cost accounting q a

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Information Field: LO

Highest Answer Letter: E

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Chapter: Chapter 24: Process Costing

True/False

1. Process cost accounting systems are generally used by companies that produce a large volume of standardized units on a continuous basis.

Ans: True

Difficulty: Easy

LO: 1

2. The managers of process manufacturing systems focus on the series of processes needed to complete the production of the products.

Ans: True

Difficulty: Easy

LO: 1

3. In a process manufacturing system, only one process is in progress at any particular point in time.

Ans: False

Difficulty: Easy

LO: 1

4. Process manufacturing usually occurs when the manufacturer produces large quantities of identical products.

Ans: True

Difficulty: Easy

LO: 1

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5. Accountants use the term "process cost accounting system" because these systems use a number of trained individuals and computers to process the collected information.

Ans: False

Difficulty: Easy

LO: 1

6. Process costing involves repetitive production and heterogeneous products among its features.

Ans: False

Difficulty: Easy

LO: 1

7. Managers of process manufacturing systems are not evaluated on the basis of the costs incurred in their departments.

Ans: False

Difficulty: Moderate

LO: 1

8. Process cost accounting systems are used only by companies that manufacture physical products. Thus, companies and other organizations that provide services to their customers do not use process cost accounting.

Ans: False


LO: 1

9. Process cost accounting systems are used by companies that manufacture standardized products by passing them through a series of manufacturing steps.

Ans: True


LO: 1

10. A unique feature of process costing systems is the use of a single Goods in Process control account.

Ans: False


LO: 1

11. Unfortunately, the use of process costing is of little benefit to a service type of operation.

Ans: False


LO: 1

12. The ultimate objective of both job order costing and process costing is the same—to determine the cost per unit of output.


Ans: True


LO: 1

13. Companies that use a series of manufacturing processes to produce standardized products should use a process cost accounting system.

Ans: True

Difficulty: Easy

LO: 1

14. A production department is an organizational unit of a factory that has the responsibility for partially manufacturing or producing a product or service.

Ans: True

Difficulty: Easy

LO: 1

15. The cost object in process costing is the process itself.

Ans: True

Difficulty: Easy

LO: 1

16. In defining direct costs and indirect costs, it is the process that is the cost object in process costing.

Ans: True

Difficulty: Easy

LO: 1

17. The cost object in process costing is the same as in job order costing.

Ans: False


LO: 1

18. A manufacturing company may choose to use either a job order cost accounting system or a process cost accounting system, without considering the process it uses to produce its products.

Ans: False

Difficulty: Easy

LO: 2

19. Process and job order manufacturing operations are similar because they both combine materials, labour, and manufacturing overhead items in the process of producing products.

Ans: True


Difficulty: Easy

LO: 2

20. Some firms that primarily use job order costing may use process costing for a portion of their operations.

Ans: True

Difficulty: Easy

LO: 2

21. Job order and process manufacturing systems are similar in that they can only be used to apply direct materials, direct labour, and overhead to identifiable product units.

Ans: False


LO: 2

22. Using JIT in process costing can reduce costs.

Ans: True


LO: 2

23. The accounting systems used in process costing are simpler than those used in job order costing.

Ans: False


LO: 2

24. When a process cost accounting system records the purchase of raw materials, the Raw Materials Inventory account is credited instead of the Raw Materials Purchases account.

Ans: False


LO: 3

25. When a process cost accounting system records the purchase of raw materials, the Raw Materials Inventory account is debited instead of the Raw Materials Purchases account.

Ans: True


LO: 3

26. When a process cost accounting system assigns the cost of materials to the output produced by a department, the journal entry debits the Raw Materials Inventory account and credits the Goods in Process Inventory account for that department.

Ans: False



LO: 3

27. If Department A uses $10,000 of direct materials and Department B uses $15,000 of direct materials, this journal entry would be recorded by the process cost accounting system:

Goods in Process Inventory, Department B 10,000Goods in Process Inventory, Department A 15,000 Raw Materials Inventory 25,000

Ans: False


LO: 3

28. If Department J uses $40,000 of direct materials and Department K uses $70,000 of direct materials, this journal entry would be recorded by the process cost accounting system:

Raw Materials Inventory 70,000 Goods in Process Inventory, Department J 40,000Goods in Process Inventory, Department K 30,000

Ans: False


LO: 3

29. If Department Q uses $60,000 of direct materials and Department T uses $15,000 of direct materials, this journal entry would be recorded by the process cost accounting system:

Finished Goods Inventory, Department Q 60,000 Finished Goods Inventory, Department T 15,000 Raw Materials Inventory 70,000

Ans: False


LO: 3

30. If Department C uses $19,000 of direct materials and Department D uses $45,000 of direct materials, this journal entry would be recorded by the process cost accounting system:

Goods in Process Inventory, Department C 19,000 Goods in Process Inventory, Department D 45,000 Raw Materials Inventory 64,000

Ans: True


LO: 3


31. In process cost accounting, the classification of materials as direct or indirect depends on whether they are consumed totally within a single department.

Ans: True


LO: 3

32. In process cost accounting, materials are always classified as indirect if they are not physically incorporated into the final product.

Ans: False


LO: 3

33. Direct costs in process cost accounting include those costs that can be readily identified with particular product units.

Ans: False


LO: 3

34. Process cost accounting systems consider direct costs to include those costs that can be readily identified with a particular process.

Ans: True


LO: 3

35. All process cost accounting systems use materials requisitions to release raw materials from the storeroom to the factory.

Ans: False


LO: 3

36. A materials consumption report is a source document that summarizes the materials used during a reporting period.

Ans: True


LO: 3

37. A materials consumption report is prepared to identify those managers who inappropriately exceeded the planned level of materials consumption.

Ans: False


LO: 3

38. Refer to the following table of cost information:


This journal entry would be made to record the use of direct materials in the reporting period covered by the information:

Goods in Process Inventory, Pickling Dept 16,000Goods in Process Inventory, Canning Dept. 3,000 Raw Materials Inventory 19,000

Ans: True


LO: 3

39. In process cost accounting, all labour that is applied exclusively in a single production department is considered to be direct labour.

Ans: True

Difficulty: Easy

LO: 4

40. After all process cost accounting journal entries are recorded and posted for a reporting period, the Factory Payroll account should have a zero balance.

