University of Cebu Lapu Lapu & Mandaue

Cost Accounting (ACCTG 108)

Theories

1. A process cost summary is a managerial accounting report that describes all but which of
the

following:

A. The gross profit earned on the sale of products.

B. The equivalent units of production by the department.

C. How the costs were assigned to the output.

D. Physical transfers for a department.

E. The costs charged to a department

2. A system of accounting in which costs are accumulated and then measured per unit at the
end

of a period by combining costs per equivalent unit from various departments is a:

A. General cost accounting system.

B. Process costing system.

C. Job order cost accounting system.

D. Manufacturing cost accounting system.

E. Work in Process accounting system.

3. A company that applies process costing is most frequently characterized by:

A. Low standardization and high production volume.

B. Custom orders and mass production.

C. Repetitive production and unique products.

D. Repetitive production and low production volume.

E. Similar products and high production volume.

4. An organizational unit of a factory that has the responsibility for partially manufacturing or
producing a product is called a:

A. Production department.

B. Service department.

C. Primary department.

D. Responsibility department.

E. Control department.

5. In a process costing system, direct material costs incurred are recorded:

A. Indirectly to a Work in Process Inventory account from Factory Overhead.

B. Indirectly to a Finished Goods Inventory account from Factory Overhead.

C. Directly to a Work in Process Inventory account.

D. Directly to a Finished Goods Inventory account.

E. Directly to a Cost of Goods Sold account.

6. In a process operation, the direct labor of a production department includes:

A. All labor used exclusively by that department, even if the labor is not applied to the
product itself.

B. All labor used exclusively by that department, but only if the labor is applied to the product

itself.

C. All labor for that department, including labor for services that help more than one

production department, such as clerical, repair, and computer technicians.

D. Only labor that helps more than one production department, such as clerical, repair, and
computer technicians.

E. Only labor that relates to goods finished during the period.

7. After posting all actual factory overhead and applying factory overhead to production

departments in a process costing system,

A. There will never be underapplied overhead.

B. There will never be overapplied overhead.

C. There will always be underapplied overhead.

D. There will always be overapplied overhead.

E. There may be over or underapplied overhead.

8. A costing system that omits recording some or all of the journal entries relating to the cycle
from

purchase of direct materials to the sale of finished goods is called:

A) dependent costing

B) synchronous costing

C) sequential costing

D) backflush costing

9. Companies that would benefit from backflush costing include companies:

A) which have fast manufacturing lead times

B) whose inventories vary from period to period

C) companies that require audit trails

D) Both A and B are correct.

10. The implications of JIT and backflush costing systems for activity-based costing systems
include:

A) more of the costs are direct

B) overhead cost allocations are reduced

C) Neither of these answers is correct.

D) Both of these answers are correct.

11. All of the following are potential financial benefits of just-in-time EXCEPT:

A) lower investments in inventories

B) lower investments in plant space for inventories

C) reducing the risk of obsolescence

D) reducing manufacturing lead time

12. An accounting system that collects financial and operating data on the basis of underlying
nature and extent of the cost drivers is

A) Activity-based costing

B) Target costing

C) Cycle-time costing

D) Variable costing

13. What is the normal effect on the numbers of cost pools and allocation bases when an
activity-based cost (ABC) system replaces a traditional cost system?

Cost Pools Allocation Bases

A) No effect No effect

B) Increase No effect

C) No effect Increase

D) Increase Increase
14. Cost drivers are

A) Activities that cause costs to increase as the activity increases.

B) Accounting techniques used to control costs.

C) Accounting measurements used to evaluate whether performance is proceeding according

to plan.

D) A mechanical basis, such as machine hours, computer time, size of equipment, or square
footage of factory, used to assign costs to activities.

15. Which of the following would be a reasonable basis for allocating the materials handling
costs to the units produced in an activity-based costing system?

A) Number of production runs per year

B) Number of components per completed unit

C) Amount of time required to produce one unit

D) Amount of overhead applied to each completed unit

16. What type of cost is the result of an event that results in more than one product or service
simultaneously?

A) By-product cost

B) Joint cost

C) Main cost

D) Separable cost

17. All costs incurred beyond the split-off point that are assignable to one or more individual
products are called:

A) By-product costs

B) Joint costs
C) Main costs

D) Separable costs

18. When a single manufacturing process yields two products, one of which has a relatively
high sales

value compared to the other, the two products are respectively known as:

A) Joint products and by-products

B) Joint products and scrap

C) Main products and byproducts

D) Main products and joint products

19. Which of the following statements is true regarding main products and byproducts?

A) Product classifications do not change over the short run.

