............... $251,000 $122,400 $66,500
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


Solution:

+ Work in process, beginning.............................................. 40,000
− Work in process, ending................................................... 20,000
= Units completed and transferred out during the month.... 120,000

Materials
Ending work in process (20,000 units × 100% complete). . . 20,000
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:

+ Work in process, beginning.............................................. 40,000
− Work in process, ending................................................... 20,000
= Units completed and transferred out during the month.... 120,000

Labor and
Overhead


Labor and
Overhead
Total cost (a).......................................................................... $71,500

Iyer Corporation uses the weighted-average method in its process costing system. Data

Units in beginning work in process inventory........................ 800
Materials costs........................................................................ $13,900
Conversion costs..................................................................... $7,200
Percent complete with respect to materials............................ 85%
Percent complete with respect to conversion......................... 20%
Units started into production during the month......................... 7,200
Units transferred to the next department during the month....... 6,100
Materials costs added during the month.................................... $115,700
Conversion costs added during the month................................. $240,600
Units in ending work in process inventory............................. 1,900
Percent complete with respect to materials............................ 75%
Percent complete with respect to conversion......................... 10%

department?
A) 8,000
B) 6,290
C) 6,100
D) 190

Solution:

Conversion
Transferred to next department......................................................... 6,100
Ending work in process (1,900 units × 10% complete)................... 190
Equivalent units of production......................................................... 6,290
A) $16.20
B) $17.22
C) $14.46
D) $15.38

Solution:

Materials


Materials
Total cost (a)...................................................................... $129,600

Jones Corporation uses the weighted-average method in its process costing system. Data

Materials costs...................................................................... $8,500
A) $15.51
B) $13.64
C) $15.10
D) $17.18


Solution:
Materials

Materials
Total cost (a)...................................................................... $87,600

is closest to:
A) $43.71
B) $49.10
C) $46.76
D) $38.86

Solution:

Conversion

Conversion
Total cost (a)...................................................................... $225,400


(Appendix 4A) The following data relate to the Mixing Department of Dillard Company for a
recent month:
Percent Complete
with Respect to
Units Processing
Beginning work in process inventory..... 10,000 65%
Units started into production................... 50,000
Units completed and transferred out....... 51,000
Ending work in process inventory.......... 9,000 30%
All materials are added at the beginning of the mixing process.
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:

Materials
To complete beginning work in process (10,000 units × 0%).... 0
started − 9,000 units in ending inventory).............................. 41,000
Ending work in process (9,000 units × 100% complete)........... 9,000
Equivalent units of production................................................... 50,000

140. Assuming that Dillard Company uses the FIFO method, the equivalent units for
processing would be:
A) 47,200
B) 50,200
C) 51,000
D) 60,000

Solution:

Conversion
To complete beginning work in process (10,000 units × 35%).. 3,500
Ending work in process (9,000 units × 30% complete)............. 2,700
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:

Materials
Transferred to next department......................................................................
51,000
Ending work in process (9,000 units × 100% complete)...............................9,000
Equivalent units of production.......................................................................
60,000

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:

Conversion
(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%
Started into production during March..... 66,000
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:


Materials

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:


Labor and
Overhead

145. The equivalent units for materials for March using the FIFO method, would be:
A) 68,000
B) 65,350
C) 71,000
D) 67,000

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

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:


Labor and
Overhead
To complete beginning work in process (7,000 units × 65%)........ 4,550
started − 5,000 units in ending inventory)................................... 61,000
Ending work in process (5,000 units × 30% complete).................. 1,500
Equivalent units of production........................................................ 67,050
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:

Conversion
148. How many units were started into production during January?
A) 18,000
B) 19,600
C) 20,000
D) 22,000

Solution:

+ Work in process, ending................................................... 8,000
+ Units completed and transferred out during the month.... 20,000
− Work in process, beginning.............................................. 6,000
= Units started into production during the month................ 22,000

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.
Work in process, beginning (May 1):

Units in process...........................................................................................
30,000
Percent complete with respect to materials.................................................
100%
Percent complete with respect to conversion..............................................
10%
Units completed and transferred out during May..........................................
290,000
Work in process, ending (May 31):
Units in process...........................................................................................
17,000
Percent complete with respect to materials.................................................
100%
Percent complete with respect to conversion..............................................
80%
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:

Materials
Ending work in process (17,000 units × 100% complete) 17,000

150. What are the Blending Department's equivalent units related to conversion costs for
May?
A) 266,400
B) 290,400
C) 293,400
D) 303,600

Solution:

Conversion
Ending work in process (17,000 units × 80% complete). . 13,600
Bettie Corporation uses a weighted-average process costing system to collect costs related to
production. The following selected information relates to production for October:
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
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.

out during October?
A) $642,000
B) $677,500
C) $690,000
D) $691,900

Solution:

Total cost................................................... $252,000 $518,400
Equivalent units......................................... ÷ 60,000 ÷ 54,000
Cost per equivalent unit............................. $4.20 $9.60
× # of units completed and transferred out 50,000 50,000
Total cost of units completed and
transferred out........................................ $210,000 $480,000 $690,000
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:

Total cost................................................... $252,000 $518,400
Equivalent units......................................... ÷ 60,000 ÷ 54,000
× # of equivalent units in ending work in
process................................................... 10,000 4,000
Total cost of ending work in process......... $42,000 $38,400 $80,400

(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:
Units Processing Cost

Work in process inventory on March 1...... 60,000 $35,000
Units started into production and costs
incurred during the month...................... 190,000 $700,000
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:



Processing
Cost


Conversion
Total cost (a).......................................................................... $735,000

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


Solution:


Processing
Cost
To complete beginning work in process (60,000 units ×
40%)................................................................................... 24,000
units started − 50,000 units in ending inventory)............... 140,000


Conversion
Cost added during the period (a)............................................ $700,000
Cost per equivalent unit (a) ÷ (b)........................................... $4.02
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%
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.

