Key Answers (last page)

Items 1 and 2 are based on the following data:

Sol Company’s Job 501 for the manufacturing of 2,200 coats was completed during
August 2003 at the following unit costs:

Direct materials P 20
Direct labor 18
Factory overhead (includes an allowance of P1 for
spoiled work) 18
P 56

Final inspection of Job 501 disclosed 200 spoiled coats which were sold to a jobber for
P6,000.

1. Assume that spoiled loss is charged attributable to exacting specification of Job 501
during August 2003. What would be the unit cost of the good coats produced on Job
501?
a. P 55.00 c. P 57.50
b. 58.00 d. 56.00

2. Assume that the spoilage loss is charged to all production (or due to internal failure)
during August. What would be the unit cost of the good coats produced on Job 501?
a. P 53.00 c. P 56.00
b. 55.00 d. 58.60

Items 3 and 4 are based on the following information:

During March, Sofia Company incurred the following costs on Job 109 for the
manufacture of 200 motors:

Original cost accumulation:

Direct Materials P 660
Direct labor 800
Factory overhead (150% of DL) 1,200
P2,660
Direct costs of reworking 10 units:
Direct materials P 100
Direct labor 160
P 260

3. The rework coats were attributable to the exacting specifications of Job 109, and the full
rework costs were charged to this specific job.
a. P 15.80 c. P 14.00
b. 14.60 d. 13.30

4. If the rework coat was the result of an internal failure due to the employee error, what is
the cost per unit of Job 1097?
a. P 15.80 c. P 14.00
b. 14.60 d. 13.30

5. Under Hermie Company’s job order cost system; estimated costs of defective work
(considered normal in the manufacturing process) are included in the predetermined
factory overhead rate. During March, Job No. 210 for 2,000 handsaws was completed at
the following costs per unit.

Direct materials P5
Direct labor 4
Factory overhead (applied at 150% of direct labor cost) 6
P15

Final inspection disclosed 100 defective saws, which were reworked at a cost of P2 per
unit for direct labor, plus overhead at the predetermined rate. The defective units fall with
in the normal range. What is the total rework cost and to what account should it be
charged?
a. P200 to work-in-process c. P500 to work-in process
b. P200 to factory overhead control d. P500 to factory overhead control
 Process Costing

6. Kew had 3,000 units of work-in-process at April 1 which were 60% complete as to
conversion cost. During April, 10,000 units were completed. At April 30, 4,000 units
remained in work-in-process which were 40% complete as to conversion cost. Direct
materials are added at the beginning of the process. How many units were started during
April?
a. 9,000 c. 10,000
b. 9,800 d. 11,000

7. With the following data for a company using the FIFO process cost
system, calculate the equivalent units for materials and conversion costs:
Whole Conversion
Units Materials Costs
Beginning inventory 10 100% 30%
Transferred-in 100
Transferred-out 80
Ending inventory 30 100% 40%
a. 89 materials, 100 conversion costs.
b. 100 materials, 89 conversion costs.
c. 110 materials, 99 conversion costs.
d. 130 materials, 119 conversion costs.

8. The Wilson Company manufactures the famous “Ticktock” watch on an assembly-line

basis. January 1 work-in process consisted of 5,000 units partially completed. During the
month an additional 110,000 units were started and 105,000 units were completed. The
ending work-in-process was 3/5 complete as to conversion costs. Conversion costs are
added evenly throughout the process. The following conversion costs were incurred:

Beginning costs for work-in process……………………P 1,500

Total current conversion costs…………………………. 273,920

The conversion costs assigned to ending work-in process totaled P15,360 using the FIFO
method of process costing. What was the percentage of completion as to conversion
costs on the 5,000 units in BWIP?
a. 20% c. 60%
b. 40% d. 80%

9. Winnie Incorporated had 8,000 units of work in process in Department A on October 1,

2003. These units were 60% complete as to conversion costs. Materials are added in the
beginning of the process. During the month of October, 34,000 units were started and
36,000 units completed. Winnie had 6,000 units of work in process on October 31, 2003.
These units were 80% complete as to conversion costs. By how much did the equivalent
units for the month of October using the weighted-average method exceed the equivalent
units for the month of October using the first-in, first-out method?
Materials Conversion Costs
a. P 0 P 3,200
b.. 0 4,800
c. 8,000 3,200
d. 8,000 4,800

10. RIVERA CORPORATION’S PRODUCTION CYCLE STARTS IN THE MIXING DEPARTMENT.

THE FOLLOWING INFORMATION IS AVAILABLE FOR THE MONTH OF APRIL 2003:
Units
Work in process, April 30 (50% complete) 40,000
Started in April 240,000
Work in process, April 30 (60% complete) 25,000