B) Product classifications do not change over the long run.

C) Product classifications may change over time.

D) The cause-and-efect criterion determines the classification.

20. A document in a job order costing system that is used to record the costs of producing a
job is a(n):

A) Job cost sheet

B) Job lot

C) Finished goods summary

D) Process cost system

ACCTG 108

PROBLEMS

1. Flor Company consumed P450,000 worth of direct materials during May, 2018. At the end
of the month, the direct materials inventory of Flor was P25,000 lower than the May 1
inventory level. How much was the direct materials procured during May 2018?
__________________

Answer/Solution:

Direct materials used P450,000

Less: Decrease in inventory 25,000

Direct materials purchased P425,000

Or, alternatively:

Direct materials, May 1 P 25,000

Add: Direct materials purchases 425,000

Direct materials available for use P450,000

Less: Direct materials, May 31 0

Direct materials used P450,000

2. Job No. 010 has, at the end of the second week in April, an accumulated total cost of P
4,200. In the third week, P 1,010 of direct materials were used on the Job. Twenty (20) hours
of direct labor services were applied to the job at a cost of P5 per hour. Manufacturing
overhead was applied at the basis of P2.50 per direct labor hour for fixed overhead and P2 per
hour for variable overhead. Job No. 010 was the only job completed during the third week.
The total cost of Job Order No. 010 is ____________________.

Answer/Solution:

Work-in-process, beginning P 4,200

Added: Direct materials 1,010

Direct labor (20 hours x P5) 100

Applied factory overhead (20 hours x P4.50) 90 1,200

Total cost of Job 010 P 5,400

3. Ambo Incorporated manufactured 50,000 kilos of compound Am in 2018 at the following

costs:
 Opening work-in-process of P 88,125.

Materials of P 182,500 of which 90% is direct materials.

Labor of P 242,500 of which 93% is direct labor.

Closing work-in-process of P 67,500.

Factory overhead is 125% of direct labor cost and includes indirect materials and indirect
labor. The cost of goods manufactured is _______________________.

Answer/Solutions:

Work-in-process, beginning P 88, 125

Added:

Materials (P 182,500 x 90%) P 164,250

Labor (P 242,500 x 93%) 225,525

Overhead (P 225,525 x 125%) 281,906 671,681

Total work placed in process P 759,806

Less: Work-in-process, ending 67,500

Cost of goods manufactured P 692,306

Items 4 and 5 are based on the following information:

E&F Tool has three service departments that support the production area. Outlined below is
the estimated overhead by department for the upcoming year.

Estimated Number of

Service Departments Overhead Employees

Receiving P 25,000 2

Repair 35,000 2

Tool 10,000 1

Production Departments
 Assembly 25

Bolting 12

The Repair Department supports the greatest number of departments, followed by the Tool
Department. Overhead cost is allocated to departments based upon the number of employees.

4. Using the direct method of allocation, how much of the Repair Department’s overhead will
be allocated to the Tool Department? __________________________.

Answer: Zero

Explanation: The direct method allocates service department costs directly to the producing
departments without recognition of services provided among the service departments. Hence,
no service cost is allocated to the Tool Department because it is a service department.

5. Using the step-down method of allocation, the allocation from the Repair Department to
the Tool Department would be ___________________.

Answers/Solutions: P 875

Service

Receiving Repair Tool

Direct costs P 35,000

% of employees:

(2 : 1 : 25 : 12 = 5% : 25% :

62.5% : 30%) P 35,000 P 875

Bronson Company, which had 6,000 units in work-in-process at January 1 that were 60%
complete as to conversion costs. During January, 20,000 units were completed. At January 31,
8,000 units remained in WIP which were 40% complete as to conversion costs. Materials are
added at the beginning of the process.

Using the weighted average method, the equivalent units for January for conversion costs
were ____________________________.