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:


90% complete).................................................. 10,000 9,000
Cost per equivalent unit (given)........................... $1.50 $2.80

Units transferred to the next department.............. 311,000 311,000
Cost of units transferred out................................. $466,500 $870,800 $1,337,300

November 30?
A) $17,800
B) $38,700
C) $40,200
D) $43,000

Solution:


90% complete)................................................. 10,000 9,000
Equivalent units of production............................ 321,000 320,000
Cost per equivalent unit (given).......................... $1.50 $2.80
Cost of Ending Work in Process Inventory and

Equivalent units of production (materials:
10,000 units × 100% complete; conversion:
10,000 units × 90% complete)......................... 10,000 9,000
Cost of ending work in process inventory........... $15,000 $25,200 $40,200

(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:

Units in beginning work in process inventory............. 600
Materials costs............................................................. $7,800
Conversion costs.......................................................... $10,700
Units started into production during the month.............. 5,700
Units transferred to the next department during the
month........................................................................... 5,000
Materials costs added during the month......................... $92,400
Conversion costs added during the month...................... $160,000
Units in ending work in process inventory.................. 1,300

department?
A) 910
B) 5,520
C) 6,300
D) 4,400

Solution:

Materials
To complete beginning work in process (600 units × 35%)....... 210
Ending work in process (1,300 units × 70% complete)............. 910
department?
A) 520
B) 6,300
C) 4,400
D) 5,220

Solution:

Conversion
To complete beginning work in process (600 units × 50%)........ 300
started − 1,300 units in ending inventory)................................ 4,400
Ending work in process (1,300 units × 40% complete)............... 520
Equivalent units of production..................................................... 5,220

A) $20.00
B) $14.67
C) $16.74
D) $18.48

Solution:

Materials

Materials
Cost added during the period (a)................................................ $92,400
Cost per equivalent unit (a) ÷ (b)............................................... $16.74

is closest to:
A) $30.65
B) $32.18
C) $32.00
D) $35.67

Solution:

Conversion

Conversion
Cost added during the period (a)................................................ $160,000
Cost per equivalent unit (a) ÷ (b)............................................... $30.65

A) $270,900
B) $252,400
C) $239,726
D) $298,557

Solution:

(materials: 600 units × 35% complete;
conversion: 600 units × 50% complete)......... 210 300
inventory)........................................................ 4,400 4,400
40% complete)................................................ 910 520

Cost added during the period (a)........................ $92,400 $160,000
Equivalent units of production (b)...................... 5,520 5,220
Cost per equivalent unit (a) ÷ (b)....................... $16.74 $30.65 $47.39


Cost in beginning inventory............................... $7,800 $10,700 $ 18,500
Cost to complete the units in beginning inventory:
complete the beginning inventory................... 210 300
Cost per equivalent unit...................................... $16.74 $30.65
inventory......................................................... $3,515 $9,195 12,710
Units started and completed this period............. 4,400 4,400
Cost per equivalent unit...................................... $16.74 $30.65
Cost of units started and completed this period. $73,652 $134,866 208,518
Cost of units transferred out............................... $239,728
A) $61,607
B) $24,643
C) $31,171
D) $43,125

Solution:

600 units × 35%; conversion: 600 units × 50%). 210 300
inventory)............................................................ 4,400 4,400
70% complete; conversion: 1,300 units × 40%
complete)............................................................. 910 520


Cost added during the period (a)............................ $92,400 $160,000
Cost per equivalent unit (a) ÷ (b)............................ $16.74 $30.65
Costs of Ending Work in Process Inventory and

Equivalent units of production............................... 910 520
(Appendix 4A) Prochino Corporation uses the FIFO method in its process costing system.

Materials costs...................................................................... $9,500

department?
A) 1,680
B) 9,605
C) 10,700
D) 7,700

Solution:

Materials
To complete beginning work in process (900 units × 25%
complete)................................................................................ 225
Ending work in process (2,100 units × 80% complete)............. 1,680

is closest to:
A) $18.22
B) $16.63
C) $15.34
D) $16.11

Solution:

Conversion
complete)................................................................................... 675
started − 2,100 units in ending inventory)................................. 7,700

Conversion
Cost added during the period (a)................................................... $143,000
Equivalent units of production (b)................................................. 9,320
Cost per equivalent unit (a) ÷ (b).................................................. $15.34

A) $255,900
B) $269,500
C) $235,249
D) $289,938

Solution:
(materials: 900 units × 25% complete;
conversion: 900 units × 75% complete)........ 225 675
inventory)...................................................... 7,700 7,700
45% complete)............................................... 1,680 945
Equivalent units of production.......................... 9,605 9,320

Cost added during the period (a)....................... $112,900 $143,000
Equivalent units of production (b).................... 9,605 9,320
Cost per equivalent unit (a) ÷ (b)...................... $11.75 $15.34 $27.10

Cost in beginning inventory.............................. $9,500 $4,100 $ 13,600
complete the beginning inventory................. 225 675
Cost per equivalent unit.................................... $11.75 $15.34
inventory........................................................ $2,645 $10,357 13,001


Units started and completed this period............ 7,700 7,700
Cost per equivalent unit.................................... $11.75 $15.34
Cost of units started and completed this period $90,508 $118,144 208,652
Cost of units transferred out.............................. $235,253
(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:

Units in process................................................................. ?
Percent complete with respect to materials....................... 75%
Percent complete with respect to conversion.................... 50%
Materials cost..................................................................... $2,300
Conversion cost................................................................. $3,600
Units started into production during the month.................... 25,200
Units completed and transferred out during the month........ 24,000
Materials cost..................................................................... $98,750
Conversion cost................................................................. $220,500
Units in process................................................................. 2,000
Percent complete with respect to materials....................... 80%
Percent complete with respect to conversion.................... 45%
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:
+ Units completed and transferred out during the month..... 24,000
− Units started into production during the month................. 25,200
= Work in process, beginning................................................ 800

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.