Ans: True

Difficulty: Easy

LO: 4

41. If the factory labour cost for a month was $123,000, this journal entry would be recorded by the process cost accounting system:

Factory Payroll 123,000 Cash 123,000

Ans: True


LO: 4

42. If Department N incurred direct labour cost of $22,000 and Department O incurred direct labour cost of $43,000, this journal entry would be recorded by the process cost accounting system:

Factory Payroll 65,000 Goods in Process Inventory, Department N 22,000 Goods in Process Inventory, Department O 43,000

Ans: False


LO: 4

43. If Department T uses $89,000 of direct labour and Department V uses $11,000 of direct labour, this journal entry would be recorded by the process cost accounting system:


Goods in Process Inventory, Department V 89,000Goods in Process Inventory, Department T 11,000 Factory Overhead 100,000

Ans: False


LO: 4

44. If Department G uses $53,000 of direct labour and Department H uses $21,000 of direct labour, this journal entry would be recorded by the process cost accounting system:

Goods in Process Inventory, Department G 53,000Goods in Process Inventory, Department H 21,000 Factory Payroll 74,000

Ans: True


LO: 4

45. In process cost accounting, direct labour always includes only the labour that is applied directly to the products.

Ans: False


LO: 4

46. In some circumstances, a process cost accounting system may classify wages paid to maintenance workers as direct labour costs instead of factory overhead.

Ans: True


LO: 4

47. Some factory labour costs incurred in a reporting period are presented on the income statement as Factory Labour Expense.

Ans: False


LO: 4


This journal entry would be made to record the use of direct labour in the reporting period covered by the information:

Factory Payroll 6,100 Goods in Process Inventory, Pickling Dept. 4,000 Goods in Process Inventory, Canning Dept. 2,100


Ans: False


LO: 4


This journal entry would be made to record the use of direct labour in the reporting period covered by the information:

Goods in Process Inventory, Pushing Dept. 120,000Goods in Process Inventory, Shoving Dept. 70,000 Factory Payroll 190,000

Ans: True


LO: 4

50. Process cost accounting systems consider overhead costs to include those costs that cannot be readily identified with any specific process.

Ans: True

Difficulty: Easy

LO: 5

51. Factory overhead costs can be allocated by a process cost accounting system to the output of production departments by using a predetermined overhead allocation rate.

Ans: True

Difficulty: Easy

LO: 5

52. If the indirect materials cost for a reporting period was $37,500, the following journal entry would be recorded by the process cost accounting system:

Factory Overhead 37,500 Raw Materials Inventory 37,500

Ans: True

Difficulty: Easy

LO: 5

53. A process cost accounting system records all factory overhead costs directly in the Goods in Process Inventory accounts.

Ans: False

Difficulty: Easy

LO: 5


54. In process costing there is rarely a balance in Factory Overhead that needs to be closed at period-end.

Ans: False

Difficulty: Easy

LO: 5

55. In process costing, indirect materials are charged directly to Goods in Process.

Ans: False

Difficulty: Easy

LO: 5

56. If the predetermined overhead allocation rate is 350% of direct labour cost and the Painting Department's direct labour cost for the reporting period is $20,000, this entry would record the allocation of overhead to the products processed in thisdepartment:

Goods in Process Inventory, Painting Dept 70,000 Factory Overhead 70,000

Ans: True


LO: 5

57. If the predetermined overhead allocation rate is 85% of direct labour cost, and the Polishing Department's direct labour cost for the reporting period is $20,000, this entry would be made to record the allocation of overhead to the products processed in thisdepartment:

Factory Overhead 17,000 Goods in Process Inventory, Painting Dept. 17,000

Ans: False


LO: 5

58. If the predetermined overhead allocation rate is 225% of direct labour cost, and the Mixing Department's direct labour cost for the reporting period is $10,000, this entry would be made to record the allocation of overhead to the products processed in thisdepartment:

Goods in Process Inventory, Mixing Dept. 225,000 Factory Overhead 225,000

Ans: False

Difficulty: Hard

LO: 5



The company uses the same predetermined overhead allocation rate for the Pickling and Canning Departments.

Ans: False

Difficulty: Easy

LO: 5


If the allocated overhead equalled the actual overhead, the total manufacturing costs incurred during the reporting period were $35,300.

Ans: True


LO: 5


If the predetermined overhead allocation rates were based on direct labour costs, the rates for the Pushing and Shoving Departments were 50% and 150%, respectively.

Ans: True


LO: 5

62. In order to determine unit cost under a process cost accounting system, equivalent finished units produced must be calculated.

Ans: True

Difficulty: Easy

LO: 6

63. In the same time period, a production department can produce 1,000 equivalent finished units with respect to direct materials and 1,200 equivalent finished units with respect to direct labour.

Ans: True


LO: 6

64. If a production department has 100 equivalent units of production with respect to direct materials in a given reporting period, the equivalent units of production with respect to direct labour also must be 100.

Ans: False


LO: 6


65. In a process cost accounting system, a department's production should be measured in terms of equivalent units.

Ans: True


LO: 6

66. If a department did all the work on 30 units, one-half the work on 50 units, and one-fourth of the work on 100 units, you would find the unit cost by dividing the incurred costs by 180 equivalent units.

Ans: False


LO: 6

67. Equivalent units of production are always the same as the total number of physical units finished during the period.

Ans: False


LO: 6

68. Equivalent units of production need to be determined only if a processing department adds materials and labour to its products at different rates.

Ans: False


LO: 6

69. "Equivalent units of production" is an engineering term used to describe the process by which one company attempts to manufacture units of a product that are equivalent to the product manufactured by a competitor.

Ans: False


LO: 6

70. Once equivalent units are calculated for materials, this number may also be used for direct labour and factory overhead.

Ans: False


LO: 6

71. Material EUP started and completed is never the same as Direct Labour EUP started and completed.

Ans: False


LO: 6

72. If a processing department starts the reporting period with 100,000 physical units that were 20% complete with respect to direct labour, it must add 80,000 equivalent units of labour to complete them.


Ans: True

Difficulty: Easy

LO: 6

73. The number of EUPs assigned to ending inventory should usually be equal to or less than the number of physical units in ending inventory.

Ans: True

Difficulty: Easy

LO: 6

74. If a processing department starts the reporting period with 50,000 physical units that were 25% complete with respect to direct materials and 40% complete with respect to direct labour, it must add 12,500 equivalent units of direct materials and 20,000equivalent units of direct labour to complete them.

Ans: False

Difficulty: Easy

LO: 6

75. Accounting for the activities of a process costing operation involves five distinct stages of calculation.

Ans: False


LO: 7

76. The last step in the four-step accounting procedure for process costing is the calculation of EUPs.

Ans: False


LO: 7

77. The process cost summary is a primary managerial accounting report produced by a process cost accounting system.

Ans: True

Difficulty: Easy

LO: 8

78. One section of the process cost summary describes the equivalent units of production for the department during the reporting period and presents the calculations of the costs per equivalent unit.

Ans: True

Difficulty: Easy

LO: 8

79. A process cost summary is a financial report that describes the costs charged to a department, the equivalent units of production by the department, and how the costs were assigned to the output.