Answer/Solutions:

Quantity Schedule Actual Work Done EP-CC

 In process, beginning 6,000

Started in process (28,000-6,000) 22,000

28,000

Accounted for as follows:

Finished and transferred 20,000 100% 20,000

In process, ending 8,000 40% 3,200

28,000 23,200

6. Using the same information at No. 1, how many units were started during January?
_________________

Answer/Solution:

Quantity Schedule Actual Work Done EP-CC

In process, beginning 6,000

Started in process (28,000-6,000) 22,000

28,000

7. The Fabricating Department started the current month with a beginning Work in Process

inventory of P10,000. During the month, it was assigned the following costs: direct materials,
P76,000; direct labor, P24,000; and factory overhead, 50% of direct labor cost. Also,
inventory with a cost of P109,000 was transferred out of the department to the next phase in
the process. The ending balance of the Work in Process Inventory account for the Fabricating
Department is ___________________.

Answer/Solution:

P10,000 + P76,000 + P24,000 + P12,000 - P109,000 = P13,000

8. A company uses a process costing system. Its Assembly Department's beginning inventory
consisted of 30,000 units, 75% complete with respect to direct labor and overhead. The
department completed and transferred out 127,500 units this period. The ending inventory
consists of 20,000 units that are 25% complete with respect to direct labor and overhead. All
direct materials are added at the beginning of the process. The department incurred direct
labor costs of P24,000 and overhead costs of P32,000 for the period. Assuming the weighted
average method, the direct labor cost per equivalent unit (rounded to the nearest cent) is
______________________.

Answer/Solution:

Completed and transferred out 127,500

EGIP (20,000 * 25%) 5,000

Total EUP's 132,500

Cost ÷ EUP

(P24,000/132,500) P0.18/EUP

9. Andrews Corporation uses a process costing system for manufacturing. The following

information is available for the February in its Polishing Department:

Equivalent units of production—direct materials 110,000 EUP

Equivalent units of production—conversion 95,000 EUP

Costs in beginning Work in Process—direct materials P49,000

Costs in beginning Work in Process—conversion P36,000

Costs incurred in February—direct materials P414,000

Costs incurred in February—conversion 520,000

The cost per equivalent unit of production for conversion is ___________________.

Answer/Solution:

Cost of beginning WIP P49,000 + costs incurred in February P414,000 = P463,000

Total cost P463,000/Equivalent units of production 110,000 = P4.21 cost per equivalent unit
of production.

10. During April, the production department of a process operations system completed and
transferred to finished goods 18,000 units that were in process at the beginning of April and

90,000 units that were started and completed in April. April's beginning inventory units were

100% complete with respect to materials and 40% complete with respect to labor. At the end
of April, 30,000 additional units were in process in the production department and were 100%
complete with respect to materials and 60% complete with respect to labor. The beginning
inventory included materials cost of P107,000 and the production department incurred direct
materials cost of P329,000 during the month. Compute the direct materials cost per equivalent
unit for the department using the weighted-average method. _____________________

Answer/Solution:

EUP and cost per EUP DM

Completed and transferred (108,000 * 100%) 108,000

Ending Work in Process

Direct materials (30,000 * 100%) 30,000

Equivalent units 138,000

Costs of beginning inventory P107,000

Costs incurred this period 329,000

Total costs P436,000

Cost per equivalent unit (P436,000/138,000) P3.16

11. Williams Company computed its cost per equivalent unit for direct materials to be P2.60
and its cost per equivalent unit for conversion to be P3.75. A total of 250,000 units of product
were completed and transferred out as finished goods during the month, and 36,000 of
equivalent units remained unfinished at the end of the month. The amount that should be
reported in ending Work in Process Inventory is __________________.

Answer/Solution:

Direct materials 36,000 * P2.60 = P93,600

Conversion 36,000 * P3.75 = P135,000

Total ending Work in Process = P93,600 + P135,000 = P228,600

Vision Enterprises manufactures converter boxes for high definition TVs. All processing is
initiated when an order is received. For March there were no beginning inventories.
Conversion Costs and Direct Materials are the only manufacturing cost accounts. Direct
Materials are purchased under a just-in-time system. Backflush costing is used with a finished
goods trigger point. Additional information is as follows:

Actual conversion costs P435,000

Standard materials costs per unit 115

Standard conversion cost per unit 85

Units produced 7,900

Units sold 7,600

Required:

Record all journal entries for the monthly activities related to the above transactions if
backflush costing is used. (conversion cost, finished goods and sale)

12. ______________________

______________________

13. ______________________

______________________

14. ______________________

______________________

Answer:

To record actual conversion costs:

Conversion Costs 435,000

Various Accounts 435,000

To record finished goods:

Finished Goods (7,900 × P200) 1,580,000

Inventory-Materials and In Process Control (7,900 × 115) 908,500

Conversion Costs Allocated (7,900 × 85) 671,500

To record sale of 7,600 units:

Cost of Finished Goods Sold (7,600 × 200) 1,520,000

Finished Goods 1,520,000

15. Changi Ong, general manager of Casio Corporation’s Midwest Division, has provided the
following information for transactions that occurred during March. The division uses a JIT
costing system.

a) Raw materials were purchased at the cost of P97,000

b) All materials purchased were requisitioned for production.

c) Direct labor costs of P77,000 were incurred.

d) Actual factory overhead costs amounted to P225,000.

e) Applied conversion costs totaled P300,000. This included P77,000 of direct labor.

f) All units were completed.

Compute the March 31 balance in the Conversion Cost: _______________________

Answer/Solution:

Actual factory overhead P225,000

Direct labor costs incurred 77,000

Total actual conversion costs P302,000

Less: Applied conversion costs to production 300,000

March 31 conversion cost balance-debit/underapplied P 2,000 debit

16. Using the same information in No. 15, compute the March 31 balance in the Finished
goods account: _________________________

Answer/Solution:

Amount to be backflushed from RIP to Finished Goods P97,000

Applied conversion costs to production 300,000

March 31 finished goods balance, debit P397,000 debit

*Note: There’s no RIP beginning and ending balances

17. Katherine, owner of KCO Supply Company in Cebu, which manufactures chopsticks for
restaurants, has recently decided to implement a JIT costing system. Transactions for August
are as follows:

a) Raw materials were purchased at the cost of P950,000.

b) All materials purchased were requisitioned for production.

c) Direct labor costs of P2,500,000 were incurred.

d) Actual factory overhead costs amounted to P6,000,000.

e) Applied conversion costs totaled P8,100,000. This included P2,500,000 of direct labor.

f) All units were completed.

Compute the amount to be backflushed from RIP to Finished Goods: ________________

Answer/Solution:

Raw materials purchased were requisitioned for production P950,000

*Note: There’s no RIP beginning and ending balances.

18. Using the same information in No. 17, compute the amount of Finished goods after all
transactions have been completed. _____________________

Answer/Solution:

Amount to be backflused from RIP to Finished Goods P950,000

Applied conversion costs to production 8,100,000

P9,050,000

19 - 20. Two of the activity cost pools for Sabrina Company are (a) machining (P800,000)
and (b)inspections (P84,000). Possible cost drivers are direct labor hours (5,000), machine
hours (25,000), square footage (4,000), and number of inspections (300).

Compute the overhead rate for each activity.

A. ________________________ B. _______________________

Answer/Solution:

P800,000
A. Machining: —————————— = P32 per machine hour
25,000 machine hours
P84,000
B. (b) Inspections: ———————- = P280 per inspection
300 inspections

Compute activity-based costing rates from the following budgeted data for Freddy's Fashions:

Activity Cost Pool Budgeted Cost BudgetedCost Driver

Cutting and stitching P5,100,000 150,000 machine hours

Trimming and packing 1,050,000 42,000 operator hours

Designing 930,000 62,000 designer hours

21. Cutting and stitching ________________

22. Trimming and packing ________________

23. Designing ________________

Answer/Solution:

Cutting and stitching (P5,100,000 ÷ 150,000) = P34

Trimming and packing (P1,050,000 ÷ 42,000) = P25

Designing (P930,000 ÷ 62,000) = P15

Sabrina Company is placing an ad in the local paper to advertise its products. The ad will run
for oneweek at a total cost of P5,500. Sabrina Company has four categories of products as
follows:

% of floor spaceoccupied Expected sales value

Hardware 20% P35,000

Hand Tools 15% P15,000

Lawn Furniture 45% P64,500

Light Fixtures 20% P25,500

24. Refer to Sabrina Company. What amount of advertising cost should be allocated to
hardware, assuming Sabrina allocates based on percent of floor space occupied?
________________

Answer/Solution:

P5,500 * 0.20 = P1,100

25. Refer to Sabrina Company. Assume that Sabrina decides to allocate based on expected
sales value. What amount of advertising cost should be allocated to light fixtures?
_____________

Answer/Solution:

(P25,500/140,000) * 5,500 = P1,002

26. Gable Company produces two main products jointly, A and B, and C, which is a
by-product of B. A and B are produced form the same raw material. C is manufactured from
the residue of the process creating B. Costs before separation are apportioned between the two
main products by the net realizable value method. The net revenue realized from the sale of C
is deducted from the cost of B. Data for April were as follows:

Costs before separation: P200,000

Costs after separation:

A 50,000

B 32,000

C 4,000

Production for April, in pounds:

A 800,000

B 200,000

C 20,000

Sales for April:

A 640,000 pounds @ P.4375

B 180,000 pounds @ .65

C 20,000 pounds @ .30

Determine the gross profit for April. ____________________

Answer/Solution:

NRV C REVENUE 20,000 × .30 = P6,000

COST (4,000)

NRV P2,000

NRV:

A (800,000 × P.4375) = P350,000 - P50,000 = P300,000

B (200,000 × P.65) = P130,000 - (P32,000 - P2,000) = P100,000

P400,000

ALLOCATION:

A (P300,000/P400,000 × P200,000 = P150,000

B (P100,000/P400,000 × P200,000 = P50,000

UNIT COST:

A (P150,000 + P50,000)/800,000 = P .25

B (P50,000 + P30,000)/200,000 = P .40

GROSS PROFIT:

A (P .4375 - P.25) × 640,000 = P120,000

B (P .65 - P.40) × 180,000 = 45,000

P165,000

27. Earl Corporation, which manufactures a product that gives rise to a by-product called
“Zafa”. The only costs associated with Zafa are selling costs of P1 for each unit sold. Earl
accounts for Zafa sales first by deducting its separable costs from such sales, and then by
deducting this net amount from cost of sales of the major product. This year, 1000 unit of
Zafa were sold at P4 each.

If Earl changes its method of accounting for Zafa sales by showing the net amount as
additional sales revenue, Earl’s gross margin would __________________.

A. Be unaffected

B. Increase by P3,000

C. Decrease by P3,000

D. Increase by P4,000

Answer: A. Be unaffected

The gross margin equals sales minus cost of sales. Before the change, the net amount was
deducted from cost of sales. After the change, the net amount is added to regular sales with no
additional increase in cost of goods sold. Hence, the gross margin will be the same.

28. Using the same information in No. 27, and Earl changes its method of accounting for Zafa
sales by showing the net amount as other income, Earl’s gross margin will _____________.

A. Be unaffected

B. Increase by P3,000

C. Decrease by P3,000

D. Increase by P4,000

Answer: C. Decrease by P3,000

Sales revenue minus cost of goods sold is gross margin. If the net revenue from the
by-product is recorded as other income rather than being deducted form cost of goods sold,
the gross margin will decrease by P3,000.

29. Using the same information in No. 27, and Earl records the net realizable value of Zafa as
inventory as it is produced, what will the per unit value be? ____________

Answer: P3
The NRV is selling price minus cost to complete and cost to dispose. The selling price of Zafa
is P4, and the selling costs are P1. Given no competition or additional processing costs, unit
net realizable value is P3.

30. Using the same information in No. 27, and Earl sold 1,000 units of Zafa. Assuming that
1,500 units were produced for the year and that net realizable value is recorded as inventory.
Earl’s net income will increase by _____________________.

Answer: P4,500

(P3 unit NRV x 1500)

31. Using the same information in No. 27, and Earl records Zafa inventory at net realizable
value as it is produced this year, what will be the profit recognized next year on a sale of 500
units?

___________________

Answer: P-0-

Because net realizable value is selling price minus completion and disposal cost, there is no
profit upon sale. The sale of P500 units of Zafa with an inventory value of P3 per unit will
produce no profit (P4 unit selling price - P3 inventory cost - P1 selling cost = P0).

32. The Arvid Corporation manufactures widgets, gizmos, and turnbols from a joint process.
May production is 2,000 widgets; 3,500 gizmos; and 4,000 turnbols. Respective per unit
selling prices at splitoff are P30, P20, and P10. Joint costs up to the splitoff point are P75,000.
If joint costs are allocated based upon the sales value at splitoff, what amount of joint costs
will be allocated to the widgets? ___________________

Answer/Solution:

P30 × 2,000 = P60,000

P20 × 3,500 = P70,000

P10 × 4,000 = P40,000

Total = P170,000
P60,000/P170,000 × P75,000 = P26,471

Product X is sold for P32 a unit and Product Y is sold for P48 a unit. Each product can also be
sold at the splitoff point. Product X can be sold for P10 and Product Y for P8. Joint costs for
the two products totaled P2,000 for January for 300 units of X and 250 units of Y. What are
the respective joint costs assigned each unit of products X and Y if the sales value at splitoff
method is used?