Units in beginning work in process inventory.............. 400
Materials costs.............................................................. $6,900
Conversion costs........................................................... $6,900
Materials costs added during the month.......................... $142,800
Conversion costs added during the month....................... $242,800
Units in ending work in process inventory................... 900

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:

− Work in process, ending..................................................... 900
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.

is closest to:
A) $46.69
B) $46.65
C) $44.43
D) $49.29

Solution:
Conversion
complete)................................................................................. 260
started − 900 units in ending inventory).................................. 4,800
Ending work in process (900 units × 45% complete)................. 405

Conversion

(Appendix 4A) Noguti Corporation uses the FIFO method in its process costing system. Data

Materials costs.............................................................. $1,800
month........................................................................... 7,000
Conversion costs added during the month $174,600
Ending work in process inventory:..................................
Units in ending work in process inventory................... 500

department?
A) 250
B) 7,500
C) 7,110
D) 6,800

Solution:

Materials
complete) 60
started − 500 units in ending inventory)................................. 6,800
Ending work in process (500 units × 50% complete)................ 250

is closest to:
A) $26.25
B) $25.66
C) $24.44
D) $24.94

Solution:

Conversion
complete).................................................................................. 120
started − 500 units in ending inventory)................................... 6,800
Ending work in process (500 units × 45% complete).................. 225
Equivalent units of production..................................................... 7,145

Conversion
Cost added during the period (a).................................................. $174,600
Equivalent units of production (b)............................................... 7,145
Cost per equivalent unit (a) ÷ (b)................................................. $24.44

(Appendix 4A) Outinki Corporation uses the FIFO method in its process costing system. Data

Materials costs.............................................................. $8,600
month........................................................................... 6,800
Conversion costs added during the month....................... $172,900
Units in ending work in process inventory................... 1,700

department?
A) 6,910
B) 425
C) 8,500
D) 6,100

Solution:

Conversion
complete)................................................................................... 385

A) $14.35
B) $12.51
C) $16.38
D) $11.48

Solution:

Materials
complete)..................................................................................... 175
Units started and completed during the period (7,800 units started
− 1,700 units in ending inventory).............................................. 6,100
Ending work in process (1,700 units × 90% complete).................. 1,530

Materials
Cost added during the period (a)..................................................... $97,600
Equivalent units of production (b).................................................. 7,805
Cost per equivalent unit (a) ÷ (b).................................................... $12.50
(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.

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:

Materials
complete)...................................................................................... 0
started − 18,000 units in ending inventory).................................. 442,000
Ending work in process (18,000 units × 100% complete)............... 18,000
Equivalent units of production......................................................... 460,000
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:

Conversion
complete)..................................................................................... 6,400
Ending work in process (18,000 units × 60% complete)................ 10,800

(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:
Equivalent units: Materials Conversion

Units in process, April 1......................................... 0 2,500
Units started and completed during April.............. 32,000 32,000
Units in process, April 31....................................... 8,000 1,500
Total equivalent units............................................. 40,000 36,000
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.

out during April?
A) $642,830
B) $819,230
C) $833,360
D) $1,009,760

Solution:

To complete beginning work in process............................. 0 2,500
Units started and completed during the period................... 32,000 32,000
Ending work in process....................................................... 8,000 1,500
Equivalent units of production............................................ 40,000 36,000

Cost added during the period (a)......................................... $169,600 $529,200
Equivalent units of production (b)...................................... 40,000 36,000
Cost per equivalent unit (a) ÷ (b)........................................ $4.24 $14.70

Cost in beginning inventory................................................ $50,400 $126,000
Equivalent units of production required to complete the
beginning inventory......................................................... 0 2,500
Cost per equivalent unit...................................................... $4.24 $14.70
Cost to complete the units in beginning inventory............. $0 $36,750
Units started and completed this period.............................. 32,000 32,000
Cost per equivalent unit...................................................... $4.24 $14.70
Cost of units started and completed this period.................. $135,680 $470,400
Cost of units transferred out................................................ $186,080 $633,150
Total cost of units transferred out = $186,080 + $633,150 =$819,230.

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:
Equivalent Units of Production:

To complete beginning work in process................... 0 2,500
Units started and completed during the period......... 32,000 32,000
Ending work in process............................................ 8,000 1,500
Cost per Equivalent Unit:

Cost added during the period (a).............................. $169,600 $529,200
Cost per equivalent unit (a) ÷ (b)............................. $4.24 $14.70 $18.94
Costs of Ending Work in Process Inventory and Units Transferred Out:


(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%
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.

out during February?
A) $1,743,300
B) $1,812,600
C) $1,814,040
D) $1,922,040

Solution:

(materials: 18,000 units × 0% complete;
conversion: 18,000 units × 90% complete)...... 0 16,200
inventory)......................................................... 153,000 153,000
100% complete; conversion: 7,000 units ×
40% complete).................................................. 7,000 2,800

Cost added during the period (a).......................... $496,000 $1,290,000
Cost per equivalent unit (a) ÷ (b)......................... $3.10 $7.50 $10.60

Cost in beginning inventory................................. $55,620 $123,120 $ 178,740
complete the beginning inventory.................... 0 16,200
inventory........................................................... $0 $121,500 121,500


Units started and completed this period............... 153,000 153,000
Cost of units started and completed this period... $474,300 $1,147,500 1,621,800
Cost of units transferred out................................. $1,922,040
February 28?
A) $29,680
B) $42,700
C) $44,520
D) $53,200

Solution:

18,000 units × 0% complete; conversion: 18,000 units
× 90% complete)............................................................ 0 16,200
units started − 7,000 units in ending inventory)............ 153,000 153,000
complete; conversion: 7,000 units × 40% complete)..... 7,000 2,800
Equivalent units of production.......................................... 160,000 172,000

Cost added during the period (a)....................................... $496,000 $1,290,000
Equivalent units of production (b)..................................... 160,000 172,000
Cost per equivalent unit (a) ÷ (b)...................................... $3.10 $7.50

Equivalent units of production.......................................... 7,000 2,800
Cost per equivalent unit..................................................... $3.10 $7.50
Cost of ending work in process inventory......................... $21,700 $21,000 $42,700

(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:
Custodial Services.............. 500 square feet

Maintenance....................... 2,000 square feet
Operating Department 1..... 10,000 square feet
Operating Department 2..... 8,000 square feet
Budgeted costs in the Custodial Services department total $36,000.
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:
Department: Square Feet Percent

Maintenance..................................................................... 2,000 10%
Operating Department 1................................................... 10,000 50%
Operating Department 2................................................... 8,000 40%
Total square feet............................................................... 20,000 100%
Total Custodial Services costs......................................... $36,000

× % to Maintenance......................................................... 10%
Custodial Services costs allocated to Maintenance......... $3,600

181. The amount of Custodial Services department cost allocated to Operating Department
2 under the direct method would be closest to:
A) $14,400
B) $14,049
C) $16,000
D) $9,000

Solution:
Department: Square Feet Percent

Operating Department 1.............................. 10,000 56%
Operating Department 2.............................. 8,000 44%
Total square feet.......................................... 18,000 100%
Total Custodial Services costs.................... $36,000

× % to Operating Department 2.................. 44%
Custodial Services costs allocated to
Operating Department 2.......................... $16,000

(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
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.