Ans: True

Difficulty: Easy

LO: 8

80. A process cost summary includes the amounts of equivalent finished units of production for the period.

Ans: True


LO: 8

81. A process cost summary for a production department accounts for all costs assigned to that department during the period plus costs that were in the department's Goods in Process Inventory account at the beginning of the period.

Ans: True


LO: 8

82. A process cost summary shows the cost of a particular job manufactured in the reporting period.

Ans: False


LO: 8

83. The process cost summary presents calculations of the cost of units completed during the reporting period, but does not present any information about the ending goods in process inventory.

Ans: False


LO: 8

84. A process cost summary balances costs in opening inventory and transferred in to costs transferred out and ending inventory.

Ans: True


LO: 8

85. Because the process cost summary describes the activities of the production department for the specified reporting period, it does not present information about any costs incurred in prior periods.

Ans: False

Difficulty: Hard

LO: 8

86. A company that uses a process cost accounting system maintains separate Goods in Process Inventory accounts for each of its manufacturing departments.

Ans: True


Difficulty: Easy

LO: 9


This journal entry would be made to record the transfer of partially completed goods from the Pushing Department to the Shoving Department:

Goods in Process Inventory, Pushing Dept. 250,000 Goods in Process Inventory, Shoving Dept 250,000

Ans: False


LO: 9

88. During a recent month, the Shaking Department received input transferred from the Rolling Department with an assigned cost of $65,000. This transfer should be recorded with the following entry:

Goods in Process Inventory, Shaking Dept. 65,000 Goods in Process Inventory, Rolling Dept. 65,000

Ans: True


LO: 9

89. During a recent month, the Canning Department received input transferred from the Cooking Department with an assigned cost of $100,000. This transfer should be recorded with the following entry:

Goods in Process Inventory, Cooking Dept. 100,000 Goods in Process Inventory, Canning Dept. 100,000

Ans: False


LO: 9

90. When goods are transferred from the Grinding department to the Mixing department for further processing, the Mixing department should debit its Goods in Process Inventory account and the Grinding department should credit its Goods in ProcessInventory account.

Ans: True


LO: 9

91. Ultimately all costs of the processes in a Process Costing system pass through the Cost of Goods Sold account.

Ans: True

Difficulty: Easy


LO: 10

92. During the preceding week, the Packing Department transferred out completed units with a cost of $74,000. This transfer should be recorded with the following entry:

Finished Goods Inventory 74,000 Goods in Process Inventory, Packing Dept. 74,000

Ans: True


LO: 10


This journal entry would be made to record the transfer of fully completed goods from Shoving to the finished goods inventory:

Finished Goods Inventory 525,000 Goods in Process Inventory, Shoving Dept 525,000

Ans: False


LO: 10

94. Supervisory staff associated with a particular department would be considered indirect labour in job costing but direct labour in process costing.

Ans: True


LO: 10

Multiple Choice

95. Which of the following is not a true statement about process cost accounting systems?

A) Process cost accounting systems attempt to determine unit costs.

B) Process cost accounting systems use predetermined overhead application rates.

C) Process cost accounting systems involve a number of departments, each of which produces a different product.

D) Process cost accounting systems accumulate costs in Goods in Process Inventory accounts.

E) Process cost systems use equivalent units of production.

Ans: C


LO: 1


96. Which of the following five kinds of products is unlikely to be produced in a process manufacturing system?

A) Compact disks.

B) Slacks for casual wear.

C) Baseball hats.

D) Calculators.

E) Oil paintings.

Ans: E


LO: 1

97. Which of the following characteristics does not apply to process manufacturing systems?

A) Each unit of product is separately identifiable.

B) Partially completed products are transferred between processes.

C) Different managers are responsible for the different steps in the whole process.

D) The output of all processes (except the final process) is a raw material to the next process.

E) All of these are characteristics of process manufacturing systems.

Ans: A


LO: 1

98. Process costing is frequently characterized by:

A) Low standardization and high production volume.

B) Custom orders and homogeneous products.

C) Repetitive production and heterogeneous products.

D) Repetitive production and low production volume.

E) Homogeneous product and high production volume.

Ans: E


LO: 1

99. A system of accounting in which the costs of each process are accumulated separately and then assigned to the units of product that passed through the process is a:

A) Product cost accounting system.

B) Process cost accounting system.

C) Job order cost accounting system.

D) Manufacturing cost accounting system.

E) Goods in process accounting system.

Ans: B

Difficulty: Easy


LO: 1

100. 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.

Ans: A


LO: 1

101. In Process Cost, the goal of the system is to:

A) Identify all incoming costs.

B) Identify all outgoing costs.

C) Identify all unit costs.

D) Identify and trace all incoming and outgoing costs.

E) Identify and trace all total costs.

Ans: D


LO: 1

102. Which of the following characteristics applies to process cost accounting but not to job order cost accounting?

A) Use of a predetermined overhead rate.

B) Identifiable lots of production.

C) Equivalent finished units.

D) Labour time ticket for each employee.

E) Use of a single Goods in Process account.

Ans: C


LO: 2

103. A document that shows the raw materials issued to a department during a period and that substitutes for a materials requisition is a:

A) Materials purchase order.

B) Receiving report.

C) Materials consumption report.

D) Job cost sheet.


E) Production order.

Ans: C


LO: 3

104. Direct material costs are recorded:

A) Indirectly to Goods in Process account.

B) Indirectly to a Finished Goods account.

C) Directly to a Goods in Process account.

D) Directly to a Finished Goods account.

E) Directly to a Cost of Goods Sold account.

Ans: C


LO: 3

105. Direct labour and indirect labour are recorded respectively to:

A) Factory Overhead and Goods in Process.

B) Goods in Process and Finished Goods.

C) Finished Goods and Goods in Process.

D) Goods in Process and Factory Overhead.

E) Cost of Goods Sold and Finished Goods.

Ans: D


LO: 4

106. X Company uses a process cost accounting system. The Sewing Department's beginning inventory consisted of 50,000 units, complete with respect to direct labour and overhead. The department started and finished 127,500 units. The ending inventoryconsists of 40,000 units that are complete with respect to direct labour and overhead. All direct materials are added at the beginning of the process. The department incurred direct labour costs of $24,000 and overhead costs of $32,000. The direct labour costper equivalent unit is:

A) $0.126.

B) $0.160.

C) $0.178.

D) $0.295.

E) $0.373.

Ans: B

Difficulty: Hard

LO: 4

107. The purpose of the process cost summary report is to:


A) Help managers control departments, factory managers evaluate department managers' performance, and provide cost information for financial statements.

B) Help managers control departments.

C) Help factory managers evaluate department managers' performance.

D) Provide cost information for financial statements.

E) Help managers control departments and provide cost information for financial statements.

Ans: A


LO: 5

108. A measure of the productivity of a process with respect to its use of direct materials, direct labour, or overhead, and an expression of the activity of a process as the number of units that would have been processed during a period if all effort had beenapplied to units that were started and finished during the period, is called:

A) Manufacturing overhead.

