Principles of Cost Accounting 16th Edition Vanderbeck Test Bank

Principles of Cost Accounting 16th
Edition Vanderbeck Test Bank

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CHAPTER 6: PROCESS COST
ACCOUNTING--ADDITIONAL PROCEDURES
Student: ___________________________________________________________________________
1. An example of a process where all of the materials would be added at the beginning of the process would be:
A. A bakery where the ingredients for bread are combined and left to rise.
B. The second process of a snack factory where snack chips coming from the frying process are cooled and
dried for an hour, then bagged.
C. A baker where the wet ingredients for a cake are added one-at-a-time after the dry ingredients have been
thoroughly blended.
D. None of the above.
2. An example of a process where all of the materials would be added at the end of the process would be:
thoroughly blended.
3. The following information is available for the month of October from the First department of the Vaughn
Corporation:
Units
Work in process, October 1 (40% complete) 7,500
Started in October 32,000
Transferred to Second Department in October 33,000
Materials are added in the beginning of the process in the First department. Using the average cost method, what are the equivalent units of
production for the month of October?
Materials Conversion
A. 43,000 39,500
B. 39,500 36,000
C. 38,500 34,300
D. 39,500 38,200
4. The following information is available for the month of August from the First department of the Twigg
Corporation:
Units
Work in process, August 1 (60% complete) 50,000
Started in August 190,000
production for the month of August?
A. 192,000 240,000
B. 190,000 192,000
C. 240,000 208,000
D. 240,000 192,000
5. Information concerning Department A of Ali Company for the month of June is as follows:
Materials
Units Costs
Work in process, beginning of month 20,000 $14,550

Started in June 85,000 $66,300
Units completed 90,000
Work in process, end of month 15,000
All materials are added at the beginning of the process. Using the average cost method, the cost (rounded to two places) per equivalent unit for
materials for June is:
A. $0.74.
B. $0.90.
C. $0.77.
D. $0.78.
6. Plemmon Company adds materials at 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 April follows:
Materials
Units Costs
Work in process at April 1 15,000 $ 8,000
Units started during April 60,000 $38,500
Units completed and transferred to next department
during April 65,000
Using the average cost method, what is the materials cost of the work in process at April 30 (rounded to nearest dollar)?
A. $7,154
B. $6,200
C. $7,750
D. $6,417
7. The following information is available for the month of April from the Second department of the Armque
Corporation:
Units
Work in process, April 1 (50% complete) 90,000
Transferred from First Department in April 250,000
Transferred to Second Department in April 280,000
Materials are added at the end of the process in the Second department. Using the average cost method, what are the equivalent units of production
for materials and conversion costs for the month of April?
A. 304,000 250,000
B. 280,000 295,000
C. 340,000 316,000
D. 280,000 304,000
8. The following information is available for the month of August from the Second department of the Twigg
Corporation:
Units
Transferred from First Department in August 190,000
for materials and conversion costs for the month of August?
A. 192,000 160,000
B. 160,000 192,000
C. 160,000 208,000
D. 240,000 192,000
9. During June, Birch Bay Company's Department B equivalent unit product costs computed under the average
cost method were as follows:
Materials $2
Conversion $3
Transferred-in $5
Materials are introduced at the end of the process in Department B. There were 4,000 units (60 % complete as to conversion costs) in work in
process at June 30. The total costs assigned to the June 30 work in process inventory should be:
A. $20,000.
B. $24,800.
C. $27,200.
D. $35,200.
10. Blanche Corporation adds materials at the end of the process in the injection department, which is the
second of two stages of its production cycle. Information concerning the materials used in the forming
department in April follows:
Materials
Units Costs
Work in process at March 1 30,000 $ 60,000
Units transferred from previous department during March 125,000 $360,000
during March 120,000
Using the average cost method, what is the materials cost of the work in process at March 31 (rounded to nearest dollar)?
A. $108,000
B. $126,000
C. $120,000
D. $0
11. Van Pelt Company uses the average cost method of process costing. The production report for the Mixing
department follows:
In process, beginning of period 1,000 units

800 units - materials 50% complete; conversion costs 40% complete
Placed in process during period 5,000 units
Transferred to packing department 4,800 units
In process, end of period 1,200 units
What are the equivalent units for:
Materials Conversion Costs

A. 5,650 5,450
B. 5,450 5,250
C. 4,850 4,400
D. 5,400 5,220
12. Normal losses that occur in the manufacturing process are properly classified as:
A. Extraordinary items.
B. Product costs.
C. Period costs.
D. Deferred charges.
13. Stanley Company adds materials at the beginning of the process in Department M. Data concerning the
materials used in the March production follows:
Units
Work in process at March 1 15,000
Started during March 38,000
Completed and transferred to next department during March 37,000
Normal spoilage incurred 2,000
Using the average cost method, the equivalent units for the materials unit cost calculation are:
A. 38,000.
B. 51,000.
C. 55,000.
D. 37,000.
14. Materials are added at the end of the process in a company's curing department, the second stage of the
production cycle. The following information is available for the month of July:
Units
Work in process, July 1 (50% complete as to conversion costs) 50,000
Transferred from the previous department 200,000
Transferred to the next department 195,000
Lost in production 15,000
Under the cost accounting system, the costs incurred on the lost units are absorbed by the remaining good units. Using the average cost method,
what are the equivalent units for the materials unit cost calculation?
A. 210,000
B. 195,000
C. 250,000
D. 235,000
15. Boron Refiners had 50,000 gallons started in its process in June. At June 30, 35,000 gallons were
completed and transferred to finished goods and 10,000 gallons were still in process, one-fourth completed as to
materials, labor and overhead. The remaining 5,000 units were lost to evaporation, a normal result of the
process. Costs of production during the month were $75,000, $50,000, and $25,000 for material, labor and
overhead, respectively. What is the cost per equivalent unit in June?
A. $4.00
B. $3.33
C. $3.53
D. $3.75
16. In a process cost system, the cost attributable to abnormal losses that occur due to unexpected circumstances
such as machine operator error should be assigned to:
A. Ending work in process inventory.
B. Cost of goods manufactured and ending work in process inventory in the ratio of units worked on during the
period to units remaining in work in process inventory.
C. A separate loss account in order to highlight production inefficiencies
D. Cost of good manufactured (transferred out)
17. If the amount of loss in a manufacturing process is abnormal, it should be classified as a:

A. Period cost.
B. Deferred charge.
C. Joint cost.
D. Product cost.
18. What losses should not affect the recorded cost of inventories?
A. Normal losses
B. Abnormal losses
C. Seasonal losses
D. Standard losses
19. In a process cost system, how is the unit cost affected in a production cost report when materials are added
in a department subsequent to the first department and the added materials result in additional units?
A. It causes an increase in the preceding department's unit cost that necessitates an adjustment of the
transferred-in unit cost.
B. It causes a decrease in the preceding department's unit cost that necessitates an adjustment of the
C. It causes an increase in the preceding department's unit cost but does not necessitate an adjustment of the
D. It causes a decrease in the preceding department's unit cost but does not necessitate an adjustment of the
20. CPG Company manufactures chemicals. Chemical agent PL62 is refined in the Refining department and,
after it is transferred to the Mixing department, a reactive agent is added to it. In January, 6,000 gallons of
PL62 having a cost of $30,000 were transferred from the refining to the Mixing department where 4,000 gallons
of the reactive agent were added. When calculating the inventory costs in the Mixing department, what will the
cost per unit relating to gallons transferred in from the Refining department be?
A. $3.33
B. $3.00
C. $5.00
D. $7.50
21. In order to compute equivalent units of production using the FIFO method of process costing, work for the
period must be broken down to units:
A. Completed from beginning inventory, started and completed during the month, and units in ending
inventory.
B. Completed during the period 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.
22. Under which of the following conditions will the first-in, first-out method of process costing produce the
same cost of goods manufactured amount as the average cost method?
A. When goods produced are homogeneous in nature
B. When there is no beginning inventory
C. When there is no ending inventory
D. When beginning and ending inventories are each 50 percent complete
23. The average cost method of process costing differs from the FIFO method of process costing in that the
average cost method:
A. Requires that ending work in process inventory be stated in terms of equivalent units of production.
B. Can be used under any cost-flow assumption.
C. Does not consider the degree of completion of beginning work in process inventory when computing
equivalent units of production.
D. Considers the ending work in process inventory only partially complete.
24. Material is added at the beginning of a process in a process costing system. The beginning work in process
inventory for this process this period was 30 percent complete as to conversion costs. Using the first-in,
first-out method of costing, the total equivalent units for material for this process during this period are equal to
the:
A. Units started this period in this process.
B. Beginning inventory this period for this process.
C. Units started this period in this process plus the beginning inventory.
D. Units started this period in this process plus 70 percent of the beginning inventory.
25. Regina Manufacturing uses the FIFO method of process costing. The production report for the Curing
Department, where the materials are added at the beginning of the period, for September was as follows:
In process, beginning of the period 3,000 units

Stage of completion 30 %
Transferred to stockroom during period 12,000 units

In process, end of the period 6,000 units
The number of units started and completed during the period was:
A. 12,000
B. 9,000
C. 15,000
D. 6,000


The number of equivalent units for conversion costs during the period was:
A. 13,500
B. 16,500
C. 12,300
D. 14,700
27. The following information is available for the month of April from the First department of the Armque
Corporation:
Units
Started in April 250,000
Materials are added in the beginning of the process in the First department. Using the first-in, first-out method, what are the equivalent units of
production for the month of April?
A. 250,000 259,000
B. 340,000 259,000
C. 280,000 271,000
D. 250,000 271,000
Materials
Units Costs

All materials are added at the beginning of the process. Using the first-in, first-out method, the cost (rounded to two places) per equivalent unit for
A. $0.63.
B. $0.90.
C. $0.77.
D. $0.78.
29. Klug Industries adds materials at the beginning of the process in the molding department, which is the first
of two stages of its production cycle. Information concerning the materials used in the molding department in
August follows:
Materials
Units Costs
Work in process at August 1 8,000 $11,550
Units started during August 20,000 $72,450
during August 21,000
Using the FIFO method, what is the materials cost of the work in process at August 31 (rounded to nearest dollar)?
A. $28,000
B. $29,400
C. $29,639
D. $25,358
30. A major difference between FIFO and average costing is:

A. The number of equivalent units in ending work in process.
B. It is not possible to use FIFO when there is more than one department.
C. FIFO separates beginning inventory from current production.
D. The current month’s cost of production will be less.
Corporation:
Units
Transferred to Finished Goods in April 280,000
Materials are added at the end of the process in the Second department. Using the first-in, first-out method, what are the equivalent units of
production for materials and conversion costs for the month of April?
A. 250,000 259,000
B. 280,000 259,000
C. 340,000 271,000
D. 280,000 271,000
32. During June, Birch Bay Company's Department B equivalent unit product costs computed under the FIFO
method were as follows:
Materials $2
Conversion $3
Transferred-in $5
A. $20,000.
B. $24,800.
C. $27,200.
D. $35,200.
33. When two products are produced during a common process, what is the factor that determines whether the
products are joint products or one principal product and a by-product?
A. Potential marketability for each product
B. Amount of work expended in the production of each product
C. Management policy
D. Relative total sales value
34. Which of the following statements best describes a by-product?
A. A product with a value that can easily and accurately be determined.
B. A product that has a greater value than the main product.
C. A product created along with the main product whose sales value does not cover the cost of its production.
D. A product that usually produces a small amount of revenue when compared to the main product revenue.
35. Which of the following is most likely to be accounted for as a by-product?

A. Heating oil resulting from processing crude oil at a refinery.
B. Cream resulting from processing raw milk at a dairy.
C. Sawdust resulting from processing lumber at a lumber mill.
D. Ground beef resulting from processing beef at a meat packer.
36. If two or more products share a common process before they are separated, the joint costs should be
allocated in a manner that:
A. Assigns a proportionate amount of the total cost to each product equitably.
B. Maximizes total earnings.
C. Minimizes variations in a unit of production cost.
D. Does not introduce an element of estimation into the process of accumulating costs for each product.
37. Each of the following is a method by which to allocate joint costs except:
A. Chemical or engineering analysis.
B. Relative sales value.
C. Relative weight, volume, or linear measure.
D. Relative marketing costs.
38. Joint costs are commonly allocated based upon relative:

A. Sales value.
B. Marketing costs.
C. Conversion costs.
D. Prime costs.
39. Budde Chemicals produces two industrial chemical compounds, X15 and Z24, from the same process,
which last year, cost $300,000. Budde produced 10,000 gallons of X15, which sells for $40 per gallon and
40,000 gallons of Z24, which sells for $20 per gallon. Using the relative sales method, how much of the joint
cost should be allocated to X15?
A. $100,000
B. $200,000
C. $60,000
D. $75,000
40. If a company using the adjusted sales value method to assign joint costs produces two products, A and B,
from a joint process, and B requires additional processing after the split-off in order to be salable, how is the
joint cost allocated to B determined?
A. The costs of the additional processing are ignored in allocating joint costs.
B. The costs of the additional processing are subtracted from the joint costs allocated to B.
C. The relative sales value used to allocate the joint cost are determined after the costs of further processing are
subtracted from the ultimate sales value of B.
D. None of these are correct.
41. Anderson Compounds produces two industrial chemical compounds, Gorp and Gumm, from the same
process, which last year, cost $240,000. Anderson produced 20,000 pounds of Gorp, which sells for $60 per
gallon and 60,000 gallons of Gumm, which sells for $30 per gallon. After the split-off point, Gorp required
additional processing costing $300,000 to make it salable. Using the adjusted sales method, how much of the
joint cost should be allocated to Gorp?
A. $60,000
B. $160,000
C. $80,000
D. $96,000
42. Braun Company produces two chemical compounds, Herzog and Lomax from a joint process. Joint costs to
produce 500 gallons of Herzog and 300 gallons of Lomax were $80,000. A by-product, Horst, results from the
joint process and has a market value of $1,000. Assuming Braun accounts for the by-product as a reduction in
the costs assigned to the products, what are the joint costs assigned to Herzog?
A. $39,500
B. $49,375
C. $50,000
D. $40,000
additional processing costing $300,000 to make it salable. Using the adjusted sales method, what is the
completed cost of Gorp?
A. $300,000
B. $380,000
C. $520,000
D. $540,000
44. Which of the following is not an acceptable method for accounting for by-products in a joint manufacturing
process?
A. Costs before the split-off point are allocated to by-products.
B. The estimated sales value of the by-product reduces the cost of the main product.
C. The value of by-products is included in an account called “By-products Inventory.”
D. In some instances, the revenue from selling by-products may be treated as “other income” on the income
statement.
45. Thomas Lumber Company produces furniture grade lumber and building grade lumber from a joint
process. Sawdust, a by-product of the manufacturing process is sold to a local toy manufacturer to stuff leather
toys for $10 per ton. In February, the company produced 3,000 tons of sawdust. What is the entry to reduce
the cost of the main products by the estimated sales value of the by-product?
A. By-product inventory $30,000
Work in process $30,000
B. Work in process $30,000
Other income $30,000
C. Cost of goods sold $30,000
By-product inventory $30,000
D. By-product inventory $30,000
Gain or loss on sale of by-product $30,000
46. Dover Enterprises has two products, Chalk V and Alabaster X, that come from a joint process,
blending. Alabaster X undergoes additional curing after the split-off before it can be sold. The entry to
account for the movement of products from the blending department is:
A. Debit - Finished Goods
Credit - Work in Process - Blending
B. Debit - Finished Goods
Debit - Work in Process - Curing
C. Debit - Work in Process - Curing
D. Debit - Work in Process - Curing
Credit - Factory Overhead
47. Information for Chaucer, Ltd. in July for the Prep Department, the first stage of the production cycle, is as
follows:
Conv
Materials ersion
Costs
Beginning work in process $ 8,100 $
6,200
Costs added during July 23,400 13,40
0
Total costs $31,500 $19,6
00
Goods completed 60,00