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
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
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
*Sigma department costs allocation: 15% + 60% = 75%.

**Delta department costs allocation: 69% + 23% = 92%.

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
Sigma Delta Chi Omega Total
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
*Sigma department costs allocation: 15% + 60% + 25% = 100%.

**Delta department costs allocation: 69% + 23% = 92%.
(Appendix 4B) Seidell Corporation has two service departments, Administrative and
Facilities, and two operating departments, Assembly and Customer Solutions.

Adminis- Customer
trative Facilities Assembly Solutions
Departmental costs.... $43,560 $54,720 $561,960 $253,030
Employee hours........ 4,000 2,000 27,000 17,000
Space occupied.......... 1,000 2,000 37,000 1,000
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
Customer
Admin. Facilities Assembly Solutions Total
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
*Administration costs are allocated on the basis of employee hours: 27 + 17 = 44.

**Facilities costs are allocated on the basis of space occupied: 37 + 1 = 38.

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
allocation......................... $43,560 $54,720 $561,960 $253,030 $913,270
Allocation:
17/44)*............................ (43,560) 26,730 16,830 0
1/38)**............................ (54,720) 53,280 1,440 0
Total costs after allocation.. $ 0 $ 0 $641,970 $271,300 $913,270
*Administrative costs are allocated on the basis of employee hours: 27 + 17 = 44.


(Appendix 4B) Maute Clinic has two service departments, Administrative and Support, and
two operating departments, Adult Medicine and Pediatrics.

Adminis- Adult
trative Support Medicine Pediatrics
Employee hours........ 3,000 2,000 26,000 14,000
Space occupied.......... 3,000 2,000 38,000 6,000
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.

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
Adult
Admin. Support Medicine Pediatrics Total
allocation........................... $23,600 $51,480 $259,690 $288,790 $623,560
Allocation:
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

**Support costs are allocated on the basis of space occupied: 38 + 6 = 44.

189. The total Pediatrics Department cost after the allocations of service department costs
is closest to:
A) $302,436
B) $304,070
C) $304,136
D) $295,810

Solution:
Service Operating
Adult
Admin. Support Medicine Pediatrics Total
allocation........................... $23,600 $51,480 $259,690 $288,790 $623,560
Allocation:
14/40)*............................... (23,600) 15,340 8,260 0
Support costs (38/44,
6/44)**............................... (51,480) 44,460 7,020 0

**Support costs are allocated on the basis of space occupied: 38 + 6 = 44.

(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 Fabri- Customi-
Technology Personnel cation zation
Computer
workstations........... 37 18 43 37
Employees................. 34 13 73 32
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:
Service Operating
Info.
Tech. Personnel Fabrication Custom. Total
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
32/105)**......................... (21,525) 14,965 6,560 0
Total costs after allocation. $ 0 $ 0 $280,623 $465,992 $746,615
*Information technology costs are allocated on the basis of number of computer

workstations: 26 + 14 = 40.
**Personnel costs are allocated on the basis of employees: 38 + 6 = 44.

(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 Admini-
Technology stration Surgery Recovery
Computer
workstations........... 20 17 54 30
Employees................. 15 13 95 27
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
Info.
Tech. Admin. Surgery Recovery Total
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
(95/122, 27/122)**........... (36,356) 28,310 8,046 0
Total costs after allocation. $ 0 $ 0 $608,636 $605,516 $1,214,152
*Administration costs are allocated on the basis of computer workstations: 54 + 30 =

84.
**Support costs are allocated on the basis of employees: 95 + 27 = 122.

(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 Service Operating Operating
Department Department Department Department
A B X Y
Allocation base A...... 5,000 1,000 29,000 15,000
Allocation base B...... 5,000 2,000 39,000 3,000
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 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
*Service Department A costs are allocated on the basis of allocation base A: 1 + 29 +

15 = 45.
**Service Department B costs are allocated on the basis of allocation base B: 39 + 3 =
42.

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
Service Service Oper. Oper.
Dept. A Dept. B Dept. X Dept.Y Total
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
*Service Department A costs are allocated on the basis of allocation base A: 1 + 29 +

15 = 45.
**Service Department B costs are allocated on the basis of allocation base B: 39 + 3 =
42.

(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:

Adminis-
trative Facilities Assembly Finishing
Labor hours............... 3,000 2,000 21,000 16,000
Space occupied.......... 7,000 1,000 32,000 3,000
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.

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
Admin. Facilities Assembly Finishing Total
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
3/35)**............................... (68,600) 62,720 5,880 0
*Administration costs are allocated on the basis of labor hours: 2 + 21 + 16 = 39.


197. The total Finishing Department cost after allocations is closest to:
A) $443,342
B) $433,660
C) $441,102
D) $442,940

Solution:
Service Operating
Admin. Facilities Assembly Finishing Total
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
3/35)**.................................. (68,600) 62,720 5,880 0
Total costs after allocation..... $ 0 $ 0 $180,420 $442,940 $623,360
*Administration costs are allocated on the basis of labor hours: 2 + 21 + 16 = 39.


(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:

Family Geriatric
Personnel IT Medicine Medicine
Employees................. 11 27 104 160
PCs............................ 11 27 85 87
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
Family Geriatric
Personnel IT Medicine Medicine Total
allocation........................... $66,930 $11,678 $563,940 $82,310 $724,858
Allocation:
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
*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.

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
Family Geriatric
Personnel IT Medicine Medicine Total
allocation.......................... $66,930 $11,678 $563,940 $82,310 $724,858
Allocation:
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

(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:

Family Corporate
Personnel IT Law Law
Employees................. 11 25 121 163
PCs............................ 12 26 112 137
Personnel costs are allocated first on the basis of employees and IT costs are allocated second
on the basis of PCs.