B) Units in process.

C) A job cost sheet.

D) Equivalent units of production.

E) A job lot.

Ans: D

Difficulty: Easy

LO: 6

109. Equivalent units of production are equal to:

A) The number of units that could have been produced.

B) The number of finished units produced.

C) The number of units introduced into the process.

D) The number of units still in process.

E) The sum of the numbers of finished units produced and units still in process.

Ans: A

Difficulty: Easy

LO: 6

110. In order to compute an EUP, you must know:

A) An estimate of the percentage of completion.

B) An estimate of units completed.

C) An estimate of units started and completed.

D) An estimate of direct labour cost.

E) An estimate of materials cost.

Ans: A



LO: 6

111. With respect to direct labour costs, a company's beginning work in process inventory consisted of 20,000 units that were 1/5 complete. These units were completed and another 90,000 units were started during the period. Of those started, 60,000 werefinished and the remaining 30,000 were 1/3 complete at the end of the period. The equivalent units of production were:

A) 60,000.

B) 74,000.

C) 76,000.

D) 86,000.

E) 96,000.

Ans: D


LO: 6

112. Assume the following data:

Beginning goods in process inventory 5,000 units (3/4 completed)Units started and completed 15,000Ending goods in process inventory 6,000 units (1/2 completed)

If materials are added when the production process begins and direct labour is applied uniformly throughout the process, what are the equivalent units for direct materials and for direct labour, respectively?

A) 16,250; 19,250.

B) 16,250; 21,750.

C) 21,000; 19,250.

D) 19,250; 18,750.

E) 21,000; 22,250.

Ans: C


LO: 6

113. At the beginning of a recent period, there were 900 units of product in a department, one-third processed. These units were finished and an additional 5,000 units were started and finished during the period. 800 units were still in process at the end ofthe period, one-fourth processed. The equivalent units produced by the department were:

A) 6,700 units.

B) 5,900 units.

C) 5,800 units.

D) 5,500 units.

E) Some other number of units.

Ans: C

Difficulty: Hard

LO: 6


114. During a period, Department A finished and transferred 50,000 units to Department B. Of the 50,000 units, 20,000 were 1/5 complete at the beginning of the period and 30,000 were started and completed during the period. During the period, 10,000units were started but brought only to a stage of being 3/5 completed. The number of equivalent finished units produced by Department A during the period was:

A) 46,000 units.

B) 50,000 units.

C) 52,000 units.

D) 54,000 units.

E) 56,000 units.

Ans: C

Difficulty: Hard

LO: 6

115. X Company uses a process cost accounting system. The Sewing Department's beginning inventory consisted of 50,000 units complete with respect to direct labour and overhead. The Sewing Department started and finished 120,000 units. The endinginventory consists of 40,000 units that are also complete with respect to direct labour and overhead. All direct materials are added at the beginning of the process. What are the equivalent units of production of the Sewing Department for direct materials andfor direct labour and overhead, respectively?

A) 160,000; 120,000.

B) 120,000; 157,500.

C) 167,500; 167,500.

D) 160,000; 162,500.

E) 160,000; 167,500.

Ans: E

Difficulty: Hard

LO: 6

116. Medina Corp. had the following information available for the year:

Beginning inventory of goods in process 40% complete, $1,100 200 unitsEnding inventory of goods in process 80% complete 400 unitsTotal units started during the year 3,200 unitsTotal manufacturing costs incurred during the year $47,600

Equivalent units produced for the year are:

A) 3,800 units.

B) 3,200 units.

C) 3,240 units.

D) 3,520 units.

E) Cannot be determined from information given.

Ans: C

Difficulty: Hard

LO: 6

117. When considering spoilage in the computation of cost per EUP:

A) The unit cost is greater.


B) The unit cost is lesser.

C) The unit cost is the same but reported differently.

D) The unit cost and reporting method are the same.

E) Spoilage does not affect the cost per EUP.

Ans: B

Difficulty: Hard

LO: 6


Beginning inventory of goods in process 40% complete,$1,100

200 units

Ending inventory of goods in process 80% complete 400 unitsTotal units started during the year 3,200 unitsTotal manufacturing costs incurred during the year $47,600

The equivalent unit processing cost is equal to:

A) $47,600/Equivalent finished units for the year.

B) $48,700/Equivalent finished units for the year.

C) $46,500/Equivalent finished units for the year.

D) $14.875 per EUP.

E) None of these answers is correct.

Ans: A


LO: 6

119. A process cost summary is a managerial accounting report that describes the:

A) Costs charged to a department.

B) Equivalent units of production by the department.

C) How the costs were assigned to the output.

D) Physical transfers for a department.

E) All of these answers are correct.

Ans: D


LO: 8

120. The following is an account for a production department, showing its costs for one month:

Assume that materials are added at the beginning of the production process and that direct labour and overhead occur uniformly. If the units in the ending goods in process inventory cost $4,590 and the started and completed units cost $41,850, what was thecost of completing the units in the beginning goods in process inventory?

A) $12,150.

B) $ 2,160.


C) $ 7,560.

D) $54,000.

E) Unable to determine from data given.

Ans: B

Difficulty: Hard

LO: 8

121. The Machining Department started last month with a beginning goods in process inventory of $10,000. During the month, it was assigned the following costs: direct materials—$76,000; direct labour—$24,000; and factory overhead—50% of directlabour cost. Also, inventory with a cost of $109,000 was transferred out of the department to the next phase in the process. The ending balance of the Goods in Process Inventory account for the Machining Department should be:

A) $ 13,000.

B) $ 56,000.

C) $ 59,000.

D) $110,000.

E) $165,000.

Ans: A


LO: 9

122. During a period, Department A finished and transferred 50,000 units to Department B. Of the 50,000 units, 20,000 were 1/5 complete at the beginning of the period and 30,000 were started and completed during the period. During the period, 10,000units were started but brought only to a stage of being 3/5 completed. If $13,000 of overhead was charged to Department A during the period, how much overhead should be allocated to the ending work in process inventory?

A) $4,333.

B) $3,250.

C) $2,600.

D) $2,500.

E) $1,500.

Ans: E

Difficulty: Hard

LO: 9

123. A common recording procedure in process cost accounting is the transfer of costs from:

A) One Goods in Process account to another Goods in Process account.

B) Materials to Finished Goods.

C) Goods in Process to Cost of Goods Sold.

D) Goods in Process to Overhead.

E) Finished Goods to Goods in Process.

Ans: A


LO: 9



Beginning inventory of goods in process 40% complete,$1,100

200 units

Ending inventory of goods in process 80% complete 400 unitsTotal units started during the year 3,200

unitsTotal manufacturing costs incurred during the year $47,600

The number of units transferred to finished goods during the year is:

A) 3,200 units.