0
units
Ending work in process 15,00
0
units
Material costs are added at the beginning of the process. The ending work in process is two-thirds complete as to conversion costs. How would the
total costs accounted for be distributed using the average cost method?
48. Information for Milton, Inc. in July for the Finishing Department, the second stage of the production cycle,
is as follows:
Conv
Materials ersion
Costs
Beginning work in process $366,200 $237,
000
00
Total costs $434,600 $279,
000

0
units
0
units
Material costs are added at the end of the process. The ending work in process is 40% complete as to conversion costs. Ignoring any transferred in
costs, how would the total costs accounted for be distributed using the average cost method?
49. Highlander Corporation is a manufacturer that uses the average cost method to account for costs of
production. Highlander manufactures a product that is produced in three separate departments: molding,
assembling, and finishing. The following information was obtained for the assembling department for the
month of June:
Work in process, June 1: 4,000 units composed of the following:
Percent of
Amount Completion
Transferred in from the molding department $60,000 100%
Costs added by the assembling department:
Direct materials $ 0 0%
Direct labor 12,300 60%
Factory overhead applied 4,700 50%
$17,000
Work in process, June 1 $77,000
The following activity occurred during the month of June:
(1) 20,000 units were transferred in from the molding department at a cost of $300,000.
(2) Costs were added by the assembling department as follows:
Direct materials $ 93,600

Direct labor 43,200
Factory overhead 19,420
$156,220
(3) Materials are added at the end of the process.
(4) 18,000 units were completed and transferred to the finishing department. At June 30, 6,000 units were still in process. The
degree of completion of work in process at June 30 follows:
Direct labor 70%

Factory overhead applied 35%
Prepare in good form a cost of production report for the assembling department for the month of June. Show supporting computations in good
form. The report should include:
a. Equivalent units of production.

b. Total manufacturing costs.
c. Cost per equivalent unit.
d. Dollar amount of ending work in process.
e. Dollar amount of inventory cost transferred out.
50. On September 1, Saranac Enterprises had a work in process inventory of 45,000 units that were complete as
to materials and 60% complete as to labor and overhead. September 1, costs follow:
Materials $39,100
Labor 9,800
Factory Overhead 19,600
During September, the following transactions occurred:
a .Purchased materials costing $105,000 on account.

b. Placed direct materials costing $89,900 into production.
c. Incurred production wages totaling $16,200.
d. Incurred overhead costs for September:
Depreciation $13,700
Utilities (cash payment) 11,800
Supplies (from inventory) 8,000
e. Applied overhead to work in process at a predetermined rate of 200% of direct labor cost.
f. Completed and transferred 100,000 units to Finished Goods.
Saranac uses an average cost system. The ending inventory consisted of 50,000 units that were completed as to materials and 40% complete as to
labor and overhead.
Required:
Prepare the journal entries to record the above information for the month of September.
51. Logan, Inc., had 9,000 units of work in process in Department M on March 1 that were 50 percent
complete as to conversion costs. Materials are introduced at the beginning of the process. During March,
18,000 units were started, 20,000 units were completed, and there were 1,000 units of normal losses. Logan
had 6,000 units of work in process at March 31 that were 60 percent complete as to conversion costs. Under
Logan's cost accounting system, lost units reduce the number of units over which total cost can be
spread. Using the average cost method, what were the equivalent units for March for conversion costs?
52. Kyle, Inc., instituted a new process in October. During October, 18,000 units were started in Department
A. Of the units started, 2,000 were lost in the process, 12,000 were transferred to Department B, and 4,000
remained in work in process at October 31. The work in process at October 31 was 100 percent complete as to
material costs and 15% complete as to conversion costs. Material costs of $78,400 and conversion costs of
$52,920 were charged to Department A in October. What were the total costs transferred to Department B and
assigned to ending work in process using the average cost method?
53. Howard Poster Incorporated had 12,000 units of work in process in Department A on October 1. These
units were 60 percent complete as to conversion costs. Materials are added in the beginning of the
process. During the month of October, 38,000 units were started and 40,000 units were completed. Howard
had 10,000 units of work in process on October 31. These units were 75 percent complete as to conversion
costs.
1) Compute the equivalent units for materials and conversion costs for the month of October using the FIFO
method.
2) Using the average cost method determine the equivalent units for materials and conversion costs for the
month of October.
54. Howard Poster Incorporated had 12,000 units of work in process in Department B on October 1. These
units were 60 percent complete as to conversion costs. Materials are added at the end of the process. During
the month of October, 38,000 units were transferred in from Department A and 40,000 units were
completed. Howard had 10,000 units of work in process on October 31. These units were 75 percent complete
as to conversion costs.
method. (Ignore units transferred in.)
month of October. (Ignore transferred in costs.)
55. The Roberto Company had computed the flow of units for Department A for the month of May as follows:
Work in process, May 1: 10,000

Started into production during May 39,000
Units to be accounted for 49,000
Beginning Added during the current month
work in process
Materials $20,800 $ 97,500
Labor 5,200 34,920
Factory overhead 4,800 32,980
Total $30,800 $165,400
Materials are added at the beginning of the process. There were 8,000 units of work in process at May 31. The work in process at May 1 was 70
percent complete as to conversion costs and the work in process at May 31 was 60 percent complete as to conversion costs. What was the cost of the
goods transferred out and in ending work in process using the FIFO method?
56. The Roberto Company had computed the flow of units for Department B for the month of May as follows:

Transferred from Department A during May 39,000

work in process
Materials $ -0- $235,750
Labor 12,660 166,320
Total $23,970 $552,550
Materials are added at the end of the process. There were 8,000 units of work in process at May 31. The work in process at May 1 was 30 percent
complete as to conversion costs and the work in process at May 31 was 20 percent complete as to conversion costs. What was the cost of the goods
transferred out and in ending work in process using the FIFO method? (Ignore transferred-in costs).
57. Terrell Corporation manufactures Products X, Y, and Z from a joint process. Additional information is as
follows:
Product
X Y Z Total
Units produced 5,000 2,000 6,000 13,000
Joint costs $60,000 ? ? $150,000
Sales value at split off ? ? $45,000 $375,000
Assuming that joint costs are allocated using the relative sales value at split-off approach, what was the sales value at split off for Product X?
58. Jim Davis Company processes hogs into three products, chops, bacon and sausage. Production and selling
price data follow:
Chops 100,000 lbs. $5.00/ lb.