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
Family Corporate
Personnel IT Law Law Total
allocation.......................... $85,284 $29,703 $883,360 $189,010 $1,187,357
Allocation:
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

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
Family Corporate
Personnel IT Law Law Total
allocation.......................... $85,284 $29,703 $883,360 $189,010 $1,187,357
Allocation:
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

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:
Prepare journal entries for each of the transactions listed above.
Ans:
(1) Work in Process-Mixing Department $39,800

Raw Materials $39,800
Salaries and Wages Payable $16,100
Manufacturing Overhead $45,700
(4) Work in Process-Drying Department $87,600
Work in Process-Mixing Department $87,600
(5) Finished Goods $111,300
Work in Process-Drying Department $111,300
(6) Cost of Goods Sold $98,200
Finished Goods $98,200
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting

LO: 1 Level: Easy

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:
Prepare journal entries for each of the transactions listed above.
Ans:
(1) Work in Process-Assembly Department $24,500

Raw Materials $24,500
Salaries and Wages Payable $29,000
Manufacturing Overhead $58,900
(4) Work in Process-Painting Department $101,200
Work in Process-Assembly Department $101,200
(5) Finished Goods $106,100
Work in Process-Painting Department $106,100
(6) Cost of Goods Sold $95,100
Finished Goods $95,100

LO: 1 Level: Easy

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
Units started into production...................... 150,000
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:
a. Units transferred out............................................... 140,000

Add: equivalent units in the ending inventory....... 8,000
Equivalent units of production............................... 148,000
b. Cost in the beginning inventory............................. $ 4,600

Cost added during the month................................. 210,000
Total cost................................................................ $214,600
$214,600 ÷ 148,000 units = $1.45 per unit
c. 140,000 units × $1.45 per unit = $203,000
d. 20,000 units × 40% × $1.45 per unit = $11,600

LO: 2,3,4 Level: Medium

205. Timberline Associates uses the weighted-average method in its process costing
system. The following data are for the first processing department for a recent month:

Units in process......................................................... 2,400
Percent complete with respect to materials............... 75%
Percent complete with respect to conversion............ 50%
Materials cost............................................................ $8,400
Conversion cost......................................................... $7,200
Units started into production during the month........... 20,800
Units completed and transferred out............................ 22,200
Materials cost............................................................ $97,400
Conversion cost......................................................... $129,600
Units in process......................................................... 1,000
Percent complete with respect to materials............... 80%
Percent complete with respect to conversion............ 60%
Required:
a. Determine the equivalent units of production.

b. Determine the costs per equivalent unit.
c. Determine the cost of ending work in process inventory.
d. Determine the cost of the units transferred to the next department.

Ans:
a. Materials Conversion
Materials: 1,000 units × 80%............ 800
Conversion: 1,000 units × 60%......... 600
b. Materials Conversion
Total cost (a)......................................... $105,800 $136,800
c. Materials Conversion Total

d. Materials Conversion Total

Equivalent units of production: ending
work in process................................. 800 600
Cost of ending work in process............ $3,680 $3,600 $7,280

LO: 2,3,4 Level: Hard

206. Avignon Inc. uses the weighted-average method in its process costing system. The
following data concern the operations of the company's first processing department for
a recent month.

Units in process................................................... 900
Percent complete with respect to materials......... 80%
Percent complete with respect to conversion...... 10%
Materials cost...................................................... $6,768
Conversion cost................................................... $3,186
Units started into production during the month..... 10,000
Units completed and transferred out...................... 10,100
Materials cost...................................................... $97,104
Conversion cost................................................... $356,940
Units in process................................................... 800
Required:
a. Determine the equivalent units of production.

b. Determine the costs per equivalent unit.
d. Determine the cost of the units transferred to the next department.

Ans:
Units transferred to next department....... 10,100 10,100
Materials: 800 units × 90%.................. 720
Conversion: 800 units × 20%............... 160
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
c. Ending work in process: Materials Conversion Total

Equivalent units of production................ 720 160
Cost of ending work in process
inventory.............................................. $6,912 $5,616 $12,528

Units completed and transferred out....... 10,100 10,100
Cost of units transferred out.................... $96,960 $354,510 $451,470


207. Bansal Inc. uses the weighted-average method in its process costing system. The
a recent month.

Units in process................................................... 300
Materials cost...................................................... $342
Conversion cost................................................... $4,518
Units started into production during the month..... 22,000
Units completed and transferred out...................... 21,800
Materials cost...................................................... $45,963
Conversion cost................................................... $538,602
Units in process................................................... 500
Required:
Using the weighted-average method:

a. Determine the equivalent units of production for materials and conversion costs.
b. Determine the cost per equivalent unit for materials and conversion costs.
c. Determine the cost of units transferred out of the department during the month.
d. Determine the cost of ending work in process inventory in the department.

Ans:
Weighted-average method:
Units transferred to next department....... 21,800 21,800
Materials: 500 units × 50%.................. 250
Conversion: 500 units × 20%............... 100
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 of ending work in process............... $525 $2,480 $3,005

Units completed and transferred out....... 21,800 21,800
Cost of units transferred out.................... $45,780 $540,640 $586,420


208. Whitney Company uses the weighted-average method in its process costing system.
The following data were taken from the records of the first processing department for
a recent month.

Units in process................................................... 10
Materials cost...................................................... $1,200
Conversion cost................................................... $3,000
Units started into production during the month..... 150
Materials cost...................................................... $42,460
Conversion cost................................................... $137,400
Units in process................................................... 20
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?