B) 3,000 units.

C) 3,400 units.

D) 3,160 units.

E) Cannot be determined from information given.

Ans: B


LO: 10

125. Que Corporation uses a process cost accounting system. The company manufactured goods at a cost of $800 and sold them on credit to Are Corporation for $1,075. The correct journal entry to be made by Que at the time of the sale is:

A)

Accounts Receivable—Are Corporation 1,075Cost of Goods Sold 800 Sales 1,075 Finished Goods Inventory 800

B)

Accounts Receivable—Are Corporation 1,075 Finished Goods Inventory 800 Sales 275

C)

Cost of Goods Sold 1,075 Sales 1,075

D)

Finished Goods Inventory 800Sales 1,075 Accounts Receivable—Are Corporation 1,075 Cost of Goods Sold 800

E) None of these answers is correct.

Ans: A


LO: 10


Short Answer

126. Match the following definition with the appropriate terms:

(a) Estimate of efforts attained.

(b) Unique product design.

(c) Traceable costs.

(d) Total cost expensed.

(e) Allocated costs.

(f) Cost from a goods in process to another.

(g) Mass production in a sequence.

(h) Work completed entirely in one period.

__________ (1) Cost transfer

__________ (2) Process cost

__________ (3) Percent of completion

__________ (4) Indirect costs

__________ (5) Units started and completed

__________ (6) Job order cost

__________ (7) Direct costs

__________ (8) Cost of goods sold

Ans: (1) f (2) g (3) a (4) e (5) h (6) b (7) c (8) d

Difficulty: Hard

LO: 1

127. Match the following definition with the appropriate terms:

(a) The number of units if all efforts are counted.

(b) Imperfectly produced units.

(c) An average unit cost.

(d) A period report of a department's costs.

(e) Units transferred to the next department.

(f) The most common method of calculating unit costs.

(g) Assigning costs to Finished Goods and Goods in Process.

(h) An alternative method for calculating unit cost.

__________ (1) Weighted Average

__________ (2) Cost Reconciliation

__________ (3) Physical Flow

__________ (4) FIFO

__________ (5) Spoiled Units


__________ (6) Equivalent Units

__________ (7) Process Cost Summary

__________ (8) Cost per EUP

Ans: (1) h (2) g (3) e (4) f (5) b (6) a (7) d (8) c


LO: 1, 5, 6

128. A company's January 1 work in process inventory contained 30,000 units that were complete with respect to direct labour. Production for the year included completing these units and another 120,000 units were started. Of those started, 80,000 werefinished and the remaining 40,000 were left 1/5 complete. Calculate the equivalent units of production for the year.

Ans: (3/4 30,000) + 80,000 + (1/5 40,000) = 110,500


LO: 6

129. Briefly explain the conditions under which job order cost accounting systems and process cost accounting systems are used.

Ans: Job order cost accounting systems are used when each product or job has a unique design so that the manufacturing process focuses on the production of that specific job.

Process cost accounting systems are used when manufacturing operations produce a large volume of standardized units that generally pass from one manufacturing process to another.


LO: 1

130. Experts in production management have claimed that multiple products demand the use of multiple production methods. From your reading of Chapter 23, comment on how this might be accomplished.

Ans: Cite examples of how a mass product manufacturer can tailor specific lines.

Difficulty: Hard

LO: 1

131. Briefly describe how JIT may be used in a modern manufacturing environment.

Ans: In a system using JIT, the manufacturer may be able to eliminate inventories at several steps in the process. This would allow for cost savings and possibly even direct transfers to customers.

Difficulty: Hard

LO: 1

132. Job order costing and process costing are the two major alternatives used in manufacturing. Briefly contrast the characteristics of these two systems.

Ans:

Job Order Cost Process CostCustom orders Repetitive productionHeterogeneous product Homogeneous productLow volume High volumeHigh flexibility (prod.) Low flexibility (prod.)Low to medium standard High standardization



LO: 2

133. Refer to the following incomplete table of cost information:

What was the cost of the direct materials used in the Grating Department?

Ans: The calculation can be made after setting the costs transferred out of the Grating Department equal to the costs transferred into the Bagging Department. With this substitution, the column of the table appears as follows:

Thus, the missing amount is found to be $20,000.


LO: 3


What was the cost of the direct labour used in the Bagging Department?

Ans: The calculation can be made after setting the cost transferred out of the Bagging Department equal to the costs transferred into Finished Goods.

Goods in Process—Bagging Beginning inventory $ 13,000Costs incurred: Direct materials 12,000Direct labour ?Overhead applied 22,500Costs transferred out (150,000)Costs transferred in 98,000Ending inventory $ 10,500



LO: 4

135. Iolaus Company provides the following data for 2003:

Factory Overhead Incurred $11,400Factory Overhead Applied ?Estimated Direct Labour Cost $12,000Direct Labour Cost Incurred $11,800Estimated Factory Overhead $8,000

Required:

Based on the data above:

Calculate the Overhead application rate.

Determine the amount of overhead applied to production.

Prepare a journal entry to apply Factory Overhead.

Ans:

$8,000/$12,000 = 66.7% of Direct Labour Cost$11,800 .667 = $7,871 Overhead applied


Goods in Process 7,871 Factory Overhead 7,871


LO: 5

136. What is meant by equivalent units of production, and why are they important when a process cost accounting system is used?

Ans: Equivalent units of production measure production with respect to direct materials, direct labour and overhead, expressed as the number of units that could have been manufactured from start to finish during a period given the amount of direct materials,direct labour, and overhead used during the period. Determining equivalent finished units produced is important for the calculation of the cost per unit and thus for calculating the costs of inventories and the cost of goods sold.


LO: 6

137. Osman Corp. is a manufacturing firm. The following data is available for the year:

Beginning inventory of goods in process,

12,000 units, 60% completed

Ending inventory of goods in process,

18,000 units, 30% completed

Units completed and transferred to finished goods

during the year, 144,000 units

Calculate the equivalent units of production for the year.

Ans:

% of Work Equivalent Units Performed UnitsBeginning inventory of goods in process 12,000 40% 4,800Units completed during 1998 (144,000 –12,000)

132,000 100% 132,000

Ending inventory of goods in process 18,000

30% 5,400

Total 162,000 142,200


LO: 6

138. Refer to the following information about the Painting Department in the Richardson Factory for the month of June:

Beginning goods in process inventory: Physical units 5,000 % complete for materials 70% % complete for labour and overhead 25% Materials cost from May $7,350 Labour and overhead cost from May $3,125Product started and completed: Physical units 40,000Ending goods in process inventory:


Physical units 4,000 % complete for materials 40% % complete for labour and overhead 10%Manufacturing costs for June: Materials $96,975 Labour and overhead $79,470

How many equivalent units of materials were added to the beginning inventory in finishing those units during June? How many equivalent units of labour and overhead were added to the beginning inventory in finishing those units during June?