Materials are added in the beginning of the process in the Mixing Department. Using the
weighted-average method, what are the equivalent units of production for the month of
April 2003?
Materials Conversion
a. 240,000 250,000
b. 255,000 255,000
 c. 270,000 280,000
d. 280,000 270,000

11. The Alice Company had computed the physical flow (of physical units) for Department A,
for the month of April 2003 as follows:
Units completed:
From work in process on April 1, 2003 10,000
From April production 30,000
40,000

Materials are added at the beginning of the process. Units of work in process at April 30,
2003, were 8,000. The work in process of April 1, 2003, was 80% complete as to
conversion costs and the work in process at April 30, 2003, was 60% complete as to
conversion costs. What are the equivalent units of production for the month of April 2003
using the FIFO methods?
Materials Conversion Costs
a. 38,000 36,800
b. 38,000 38,000
c. 48,000 44,800
d. 48,000 48,000

12. A company uses the first-in, first-out method of costing in a process costing system.
Material is added at the beginning of the process in Department A, and conversion costs
are incurred uniformly throughout the process. Beginning work in process inventory on
April 1 in Department A consisted of 50,000 units estimated to be 30% complete. During
April 150,000 units were started in Department A, and 160,000 units were completed and
transferred to Department B. Ending work in process inventory on April 30 in Department
A was estimated to be 20% complete. What were the total equivalent units in
Department A for April for materials and conversion costs, respectively?
a. 150,000 and 133,000 c. 200,000 and 133,000
b. 150,000 and 153,000 d. 200,000 and 153,000

13. Rina Inc. had 8,000 units of work in process in its Department A on March 1, 2003, which
were 50% complete as to conversion costs. Materials are introduced at the beginning of
the process. During March 17,000 units were started, 18,000 units were completed and
there were 2,000 units of normal spoilage. Rina had 5,000 units of work in process at
March 31, 2003, which was 60% complete as to conversion costs. Under Rina’s cost
accounting system, spoilage units reduce the number of units over which total cost can
be spread. Using the weighted-average method, the equivalent units for March for
conversion cost were
a. 17,000 c. 21,000
b. 19,000 d. 23,000

14. Dorie Co. had the following production for the month of June:

Units
Work in process at June 1 10,000
Started during June 40,000
Completed and transferred to finished goods during June 33,000
Abnormal spoilage incurred 2,000
Work in process at June 30 15,000

Materials are added at the beginning of the process. As to conversion cost, the
beginning work in process was 70% completed, and the ending work in process was 60%
completed. Spoilage is detected at the end of the process. Using the weighted-average
method, the equivalent units for June, with respect to conversion costs, were
a. 42,000 c. 45,000
b. 44,000 d. 50,000

15. A COMPANY MANUFACTURES A PRODUCT THAT PASSES THROUGH TWO PRODUCTION

DEPARTMENTS, MOLDING AND ASSEMBLY. DIRECT MATERIALS ARE ADDED IN THE
ASSEMBLY DEPARTMENT WHEN CONVERSION IS 50% COMPLETE. CONVERSION COSTS
ARE INCURRED UNIFORMLY. THE ACTIVITY IN UNITS FOR THE ASSEMBLY DEPARTMENT
DURING APRIL IS AS FOLLOWS:
Units
Work in process inventory, April 1 (60% complete as to
conversion costs) 5,000
Transferred in from molding department 32,000
 Defective at final inspection (within normal limits) 2,500
Transferred out to finished goods inventory 28,500
Work in process inventory, April 30 (40% complete as
conversion costs) 6,000

The number of equivalent units for direct materials in the assembly department for April
calculated on the weighted-average basis is
a. 26,000 units c. 34,000 units
b. 31,000 units d. 37,000 units

16. LEA COMPANY ADDS MATERIALS IN THE BEGINNING OF THE PROCESS IN THE FORMING
DEPARTMENT, WHICH IS THE FIRST OF TWO STAGES OF ITS PRODUCTION CYCLE.
INFORMATION CONCERNING THE MATERIALS USED IN THE FORMING DEPARTMENT IN
OCTOBER 2003 IS AS FOLLOWS:
Materials
Units Cost
Work in process at October 1, 2003 6,000 P 3,000
Units started during October 50,000 25,000
Units completed and transferred to next
Department during October 44,000

Using the weighted-average method, what was the materials cost of work in process at
October 31, 2003?
a. P 3,060 c. P 6,000
b. 5,520 d. 6,120