33. Product X _____________________

34. Product Y _____________________

Answer/Solution:

Total splitoff market value = (300 × P10) + (250 × P8) = P5,000

Product X = P3,000/P5,000 × P2,000 = P1,200/300 = P4.00

Product Y = P2,000/P5,000 × P2,000 = P800/250 = P3.20

XYZ Company has identified the following overhead activities, costs, and activity drivers
for the coming year:

Activity Expected CostActivity DriverActivity Capacity

Material-handling costs ............. P45,000 Number of moves .................... 450
Machine costs ............................ 80,000 Machine hours ......................... 20,000
Order costs ................................. 15,000 Number of orders ..................... 750
Receiving costs .......................... 30,000 Number of parts ....................... 50,000
Setup costs ................................. 50,000 Number of setups ..................... 250

Assume that each activity corresponds to a process. XYZ’s normal activity is 5,000 direct
labor hours. The following two jobs were completed during March:

Job X-1 Job Y-4

Direct materials........................................... P1,500 P2,000
Direct labor (P15 per hour) ......................... P750 P750
 Units completed .......................................... 200 200
Number of moves ....................................... 3 6
Machine hours ............................................ 125 75
Number of orders ........................................ 3 12
Number of parts .......................................... 200 800
Number of setups ........................................ 1 4

Determine the unit cost for each job using direct labor hours to apply overhead.

35. Job X-1 _____________________

36. Job Y-4 _____________________

Answer/Solution:
Total overhead = P45,000 + P80,000 + P15,000 + P30,000 + P50,000 = P220,000 / 5,000 DL
hours = P44 per DL hour
Job X-1 Job Y-4
Materials ................. P1,500 P2,000
Labor....................... 750 750
Overhead................. 2,200 (50 × P44) 2,200 (50 × P44)
Total........................ P4,450 P4,950
Divided by units ..... ÷ 200 ÷ 200
Per unit.................... P22.25 P24.75

Determine the unit cost for each job using the activity drivers to apply overhead.
37. Job X-1 _____________________

38. Job Y-4 _____________________

Answer/Solution:
Materials handling P45,000 / 450 = P100 per move
Machine time P80,000 / 20,000= P4 per machine hour
Ordering P15,000 / 750 = P20 per order
Receiving P30,000 / 50,000= P0.60 per part
Setup P50,000 / 250 = P200 per setup
Job X-1 Job Y-4
Materials ................. P1,500 P2,000
Direct labor ............. 750 750
Moves ..................... 300 (3 × P100) 600 (6 × P100)
Machine .................. 500 (125 × P4) 300 (75 × P4)
Orders ..................... 60 (3 × P20) 240 (12 × P20)
Parts ........................ 120 (200 × P0.60) 480 (800 × P0.60)
Setups ..................... 200 (1 × P200) 800 (4 × P200)
Total........................ P3,430 P5,170
Divided by units ..... ÷ 200 ÷ 200
Per unit.................... P17.15 P25.85

Games R Us manufactures various games. For March, there were no beginning inventories of
direct materials and no beginning or ending work in process. Conversion costs is the only
indirect manufacturing cost category currently used. Journal entries are recorded when
materials are purchased and when conversion costs are allocated under backflush costing.
Conversion costs - March P 400,000
Direct materials purchased - March P1,070,000
Units produced - March 58,800
Units sold - March .. 41,800

39. Which of the following journal entries properly records the purchase of direct materials?
A) Accounts Payable Control 1,070,000
Inventory: Raw and In-Process Control 1,070,000
B) Inventory: Raw and In-Process Control 1,070,000
Accounts Payable Control 1,070,000
C) Inventory: Raw and In-Process Control 1,070,000
Conversion Costs 1,070,000
D) Conversion Costs 1,070,000
Inventory: Raw and In-Process Control 1,070,000

Answer: B

40. Which of the journal entries properly records conversion costs?

A) Conversion Costs 400,000
Various Accounts 400,000
B) Various Accounts 400,000
Conversion Costs 400,000
C) Conversion Costs 400,000
Inventory: Direct Materials 400,000
D) Inventory: Direct Materials 400,000
Conversion Costs 400,000

Answer: A