Bacon 210,000 lbs. $4.00/ lb.
Sausage 410,000 lbs. $2.00/ lb.
Hogs are processed in the Processing Department. From the split-off point, bacon is smoked, sliced and packaged in the Bacon Department. The
cost incurred for these processes was $100,000. In addition, sausage was ground and formed into patties in the Sausage Department after the
split-off. This process cost $60,000.
Required:
a) If joint processing costs were $1,500,000, calculate the total cost of each product using the adjusted sales value method.
b) Prepare the journal entries to 1) record the joint processing and movement of product out of the Processing Department after the split off, and 2)
record the additional processing and completion of the bacon and sausage.
59. Nate Company manufactures Products A and B from a joint process that also yields a by-product, X. Nate
Company accounts for the revenue from its by-product sales as a deduction from the cost of its main
products. Additional information is as follows:
Product
A B X Total
Units produced 15,000 9,000 6,000 30,000
Joint costs ? ? ? $180,000
Sales value at split off $420,000 $140,000 $20,000 $580,000
(1) Assuming that joint product costs are allocated using the relative sales value at split-off approach, what was the joint cost allocated to Products A
and B?
(2) Prepare the journal entry to transfer the finished products to separate inventory accounts.
(3)Assuming the sales value of X is stable, prepare the journal entries to:
(a) place the by-product in stock
(b) record the sale of 3,000 units for $10,500 on account.
CHAPTER 6: PROCESS COST ACCOUNTING--ADDITIONAL
PROCEDURES Key
1. An example of a process where all of the materials would be added at the beginning of the process would be:
thoroughly blended.
2. An example of a process where all of the materials would be added at the end of the process would be:
thoroughly blended.
3. The following information is available for the month of October from the First department of the Vaughn
Corporation:
Units
Started in October 32,000
Transferred to Second Department in October 33,000
production for the month of October?
A. 43,000 39,500
B. 39,500 36,000
C. 38,500 34,300
D. 39,500 38,200
4. The following information is available for the month of August from the First department of the Twigg
Corporation:
Units
Started in August 190,000
production for the month of August?
A. 192,000 240,000
B. 190,000 192,000
C. 240,000 208,000
D. 240,000 192,000
Materials
Units Costs

All materials are added at the beginning of the process. Using the average cost method, the cost (rounded to two places) per equivalent unit for
A. $0.74.
B. $0.90.
C. $0.77.
D. $0.78.
6. Plemmon Company adds materials at 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 April follows:
Materials
Units Costs
Work in process at April 1 15,000 $ 8,000
Units started during April 60,000 $38,500
during April 65,000
Using the average cost method, what is the materials cost of the work in process at April 30 (rounded to nearest dollar)?
A. $7,154
B. $6,200
C. $7,750
D. $6,417
Corporation:
Units
for materials and conversion costs for the month of April?
A. 304,000 250,000
B. 280,000 295,000
C. 340,000 316,000
D. 280,000 304,000
8. The following information is available for the month of August from the Second department of the Twigg
Corporation:
Units
Transferred from First Department in August 190,000
for materials and conversion costs for the month of August?
A. 192,000 160,000
B. 160,000 192,000
C. 160,000 208,000
D. 240,000 192,000
9. During June, Birch Bay Company's Department B equivalent unit product costs computed under the average
cost method were as follows:
Materials $2
Conversion $3
Transferred-in $5
A. $20,000.
B. $24,800.
C. $27,200.
D. $35,200.
10. Blanche Corporation adds materials at the end of the process in the injection department, which is the
second of two stages of its production cycle. Information concerning the materials used in the forming
department in April follows:
Materials
Units Costs
Work in process at March 1 30,000 $ 60,000
Units transferred from previous department during March 125,000 $360,000
during March 120,000
Using the average cost method, what is the materials cost of the work in process at March 31 (rounded to nearest dollar)?
A. $108,000
B. $126,000
C. $120,000
D. $0
11. Van Pelt Company uses the average cost method of process costing. The production report for the Mixing
department follows:
In process, beginning of period 1,000 units

Placed in process during period 5,000 units
Transferred to packing department 4,800 units
In process, end of period 1,200 units
What are the equivalent units for:
Materials Conversion Costs

A. 5,650 5,450
B. 5,450 5,250
C. 4,850 4,400
D. 5,400 5,220
12. Normal losses that occur in the manufacturing process are properly classified as:
A. Extraordinary items.
B. Product costs.
C. Period costs.
D. Deferred charges.
13. Stanley Company adds materials at the beginning of the process in Department M. Data concerning the
materials used in the March production follows:
Units
Started during March 38,000
Completed and transferred to next department during March 37,000
Normal spoilage incurred 2,000
Using the average cost method, the equivalent units for the materials unit cost calculation are:
A. 38,000.
B. 51,000.
C. 55,000.
D. 37,000.
14. Materials are added at the end of the process in a company's curing department, the second stage of the
production cycle. The following information is available for the month of July:
Units
Transferred from the previous department 200,000
Transferred to the next department 195,000
Lost in production 15,000
Under the cost accounting system, the costs incurred on the lost units are absorbed by the remaining good units. Using the average cost method,
what are the equivalent units for the materials unit cost calculation?
A. 210,000
B. 195,000
C. 250,000
D. 235,000
15. Boron Refiners had 50,000 gallons started in its process in June. At June 30, 35,000 gallons were
completed and transferred to finished goods and 10,000 gallons were still in process, one-fourth completed as to
materials, labor and overhead. The remaining 5,000 units were lost to evaporation, a normal result of the
process. Costs of production during the month were $75,000, $50,000, and $25,000 for material, labor and
overhead, respectively. What is the cost per equivalent unit in June?
A. $4.00
B. $3.33
C. $3.53
D. $3.75
16. In a process cost system, the cost attributable to abnormal losses that occur due to unexpected circumstances
such as machine operator error should be assigned to:
A. Ending work in process inventory.
B. Cost of goods manufactured and ending work in process inventory in the ratio of units worked on during the
period to units remaining in work in process inventory.
C. A separate loss account in order to highlight production inefficiencies
D. Cost of good manufactured (transferred out)
17. If the amount of loss in a manufacturing process is abnormal, it should be classified as a:

A. Period cost.
B. Deferred charge.
C. Joint cost.
D. Product cost.
18. What losses should not affect the recorded cost of inventories?
A. Normal losses
B. Abnormal losses
C. Seasonal losses
D. Standard losses
19. In a process cost system, how is the unit cost affected in a production cost report when materials are added
in a department subsequent to the first department and the added materials result in additional units?
A. It causes an increase in the preceding department's unit cost that necessitates an adjustment of the
B. It causes a decrease in the preceding department's unit cost that necessitates an adjustment of the
C. It causes an increase in the preceding department's unit cost but does not necessitate an adjustment of the
D. It causes a decrease in the preceding department's unit cost but does not necessitate an adjustment of the
20. CPG Company manufactures chemicals. Chemical agent PL62 is refined in the Refining department and,
after it is transferred to the Mixing department, a reactive agent is added to it. In January, 6,000 gallons of
PL62 having a cost of $30,000 were transferred from the refining to the Mixing department where 4,000 gallons
of the reactive agent were added. When calculating the inventory costs in the Mixing department, what will the
cost per unit relating to gallons transferred in from the Refining department be?
A. $3.33
B. $3.00
C. $5.00
D. $7.50
21. In order to compute equivalent units of production using the FIFO method of process costing, work for the
period must be broken down to units:
A. Completed from beginning inventory, started and completed during the month, and units in ending
inventory.
B. Completed during the period 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.
22. Under which of the following conditions will the first-in, first-out method of process costing produce the
same cost of goods manufactured amount as the average cost method?
A. When goods produced are homogeneous in nature
B. When there is no beginning inventory
C. When there is no ending inventory
D. When beginning and ending inventories are each 50 percent complete
23. The average cost method of process costing differs from the FIFO method of process costing in that the
average cost method:
A. Requires that ending work in process inventory be stated in terms of equivalent units of production.
B. Can be used under any cost-flow assumption.
C. Does not consider the degree of completion of beginning work in process inventory when computing
equivalent units of production.
D. Considers the ending work in process inventory only partially complete.
24. Material is added at the beginning of a process in a process costing system. The beginning work in process
inventory for this process this period was 30 percent complete as to conversion costs. Using the first-in,
first-out method of costing, the total equivalent units for material for this process during this period are equal to
the:
A. Units started this period in this process.
B. Beginning inventory this period for this process.
C. Units started this period in this process plus the beginning inventory.
D. Units started this period in this process plus 70 percent of the beginning inventory.


The number of units started and completed during the period was:
A. 12,000
B. 9,000
C. 15,000
D. 6,000


The number of equivalent units for conversion costs during the period was:
A. 13,500
B. 16,500
C. 12,300
D. 14,700
27. The following information is available for the month of April from the First department of the Armque
Corporation:
Units
Started in April 250,000
Materials are added in the beginning of the process in the First department. Using the first-in, first-out method, what are the equivalent units of
production for the month of April?
A. 250,000 259,000
B. 340,000 259,000
C. 280,000 271,000
D. 250,000 271,000
Materials
Units Costs

All materials are added at the beginning of the process. Using the first-in, first-out method, the cost (rounded to two places) per equivalent unit for
A. $0.63.
B. $0.90.
C. $0.77.
D. $0.78.
29. Klug Industries adds materials at the beginning of the process in the molding department, which is the first
of two stages of its production cycle. Information concerning the materials used in the molding department in
August follows:
Materials
Units Costs
Work in process at August 1 8,000 $11,550
Units started during August 20,000 $72,450
during August 21,000
Using the FIFO method, what is the materials cost of the work in process at August 31 (rounded to nearest dollar)?
A. $28,000
B. $29,400
C. $29,639
D. $25,358
30. A major difference between FIFO and average costing is:

A. The number of equivalent units in ending work in process.
B. It is not possible to use FIFO when there is more than one department.
C. FIFO separates beginning inventory from current production.
D. The current month’s cost of production will be less.
Corporation:
Units
Transferred to Finished Goods in April 280,000
Materials are added at the end of the process in the Second department. Using the first-in, first-out method, what are the equivalent units of
production for materials and conversion costs for the month of April?
A. 250,000 259,000
B. 280,000 259,000
C. 340,000 271,000
D. 280,000 271,000
32. During June, Birch Bay Company's Department B equivalent unit product costs computed under the FIFO
method were as follows:
Materials $2
Conversion $3
Transferred-in $5
A. $20,000.
B. $24,800.
C. $27,200.
D. $35,200.
33. When two products are produced during a common process, what is the factor that determines whether the
products are joint products or one principal product and a by-product?
A. Potential marketability for each product
B. Amount of work expended in the production of each product
C. Management policy
D. Relative total sales value
34. Which of the following statements best describes a by-product?
A. A product with a value that can easily and accurately be determined.
B. A product that has a greater value than the main product.
C. A product created along with the main product whose sales value does not cover the cost of its production.
D. A product that usually produces a small amount of revenue when compared to the main product revenue.
35. Which of the following is most likely to be accounted for as a by-product?

A. Heating oil resulting from processing crude oil at a refinery.
B. Cream resulting from processing raw milk at a dairy.
C. Sawdust resulting from processing lumber at a lumber mill.
D. Ground beef resulting from processing beef at a meat packer.
36. If two or more products share a common process before they are separated, the joint costs should be
allocated in a manner that:
A. Assigns a proportionate amount of the total cost to each product equitably.
B. Maximizes total earnings.
C. Minimizes variations in a unit of production cost.
D. Does not introduce an element of estimation into the process of accumulating costs for each product.
37. Each of the following is a method by which to allocate joint costs except:
A. Chemical or engineering analysis.
B. Relative sales value.
C. Relative weight, volume, or linear measure.
D. Relative marketing costs.
38. Joint costs are commonly allocated based upon relative:

A. Sales value.
B. Marketing costs.
C. Conversion costs.
D. Prime costs.
39. Budde Chemicals produces two industrial chemical compounds, X15 and Z24, from the same process,
which last year, cost $300,000. Budde produced 10,000 gallons of X15, which sells for $40 per gallon and
40,000 gallons of Z24, which sells for $20 per gallon. Using the relative sales method, how much of the joint
cost should be allocated to X15?
A. $100,000
B. $200,000
C. $60,000
D. $75,000
40. If a company using the adjusted sales value method to assign joint costs produces two products, A and B,
from a joint process, and B requires additional processing after the split-off in order to be salable, how is the
joint cost allocated to B determined?
A. The costs of the additional processing are ignored in allocating joint costs.
B. The costs of the additional processing are subtracted from the joint costs allocated to B.
C. The relative sales value used to allocate the joint cost are determined after the costs of further processing are
subtracted from the ultimate sales value of B.
D. None of these are correct.
additional processing costing $300,000 to make it salable. Using the adjusted sales method, how much of the
joint cost should be allocated to Gorp?
A. $60,000
B. $160,000
C. $80,000
D. $96,000
42. Braun Company produces two chemical compounds, Herzog and Lomax from a joint process. Joint costs to
produce 500 gallons of Herzog and 300 gallons of Lomax were $80,000. A by-product, Horst, results from the
joint process and has a market value of $1,000. Assuming Braun accounts for the by-product as a reduction in
the costs assigned to the products, what are the joint costs assigned to Herzog?
A. $39,500
B. $49,375
C. $50,000
D. $40,000
additional processing costing $300,000 to make it salable. Using the adjusted sales method, what is the
completed cost of Gorp?
A. $300,000
B. $380,000
C. $520,000
D. $540,000
44. Which of the following is not an acceptable method for accounting for by-products in a joint manufacturing
process?
A. Costs before the split-off point are allocated to by-products.
B. The estimated sales value of the by-product reduces the cost of the main product.
C. The value of by-products is included in an account called “By-products Inventory.”
D. In some instances, the revenue from selling by-products may be treated as “other income” on the income
statement.
45. Thomas Lumber Company produces furniture grade lumber and building grade lumber from a joint
process. Sawdust, a by-product of the manufacturing process is sold to a local toy manufacturer to stuff leather
toys for $10 per ton. In February, the company produced 3,000 tons of sawdust. What is the entry to reduce
the cost of the main products by the estimated sales value of the by-product?
A. By-product inventory $30,000
Work in process $30,000
B. Work in process $30,000
Other income $30,000
C. Cost of goods sold $30,000
By-product inventory $30,000
D. By-product inventory $30,000
Gain or loss on sale of by-product $30,000
46. Dover Enterprises has two products, Chalk V and Alabaster X, that come from a joint process,
blending. Alabaster X undergoes additional curing after the split-off before it can be sold. The entry to
account for the movement of products from the blending department is:
A. Debit - Finished Goods
B. Debit - Finished Goods
Debit - Work in Process - Curing
C. Debit - Work in Process - Curing
D. Debit - Work in Process - Curing
Credit - Factory Overhead
47. Information for Chaucer, Ltd. in July for the Prep Department, the first stage of the production cycle, is as
follows:
Conv
Materials ersion
Costs
Beginning work in process $ 8,100 $
6,200
0
Total costs $31,500 $19,6
00

0
units
0
units
Material costs are added at the beginning of the process. The ending work in process is two-thirds complete as to conversion costs. How would the
total costs accounted for be distributed using the average cost method?
Materials Labor
Equivalent units:
Goods completed 60,000 60,000
Ending in process:
Material (15,000 x 100% complete) 15,000
Conversion costs (15,000 x 2/3 complete) 10,000
75,000 70,000
Material costs ($31,500 / 75,000 units) $.42 unit cost

Conversion costs ($19,650 / 70,000 units) .28 unit cost
Total $ .70 unit cost
Cost of units completed (60,000 units ´ $.70) $42,000

Ending work in process:
Materials (15,000 units ´ $.42) $6,300
Conversion costs (15,000 units ´ 2/3 ´ $.28) 2,800 9,100
Total costs accounted for $51,100
48. Information for Milton, Inc. in July for the Finishing Department, the second stage of the production cycle,
is as follows:
Conv
Materials ersion
Costs
Beginning work in process $366,200 $237,
000
00
Total costs $434,600 $279,
000

0
units
0
units
Material costs are added at the end of the process. The ending work in process is 40% complete as to conversion costs. Ignoring any transferred in
costs, how would the total costs accounted for be distributed using the average cost method?
Materials Labor
Equivalent units:
Goods completed 82,000 82,000
Ending in process:
Material - none 0
Conversion costs (20,000 x 40% complete) 8,000
82,000 90,000
Material costs ($434,600 / 82,000 units) $5.30 unit cost

Conversion costs ($279,000 / 90,000 units) 3.10 unit cost
Total $8.40 unit cost
Cost of units completed (82,000 units ´ $8.40) $688,800

Materials - none
Conversion costs (20,000 units ´ .4 ´ $3.10) 24,800
Total costs accounted for $713,600
49. Highlander Corporation is a manufacturer that uses the average cost method to account for costs of
production. Highlander manufactures a product that is produced in three separate departments: molding,
assembling, and finishing. The following information was obtained for the assembling department for the
month of June:
Work in process, June 1: 4,000 units composed of the following:
Percent of
Amount Completion
Transferred in from the molding department $60,000 100%
Costs added by the assembling department:
Direct materials $ 0 0%
Direct labor 12,300 60%
Factory overhead applied 4,700 50%
$17,000
Work in process, June 1 $77,000
The following activity occurred during the month of June:
(1) 20,000 units were transferred in from the molding department at a cost of $300,000.
(2) Costs were added by the assembling department as follows:
Direct materials $ 93,600

Direct labor 43,200
$156,220
(3) Materials are added at the end of the process.
(4) 18,000 units were completed and transferred to the finishing department. At June 30, 6,000 units were still in process. The
degree of completion of work in process at June 30 follows:
Direct labor 70%

Factory overhead applied 35%
Prepare in good form a cost of production report for the assembling department for the month of June. Show supporting computations in good
form. The report should include:
a. Equivalent units of production.

b. Total manufacturing costs.
c. Cost per equivalent unit.
d. Dollar amount of ending work in process.
e. Dollar amount of inventory cost transferred out.
Highlander Corporation
Cost of Production Summary--Assembling Department
For the Month Ended June 30, 20--
Cost of work in process, beginning of month:
Cost in molding dept. $60,000
Cost in assembling dept.:
Labor $12,300
Factory overhead 4,700 17,000 $ 77,000
Cost of goods received from molding
dept. during month 300,000
Cost of production for month:
Materials $93,600
Labor 43,200
Total costs to be accounted for $533,220
Unit output for month:

Materials:
Finished and transferred to finishing
dept. during month 18,000
Equivalent units of work in process, end
of month (6,000 units, 0% completed)
0
Total equivalent production 18,000
Labor:
Finished and transferred to finishing dept. 18,000
during month
Equivalent units of work in process, end
of month (6,000 units, 70% completed) 4,200
Factory overhead:
Finished and transferred to finishing dept.
during month 18,000
Equivalent units of work in process, end of
month (6,000 units, 35% completed) 2,100
20,100
Unit cost for month:
Materials [($0 + $93,600) / 18,000] $ 5.20
Labor [($12,300 + $43,200) / 22,200] 2.50
Factory overhead [($4,700 + 19,420) / 20,100] 1.20
Total $8.90
Inventory costs:
Cost of goods finished and transferred
to finishing dept. during month:
Cost in molding dept. (18,000 ´ $15.00*) $270,000
Cost in assembling dept. (18,000 ´ $8.90) 160,200 $430,200
Cost of work in process, end of month:
Cost in molding dept. (6,000 ´ $15.00) $90,000
Cost in assembling dept.
Materials (6,000 ´ 0% ´ $4.00) $ -0-
Labor (6,000 ´ 70% ´ $2.50) 10,500
Factory overhead (6,000 ´ 35% x
$1.20) 2,520 13,020 103,020
Total production cost accounted for $533,220
* Costs from Molding department ($60,000 + $300,000) /24,000 = $15.00

50. On September 1, Saranac Enterprises had a work in process inventory of 45,000 units that were complete as
to materials and 60% complete as to labor and overhead. September 1, costs follow:
Materials $39,100
Labor 9,800
During September, the following transactions occurred:
a .Purchased materials costing $105,000 on account.