Ans:
a. Units in beginning inventory...................... 10
+ Units started into production.................. 150
− Units in ending inventory....................... 20
= Units transferred out............................... 140
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

Ending work in process equivalent units.... 8 4
Cost per equivalent unit.............................. $295 $975
Cost of ending work in process.................. $2,360 $3,900 $6,260


209. Mccabe Corporation uses the weighted-average method in its process costing. The
following data pertain to its Assembly Department for November.
Percent Complete
Units Materials Conversion
Work in process, November 1.................... 800 55% 10%
Units started into production during
November............................................... 8,200
Units completed during November and
transferred to the next department.......... 7,300
Work in process, November 30.................. 1,700 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:
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

LO: 2 Level: Easy

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
Work in process, February 1..................... 300 50% 10%
Units started into production during
February................................................ 5,200
Units completed during February and
transferred to the next department........ 4,800
Work in process, February 28................... 700 50% 40%
Required:
for the Shaping Department for February using the weighted-average method.
Ans:
Units transferred to the next department................ 4,800 4,800
Work in process, February 28:
700 units × 50%.................................................. 350
700 units × 40%.................................................. 280

LO: 2 Level: Easy

211. Camelin Inc. uses the weighted-average method in its process costing system. The
a recent month.

Units in process............................................................. 600
Percent complete with respect to materials................... 60%
Percent complete with respect to conversion................ 70%
Units started into production during the month................ 20,000
Units in process............................................................. 800
Percent complete with respect to materials................... 80%
Percent complete with respect to conversion................ 50%
Required:
Using the weighted-average method, determine the equivalent units of production for
materials and conversion costs.
Ans:
Materials: 800 units × 80%............... 640
Conversion: 800 units × 50%............ 400
Equivalent units of production.......... 20,440 20,200

LO: 2 Level: Easy

212. Poirrier Corporation uses process costing. The following data pertain to its Assembly
Department for May.
Units in process, May 1: materials 75% complete,

conversion 30% complete................................................ 700
Units started into production during May........................... 5,500
Units completed and transferred to the next department..... 4,600
Units in process, May 31: materials 85% complete,
conversion 65% complete................................................ 1,600
Required:
Determine the equivalent units of production for the Assembly Department for May
using the weighted-average method.
Ans:
Materials: 1,600 units × 85%............ 1,360
Conversion: 1,600 units × 65%......... 1,040

LO: 2 Level: Easy

213. Greenham Corporation uses the weighted-average method in its process costing. The
following data pertain to its Materials Preparation Department for March.
Units in process, March 1: materials 75% complete,

conversion 60% complete................................................. 400
Units started into production during March.......................... 6,800
Units completed and transferred to the next department...... 6,300
Units in process, March 31: materials 55% complete,
conversion 10% complete................................................. 900
Required:
Determine the equivalent units of production for the Materials Preparation Department
for March using the weighted-average method.
Ans:
Materials: 900 units × 55%............... 495
Conversion: 900 units × 10%............ 90

LO: 2 Level: Easy

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.
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:
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

LO: 3 Level: Easy

215. Holling Inc. uses the weighted-average method in its processing costing. The
following data concern the company's Mixing Department for the month of December.
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:
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

LO: 3 Level: Easy

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.
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:
6,200 units at $51.40 per unit.....................................................................
$318,680
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

LO: 4 Level: Medium

217. Lorona Inc. has provided the following data concerning the Assembly Department for
the month of June. The company uses the weighted-average method in its processing
costing.
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:
transferred out of the department during June using the weighted-average method.
Ans:
7,400 units × $36.60 per unit........................... $270,840
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

LO: 4 Level: Medium

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.

Units in process............................................................ 400
Materials cost................................................................ $1,944
Conversion cost............................................................ $4,512
Units completed and transferred out................................ 14,500
Materials cost................................................................ $119,053
Conversion cost............................................................ $418,950
Units in process............................................................ 900
Required:
Using the FIFO method:

d. Determine the cost of units transferred out of the department during the month.

Ans:
FIFO method:
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
Materials: 900 units × 90%.................................... 810
Conversion: 900 units × 40%................................. 360
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
c. Materials Conversion Total

Equivalent units of production.................................. 810 360
Cost per equivalent unit............................................. $7.90 $28.50
Cost of ending work in process................................. $6,399 $10,260 $16,659

Cost from the beginning inventory............................ $1,944 $4,512 $6,456
Equivalent units to complete.................................. 160 240
Cost to complete..................................................... $1,264 $6,840 $8,104
Cost of units started and completed:
Units started and completed................................... 14,100 14,100
Cost of units started and completed....................... $111,390 $401,850 $513,240
Total cost of units transferred out.............................. $527,800

Appendix: 4A LO: 5,6,7 Level: Hard

219. Engsbye Inc. uses the FIFO method in its process costing system. The following data
month.

Units in process............................................................ 200
Materials cost................................................................ $800
Conversion cost............................................................ $406
Units completed and transferred out................................ 20,000
Materials cost................................................................ $96,000
Conversion cost............................................................ $413,648
Units in process............................................................ 200
Required:
Using the FIFO method:

d. Determine the cost of units transferred out of the department during the month.

Ans:
FIFO method:
Materials: 200 units × (100% − 80%)......... 40
Conversion: 200 units × (100% − 10%)...... 180
Units started and completed (20,000 − 200)... 19,800 19,800
Materials: 200 units × 80%.......................... 160
Conversion: 200 units × 50%...................... 100
Equivalent units of production........................ 20,000 20,080
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

Cost of ending work in process............... $768 $2,060 $2,828

Cost from the beginning inventory.......... $800 $406 $1,206
inventory:
Equivalent units to complete................ 40 180
Cost to complete................................... $192 $3,708 $3,900
Cost of units started and completed:
Units started and completed................. 19,800 19,800
Cost of units started and completed..... $95,040 $407,880 $502,920
Total cost of units transferred out............ $508,026

Appendix: 4A LO: 5,6,7 Level: Hard

220. Lenning Corporation uses the FIFO method in its process costing. The following data
pertain to its Assembly Department for July.
Percent Complete
Work in process, July 1.............................. 300 75% 10%
Units started into production during July... 6,100
Units completed during July and
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:
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

Appendix: 4A LO: 5 Level: Medium

221. The following data pertain to the Milling Department of Malmberg Corporation for
June. The company uses the FIFO method in its process costing.
Percent Complete
Work in process, June 1............................. 800 80% 35%
Units started into production during June. . 9,400
Units completed during June and
Work in process, June 30........................... 1,900 75% 40%
Required:
for the Milling Department for June using the FIFO method.
Ans:
FIFO method:
800 units × (100% − 80%)..........................................................................
160
800 units × (100% − 35%).......................................................................... 520
Units started and completed in June..............................................................
7,500 7,500
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
month.

