ECAT, IVY T.

BSA 301

MULTIPLE CHOICE QUESTIONS:

ANSWERS:

1. C- DEPARTMENTS
2. C- UTILITY COMPANY
3. B. 150
4. C. 158

Solution:
Units Completed and Transferred 150
WIP, Ending (40x20%) __ 8
158
5. C. $ 64.67
Solution:
$ 4,000 + $2,500 +$ 3,200 = $ 9,700/150=$ 64.67

6. B. 138 units
Solution:
Units Completed and Transferred 130(150-20)
WIP, Ending (40x20%) 8
138
7. D. (130 x $ 70.29) and (8 x $ 70.29)
Solution:
$ 4,000 + $2,500 +$ 3,200 = $ 9,700/138=$ 70.29

8. A. Work In Process-Photo 228,500

Work in Process-Binding 179,250
Direct Materials & Supplies Inventory 407,750

9. A. $ 8,207 and $ 438

Solution:

WIP Beg. ($ 180 + $ 162 +$ 108) $ 450

 Cost Incurred ($ 2,980 + $ 3,319 + $ 2,086) $ 8,195
Total Cost $ 8,645
EUP 158
Cost Per Equivalent Unit $ 54.72

Ending work in process inventory:

Equivalent units of production 8
Cost per equivalent unit $ 54.72
Cost of ending work in process inventory $ 438
Units completed and transferred out:
Units transferred to the next department 150
Cost per equivalent unit 54.72
Cost of units transferred out $ 8,207

10. C. Material 190 & Labor and Overhead 158

Solution: Materials Labor & Overhead

Units transferred to the next department 150 150

WIP Ending
Materials 40 x 100% 40
Labor & Overhead 40 x 20% 8
Equivalent units of production 190 158

11. B. Materials 160 & Labor and Overhead 149

Beginning work in process inventory
Materials (30 x100%-100%) 0 0
Labor & Overhead (30 x100%-30%) 21
Units started and completed 120 120
Ending work in process inventory
Materials 40 x 100% 40
Labor & Overhead 40 x 20% 8
Equivalent units of production 160 149

WIP, July 1 30
Units started and completed 120
Units Completed 150
 WIP, July 31 40
Total Units Accounted for 190

SHORT ANSWER:

ANSWERS:

1. because the firm only manufacture single product. Process costing system is used
by companies that produce similar or identical units of product in batches
employing a consistent process. While, job order costing is used when it
manufactures variety of products which are different from one another.

2. It because the units completed and transferred was decreased by 20 units with a 40
percent completed units of bookcases as of June 30, 1992 which is the beginning
of the Work in process inventory. These will affect the result of the equivalent
units of production causes to increase its production throughout the process since
in question number 5 it was assumed that 150 units were already completed.

3. Materials requisition form. To assure that materials costs are properly allocated to
jobs in process, a materials requisition form is usually completed as materials are
taken from the raw materials inventory and added to work‐in‐process.

DEFINE THE FOLLOWING:

1. Transferred out costs:

ANSWER:
Transferred out costs refers to a schedule or statement that shows the total
production costs for a company during a specific period of time. It is the total cost
incurred to manufacture products and transfer them into finished goods inventory
for retail sale.

2. Equivalent production:

ANSWER:
 Equivalent Production represents the production of a process in terms of
completed units. At the end Of any given period there are likely to be partly
completed units (work-in-process). It is evident that some of the costs pertaining to
this period are attributable to the units which have not been completed.

3. Production report:

ANSWER:

Production report is a document used in process costing system that summarizes

the information about the flow of units and costs through the work in process
account of a processing department. It is equal to the job cost sheet prepared in
a job order costing system. A separate cost of production report is prepared for
each processing department.

4. Average cost method:

ANSWER:

The average cost method assigns a cost to inventory items based on the total cost
of goods purchased or produced in a period divided by the total number of items
purchased or produced. The average cost method is also known as the weighted-
average method.

5. Sequential production process:

ANSWER:

Sequential production is neither an inventory control system, nor a replacement for

MRP. It is an organized and focused assault on production flexibility, speed,
quality and costs.

6. FIFO Cost Method:

ANSWER:

First In, First Out, commonly known as FIFO, is an asset-management and

valuation method in which assets produced or acquired first are sold, used, or
disposed of first. For tax purposes, FIFO assumes that assets with the oldest costs
are included in the income statement's cost of goods sold (COGS). The remaining
inventory assets are matched to the assets that are most recently purchased or
produced.
TRUE OR FALSE
ANSWERS:

1. TRUE
2. TRUE
3. FALSE
4. TRUE
5. FALSE
6. FALSE
7. TRUE
8. TRUE

EXERCISES:

ANSWERS:

1. WIP, July 1 15,000

Units Started during July 80,000 (Answer)
Total Units to Account For 95,000

Units Completed and transferred 85,000

WIP, July 31 10,000
Total Units accounted for 95,000

DM C Total
2. Units Completed and transferred 85,000 85,000
WIP, July 31
DM 10,000x100% 10,000
C 10,000x20% 2,000
Equivalent Units of Production 95,000 87,000 182,000

DM C
3. Cost of beginning WIP $18,000 $7,500
Costs added during the period $ 100,000 $ 148,500
Total cost to account for $ 118,000 $ 156,000
Equivalent units of production 95,000 87,000
Cost per equivalent unit $ 1.24 $ 1.79

DM C
4. Units completed and transferred out:
 Units Completed and transferred 85,000 85,000
Cost per equivalent unit $ 1.24 $ 1.79
Cost of units transferred out $ 105,400 $ 152,150

DM C
5. Ending work in process inventory:
Equivalent units of production
DM 10,000x100% 10,000
C 10,000x20% 2,000
Cost per equivalent unit $ 1.24 $ 1.79
Cost of ending work in process inventory $12,400 $3,580

6. No
WIP, July 1 15,000
Units Started during July 80,000
Total Units to Account For 95,000

WIP, July 1 15,000

Units started and completed 70,000
Units Completed 85,000
WIP, July 31 10,000
Total Units Accounted for 95,000

DM C
7. To complete beginning WIP:
DM 15,000x(100%-100%) 0
C 15,000x(100%-30%) 10,500
Units started and completed during the period 70,000 70,000
Ending work in process inventory
DM 10,000x100% 10,000
C 10,000x20% 2,000
Equivalent units of production 80,000 82,500

Total Equivalent units of production for July

80,000
82,500
162,500

DM C
8. Cost added during the period 100,000 148,500
 Equivalent units of production 80,000 82,500
Cost per equivalent unit $ 1.25 $ 1.80

DM C Total

9. Units transferred out:

Cost in beginning work in process inventory 18,000 7,500 $ 25,500
Cost to complete the units in beginning
work in process inventory:
Equivalent units of production required to 0 10,500
complete the units in beginning inventory
Cost per equivalent unit $ 1.25 $ 1.80
Cost to complete the units 0 $ 18,900$ 18,900
in beginning inventory
Cost of units started and completed this period:
Cost of units started and completed this period:
Units started and completed this period 70,000 70,000
Cost per equivalent unit $ 1.25 $ 1.80
Cost of units started and completed this period 87,500 126,000 $ 213,500
Total cost of units transferred out $ 257,900

DM C

10. Ending work in process inventory:

Equivalent units of production 80,000 82,500
Cost per equivalent unit $ 1.25 $ 1.80
Cost of ending work in process inventory $ 100,000 $ 148,500