17. Information concerning Department B of the Loren Company is as follows:

Units Costs
Beginning work in process 5,000 P 6,300
Units transferred 35,000 58,000
40,000 64,300
Units completed 37,000
Ending work in process 3,000
Costs
Total
Transferred in Materials Conversion costs
Beginning work in
process P 2,900 P - P 3,400 P 6,300
Units transferred in 17,500 25,500 15,000 58,000
P 20,400 P 25,500 P18,400 P 64,300

Conversion costs were 20% complete as to the beginning work in process and 40%
complete as to the ending work in process. All materials are added at the end of the
process. Loren uses the weighted-average method. The portion of the total cost of
ending work in process attributable to transferred in cost is
a. P 0 c. P 1,530
b. 1,500 d. 1,650

18. Roy Company manufactures product X in a two-stage production cycle in Department A

and B. Materials are added at the beginning of the process in Department B. Roy used
the weighted-average method. Conversion costs for Department B were 50% complete
as to the 6,000 units in the beginning work in process and 75% complete as to the 8,000
units in the ending work in process. 12,000 units were completed and transferred out of
Department B during February 2003. An analysis of the costs relating to work in process
(WIP) and production activity in Department B for February 2003 is as follows:

Cost
Transferred in Materials Conversion
WIP, February 1: Costs attached P 12,000 P 2,500 P 1,000
February activity: Costs added 29,000 5,500 5,000

The total cost per equivalent unit transferred out for February 2003 of product X, rounded
to the nearest centavo, was
a. P 2.75 c. P 2.82
b. 2.78 d. 2.85

19. INFORMATION FOR THE MONTH OF MAY CONCERNING DEPARTMENT A, THE FIRST
STAGE OF LEO CORPORATION’S PRODUCTION CYCLE, IS AS FOLLOWS:
 Conversion
Materials Costs
Work in process, beginning P 4,000 P 3,000
Current costs 20,000 16,000
Total Costs P24,000 P 19,000
Equivalent units based on weighted- average
method 100,000 95,000
Average unit costs P 0.24 P 0.20
Goods completed 90,000 units
Work in process, end 10,000 units

Materials costs are added at the beginning of the process. The ending work in process is
50% complete as to conversion costs. How would the total cost accounted for be
distributed, using the weighted-average method?

Goods Work-in-
Completed process, end
a. P 39,600 P 3,400
b. 39,600 4,400
c. 13,000 0
d. 44,000 3,400

20. The Cutting Department in the first stage of Marlene Company’s production cycle.
Conversion costs for this department were 80% complete to the beginning work in
process and 50% complete as to the ending work in process. Information as to
conversion costs in the Cutting Department for January 2003 is as follows:

Conversion
Units Costs
Work in process at January 1, 2003 25,000 P 22,000
Units started and costs incurred during January 135,000 143,000
Units completed and transferred to next department
during January 100,000

Using the FIFO method, what was the conversion cost of the work in process in the
Cutting Department at January 31, 2003?
a. P 33,000 c. P 39,000
b. 38,100 d. 45,000

21. The Forming Department is the first of a two-stage production process. Spoilage is
identified when the units have completed the Forming process. Costs of spoiled units are
assigned to units completed and transferred to the second department in the period
spoilage is identified. The following information concerns Forming’s conversion costs in
May 2003.

Conversion
Units Costs
Beginning work in process (50%) complete 2,000 P 10,000
Units started during May 8,000 75,500
Spoilage-normal 500
Units completed and transferred 7,000
Ending work in process (80% complete) 2,500

Using the weighted-average method, what was Forming’s conversion cost transferred to
the second production department?
a. P 59,850 c. P 67,500
b. 64,125 d. 71,250

Key Answers:
1. C
2. C
3. A
4. D
5. D
6. D
7. B
8. D
9. D
10. D
11. A
12. B
13. C
14. B
15. B
16. C
17. C: IP, end: 3,000xP.51=P1,530 (P20,400/40,000=P.51)
18. B: UCPD: P12,000+29,000 = P 2.05
20,000
UCTD
M:P2,500+P5,500 = .40
20,000 EP
CC:P1,000+P5,000 = .33
18,000EP P 2.78
19. A: 9,000x(P.24+P.20)=P 39,600
IP, end:
CPD P 0
CTD (EP)
M: 10,000x P.24 2,400
CC: 5,000x P.20 _1,000
P 3,400
20. C: IP,end: CC: 3,000x P1.30 = P39,000
(P143,000/110,000=P1.30)
21. C: UCTD: (P10,000+P75,500)
(7,000+(2,500x.8)+(5,000x1)= P 9,000
NL/u: (P9x500)
7,000 completed = 0.642
P 9,642
__7,000
P 67,500