Ans: Equivalent units of materials

added to the beginning inventory = (100% - 70%) 5,000 physical units = 1,500 equivalent units of materials

Equivalent units of labour and overhead

added to the beginninginventory

= (100% - 25%) 5,000 physical units

= 3,750 equivalent units of labour and overhead

Difficulty: Easy

LO: 6


Beginning goods in process inventory: Physical units 5,000 % complete for materials 70% % complete for labour and overhead 25% Materials cost from May $7,350 Labour and overhead cost from May $3,125Product started and completed: Physical units 40,000Ending goods in process inventory: Physical units 4,000 % complete for materials 40% % complete for labour and overhead 10%Manufacturing costs for June: Materials $96,975 Labour and overhead $79,470

How many equivalent units of materials were added to the ending inventory in getting those units to their state of partial completion? How many equivalent units of labour and overhead were added to the ending inventory in getting those units to their stateof partial completion?

Ans: Equivalent units of materials

added to the ending inventory = 40% 4,000 physical units = 1,600 equivalent units of materials

Equivalent units of labour and overhead

added to the ending inventory = 10% 4,000 physical units = 400 equivalent units of labour and overhead


LO: 6




How many equivalent units of materials were added to all units processed during June? How many equivalent units of labour and overhead were added to all units processed during June?

Ans: Equivalent units of materials:

Physical Percent Equivalent Units Added UnitsBeginning goods in process 5,000 30% 1,500Goods started and completed 40,000 100% 40,000Ending goods in process 4,000 40% 1,600Total units 49,000 43,100

Equivalent units of labour and overhead:

Physical Percent Equivalent Units Added UnitsBeginning goods in process 5,000 75% 3,750Goods started and completed 40,000 100% 40,000Ending goods in process 4,000 10% 400Total units 49,000 44,150


LO: 6


Beginning goods in process inventory: Physical units 5,000 % complete for materials 70% % complete for labour and overhead 25% Materials cost from May $7,350 Labour and overhead cost from May $3,125Product started and completed: Physical units 40,000Ending goods in process inventory: Physical units 4,000 % complete for materials 40%


% complete for labour and overhead 10%Manufacturing costs for June: Materials $96,975 Labour and overhead $79,470

What was the materials cost per equivalent unit produced during June? What was the labour and overhead cost per equivalent unit produced during June?


Physical Percent Equivalent Units Added UnitsBeginning goods in process 5,000 30% 1,500Goods started and completed 40,000 100% 40,000Ending goods in process 4,000 40% 1,600Total units 49,000 43,100 Materials cost per equiv. unit = $96,975/43,100 equiv. units = $2.25 per equivalent unit


Physical Percent Equivalent Units Added UnitsBeginning goods in process 5,000 75% 3,750Goods started and completed 40,000 100% 40,000Ending goods in process 4,000 10% 400Total units 49,000 44,150 Labour and overhead cost per equiv. unit = $79,470/44,150 equiv. units = $1.80 per equivalent unit


LO: 6



What is the total cost of all units that were completed during June? What is the total cost of the ending goods in process inventory?



Physical Percent Equivalent Units Added UnitsBeginning goods in process 5,000 30% 1,500Goods started and completed 40,000 100% 40,000Ending goods in process 4,000 40% 1,600Total units 49,000 43,100 Materials cost per equiv. unit = $96,975/43,100 equiv. units = $2.25 per equivalent unit


Physical Percent Equivalent Units Added UnitsBeginning goods in process 5,000 75% 3,750Goods started and completed 40,000 100% 40,000Ending goods in process 4,000 10% 400Total units 49,000 44,150 Labour and overhead cost per equiv. unit = $79,470/44,150 equiv. units = $1.80 per equivalent unit Equivalent Cost Total Units per Unit Cost

COST OF FINISHED GOODS:

Beginning goods in process:

Beginning materials cost $ 7,350Materials costs added 1,500 $2.25 3,375Beginning labour and overhead cost 3,125Labour and overhead cost added 3,750 $1.80 6,750Total $ 20,600

Started and completed goods:

Materials costs added 40,000 $2.25 $ 90,000Labour and overhead cost added 40,000 $1.80 72,000Total $162,000Total cost of finished goods $182,600

COST OF ENDING GOODS IN PROCESS:

Materials costs added 1,600 $2.25 $ 3,600Labour and overhead cost added 400 $1.80 720Total $ 4,320

Difficulty: Hard

LO: 6

143. A company uses a process cost accounting system. The following information is available for the year:

Goods in process, January 1, 5,500 units, 80% complete.

Goods in process, December 31, 8,800 units, 40% complete.


Units completed and transferred to finished goods during the year, 46,900.

Manufacturing costs during the year, $266,300.

(a) Calculate equivalent finished units produced during the year.

(b) Calculate the average cost per equivalent unit (round to the nearest cent).

Ans:

Equivalent Finished Physical % of

WorkUnits

Units Completed Produced(a) Beginning inventory of goods in process 5,500 20% 1,100 Units completed during the year (46,900-

5,500)41,400 100% 41,400

Ending inventory of goods in process 8,800 40% 3,520 Total 55,700 46,020

(b) Average cost per equivalent finished unit = $266,300/46,020 = $5.79


LO: 6, 8

144. Bimrose Manufacturing uses process cost accounting for its three-department operation. Direct materials are added at the beginning of the Department 1 process, at the halfway point of the Department 2 process, and at the beginning of the Department 3process. Direct labour and overhead are incurred evenly throughout all departments' processes. The following data are known for September:

Department 1 2 3

Beginning in process inventories:

Units 2,500 5,500 1,500 Percent complete 60% 40% 80%

Ending in process inventories:

Units 3,500 4,200 6,500 Percent complete 30% 60% 70%Units completed 14,500 15,800 10,800

Determine the number of units started and completed in Department 1, and the number of units transferred into and completed in Departments 2 and 3. Also, determine the equivalent units of production for direct materials, direct labour and overhead for eachdepartment.

Ans:

Dept. 1 Dept. 2 Dept. 3Units completed 14,500 15,800 10,800Less: beginning in process units (2,500) (5,500) (1,500)Units started and completed 12,000Units transferred in and completed 10,300 9,300

Equivalent units for materials:

Department 1

Materials are added at beginning.

Physical Percent Equivalent Units Added Units


Beginning goods in process 2,500 0% -0- Goods started and completed 12,000 100% 12,000 Ending goods in process 3,500 100% 3,500 Total units 18,000 15,500

Department 2

Materials are added halfway.

Physical Percent Equivalent Units Added Units Beginning goods in process 5,500 100% 5,500 Goods started and completed 10,300 100% 10,300 Ending goods in process 4,200 100% 4,200 Total units 20,000 20,000

Department 3

Materials are added at beginning.