Units in process............................................................ 800
Units in process............................................................ 800
Required:
Using the FIFO method, determine the equivalent units of production for materials and
conversion costs.
Ans:
FIFO method:
Materials: 800 units × (100% − 70%)................. 240
Conversion: 800 units × (100% − 10%)............. 720
Units started and completed (14,000 − 800).......... 13,200 13,200
Materials: 800 units × 60%................................. 480
Conversion: 800 units × 40%.............................. 320


223. Clarks Corporation uses the FIFO method in its process costing. The following data
pertain to its Assembly Department for August.
Units in process, August 1: materials 85% complete,

conversion 20% complete............................................ 700
Units started into production during August.................... 9,400
Units completed and transferred to the next department. 8,300
Units in process, August 31: materials 90% complete,
conversion 60% complete............................................ 1,800
Required:
Determine the equivalent units of production for the Assembly Department for August
using the FIFO method.
Ans:
FIFO method:
Materials: 700 units × (100% − 85%).............. 105
Conversion: 700 units × (100% − 20%).......... 560
Units started and completed (8,300 – 700)......... 7,600 7,600
Materials: 1,800 units × 90%........................... 1,620
Conversion: 1,800 units × 60%........................ 1,080


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.
Units in process, May 1: materials 60% complete, conversion

45% complete............................................................................. 500
Units started into production during May...................................... 8,900
Units started and completed during May....................................... 7,800
Units completed and transferred to the next department during
May............................................................................................ 8,300
Units in process, May 31: materials 80% complete, conversion
40% complete............................................................................. 1,100
Required:
Determine the equivalent units of production for the Circuit Prep Department for May
using the FIFO method.
Ans:
FIFO method:
Materials: 500 units × (100% − 60%)................. 200
Conversion: 500 units × (100% − 45%)............. 275
Units started and completed................................... 7,800 7,800
Materials: 1,100 units × 80%.............................. 880
Conversion: 1,100 units × 40%........................... 440


225. Zubris Corporation uses the FIFO method in its processing costing. The following data
concern the company's Assembly Department for the month of July.
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:
Cost added during July............................... $26,496 $34,040
Equivalent units of production................... 2,070 1,850

Appendix: 4A LO: 6 Level: Easy

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.
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:
Cost added during the month......... $170,940 $179,775
Equivalent units............................. 7,770 7,650
Cost per equivalent unit................. $22.00 $23.50

Appendix: 4A LO: 6 Level: Easy

227. Crone Corporation uses the FIFO method in its processing costing system. The
following data concern the company's Assembly Department for the month of October.
Cost in beginning work in process inventory........ $1,920

Units started and completed this month................. 3,130
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:
transferred out of the department during October using the FIFO method.
Ans:
FIFO method:
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
Total cost transferred to the next department............... $101,783
Work in process, October 31:

Materials, 330 EUs at $9.50 per EU............................. $3,135
Conversion, 264 EUs at $20.40 per EU....................... 5,386
Total work in process, October 31................................ $8,521


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.
Cost in beginning work in process inventory.................. $1,690

Units started and completed this month.......................... 4,110
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:
From the beginning work in process inventory:
Cost in beginning work in process inventory. . $ 1,690
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
Total cost transferred to the next department...... $258,524

Materials, 220 EUs at $12.50 per EU................. $ 2,750
Conversion, 176 EUs at $45.70 per EU.............. 8,043
Total work in process, June 30............................ $10,793


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
before allocation. $20,000 $10,000 $90,000 $60,000 $100,000
Square feet............. 1,000 4,000 6,000 18,000 12,000
Patient days............ 0 0 5,500 7,700 8,800
Required:
a. Prepare a schedule to allocate service department costs to operating departments

by the direct method (round all dollar amounts to the nearest whole dollar).
b. Prepare a schedule to allocate service department costs to operating departments
by the step-down method, allocating Building Services first (round all amounts to
the nearest whole dollar).

Ans:
a. Direct Method:
Building
Budgeted costs
before allocation $20,000 $10,000 $90,000 $60,000 $100,000
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
allocation............ $0 $0 $95,833 $73,500 $110,667

b. Step Method
Building
Budgeted costs
before allocation. $20,000 $10,000 $90,000 $60,000 $100,000
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
allocation............ $0 $0 $96,000 $73,200 $110,800

Appendix: 4B LO: 8,9 Level: Medium

230. Cerce 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 Finishing.

Administrative Facilities Assembly Finishing
Employee hours........ 5,000 2,000 29,000 17,000
Space occupied–
square feet.............. 2,000 2,000 30,000 8,000
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:
Allocation rate for administrative costs

= Cost to be allocated ÷ Allocation base
= $29,440 ÷ (29,000 + 17,000) = $0.64
Allocation rate for facilities costs
= $46,740 ÷ (30,000 + 8,000) = $1.23
Administrative Facilities Assembly Finishing

Departmental costs................ $29,440 $46,740 $258,880 $320,280
Allocation:
Administrative costs.......... (29,440) 18,560 10,880
Facilities costs.................... (46,740) 36,900 9,840
Total costs after allocation. $ 0 $ 0 $314,340 $341,000

Appendix: 4B LO: 8 Level: Easy

231. Sandven Corporation uses the direct method to allocate its two service department
costs to its two operating departments. Data concerning those departments follow:

A B X Y
Allocation base A...... 5,000 1,000 32,000 17,000
Allocation base B...... 8,000 2,000 32,000 5,000
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:
method.
Ans:
Allocation rate for Service Department A costs

= $34,300 ÷ (32,000 + 17,000) = $0.70
Allocation rate for Service Department B costs
= $66,230 ÷ (32,000 + 5,000) = $1.79

A B X Y
Service Department A. . (34,300) 22,400 11,900
Service Department B. . (66,230) 57,280 8,950
Total costs after
allocation.................. $ 0 $ 0 $241,390 $524,070


232. The direct method is used by Kurpinski Clinic to allocate its service department costs
to its operating departments. Data concerning those departments follow:
Operating
Service Departments Departments
Information
Technology Personnel Pediatrics Prenatal
Departmental costs. $34,650 $31,356 $566,960 $688,220
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:
method.
Ans:
Allocation rate for Information Technology costs