b. Placed direct materials costing $89,900 into production.
c. Incurred production wages totaling $16,200.
d. Incurred overhead costs for September:
Depreciation $13,700
Utilities (cash payment) 11,800
Supplies (from inventory) 8,000
e. Applied overhead to work in process at a predetermined rate of 200% of direct labor cost.
f. Completed and transferred 100,000 units to Finished Goods.
Saranac uses an average cost system. The ending inventory consisted of 50,000 units that were completed as to materials and 40% complete as to
labor and overhead.
Required:
Prepare the journal entries to record the above information for the month of September.
Materials 105,000
Accounts Payable 105,000
Work in Process 89,900

Materials 89,900

Payroll 16,200

Accumulated Depreciation 13,700
Cash 11,800
Materials 8,000

Applied Factory Overhead 32,400
Finished Goods 151,100

Cost of units transferred to Finished Goods:
Material Conversion Costs

Units completed and transferred to Finished Goods
100,000 100,000
Work in Process, December 31
Material (50,000, all materials) 50,000
Labor (50,000 x .4) 20,000
Equivalent units 150,000 120,000
Costs in Work in Process, December 1:

Material $ 39,100
Labor $ 9,800
Costs added in December
Material 89,900
Labor 16,200
Applied factory overhead 32,400
$129,000 $ 78,000
Equivalent units 150,000 120,000
Cost per equivalent unit $.86 $.65
Cost of units transferred out = 100,000 x (.86 + .65) = $151,100
Note to instructor: This problem includes concepts from chapter 5.
51. Logan, Inc., had 9,000 units of work in process in Department M on March 1 that were 50 percent
complete as to conversion costs. Materials are introduced at the beginning of the process. During March,
18,000 units were started, 20,000 units were completed, and there were 1,000 units of normal losses. Logan
had 6,000 units of work in process at March 31 that were 60 percent complete as to conversion costs. Under
Logan's cost accounting system, lost units reduce the number of units over which total cost can be
spread. Using the average cost method, what were the equivalent units for March for conversion costs?
Unit output--Conversion costs:

Transferred out 20,000
Ending work in process (6,000 units ´ 60%) 3,600
Equivalent production for conversion costs 23,600
52. Kyle, Inc., instituted a new process in October. During October, 18,000 units were started in Department
A. Of the units started, 2,000 were lost in the process, 12,000 were transferred to Department B, and 4,000
remained in work in process at October 31. The work in process at October 31 was 100 percent complete as to
material costs and 15% complete as to conversion costs. Material costs of $78,400 and conversion costs of
$52,920 were charged to Department A in October. What were the total costs transferred to Department B and
assigned to ending work in process using the average cost method?
Cost of production for month:

Materials $ 78,400
Conversion costs 52,920
Total costs to be accounted for $131,320
Unit output for month:
Materials:
Finished and transferred to Department B 12,000
Equivalent units of work in process,
end of month (all materials) 4,000
Conversion costs:
Finished and transferred to Department B 12,000
Equivalent units of work in process,
end of month (4,000 units, 15% completed) 600
Unit cost for month:

Materials ($78,400 / 16,000) $ 4.90
Conversion costs ($52,920 / 12,600) 4.20
Total $ 9.10
Inventory costs:
Cost of goods transferred to Department B (12,000 ´ $9.10) $109,200

Material (4,000 x 4.90) 19,600
Labor (600 x 4.20) 2,520
Total ending work in process inventory 22,120
Total production costs accounted for $131,320
53. Howard Poster Incorporated had 12,000 units of work in process in Department A on October 1. These
units were 60 percent complete as to conversion costs. Materials are added in the beginning of the
process. During the month of October, 38,000 units were started and 40,000 units were completed. Howard
had 10,000 units of work in process on October 31. These units were 75 percent complete as to conversion
costs.
method.
month of October.
FIFO equivalent units:
Conversion
Materials Costs
To complete beginning work in process:

Materials added -0-
40% ´ 12,000 4,800
Started and finished during month:
40,000 units completed - 12,000 units in process,
beginning of month 28,000 28,000
All materials added 10,000
75% ´ 10,000 7,500
Total 38,000 40,300
Average cost equivalent units:

Finished during month 40,000 40,000
75% ´ 10,000 7,500
Total 50,000 47,500
54. Howard Poster Incorporated had 12,000 units of work in process in Department B on October 1. These
units were 60 percent complete as to conversion costs. Materials are added at the end of the process. During
the month of October, 38,000 units were transferred in from Department A and 40,000 units were
completed. Howard had 10,000 units of work in process on October 31. These units were 75 percent complete
as to conversion costs.
method. (Ignore units transferred in.)
month of October. (Ignore transferred in costs.)
FIFO equivalent units:
Conversion
Materials Costs

Materials added 12,000
40% ´ 12,000 4,800
40,000 units completed - 12,000 units in process,
beginning of month 28,000 28,000
All materials added 0
75% ´ 10,000 7,500
Total 40,000 40,300
Average cost equivalent units:

Finished during month 40,000 40,000
Materials added 0
75% ´ 10,000 7,500
Total 40,000 47,500
55. The Roberto Company had computed the flow of units for Department A for the month of May as follows:

Started into production during May 39,000

work in process
Materials $20,800 $ 97,500
Labor 5,200 34,920
Total $30,800 $165,400
Materials are added at the beginning of the process. There were 8,000 units of work in process at May 31. The work in process at May 1 was 70
percent complete as to conversion costs and the work in process at May 31 was 60 percent complete as to conversion costs. What was the cost of the
goods transferred out and in ending work in process using the FIFO method?
Unit output for the month:
Conversion
Materials Costs
Materials needed -0-
30% ´ 10,000 units 3,000
All costs added 31,000 31,000
60% ´ 8,000 4,800
Total 39,000 38,800
Unit costs for month:

Materials $97,500 / 39,000 $2.50
Labor $34,920 / 38,800 .90
Factory overhead $32,980 / 38,800 .85
Total $4.25
Inventory Costs:
Cost of goods finished and transferred out during month:
Beginning units in process:
Prior month’s cost $30,800
Current cost to complete:
Materials (already complete) 0
Labor (10,000 x 30% x $.90) 2,700
Factory overhead (10,000 x 30% x $.85) 2,550 $ 36,050
Units started and completed during month

(31,000 x $4.25) 131,750
Total cost transferred $167,800

Materials (8,000 x $2.50) $20,000
Labor (8,000 x 60% x $.90) 4,320
Factory overhead (8,000 x 60% x $.85) 4,080 28,400
56. The Roberto Company had computed the flow of units for Department B for the month of May as follows:

Transferred from Department A during May 39,000

work in process
Materials $ -0- $235,750
Labor 12,660 166,320
Total $23,970 $552,550
Materials are added at the end of the process. There were 8,000 units of work in process at May 31. The work in process at May 1 was 30 percent
complete as to conversion costs and the work in process at May 31 was 20 percent complete as to conversion costs. What was the cost of the goods
transferred out and in ending work in process using the FIFO method? (Ignore transferred-in costs).
Unit output for the month:
Conversion
Materials Costs
Materials needed 10,000
70% ´ 10,000 units 7,000
All costs added 31,000 31,000
No materials added -0-
20% ´ 8,000 1,600
Total 41,000 39,600
Unit costs for month:

Materials $235,750 / 41,000 $ 5.75
Labor $166,320 / 39,600 4.20
Factory overhead $150,480 / 39,600 3.80
Total $13.75
Inventory Costs:
Cost of goods finished and transferred out during month:
Beginning units in process:
Prior month’s cost $23,970
Current cost to complete:
Materials (10,000 x 5.75) 57,500
Labor (10,000 x 70% x $4.20) 29,400
Factory overhead (10,000 x 70% x $3.80) 26,600 $137,470
Units started and completed during month

(31,000 x $13.75) 426,250
Total cost transferred $563,720

Materials (None added) $ -0-
Labor (8,000 x 20% x $4.20) 6,720
Factory overhead (8,000 x 20% x $3.80) 6,080 12,800
57. Terrell Corporation manufactures Products X, Y, and Z from a joint process. Additional information is as
follows:
Product
X Y Z Total
Units produced 5,000 2,000 6,000 13,000
Joint costs $60,000 ? ? $150,000
Sales value at split off ? ? $45,000 $375,000
Assuming that joint costs are allocated using the relative sales value at split-off approach, what was the sales value at split off for Product X?
Joint cost allocated to Product X of $60,000 / Total joint cost of $150,000 = 40%, so sales value at split off of
Product X must be 40% ´ total sales value of $375,000, or $150,000.
58. Jim Davis Company processes hogs into three products, chops, bacon and sausage. Production and selling
price data follow:
Chops 100,000 lbs. $5.00/ lb.

Bacon 210,000 lbs. $4.00/ lb.
Sausage 410,000 lbs. $2.00/ lb.
Hogs are processed in the Processing Department. From the split-off point, bacon is smoked, sliced and packaged in the Bacon Department. The
cost incurred for these processes was $100,000. In addition, sausage was ground and formed into patties in the Sausage Department after the
split-off. This process cost $60,000.
Required:
a) If joint processing costs were $1,500,000, calculate the total cost of each product using the adjusted sales value method.
b) Prepare the journal entries to 1) record the joint processing and movement of product out of the Processing Department after the split off, and 2)
record the additional processing and completion of the bacon and sausage.
a.
Ultimate sales Costs after Sales value at Percent sales Assignment of joint
Selling price value split-off split-off value costs
Product Pounds
Chops 100,000 $5.00 $ 500,000 $ 500,000 25% $ 375,000
Bacon 210,000 $4.00 840,000 $100,000 740,000 37% 555,000
Sausage 410,000 $2.00 820,000 60,000 760,000 38% 570,000
$2,260,000 $160,000 $2,000,000 $1,500,000
Total cost:
Chops $375,000
Bacon $555,000 + 100,000 = $655,000
Sausage $570,000 + 60,000 = $630,000
b.
Work in Process - Processing 1,500,000
Materials, Payroll, Applied Factory Overhead 1,500,000
Work in Process - Bacon 555,000

Work in Process - Sausage 570,000
Finished Goods (Chops) 375,000
Work in Process - Processing 1,500,000

Materials, Payroll, Applied Factory Overhead 100,000
Work in Process - Sausage 60,000

Materials, Payroll, Applied Factory Overhead 60,000
Finished Goods (555,000 + 100,000) 655,000

Finished Goods (570,000 + 60,000) 630,000

Note to instructor: This problem would be moderate in difficulty if only requirement a. was assigned.
59. Nate Company manufactures Products A and B from a joint process that also yields a by-product, X. Nate
Company accounts for the revenue from its by-product sales as a deduction from the cost of its main
products. Additional information is as follows:
Product
A B X Total
Units produced 15,000 9,000 6,000 30,000
Joint costs ? ? ? $180,000
Sales value at split off $420,000 $140,000 $20,000 $580,000
(1) Assuming that joint product costs are allocated using the relative sales value at split-off approach, what was the joint cost allocated to Products A
and B?
(2) Prepare the journal entry to transfer the finished products to separate inventory accounts.
(3)Assuming the sales value of X is stable, prepare the journal entries to:
(a) place the by-product in stock
(b) record the sale of 3,000 units for $10,500 on account.
(1) In accounting for by-products, the common practice is to make no allocation of the joint costs up to the
split-off point. First, the joint costs must be reduced by the $20,000 sales value of the by-product X ($180,000
- $20,000 = $160,000).
Percent sales Assignment of joint

Relative sales value value costs
Product Units
A 10,000 $420,000 75% (160,000 x 75%) $120,000
B 40,000 140,000 25% (160,000 x 25%) 40,000
$560,000 $160,000
(2)
Finished goods inventory - A 120,000
Finished goods inventory - B 40,000
Work in process 160,000
(3)
By-product inventory 20,000
Work in process 20,000
Accounts receivable 10,500

By-product inventory 10,000 (3,000/6,000 x 20,000)
Gain on sale of by-product 500

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Work in process, beginning of month 20,000 $14,550

In process, beginning of period 1,000 units

Materials Conversion Costs

17. If the amount of loss in a manufacturing process is abnormal, it should be classified as a:

In process, beginning of the period 3,000 units

Transferred to stockroom during period 12,000 units

In process, beginning of the period 3,000 units

Transferred to stockroom during period 12,000 units

Work in process, beginning of month 20,000 $14,550

30. A major difference between FIFO and average costing is:

35. Which of the following is most likely to be accounted for as a by-product?

38. Joint costs are commonly allocated based upon relative:

Goods completed 60,00

Goods completed 82,00

Work in process, June 1: 4,000 units composed of the following:

The following activity occurred during the month of June:

(2) Costs were added by the assembling department as follows:

Direct materials $ 93,600

(3) Materials are added at the end of the process.

Direct labor 70%

a. Equivalent units of production.

During September, the following transactions occurred:

a .Purchased materials costing $105,000 on account.

Work in process, May 1: 10,000

Work in process, May 1: 10,000

Beginning Added during the current month

Chops 100,000 lbs. $5.00/ lb.

Work in process, beginning of month 20,000 $14,550

In process, beginning of period 1,000 units

Materials Conversion Costs

17. If the amount of loss in a manufacturing process is abnormal, it should be classified as a:

In process, beginning of the period 3,000 units

Transferred to stockroom during period 12,000 units

In process, beginning of the period 3,000 units

Transferred to stockroom during period 12,000 units

Work in process, beginning of month 20,000 $14,550

30. A major difference between FIFO and average costing is:

35. Which of the following is most likely to be accounted for as a by-product?

38. Joint costs are commonly allocated based upon relative:

Goods completed 60,00

Material costs ($31,500 / 75,000 units) $.42 unit cost

Cost of units completed (60,000 units ´ $.70) $42,000

Goods completed 82,00

Material costs ($434,600 / 82,000 units) $5.30 unit cost

Cost of units completed (82,000 units ´ $8.40) $688,800

Work in process, June 1: 4,000 units composed of the following:

The following activity occurred during the month of June:

(2) Costs were added by the assembling department as follows:

Direct materials $ 93,600

(3) Materials are added at the end of the process.

Direct labor 70%

a. Equivalent units of production.

Unit output for month:

* Costs from Molding department ($60,000 + $300,000) /24,000 = $15.00

During September, the following transactions occurred:

a .Purchased materials costing $105,000 on account.

Work in Process 89,900

Work in Process 16,200

Factory Overhead 33,500

Work in Process 32,400

Finished Goods 151,100

Material Conversion Costs