Physical Percent Equivalent Units Added Units Beginning goods in process 1,500 0% -0- Goods started and completed 9,300 100% 9,300 Ending goods in process 6,500 100% 6,500 Total units 17,300 15,800

Equivalent units for labour and overhead:

Labour and overhead are applied evenly throughout the process.

Department 1


Department 2


Department 3

Physical Percent Equivalent Units Added UnitsBeginning goods in process 1,500 20% 300


Goods started and completed 9,300 100% 9,300Ending goods in process 6,500 70% 4,550Total units 17,300 14,150

Difficulty: Hard

LO: 6, 8

145. Why is the Process Cost Summary important to management? How does the Process Cost Summary accomplish its purpose?

Ans: The Process Cost Summary depicts a four-step process detailing physical flows and cost flows allowing management to verify inputs and outputs as part of a control system. It also lets management logically perform unit costing (a necessary activity toallow for appropriate product pricing).

By detailing physical flow, it measures accountability and responsibility. By detailing cost flow, it allows management to determine and derive appropriate cost allocations in a logical format.


LO: 8

146. Nano Company uses a process cost system. The Nano Assembly Department's beginning inventory consisted of 40,000 units that were 3/5 complete with respect to direct labour and overhead. The department started and finished 149,000 units withrespect to direct labour and overhead. The ending inventory consists of 60,000 units that are 3/4 complete with respect to direct labour and overhead. All direct materials are added at the beginning of the process. The department incurred direct labour costsof $262,500 and overhead costs of $120,000. What is the direct labour cost per equivalent unit?

Ans:

Physical Percent Equivalent Units Added UnitsBeginning goods in process 40,000 40% 16,000Goods started and completed 149,000 100% 149,000Ending goods in process 60,000 75% 45,000Total units 249,000 210,000 Direct labour cost per equiv. unit = $262,500/210,000 equiv. units = $1.25 per equivalent unit


LO: 8

147. Heesacker, Inc., uses a process cost accounting system. The following operating and cost data occurred during October:

October 1,Inventory:

30,000 units, 100% complete for materials ($60,000) and 50%complete for direct labour ($7,500) and overhead ($7,500).

October 31,Inventory:

20,000 units, 100% complete for materials and 30% completefor direct labour and overhead.

Units completed during Oct.: 50,000 October production costs: Direct materials $110,000 Direct labour 28,700 Overhead 28,700

Materials are added at the beginning of the process. Direct labour and overhead are incurred evenly throughout the process.

Prepare the October process cost summary.


Ans:

HEESACKER, INC. Process Cost Summary For Month Ended October 31

COSTS CHARGED TO THE DEPARTMENT

Direct materials requisitioned $110,000 Direct labour charged 28,700 Overhead costs allocated 28,700 Total processing costs for the month $167,400 Goods in process at the beginning of the month 75,000 Total costs to be accounted for $242,400

EQUIVALENT UNITS OF PRODUCTION

Equivalent Units Physical Labour & Units Materials Overhead

Categories of Units in Process:

Beginning goods in process 30,000 -0- 15,000Units started and completed 20,000 20,000 20,000Ending goods in process 20,000 20,000 6,000Total 70,000 40,000 41,000 Total materials cost for October $110,000Material cost per equivalent unit ($110,000/40,000units)

$2.75

Total labour cost for October $28,700Labour cost per equivalent unit ($28,700/41,000) $0.70 Total overhead cost for October $28,700Overhead cost per equivalent unit ($28,700/41,000) $0.70

ASSIGNMENT OF COSTS TO THE WORK OF THE DEPARTMENT

Equivalent Cost Total Units per Unit CostGoods in process, October 1 and completed during October: Costs from prior month $75,000 Direct materials added -0- -0- Direct labour added 15,000 $0.70 10,500 Overhead applied 15,000 $0.70 10,500 Total costs to process $ 96,000Goods started and completed during October: Direct materials added 20,000 $2.75 $ 55,000 Direct labour added 20,000 $0.70 14,000 Overhead applied 20,000 $0.70 14,000 Total costs to process $ 83,000

Goods in process, October 30:

Direct materials added 20,000 $2.75 $ 55,000


Direct labour added 6,000 $0.70 4,200 Overhead applied 6,000 $0.70 4,200 Total costs to process $ 63,400Total costs accounted for $242,400


LO: 8

148. Use the following information to determine the cost of the finished goods completed during the reporting period:

Equivalent Cost Total Units per Unit Cost


Costs from prior month $102,000 Materials costs added 6,000 $25.00 Labour and overhead cost added 2,000 $60.00

Started and completed goods

Materials costs added 90,000 $25.00 Labour and overhead cost added 90,000 $60.00

Ans:


COST OF FINISHED GOODS


Costs from prior month $ 102,000Materials costs added 6,000 $25.00 150,000Labour and overhead cost added 2,000 $60.00 120,000Total $ 372,000


Materials costs added 90,000 $25.00 $2,250,000Labour and overhead cost added 90,000 $60.00 5,400,000Total $7,650,000Total cost of finished goods $8,022,000


LO: 8

149. Use the following information to determine the cost of the finished goods completed during the reporting period:



Costs from prior month $735 Materials costs added 60 $ 5.00


Labour and overhead cost added 20 $12.00


Materials costs added 1,000 $ 5.00 Labour and overhead cost added 1,000 $12.00

Ans:




Costs from prior month $ 735Materials costs added 60 $ 5.00 300Labour and overhead cost added 20 $12.00 240Total $ 1,275


Materials costs added 1,000 $ 5.00 $ 5,000Labour and overhead cost added 1,000 $12.00 12,000Total $17,000Total cost of finished goods $18,275


LO: 8

150. Refer to the following information about the Dipping Department of the Halifax Factory for the month of August:

Equivalent TotalUnits Cost



Costs from prior month $ 7,000 Materials costs added 300 Labour and overhead cost added 375


Materials costs added 2,000 Labour and overhead cost added 2,000

Total cost of finished goods

COST OF ENDING GOODS IN PROCESS

Materials costs added 320 Labour and overhead cost added 360

The cost per equivalent unit of materials is $10, and the cost per equivalent unit of labour and overhead is $22.

What total cost should be assigned to the units that were in the beginning goods in process inventory and completed during August?

Ans:




Costs from prior month $ 7,000Materials costs added 300 $10.00 3,000Labour and overhead cost added 375 $22.00 8,250Total $18,250


LO: 8












What total cost should be assigned to the units that were started and completed during August?

Ans:



Materials costs added 2,000 $10.00 $20,000Labour and overhead cost added 2,000 $22.00 44,000Total $64,000


LO: 8













What total cost should be assigned to all units that were completed during August?

Ans:






Materials costs added 2,000 $10.00 $20,000Labour and overhead cost added 2,000 $22.00 44,000Total $64,000Total cost of finished goods $82,250


LO: 8





Costs from prior month $ 7,000 Materials costs added 300


Labour and overhead cost added 375







What total cost should be assigned to the units that were in process at the end of August?

Ans:



Materials costs added 320 $10.00 $ 3,200Labour and overhead cost added 360 $22.00 7,920Total $11,120


LO: 8












What is the total cost to be accounted for during August?

Ans:







Materials costs added 2,000 $10.00 $20,000Labour and overhead cost added 2,000 $22.00 44,000Total $64,000Total cost of finished goods $82,250


Materials costs added 320 $10.00 $ 3,200Labour and overhead cost added 360 $22.00 7,920Total $11,120 Total costs accounted for $93,370


LO: 8

155. During the year, RB Corp. introduced 132,000 units into production. During the year, 144,000 units were completed and transferred to finished goods. At the end of the year, the company had 13,600 units still in process that were 80% complete. Ifequivalent units produced were 136,960, how many units did the company have in goods in process at the beginning of the year, and what was their level of completion?

Ans:

Difficulty: Hard

LO: 8

156. Use the following information to determine the cost of the finished goods completed during the reporting period and the ending goods in process inventory:



Costs from prior month $ 735 Materials costs added 60 $ 5.00 Labour and overhead cost added 20 $12.00


Materials costs added 1,000 $ 5.00 Labour and overhead cost added 1,000 $12.00

Ending goods in process:

Materials costs added 80 $ 5.00


Labour and overhead cost added 30 $12.00

Ans:



Costs from prior month $ 735Materials costs added 60 $ 5.00 300Labour and overhead cost added 20 $12.00 240Total $ 1,275


Materials costs added 1,000 $ 5.00 $ 5,000Labour and overhead cost added 1,000 $12.00 12,000Total $17,000Total cost of finished goods $18,275

Ending goods in process:

Materials costs added 80 $ 5.00 $ 400Labour and overhead cost added 30 $12.00 360Total $ 760

Difficulty: Hard

LO: 8

157. Tomm Corporation provides the following information:

Beginning inventory $0Materials added $14,000Conversion costs added $21,000EUPs—materials 700EUPs—conversion costs 1,400

Required: Calculate the cost of 500 units produced.

Ans:

Materials costs $14,000/700 = $20 per unitConversion cost $21,000/1,400 = $15 per unitTotal unit costs $20 + $15 = $35 per unitTotal cost (500 units) 500 $35 = $17,500

Difficulty: Hard

LO: 8

158. Jay Company provides the following data:

Goods in process, Jan. 1 (80 units) $7,200Current costs added (50 units) $4,500Cost of goods sold (100 units) ?


Goods sold at sales price of $120.

Units completed (120 units)Finished goods, Jan. 1 (0 units)

Required: Prepared the journal entries to record:

(a) Cost of production completed in January.

(b) Sales and cost of goods sold (assume FIFO).

Ans:

(a) Finished Goods 10,800 Goods in Process 10,800

(120 units @ $90)

(b) Cost of Goods Sold 9,000 Finished Goods 9,000

(100 @ $90)

Accounts Receivable (or Cash) 12,000 Sales 12,000

(100 @ $120)

Difficulty: Hard

LO: 8, 9


Goods in Goods inProcess— Process— FinishedGrating Bagging GoodsBeginning inventory $10,000 $13,000 $ ?Costs incurred: Direct materials ? 12,000Direct labour 30,000 ?Overhead applied 45,000 22,500Costs transferred out (?) (? )Costs transferred in 98,000 150,000Cost of goods sold (147,000)Ending inventory 7,000 10,500 25,000

What was the cost of goods transferred out of the Grating Department into the Bagging Department?

Ans: The cost of goods transferred out of the Grating Department equals the $98,000 cost transferred into the Bagging Department.

Difficulty: Easy

LO: 10


Goods in Goods inProcess— Process— Finished


Grating Bagging GoodsBeginning inventory $10,000 $13,000 $ ?Costs incurred: Direct materials ? 12,000Direct labour 30,000 ?Overhead applied 45,000 22,500Costs transferred out (?) (? )Costs transferred in 98,000 150,000Cost of goods sold (147,000)Ending inventory 7,000 10,500 25,000

What was the cost of the goods transferred out of the Bagging Department into the finished goods inventory?

Ans: The cost of goods transferred out of the Bagging Department equals the $150,000 cost transferred into the Finished Goods inventory.

Difficulty: Easy

LO: 10


Goods in Goods inProcess— Process— FinishedGrating Bagging GoodsBeginning inventory $10,000 $13,000 $ ?Costs incurred: Direct materials ? 12,000Direct labour 30,000 ?Overhead applied 45,000 22,500Costs transferred out (?) (? )Costs transferred in 98,000 150,000Cost of goods sold (147,000)Ending inventory 7,000 10,500 25,000

What was the cost of the beginning inventory of finished goods?

Ans: The cost of the beginning inventory of finished goods can be found by solving for the unknown factor in the third column of the table:

Finished

Goods

Beginning inventory $ ?

Costs transferred in 150,000

Cost of goods sold (147,000)

Ending inventory $ 25,000


Difficulty: Easy

LO: 10

Fill-In-The-Blank


162. Materials and labour costs that are clearly associated with a specific process are known as _______________. Those costs that are not clearly associated with a specific process are called ______________.

Ans: Direct costs, indirect costs

Difficulty: Easy

LO: 3

163. In process cost, factory overhead is usually either ________________ or _______________.

Ans: Overapplied or underapplied


LO: 5

164. The number of units that would be completed if all effort during a period had been applied to units that were started and finished is called ______________________.

Ans: Equivalent units of production

Difficulty: Easy

LO: 6

165. An EUP is an estimate of efforts used to calculate the ______________ of each production component.

Ans: Unit cost

Difficulty: Easy

LO: 6

166. A process cost summary involves four sequential steps. These are (1)_________ (2) ___________, (3) _______________, and (4) ______________.

Ans: Physical flow, equivalent units, cost per EUP, cost reconciliation


LO: 7

167. Partially completed production is measured in two locations each accounting period. These measurement points are ________________ and ____________.

Ans: Beginning Goods in Process, Ending Goods in Process.


LO: 8

168. In a manufacturing operation with two process departments, the flow of costs would proceed from Goods in Process, Dept. #1 to ________________ to _______________ to ______________.

Ans: Goods in Process, Dept. #2, Finished Goods, Cost of Goods Sold


LO: 9

169. Cost per equivalent unit may be calculated for both _______________ and ________________.


Ans: "Good units" and spoiled units (spoilage)

Difficulty: Hard

LO: 9

cost accounting q a

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