= $34,650 / (44 + 46) = $385.00
Allocation rate for Personnel costs
= $31,356 / (75 + 42) = $268.00
Service Departments Operating Departments

Information
Technology Personnel Pediatrics Prenatal
Information
Technology........... (34,650) 16,940 17,710
Personnel................. (31,356) 20,100 11,256
Total costs after
allocation.............. $ 0 $ 0 $604,000 $717,186


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:
Service Departments Operating Departments

Information Admini- Corporate Government
Technology stration Practice Practice
Computers.............. 39 14 51 30
Employees.............. 32 10 70 26
Information Technology Department costs are allocated on the basis of computers and
Administration Department costs are allocated on the basis of employees.
Required:
method.
Ans:
Allocation rate for Information Technology costs

= Cost to be allocated ÷ Allocation base = $26,244 / (51 + 30) = $324.00
Allocation rate for Administration costs
= Cost to be allocated ÷ Allocation base = $21,696 / (70 + 26) = $226.00
Information Corporate Government

Technology Administration Practice Practice
Information
Technology......... (26,244) 16,524 9,720
Administration....... (21,696) 15,820 5,876
Total costs after
allocation............ $ 0 $ 0 $258,514 $493,576


234. Bazin Corporation has two service departments, Service Department A and Service
Department B, and two operating departments, Operating Department X and
Operating Department Y.

A B X Y
Allocation base A... 4,000 1,000 26,000 19,000
Allocation base B... 6,000 2,000 30,000 2,000
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:

A B X Y
Service Department A costs. . (31,280) 680 17,680 12,920
Service Department B costs. . (56,320) 52,800 3,520
Total costs after allocation.... $ 0 $ 0 $231,970 $415,790
Allocation rate for Service Department A costs

= Cost to be allocated / Allocation base
= $31,280 / (1,000 + 26,000 + 19,000) = $0.68
Allocation rate for Service Department B costs
= Cost to be allocated / Allocation base
= ($55,640 + $680) / (30,000 + 2,000) = $1.76


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
Administration Facilities Assembly Finishing
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:
down method.
Ans:
Admini-
stration Facilities Assembly Finishing
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
Allocation rate for Administration Department costs

= $22,260 ÷ (1,000 + 25,000 + 16,000) = $0.53
Allocation rate for Facilities Department costs
= ($69,130 + $530) ÷ (34,000 + 9,000) = $1.62


236. Georgeson Emergency Care Hospital uses the step-down method to allocate service
department costs to operating departments. The hospital has two service departments,
Administration and Information Technology (IT), and two operating departments,
Emergency Room and Intensive Care.

Admini- Emergency Intensive
stration IT Room Care
Employees.............. 4 5 142 83
Computers.............. 4 4 65 46
Administration Department costs are allocated first on the basis of employees and IT
Department costs are allocated second on the basis of computers.
Required:
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

= $13,340 ÷ (5 + 142 + 83) = $58
Allocation rate for IT Department costs
= ($15,805 + $290) ÷ (65 + 46) = $145


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.

Admini- Prenatal Postnatal
stration IT Care Care
Employees.............. 2 3 131 79
Computers.............. 2 2 45 42
Administration Department costs are allocated first on the basis of employees and IT
Department costs are allocated second on the basis of computers.
Required:
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

= $20,448 ÷ (3 + 131 + 79) = $96
Allocation rate for IT Department costs
= ($22,506 + $288) ÷ (45 + 42) = $262



Chapter 4 Systems Design Process Costing

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Chapter 4 Systems Design Process Costing

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Chapter 4 Systems Design: Process Costing

Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking

Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking

Ans: False AACSB: Analytic AICPA BB: Critical Thinking

Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking

Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking

Ans: False AACSB: Analytic AICPA BB: Critical Thinking

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 4-7

Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking

Ans: False AACSB: Analytic AICPA BB: Critical Thinking

Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking

Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking

Ans: False AACSB: Analytic AICPA BB: Critical Thinking

Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking

4-8 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition

Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking

14. Process costing is employed in industries that produce basically homogeneous

Ans: False AACSB: Analytic AICPA BB: Critical Thinking

Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking

Multiple Choice Questions

Ans: D AACSB: Analytic AICPA BB: Critical Thinking

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 4-9

Job-order costing Process costing

Ans: B AACSB: Reflective Thinking AICPA BB: Critical Thinking

Ans: C AACSB: Reflective Thinking AICPA BB: Critical Thinking

Ans: A AACSB: Analytic AICPA BB: Critical Thinking

4-10 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition

Percentage completion of Percentage completion of

Ans: B AACSB: Reflective Thinking AICPA BB: Critical Thinking

Ans: B AACSB: Analytic AICPA BB: Critical Thinking

Ans: C AACSB: Reflective Thinking AICPA BB: Critical Thinking

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 4-11

Material cost assigned to beginning Material cost added to production

Ans: A AACSB: Reflective Thinking AICPA BB: Critical Thinking

Ans: B AACSB: Analytic AICPA BB: Critical Thinking

Ans: B AACSB: Analytic AICPA BB: Critical Thinking

4-12 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition

Ans: D AACSB: Analytic AICPA BB: Critical Thinking

Ans: A AACSB: Reflective Thinking AICPA BB: Critical Thinking

Ans: B AACSB: Analytic AICPA BB: Critical Thinking

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 4-13

Ans: C AACSB: Analytic AICPA BB: Critical Thinking

To solve for units transferred:

4-14 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition

Ans: D AACSB: Analytic AICPA BB: Critical Thinking

To solve for units transferred:

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 4-15

Ans: D AACSB: Analytic AICPA BB: Critical Thinking

4-16 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition

To solve for ending work in process:

Equivalent units of production

Cost per Equivalent Unit

Equivalent units of production (b)...................................... 112,000

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 4-17

The total cost per equivalent unit for May was:

Ans: B AACSB: Analytic AICPA BB: Critical Thinking

Equivalent units of production

Cost per Equivalent Unit

Equivalent units of production (b)..................... 18,000 15,000

4-18 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition

Ans: D AACSB: Analytic AICPA BB: Critical Thinking

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 4-19

To solve for ending work in process: