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MC-SP Cost Acctg 2 - accounting
Managerial Economics (Central Philippine University)
Studocu is not sponsored or endorsed by any college or university
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Principles of Cost Accounting 17th Edition by Vanderbeck – Test Bank
1. Process costing techniques should be used in assigning costs to
products:
a.
If the product is
manufactured on the
basis of each order
received.
b.
In all manufacturing
situations.
c.
When production is
only partially
completed during the
accounting period.
d.
If the product is
composed of massproduced homogeneous
units.
ANSWER:
d
RATIONALE:
Process costing
techniques should be
used in assigning costs
to products if the
product is composed of
mass-produced
homogeneous units.
POINTS:
1
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
PRIN.EDWA.16.30 – LO
5:1
ACCREDITING STANDARDS:
AACSB Reflective
Thinking
ACCT.AICPA.FN.03 –
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Measurement
BUSPROG.06 – Reflective
Thinking
IMA-Cost Management
OTHER:
Bloom’s: Understanding
2.
Which of the following firms is least likely to use process costing?
a.
A yogurt manufacturer.
b.
A refiner of petroleum products.
c.
A machine tool manufacturer.
d.
A manufacturer of concrete products.
ANSWER:
c
RATIONALE:
Makers of machine tools
use job costing due to
customized products. The
other firms produce
homogeneous products in
continuous production.
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.30 – LO
5:1
ACCREDITING STANDARDS:
AACSB Reflective
Thinking
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.06 – Reflective
Thinking
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IMA-Cost Management
OTHER:
Bloom’s: Understanding
Principles of Cost Accounting 17th Edition
3. Which of the following characteristics applies to process costing?
a.
Differentiated products are provided on a
special order basis.
b.
Cost are accumulated by department.
c.
Cost are accumulated by jobs.
d.
Direct labor workers must keep detailed
records as to the jobs on which they worked.
ANSWER:
b
RATIONALE:
In a process costing
system, costs may be
accumulated by
department, not by job;
therefore requiring more
detailed labor records.
Job costing would be
used for special order
items.
POINTS:
1
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
PRIN.EDWA.16.30 – LO
5:1
ACCREDITING STANDARDS:
AACSB Reflective
Thinking
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.06 – Reflective
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lOMoARcPSD|29171607
Thinking
IMA-Cost Management
OTHER:
Bloom’s: Understanding
Principles of Cost Accounting 17th Edition
4. A cost object in a process cost system is usually a:
a.
Department.
b.
Job.
c.
Specific product.
d.
Employee.
ANSWER:
a
RATIONALE:
A cost object is a unit
to which costs are
accumulated. In a
process cost system,
this is typically a
department.
POINTS:
1
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
PRIN.EDWA.16.30 – LO
5:1
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Remembering
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5. Characteristics that job order costing and process costing have in
common include all of the following except:
a.
The use of predetermined factory overhead
rates.
b.
Each can be used by service firms.
c.
The costs of materials and labor are charged
to the departments where they are incurred.
d.
The primary objective is to complete a unit
cost for products.
ANSWER:
c
RATIONALE:
Charging the costs of
material and labor to
the departments in which
they are incurred is a
characteristic of
process costing. In job
order costing, these
costs are charged
directly to jobs.
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.30 – LO
5:1
ACCREDITING STANDARDS:
AACSB Reflective
Thinking
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.06 – Reflective
Thinking
IMA-Cost Management
OTHER:
Bloom’s: Understanding
Principles of Cost Accounting 17th Edition
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6. A true process costing system could make use of each of the
following except:
a.
Predetermined factory overhead rates.
b.
Individual jobs.
c.
Cost centers.
d.
General ledger control accounts.
ANSWER:
b
RATIONALE:
A true process costing
system would not make
use of individual jobs.
Both process and job
order cost accounting
systems can use
predetermined factory
overhead rates, cost
centers, and
responsibility
accounting.
POINTS:
1
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
PRIN.EDWA.16.30 – LO
5:1
ACCREDITING STANDARDS:
AACSB Reflective
Thinking
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.06 – Reflective
Thinking
IMA-Cost Management
OTHER:
Bloom’s: Understanding
Principles of Cost Accounting 17th Edition
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lOMoARcPSD|29171607
7. All of the following could be included in the cost of a product
located in the final production department of a multi-step
process except:
a.
The costs of materials, labor and overhead
identifiable with that department.
b.
Logistics (product fulfilment) costs.
c.
The costs of service departments that have
been allocated to production departments.
d.
The costs of prior production departments.
ANSWER:
b
RATIONALE:
Marketing and
distribution costs are
not manufacturing costs.
POINTS:
1
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
PRIN.EDWA.16.31 – LO
5:2
ACCREDITING STANDARDS:
AACSB Reflective
Thinking
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.06 – Reflective
Thinking
IMA-Cost Management
OTHER:
Bloom’s: Understanding
8. Brown Company incurred costs of $20,000 for material, $10,000 for
labor, and $16,000 for factory overhead. There was no beginning or
ending work in process. 5,000 units were completed and transferred
out. The unit cost for material is:
​
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a.
$4.00
b.
$2.00
c.
$9.20
d.
$3.20
ANSWER:
a
RATIONALE:
Material unit cost:
$20,000 / 5,000 = $4.00
POINTS:
1
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
PRIN.EDWA.16.31 – LO
5:2
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
9. Daniel LLC incurred cost of $45,000 for material, $25,000 for labor,
and $24,000 for factory overhead. There was no beginning or ending
work in process. 5,000 units were completed and transferred out. The
cost per unit is:
​
a.
$9.00
b.
$5.00
c.
$18.80
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d.
$4.80
ANSWER:
c
RATIONALE:
Material
$45,000
Labor
25,000
Factory
overhead
24,000
Total costs
$94,000
Divided by
the number
of units
5,000
Cost per
unit
$18.80
POINTS:
1
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
PRIN.EDWA.16.31 – LO 5:2
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
10. Which of the following is not included in departmental product
costs?
a.
Costs identifiable with the department.
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b.
Costs added by prior production departments
carried to the department.
c.
Cost of sales and administrative departments
that have been allocated to the production
department.
d.
Costs of factory service departments that have
been allocated to the production department.
ANSWER:
c
RATIONALE:
Sales and administrative
costs are not product or
manufacturing costs.
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.31 – LO
5:2
ACCREDITING STANDARDS:
AACSB Reflective
Thinking
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.06 – Reflective
Thinking
IMA-Cost Management
OTHER:
Bloom’s: Understanding
11. The primary task of process costing is to allocate total cost
between:
a.
units finished during the period and units
still in process at the end of the period.
b.
materials and conversion costs.
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c.
units in process at the beginning of the
period and units started during the period.
d.
units started during the period and units
finished during the period.
ANSWER:
a
RATIONALE:
The primary task of
process costing is to
allocate total cost
between units finished
during the period and
units still in process
at the end of the
period.
POINTS:
1
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
PRIN.EDWA.16.32 – LO
5:3
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Remembering
12. Using the average cost method of process costing, the
computation of manufacturing cost per equivalent unit considers:
a.
Current costs only.
b.
Current costs plus cost of beginning work in
process inventory.
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c.
Current costs plus cost of ending work in
process inventory.
d.
Current costs less cost of beginning work in
process inventory.
ANSWER:
b
RATIONALE:
The average cost method
of process costing
considers current cost
plus cost of beginning
work in process
inventory.
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.32 – LO
5:3
ACCREDITING STANDARDS:
AACSB Reflective
Thinking
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.06 – Reflective
Thinking
IMA-Cost Management
OTHER:
Bloom’s: Remembering
13. The number of whole units that could have been completed during
a period, using the production costs incurred during that period is
called:
a.
Standard production.
b.
Equivalent production.
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c.
Total units.
d.
Manufactured units.
ANSWER:
b
RATIONALE:
The number of whole
units that could have
been completed during a
period, using the
production costs
incurred during that
period is called
equivalent production.
POINTS:
1
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
PRIN.EDWA.16.32 – LO
5:3
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Remembering
14. A characteristic of a process cost accounting system is:
a.
Costs are accumulated by order.
b.
Work in process inventory is restated in terms
of equivalent production.
c.
It is used by a company manufacturing custom
machinery.
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d.
None of these is correct.
ANSWER:
b
RATIONALE:
With a process costing
system, work in process
inventory is restated in
terms of equivalent
production, which
represents the number of
whole units that could
have been completed
during the period. Costs
are accumulated by order
in a job order cost
system, which would be
used, for example, by a
company manufacturing
custom machinery.
Standard costs can be
used with job order or
process systems.
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.32 – LO
5:3
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Remembering
15. All of the following are characteristics of a production
report except:
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a.
It includes the number of units completed
during the period.
b.
It includes the costs incurred by the
department during the period.
c.
It includes the number of units in ending
work-in-process and the estimated stage of
completion.
d.
The department manager completes the report on
a monthly basis.
ANSWER:
b
RATIONALE:
The production report is
prepared by the
department manager
monthly and contains
information about the
number of units
completed and on hand.
It does not contain
information about
department costs.
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.32 – LO
5:3
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Remembering
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16. The cost of an equivalent unit is equal to:
a.
A unit of work in process inventory.
b.
The amount of cost necessary to start a unit
of production into work in process.
c.
The cost necessary to complete one unit of
production.
d.
A unit of work in process inventory.
ANSWER:
c
RATIONALE:
An equivalent unit of
cost is equal to the
amount of cost necessary
to complete one unit of
production. An
equivalent of material
or conversion cost is
the amount of these
elements that is
required to complete one
unit of a manufactured
product. For example, if
10 units are 50 percent
completed, in terms of
equivalency, they are
equivalent to 5 units
100 percent completed.
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.32 – LO
5:3
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
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lOMoARcPSD|29171607
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Understanding
17. The production report for Phillips Industries, which had no
beginning inventory at the beginning of the month, included the
following information for September:
Number of
Units
Units started in production
81,000
Units transferred to
finished goods
72,000
Completion
If the equivalent units for September’s production were 77,400, how
many units were in process at the end of the month, and how complete
were they?
a.
9,000; 30%
b.
9,000; 60%
c.
3,000; 90%
d.
6,000; 90%
ANSWER:
b
RATIONALE:
Units started
in production
81,000
Less: Units
transferred to
finished goods
72,000
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Ending units
in process
9,000
If Phillips started 81,000 units
during the month, and
transferred 72,000 to finished
goods, 9,000 units would be left
in ending inventory. Further, if
equivalent units of production
are equal to 77,400, the
equivalent units of ending Work
in Process would be 5,400
(77,400 – 72,000). 5,400 / 9,000
= 60% The units in ending
Work in Process are 60%
complete.
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.32 – LO 5:3
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
Principles of Cost Accounting 17th Edition
18. If there is no beginning work in process inventory and the ending work in
process inventory is 90 percent complete, the number of equivalent units
would be:
a.
The same as the units placed in process.
b.
The same as the units completed.
c.
Less than the units placed in process.
d.
Less than the units completed.
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ANSWER:
c
Proof:
Units
In process,
beginning of period
None
Placed in process
10,000
Completed and
transferred
9,000
Work in process, end
of period
1,000
Stage of completion
90%
RATIONALE:
Equivalent
production:
Completed
during period
Equivalent
units of work in
process, end of
period (1,000 units,
90%
completed)
Total
equivalent
production
9,000
900
9,900
POINTS:
1
DIFFICULTY:
Challenging
LEARNING OBJECTIVES:
PRIN.EDWA.16.32 – LO 5:3
ACCREDITING STANDARDS:
AACSB Reflective Thinking
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ACCT.AICPA.FN.03 – Measurement
BUSPROG.06 – Reflective
Thinking
IMA-Cost Management
OTHER:
Bloom’s: Analyzing
19. An error was made in the computation of the stage of completion of the current year’s ending wor
inventory. The error resulted in assigning a lower stage of completion to each component of the invento
was the case. What is the resultant effect of this error upon:
(1)
The computation of equivalent units in total?
(2)
The computation of costs per equivalent unit?
(3)
Costs assigned to cost of goods completed for the period?
​
(1)
(2)
(3)
a.
Understate
Overstate
Overstate
b.
Understate
Understate
Overstate
c.
Overstate
Understate
Understate
d.
Overstate
Overstate
Understate
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ANSWER:
a
Proof:
RATIONALE:
Actual
As
computed incorre
Equivalent units in
ending work in
process
2,000
1,000
Equivalent units in
goods completed
20,000
20,000
Total equivalent
units
22,000
21,000
Production cost
$462,000
$462,000
Unit cost
(Production cost /
Total equivalent
units)
$ 21.00
$ 22.00
Cost of goods
completed:
20,000
units × $21
unit
cost
$420,000
20,000 units × $22
unit cost
$440,000
POINTS:
1
DIFFICULTY:
Challenging
LEARNING OBJECTIVES:
PRIN.EDWA.16.32 – LO 5:3
ACCREDITING STANDARDS:
AACSB Reflective Thinking
ACCT.AICPA.FN.03 – Measurement
BUSPROG.06 – Reflective Thinking
IMA-Cost Management
OTHER:
Bloom’s: Analyzing
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20. Which of the following is not a duty of the cost accountant in a
process cost system?
a.
Estimating the stage of completion of inprocess units at the end of the month.
b.
Collecting the periodic production costs.
c.
Preparing the journal entries to record the
factory operations.
d.
Computing the amount of equivalent units.
ANSWER:
a
RATIONALE:
The production
supervisor prepares the
production report which
contains estimates of
the stage of completion
of ending work in
process.
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.33 – LO
5:4
ACCREDITING STANDARDS:
AACSB Reflective
Thinking
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.06 – Reflective
Thinking
IMA-Cost Management
OTHER:
Bloom’s: Remembering
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21. The cost of production summary for Maha Industries follows:
Maha Industries
Cost of Production Summary
For the Month Ended May 31, 20–
Cost of production for
month:
Materials
$ 8,000
Labor
4,000
Factory overhead
3,000
Total costs to be accounted
for
$15,000
Unit output for month:
Finished and
transferred to Finished
goods
during month
3,500
Equivalent units of
work in process, end of
month (2,000 units,
25% completed)
Total equivalent
production
500
4,000
Unit cost for month:
Materials ($8,000 /
4,000)
$2.00
Labor ($4,000 / 4,000)
1.00
Factory overhead
($3,000 / 4,000)
.75
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Total
$3.75
Inventory costs:
Cost of goods finished
and transferred to
Finished goods during
month:
(3,500 × $3.75)
$13,125
Cost of work in process, end
of month:
Materials (2,000
× .25 × $2.00)
$1,000
Labor (2,000 × .25 ×
$1.00)
500
Factory overhead
(1,000 × .25 × $.75)
375
1,875
Total production costs
accounted for
$15,000
What is the journal entry to record materials issued into production?
a.
Finished goods
Materials
8,000
8,000
​
b.
Work-in-process
Materials
8,000
8,000
​
c.
Work-in-process
Materials
1,000
1,000
​
d.
Materials
8,000
Accounts payable
8,000
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ANSWER:
b
The entry to record
materials issued into
production is:
Work-in-process 8,000
RATIONALE:
Materials 8,000
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.33 – LO
5:4
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
22. The cost of production summary for Maha Industries follows:
Maha Industries
Cost of Production Summary
For the Month Ended May 31, 20–
Cost of production for month:
Materials
$ 8,000
Labor
4,000
Factory overhead
3,000
Total costs to be accounted for
$15,000
Unit output for month:
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Finished and transferred
to Finished goods
during month
3,500
Equivalent units of work
in process, end of
month (2,000 units, 25%
completed)
Total equivalent
production
500
4,000
Unit cost for month:
Materials ($8,000 /
4,000)
$2.00
Labor ($4,000 / 4,000)
1.00
Factory overhead ($3,000
/ 4,000)
.75
Total
$3.75
Inventory costs:
Cost of goods finished
and transferred to
Finished goods during
month:
(3,500 × $3.75)
$13,125
Cost of work in process, end of
month:
Materials (2,000 × .25
× $2.00)
$1,000
Labor (2,000 × .25 ×
$1.00)
500
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Factory overhead (1,000
× .25 × $.75)
375
Total production costs
accounted for
1,875
$15,000
What is the journal entry to record the distribution of labor to production?
a.
Finished goods
Payroll
4,000
4,000
​
b.
Work in process
Overhead
4,000
4,000
​
c.
Work in process
Payroll
4,000
4,000
​
d.
Payroll
4,000
Accrued payroll
ANSWER:
RATIONALE:
4,000
c
The entry to record the
distribution of labor to
production is:
Work in process 4,000
Payroll 4,000
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.33 – LO
5:4
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
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lOMoARcPSD|29171607
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
Principles of Cost Accounting 17th Edition
23. The cost of production summary for Maha Industries follows:
Maha Industries
Cost of Production Summary
For the Month Ended May 31, 20–
Cost of production for month:
Materials
$ 8,000
Labor
4,000
Factory overhead
3,000
Total costs to be accounted for
$15,000
Unit output for month:
Finished and transferred
to Finished goods
during month
3,500
Equivalent units of work
in process, end of
month (2,000 units, 25%
completed)
Total equivalent
production
500
4,000
Unit cost for month:
Materials ($8,000 /
4,000)
$2.00
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Labor ($4,000 / 4,000)
1.00
Factory overhead ($3,000
/ 4,000)
.75
Total
$3.75
Inventory costs:
Cost of goods finished
and transferred to
Finished goods during
month:
(3,500 × $3.75)
$13,125
Cost of work in process, end of
month:
Materials (2,000 × .25
× $2.00)
$1,000
Labor (2,000 × .25 ×
$1.00)
500
Factory overhead (1,000
× .25 × $.75)
375
Total production costs
accounted for
1,875
$15,000
What is the journal entry to record factory overhead applied to
production?
a.
Work in process
Factory overhead
3,000
3,000
​
b.
Factory overhead
Various accounts
3,000
3,000
​
c.
Work-in-process
375
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Factory overhead
375
​
d.
Factory overhead
Work in process
375
375
ANSWER:
a
The entry to record
factory overhead applied
to production is:
Work in process 3,000
RATIONALE:
Factory overhead 3,000
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.33 – LO
5:4
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
24. The cost of production summary for Maha Industries follows:
Maha Industries
Cost of Production Summary
For the Month Ended May 31, 20–
Cost of production for month:
Materials
$ 8,000
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lOMoARcPSD|29171607
Labor
4,000
Factory overhead
3,000
Total costs to be accounted for
$15,000
Unit output for month:
Finished and transferred
to Finished goods
during month
3,500
Equivalent units of work
in process, end of
month (2,000 units, 25%
completed)
Total equivalent
production
500
4,000
Unit cost for month:
Materials ($8,000 /
4,000)
$2.00
Labor ($4,000 / 4,000)
1.00
Factory overhead ($3,000
/ 4,000)
.75
Total
$3.75
Inventory costs:
Cost of goods finished
and transferred to
Finished goods during
month:
(3,500 × $3.75)
$13,125
Cost of work in process, end of
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month:
Materials (2,000 × .25
× $2.00)
$1,000
Labor (2,000 × .25 ×
$1.00)
500
Factory overhead (1,000
× .25 × $.75)
375
Total production costs
accounted for
1,875
$15,000
What is the journal entry to record completed production and transfer to the
warehouse?
Work in process
a.
13,125
Finished
goods
13,125
Finished goods
b.
1,875
Work in
process
1,875
Finished goods
c.
3,000
Factory
overhead
3,000
Finished goods
d.
13,125
Work in
process
13,125
ANSWER:
d
RATIONALE:
The entry to completed
production and transfer
to the warehouse is:
Finished goods 13,125
Work in process 13,125
POINTS:
1
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lOMoARcPSD|29171607
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.33 – LO
5:4
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
Principles of Cost Accounting 17th Edition
25. In a given process costing system, the equivalent units of
production are computed using the average cost method. The
percentage of completion for the current period only is included in the
calculation of the:
Beginning Work in
Process Inventory
Ending Work in
Process Inventory
a.
No
No
b.
No
Yes
c.
Yes
No
d.
Yes
Yes
ANSWER:
b
RATIONALE:
In computing equivalent
units of production, the
percentage of completion
of the current period is
used only in the
calculation of the
ending work in process
inventory.
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POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.34 – LO
5:5
ACCREDITING STANDARDS:
AACSB Reflective
Thinking
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.06 – Reflective
Thinking
IMA-Cost Management
OTHER:
Bloom’s: Remembering
26. Omega Corporation uses process costing to calculate the cost of
manufacturing pool systems. Beginning work in process included
30,000 units 60 percent complete. During the month 170,000 units were
completed, 20,000 units remain in work in process at 80 percent
complete. Using the average cost method, the equivalent units are:
a.
170,000
b.
196,000
c.
186,000
d.
190,000
ANSWER:
c
RATIONALE:
Units output for the month:
Finished during month
170,000 Equivalent units of
work in process, end of
month (20,000 x 80%
completed) 16,000 186,000
POINTS:
1
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lOMoARcPSD|29171607
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.34 – LO 5:5
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
27. Norma Company had 10,000 units in work in process at January 1
that were 50 percent complete. During January, 25,000 units were
completed. At January 31, 6,000 units remained in work in process that
were 80 percent complete. Using the average cost method, the
equivalent units for January were:
a.
31,000.
b.
29,800.
c.
35,000.
d.
36,000.
ANSWER:
b
Unit output for
month:
Finished
during month
RATIONALE:
25,000
Equivalent
units of work in
process, end of
month (6,000
units, 75%
completed)
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4,800
lOMoARcPSD|29171607
29,800
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.34 – LO 5:5
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
28. The records of Andrews Company reflect the following data:
Work in process, beginning of the month – 4,500 units; 1 / 3 completed
at a cost of $2,400 for materials, $825 for labor, and $3,000 for
overhead.
Production costs for the month – materials – $20,695; labor – $13,050;
overhead – $41,500
Units completed and transferred to finished goods – 35,000
Work in process, end of month – 3,000 units; 3 / 4 completed
Compute the equivalent units of production.
a.
32,750
b.
37,250
c.
38,000
d.
36,500
ANSWER:
b
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RATIONALE:
Units
completed and
transferred to
finished goods
(35,000 x
100%)
35,000
Ending in
process (3,000
x 3 / 4)
2,250
Equivalent
units of
production
37,250
POINTS:
1
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
PRIN.EDWA.16.34 – LO 5:5
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
29. The beginning work in process inventory is 60 percent complete,
and the ending work in process inventory is 50 percent
complete. The dollar amount of the production cost included in the
ending work in process inventory (using the average cost method) is
determined by multiplying the average unit costs by what percentage
of the total units in the ending work in process inventory?
a.
100 percent
b.
60 percent
c.
55 percent
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d.
50 percent
ANSWER:
d
RATIONALE:
The dollar amount of
production cost included
in the ending work in
process inventory is
determined by
multiplying the average
unit costs by the
percentage of completion
of the ending work in
process inventory (50
percent).
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.34 – LO
5:5
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Remembering
30. The Kluesner Company started the month of June with 3,000 units
in process which were 60% completed. The company started 25,000
units during June, and at the end of the month had 3,000 units on hand
which were 40% completed. The number of units transferred to
finished goods during June was:
a.
25,500
b.
28,500
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c.
24,500
d.
25,000
ANSWER:
d
RATIONALE:
Beginning
units in
process
3,000
Plus: Units
started in
production
25,000
Total units to
account for
28,000
Less: Units
transferred to
finished goods
???
Ending units
in process
3,000
If Kluesner started the month
with 3,000 units in process and
started 25,000 more, there are
28,000 units to account for.
Those units were either
completed and transferred to
finished goods during the month
or still in process at the end of
the month. The number of units
transferred would have been
25,000 (28,000 – 3,000).
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.34 – LO 5:5
ACCREDITING STANDARDS:
AACSB Analytic
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
lOMoARcPSD|29171607
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
31. The production report for Marck Company included the following
information for August:
Number of
Units
Units started in production
44,500
Units transferred to
finished goods
46,200
Ending units in process
3,000
Completion
70%
How many units were in process at the beginning of the month?
a.
1,700
b.
1,000
c.
4,700
d.
5,700
ANSWER:
c
RATIONALE:
Beginning
units in
process
???
Plus: Units
started in
44,500
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production
Total units to
account for
49,200
Less: Units
transferred to
finished goods
46,200
Ending units
in process
3,000
If Marck transferred 46,200
units to finished goods during
the month and had 3,000 units
in process at the end of the
month, there were 49,200 units
to account for during the month
(46,200 + 3,000). If Marck
started 44,500 units during the
month, it must have had 4,700
in beginning in process (49,200
– 44,500).
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.34 – LO 5:5
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
32. The production report for Matthews, Inc. included the following
information for May:
Number of
Units
Completion
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Beginning units in process
7,800
Units transferred to
finished goods
45,300
Ending units in process
6,000
20%
40%
How many units were started during the period?
a.
43,500
b.
58,700
c.
47,500
d.
50,900
ANSWER:
a
RATIONALE:
Beginning
units in
process
7,800
Plus: Units
started in
production
???
Total units to
account for
51,300
Less: Units
transferred to
finished goods
45,300
Ending units
in process
6,000
If Matthews transferred 45,300
units to finished goods during
the month and had 6,000 units
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in process at the end of the
month, there were 51,300 units
to account for during the month
(45,300 + 6,000). If Matthews
started the month with 7,800
units in process, it must have
started 43,500 (51,300 – 7,800).
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.34 – LO 5:5
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
33. Michael Company had 2,000 units in work in process at January 1
that were 80 percent complete. During January, 15,000 units were
completed. At January 31, 4,000 units remained in work in process
that were 40 percent complete. Using the average cost method, how
many units were started during January?
a.
21,000
b.
18,200
c.
17,000
d.
19,000
ANSWER:
c
RATIONALE:
Units in
beginning
work-in-
2,000
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process
Units started
during month
???
Total units
worked on
during month
19,000
Units
completed
during month
15,000
Units in
ending workin-process
4,000
Ending work-in-process and
units completed during the
month total 19,000 units.
19,000 units less 2,000 units
equal 17,000 units.
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.34 – LO 5:5
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
Principles of Cost Accounting 17th Edition
34. The records of Andrews Company reflect the following data:
Work in process, beginning of the month – 4,500 units; 1 / 3 completed
at a cost of $2,400 for materials, $825 for labor, and $5,000 for
overhead.
Production costs for the month – materials – $20,695; labor – $13,050;
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overhead – $41,500
Units completed and transferred to finished goods – 35,000
Work in process, end of month – 3,000 units; 3 / 4 completed
What is the unit cost for material?
a.
$.66
b.
$.59
c.
$.56
d.
$.62
ANSWER:
d
RATIONALE:
Cost of
material in
beginning
work in
process
$ 2,400
Material
costs for
the current
month
20,695
Total
material
costs
$23,095
Units
completed
and
transferred
to finished
goods
(35,000 x
35,000
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100%)
Ending in
process
(3,000 x 3
/ 4)
2,250
Equivalent
units of
production
37,250
Unit cost of material = $23,095
/ 37,250 = $.62
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.34 – LO 5:5
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
35. The production report for Glenway Company for February contained the
following information:
Work in process, beginning of the month – 3,500 units; 1 / 5 completed
Units completed and transferred to finished goods – 25,000
Work in process, end of month – 4,000 units; 1 / 4 completed
Production costs for the month were: materials – $25,325; labor – $20,175;
overhead – $38,950. Costs in beginning work in process were $5,250.
What is the cost per equivalent unit?
a.
$3.45
b.
$3.59
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c.
$3.20
d.
$3.25
ANSWER:
a
Cost of
beginning
work in
process
$ 5,250
Production
costs for
the
current
month:
RATIONALE:
Material
$25,325
Labor
20,175
Factory
Overhead
38,950
84,450
$89,700
Units completed and
transferred to
finished goods
(25,000 x 100%)
25,000
Ending in process
(4,000 x 1 / 4)
1,000
Equivalent units of
production
26,000
Cost per equivalent unit = $89,700 /
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26,000 = $3.45
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.34 – LO 5:5
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 – Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
36. Information concerning the materials used in the Blending
Department in November is as follows:
Units
Materials
Costs
Work in Process, November 1
3,200
$13,200
Units started during November
8,400
37,400
Units completed and
transferred to next
department
during November
Work in Process, November 30
9,200
2,400
If the ending work-in-process inventory is 75% complete, using the
average cost method, what was the materials cost in Work in Process at
November 30?
a.
$7,852
b.
$8,280
c.
$6,120
d.
$7,317
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ANSWER:
b
(B) Units in Work in
Process, November 30:
RATIONALE:
Units in
process,
November 30
2,400
Percentage of
completion
75%
Equivalent
units in
process
1,800
Total materials
cost
Units completed
plus ending
inventory
($13,200
+
$37,000)
=
$50,600 =
$4.60 per
unit
=
(9,200 +
1,800)
11,000
Materials cost for Work in
Process, November 30: 1,800
units × $4.60 = $8,280
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.34 – LO 5:5
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lOMoARcPSD|29171607
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
37. Information for the month of January concerning Department A, the first
stage of Cando Corporation’s production cycle, follows:
Materials
Conversion
$17,200
$16,400
50,000
34,000
Total costs
$67,200
$50,400
Equivalent units using
average cost method
112,000
112,000
Beginning work in process
Current costs
Average unit costs
$
0.60
$
0.45
Goods completed
100,000
units
Ending work in process
24,000
units
The ending work in process is 50 percent complete. How would the total
costs accounted for be distributed using the average cost method?
Goods
Completed
Ending Work
in Process
a.
$105,000
$12,600
b.
$ 67,200
$14,400
c.
$ 67,200
$50,400
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d.
$105,000
ANSWER:
$14,400
a
Cost of the
completed goods:
Materials
(100,000 ×
$.60)
$
Conversion
costs (100,000
× $.45)
Total cost
of completed
goods
RATIONALE:
60,000
45,000
$105,000
Cost of ending
work in process:
Materials
(24,000 x 50% ×
$.60)
$
Conversion
costs (24,000
units × 50% ×
$.45)
Total cost of
ending work in
process
7,200
5,400
$
12,600
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.34 – LO 5:5
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lOMoARcPSD|29171607
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 – Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
38. Howell Company uses the average cost method of process
costing. Howell had 1,000 units in beginning work-in-process which
were 75% complete. Costs associated with this inventory were
$3,200. When calculating the cost per equivalent unit for the month of
June, Howell’s controller should:
a.
Not consider the $3,200 as those costs were
incurred in a prior period.
b.
Calculate the cost to complete the 1,000 items
in beginning work-in-process separately.
c.
Include the $3,200 with the current month’s
cost to arrive at total cost for production to
date.
d.
Include the equivalent units to complete the
beginning work-in-process inventory to arrive
at the equivalent units for the period.
ANSWER:
c
RATIONALE:
When using the average
cost method, the costs
associated with the
beginning work-inprocess inventory should
be added to the current
month’s cost to arrive
at the total cost of
production to date. This
amount is then divided
by the equivalent
production for the
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month. The equivalent
production is amount of
units completed added to
the equivalent units of
ending inventory (units
in ending work-inprocess x the stage of
completion).
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.34 – LO
5:5
ACCREDITING STANDARDS:
AACSB Reflective
Thinking
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.06 – Reflective
Thinking
IMA-Cost Management
OTHER:
Bloom’s: Understanding
39. Information concerning the materials used in the Mixing Department
in October is as follows:
Units
Materials
Costs
Work in Process, October 1
11,700
$ 4,100
Units started during October
43,300
22,900
Units completed and
transferred to next department
during October
45,000
If the ending work-in-process inventory is 50% complete, using the
average cost method, what was the materials cost in Work in Process at
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October 31?
a.
$2,644
b.
$2,700
c.
$4,330
d.
$4,811
ANSWER:
b
(B) Units in Work in
Process, October 31:
RATIONALE:
In process,
October 1
11,700
Started during
October
43,300
Total units to
account for
55,000
Units
transferred
45,000
Units in
process,
October 31
10,000
Percentage of
completion
50%
Equivalent
units in
process
5,000
Total materials
cost
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=
lOMoARcPSD|29171607
Units completed
plus ending
inventory
($4,100
+
$22,900)
$27,000 =
$.54 per
unit
=
(45,000
+ 5,000)
50,000
Materials cost for Work in
Process, October 31: 5,000
units × $.54 = $2,700
POINTS:
1
DIFFICULTY:
Challenging
LEARNING OBJECTIVES:
PRIN.EDWA.16.34 – LO 5:5
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
40. In a company that uses process costing, the cost of goods
manufactured is equal to:
a.
total production costs added during the
period.
b.
total production costs accounted for.
c.
the cost of goods completed in the period.
d.
the cost of ending work in process at the end
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lOMoARcPSD|29171607
of the period.
ANSWER:
c
RATIONALE:
The cost of goods
manufactured is equal to
the production costs
added during the period
plus beginning work in
process, which is equal
to the total production
costs accounted for less
the ending work in
process. This is also
the cost of goods
completed during the
period.
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.34 – LO
5:5
ACCREDITING STANDARDS:
AACSB Reflective
Thinking
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.06 – Reflective
Thinking
IMA-Cost Management
OTHER:
Bloom’s: Understanding
41. In a production cost report using process costing, transferred-in
costs are similar to:
a.
Material added at the beginning of the
process.
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lOMoARcPSD|29171607
b.
Conversion costs added during the process.
c.
Costs transferred to the next process.
d.
Costs included in beginning inventory.
ANSWER:
a
RATIONALE:
The costs transferred in
from another department
are treated in a manner
similar to materials
added in a department at
the very beginning of
processing in the
department. They are
finished units of the
preceding department but
will require additional
processing in the
department to which they
were transferred.
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.35 – LO
5:6
ACCREDITING STANDARDS:
AACSB Reflective
Thinking
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.06 – Reflective
Thinking
IMA-Cost Management
OTHER:
Bloom’s: Understanding
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lOMoARcPSD|29171607
42. What are transferred-in costs as used in a process cost
accounting system?
a.
Labor that is transferred from another
department within the same plant instead of
hiring temporary workers from the outside
b.
Costs that have been incurred in a prior
department on units that have been moved into
a subsequent department
c.
Supervisory salaries that are transferred from
an overhead cost center to a production cost
center
d.
Ending work in process inventory of a previous
process that will be used in a succeeding
process
ANSWER:
b
RATIONALE:
Transferred-in costs, as
used in a process cost
system, represent the
cost of the production
of a previous internal
process or department
subsequently used in a
succeeding internal
process.
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.35 – LO
5:6
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
lOMoARcPSD|29171607
OTHER:
Bloom’s: Remembering
Principles of Cost Accounting 17th Edition
43. The Columbus Company has three departments A, B and
C. Material requisitions amounted to $10,000, $8,000 and $5,000,
respectively, for departments A, B and C. In addition, $3,000 of indirect
materials were used during the period. What is the entry to record the
materials used during the period?
Work-inprocess
a.
23,000
Materials – Department A
10,000
Materials – Department B
8,000
Materials – Department C
5,000
​
Work-in-process – Department A
10,000
Work-in-process – Department B 8,000
Work-in-process – Department C 5,000
b.
Materials
23,000
​
Work-in-process – Department A
10,000
Work-in-process – Department B 8,000
Work-in-process – Department C 5,000
c.
Factory overhead
Materials
3,000
26,000
​
Work-ind.
process
23,000
Factory overhead
Materials
ANSWER:
3,000
26,000
c
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lOMoARcPSD|29171607
RATIONALE:
The entry to record the
use of the materials in
departments A, B and C
and the indirect
materials is: Work-inprocess – Department A
10,000 Work-in-process
– Department B 8,000
Work-in-process –
Department C 5,000
Factory overhead 3,000*
Materials 26,000
*Indirect materials
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.35 – LO
5:6
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
44. Wolf Company has two departments, Mixing and Curing. The following
information is available for September:
Mixing Department:
Number of
units
per
Cost
equivalent
unit
Transferred to the
curing department
9,000
$2.00
Ending work in
process inventory
70 % completed
4,000
$2.00
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lOMoARcPSD|29171607
Curing Department:
Completed and
transferred out
8,000
$3.00
Ending work in
process inventory
30% completed
5,000
$3.00
The entry to record the transfer of inventory from the mixing to the curing
department is:
a.
Work in process – Curing
Work in process –
Mixing
18,000
18,000
Finished
b.
goods
18,000
Work in process –
Mixing
18,000
Work in process –
c.
Mixing
5,600
Work in process –
Curing
d.
5,600
Work in process – Curing
Transferred in
costs
18,000
18,000
ANSWER:
a
RATIONALE:
The entry to transfer
the cost of inventory
from the mixing to the
curing department is:
Work in process –
Curing 18,000* Work in
process – Mixing 18,000
* 9,000 x $2.00
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lOMoARcPSD|29171607
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.35 – LO
5:6
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
Principles of Cost Accounting 17th Edition
45. Wolf Company has two departments, Mixing and Curing. The following
information is available for September:
Mixing Department:
Number of
units
per
Cost
equivalent
unit
Transferred to the
curing department
9,000
$2.00
Ending work in
process inventory
70 % complete
4,000
$2.00
Completed and
transferred out
8,000
$3.00
Ending work in
process inventory
30% complete
5,000
$3.00
Curing Department:
The entry to record the transfer of inventory from the curing department to the
warehouse is:
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lOMoARcPSD|29171607
Finished goods
a.
18,000
Work in process –
Mixing
18,000
Finished goods
b.
24,000
Work in process –
Curing
c.
24,000
Work in process – Curing
Work in process – Mixing
24,000
24,000
Work in process – Curing
Finished
d.
4,500
goods
4,500
ANSWER:
b
RATIONALE:
The entry to record the
completion of production
and transfer of the
goods to the finished
goods warehouse is:
Finished goods 24,000*
Work in process –
Curing 24,000 * 8,000 x
$3.00
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.35 – LO
5:6
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
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lOMoARcPSD|29171607
Principles of Cost Accounting 17th Edition
46. The total number of units to be accounted for in the second
department of a process is:
a.
the number of units in process at the
beginning of the period plus the units
received from another department during the
period.
b.
the number of units in process at the
beginning of the period plus the units
transferred out to another department during
the period.
c.
the number of units in process at the end of
the period plus the units completed and on
hand.
d.
the number of units in process at the end of
the period plus the units received from
another department during the period.
ANSWER:
a
RATIONALE:
The total number of
units to be accounted
for in the second
department of a process
is the number of units
in process at the
beginning of the period
plus the units received
from another department
during the period.
Generally, units must be
received from a previous
department before work
is started.
POINTS:
1
DIFFICULTY:
Moderate
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lOMoARcPSD|29171607
LEARNING OBJECTIVES:
PRIN.EDWA.16.36 – LO
5:7
ACCREDITING STANDARDS:
AACSB Reflective
Thinking
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.06 – Reflective
Thinking
IMA-Cost Management
OTHER:
Bloom’s: Understanding
Principles of Cost Accounting 17th Edition
47. The Binding Department is the second stage of News Printing’s production
cycle. On May 1, the beginning work in process contained 30,000 units that were 60
percent complete. During May, 170,000 units were transferred in from the first stage
of Pine’s production cycle and 160,000 units were completed and transferred to
Finished Goods. On May 31, the ending work in process contained 40,000 units
that were 25 percent complete. Using the average cost method, the equivalent units
of the Assembly Department are:
Transferred-In
Costs
Conversion
Costs
Materials
a.
170,000
54,000
50,000
b.
200,000
160,000
160,000
c.
200,000
170,000
170,000
d.
240,000
200,000
200,000
ANSWER:
c
Units
RATIONALE:
Transferred-in
costs:
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lOMoARcPSD|29171607
Units
completed and
transferred out
160,000
Ending
work in process:
(40,000 x 100%
completed)
40,000
Equivalent
units
200,000
Material and
Conversion
Costs:
Units
completed and
transferred (see
above)
160,000
Ending
work in process:
(40,000 x 25%
complete)
10,000
Equivalent
units
170,000
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.36 – LO 5:7
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
lOMoARcPSD|29171607
Principles of Cost Accounting 17th Edition
48. The Assembly Department is the second stage of Pine Company’s production
cycle. On May 1, the beginning work in process contained 15,000 units that were 40
percent complete. During May, 85,000 units were transferred in from the first stage
of Pine’s production cycle. On May 31, the ending work in process contained
20,000 units that were 75 percent complete. Using the average cost method, the
equivalent units of the Assembly Department are:
Transferred-In
Costs
a.
85,000
Conversion
Costs
Materials
70,000
70,000
b.
100,000
80,000
80,000
c.
100,000
95,000
95,000
d.
120,000
100,000
100,000
ANSWER:
c
Units
Cost flow
analysis:
RATIONALE:
Units in
beginning work in
process
15,000
Transferred
in during month
85,000
Total units
worked on
100,000
Less ending workin-process
20,000
Units
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80,000
lOMoARcPSD|29171607
transferred out
Transferred-in
costs:
Units
completed and
transferred out
(see above)
80,000
Ending work
in process:
(20,000 x 100%
completed)
20,000
Equivalent
units
100,000
Material and
Conversion Costs:
Units
completed and
transferred (see
above)
80,000
Ending work
in process:
(20,000 x 75%
complete)
15,000
Equivalent
units
95,000
POINTS:
1
DIFFICULTY:
Challenging
LEARNING OBJECTIVES:
PRIN.EDWA.16.36 – LO 5:7
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.BB.07 – Critical
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
lOMoARcPSD|29171607
Thinking
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
Principles of Cost Accounting 17th Edition
49. “Goods completed and on hand” refers to:
a.
goods in the finished goods warehouse.
b.
goods awaiting sale.
c.
finished goods purchased directly from
suppliers.
d.
finished goods in a department that have not
yet been transferred to the next department.
ANSWER:
d
RATIONALE:
“Goods completed and on
hand” refers to
finished goods in a
department that have not
yet been transferred to
the next department.
POINTS:
1
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
PRIN.EDWA.16.36 – LO
5:7
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 –
Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
lOMoARcPSD|29171607
OTHER:
Bloom’s: Remembering
Principles of Cost Accounting 17th Edition
50. Department B had 1,000 units in beginning work-in-process which had
transferred in costs of $2,500 from Department A associated with
them. During the period, 12,000 more units having costs of $36,000 were
transferred in to Department B from Department A. What is the unit cost for
the units transferred from Department A.
a.
$2.00
b.
$2.75
c.
$2.96
d.
$3.00
ANSWER:
c
When costs transferred in have
different unit costs in
different periods, these costs
must be averaged as follows:
RATIONALE:
Units
Costs
Beginning
work-inprocess
1,000
$ 2,500
Current
period
12,000
36,000
13,000
$38,500
Cost per unit = 38,500 / 13,000 =
$2.96
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.37 – LO 5:8
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lOMoARcPSD|29171607
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 – Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
51. Daniel LLC incurred the following cost in the month of October:
Material $55,000
Labor $46,000
Factory Overhead $23,000
There was no beginning inventory. Ending work in process was 10,000 units at 50 percent complete.
were completed and transferred out.
Prepare a cost of production summary for the month, assuming Daniel uses the average cost method
costing.
Daniel LLC
Cost of Production Summary
For the Month Ended October 31, 20–
Cost of production for month:
Materials
$ 55,000
Labor
46,000
Factory Overhead
23,000
ANSWER:
Total cost
to be accounted for
$
Unit output for the month
Finished during month
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15,000
lOMoARcPSD|29171607
Equivalent units of work
in process, end
of month (10,000
units, one-half completed)
5,000
Total
equivalent production
Unit cost for month:
Material ($55,000
/20,000)
$2.75
Labor
20,000)
2.30
(46,000 /
Overhead
Factory
(23,000 / 20,000)
1.15
Total
Inventory Costs:
Cost of goods finished
during month (15,000 x 6.20)
$
Cost of work in process,
end of month:
Material
(10,000 x 1/2 x 2.75)
Labor
( 10,000 1/2 2.30)
Factory
Overhead ( 10,000 1/2 1.15)
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$ 13,750
11,500
5,750
lOMoARcPSD|29171607
Total production cost accounted for
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.33 – LO 5:4
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 – Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
Principles of Cost Accounting 17th Edition
52. Using the data presented below, determine the figures that should be inserted in the blank spaces.
Beginning
units
in process
Units
started in
production
Units
transferred
to finished
goods
Ending units in
process
Equivalent
units
of production
a
15,000
80,000
________
10,000 – 1/5
completed
______
b
_____
2,300
________
400 – 1/2
completed
2,450
c
1,200
4,500
5,100
__________________
5,500
d
1,000
_______
8,200
___ – 1/2
completed
8,800
e
3,200
_______
17,800
2,800 – 1/4
completed
______
f
______
22,000
25,000
___ – 1/2
25,200
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completed
ANSWER:
Stage
completion
Equivalent
Units
(a)
Units
Beginning
units in
process
15,000
+ Units
started in
production
80,000
= Total
units to
account for
95,000
– Units
transferred
to finished
goods
_ _???
100%
???
= Ending
units in
process
10,000
1/5
2,000
of
???
The units transferred to finished goods is equal to 85,000 (95,000
– 10,000), therefore the equivalent units of production is equal to
87,000 (85,000 + 2,000).
(b)
Units
Beginning
units in
process
???
+ Units
started in
2,300
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of
Stage
completion
Equivalent
Units
lOMoARcPSD|29171607
production
= Total
units to
account for
???
– Units
transferred
to finished
goods
__???
= Ending
units in
process
100%
400
1/2
???
200
2,450
The number of units transferred to finished goods is 2,250 (2,450
– 200).
The total number of units to account for is 2,650 (2,250 + 400),
therefore the number of units in beginning work-in-process is
350 (2,650 – 2,300).
(c)
Units
Beginning
units in
process
1,200
+ Units
started in
production
4,500
= Total
units to
account for
5,700
– Units
transferred
to finished
goods
5,100
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of
Stage
completion
100%
Equivalent
Units
5,100
lOMoARcPSD|29171607
= Ending
units in
process
?
???
??
???
5,500
The number of equivalent units for ending work-in-process is
400 (5,500 – 5,100).
The number of units in ending work-in-process is 600 (5,700 –
5,100), therefore, the stage of completion of the ending work-inprocess is 2/3 (400 / 600).
(d)
Units
Beginning
units in
process
1,000
+ Units
started in
production
Equivalent
Units
?
??
= Total
units to
account for
???
– Units
transferred
to finished
goods
8,200
= Ending
units in
process
of
Stage
completion
?
??
100%
1/2
8,200
???
8,800
The number of equivalent units for ending work-in-process is
600 (8,800 – 8,200).
The number of units in ending work-in-process is 1,200 (600 /
(1/2)), therefore, the number of units to account for is 9,400
(8,200 + 1,200) and the number of units started in production is
8,400 (9,400 – 1,000).
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(e)
Units
Beginning
units in
process
3,200
+ Units
started in
production
of
Stage
completion
Equivalent
Units
?
??
= Total
units to
account for
???
– Units
transferred
to finished
goods
17,800
100%
= Ending
units in
process
2,800
1/4
17,800
700
???
The number of equivalent units is 18,500 (17,800 + 700).
The total number of units to account for is 20,600 (17,800 +
2,800), therefore the number of units started in production is
17,400 (20,600 – 3,200).
(f)
Units
Beginning
units in
process
???
+ Units
started in
production
22,000
= Total
???
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of
Stage
completion
Equivalent
Units
lOMoARcPSD|29171607
units to
account for
– Units
transferred
to finished
goods
= Ending
units in
process
25,000
100%
?
25,000
1/2
??
???
25,200
The number of equivalent units for ending work-in-process is
200 (25,200 – 25,000).
The number of units in ending work-in-process is 400 (200 /
(1/2)), therefore, the number of units to account for is 25,400
(25,000 + 400) and the number of units in beginning work-inprocess is 3,400 (25,400 – 22,000).
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.34 – LO 5:5
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.BB.07 – Critical Thinking
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
Principles of Cost Accounting 17th Edition
53. The records of Jordan Company reflect the following data:
Work in process, beginning of the month – 4,500 units; 30% completed at a cost of $16,700 for
materials, $7,600 for labor, and $10,400 for overhead.
Production costs for the month – materials – $54,300 labor; – $25,400; overhead – $34,600
Units completed and transferred to finished goods – 18,000
Work in process, end of month – 5,000 units; 40% completed
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Calculate the unit cost for the month for materials, labor and factory overhead.
ANSWER:
Units completed and
transferred to finished goods
(18,000 x 100%)
18,000
Ending in process (5,000 x
40%)
2,000
Equivalent units of production
20,000
Material
Labor
Factory
Overhead
Costs in
beginning
in process
$16,700
$ 7,600
$10,400
Production
costs for
month
54,300
25,400
34,600
Total
costs
$71,000
$33,000
$45,000
$3.55
$1.65
$2.25
Equivalent
units –
20,000
Cost per
unit
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.34 – LO 5:5
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.FN.03 – Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
lOMoARcPSD|29171607
OTHER:
Bloom’s: Applying
Principles of Cost Accounting 17th Edition
54. Consider the following cost of production summary for Carrigan Products for May.
Carrigan Products
Cost of Production Summary
For the Month Ended May 31, 20–
Cost of work in process, beginning
of month:
Materials
Labor
Factory overhead
$
8,200
5,500
2,000
$15,700
Cost of production for month:
Materials
$24,000
Labor
17,600
Factory overhead
16,900
Total costs to be accounted for
58,500
$74,200
Unit output for month:
Finished and transferred to
Finished goods
during month
2,000
Equivalent units of work in
process, end of
month (1,000 units, 80%
completed)
Total equivalent
production
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
800
2,800
lOMoARcPSD|29171607
Unit cost for month:
Materials [($8,200 + $24,000)
/ 2,800]
$
Labor [($5,500 + $17,600) /
2,800]
11.50
8.25
Factory overhead [($2,000 +
$16,900) / 2,800]
6.75
Total
$
26.50
Inventory costs:
Cost of goods finished and
transferred to
Finished goods during
month:
(2,000 × $26.50)
$53,000
Cost of work in process, end of
month:
Materials (1,000 × .8 ×
$11.50)
$
Labor (1,000 × .8 × $8.25)
9,200
6,600
Factory overhead (1,000 × .8
× $6.75)
5,400
Total production costs accounted for
21,200
$74,200
a. Prepare the journal entries to record the production activity.
b. Prepare the Statement of Cost of Goods Manufactured for May.
a.
Work-in-process
ANSWER:
Material
s
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
24,00
0
24,00
0
lOMoARcPSD|29171607
To record
requisition of
materials
Work-in-process
17,60
0
17,60
0
Payroll
To record
distribution of
labor
Work-in-process
16,90
0
Factory
overhead
16,90
0
To record
application of
factory overhead
Finished goods
Work-inprocess
53,00
0
53,00
0
To record the
completion of
goods
b.
Carrigan Products
Statement of Cost of Goods Manufactured
For the Month Ended May 31, 20–
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
lOMoARcPSD|29171607
Materials
$24,000
Labor
17,600
Overhead
16,900
Total
$58,500
Add work in
process
inventories, May
1
15,700
$74,200
Less work in
process
inventories, May
31
21,200
Cost of goods
manufactured
during the month
$53,000
Note to instructor: This problem may be
shortened by assigning either a. or b.
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.34 – LO 5:5
ACCREDITING STANDARDS:
OTHER:
AACSB Analytic
ACCT.AICPA.FN.03 – Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
Bloom’s: Applying
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
lOMoARcPSD|29171607
Principles of Cost Accounting 17th Edition
55. The Paul Manufacturing Company uses the process cost system and the average
cost method. The following production data are for the month of April, 20–.
Production Costs
Work in process, beginning of month:
Materials
$ 4,350
Labor
3,200
Factory overhead
1,902
$
9,452
Costs incurred during month:
Materials
$43,200
Labor
32,304
Factory overhead
19,020
Total
94,524
$103,976
Production Report
Units
In process, beginning of month
500
Finished and transferred during month
11,900
Work in process, end of month
1,200
Stage of completion
65%
Prepare a cost of production summary for the month.
ANSWER:
Paul Manufacturing Company
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
lOMoARcPSD|29171607
Cost of Production Summary
For the Month Ended April 30, 20–
Cost of work in
process, beginning
of month:
Materials
Labor
$
4,3
50
3,200
Factory
overhead
1,90
2
$
9,4
52
Cost of production
for month:
Materials
$43,20
0
Labor
32,304
Factory
overhead
19,020
Total costs to be
accounted for
94,52
4
$103,97
6
Unit output for
month:
Finished and
transferred to
finished goods
during month
Equivalent
units of work in
process, end of
month
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
11,900
lOMoARcPSD|29171607
(1,200
units, 65%
completed)
7
80
Total
equivalent
production
12,680
Unit cost for
month:
Materials
[($4,350 +
$43,200) / 12,680]
$3.75
Labor
[($3,200 +
$32,304) / 12,680]
2.80
Factory
overhead [($1,902
+ $19,020) /
12,680]
1.65
Total
$8.20
Inventory costs:
Cost of
goods finished and
transferred to
finished goods
during
month (11,900 ×
$8.20)
$
Cost of work
in process, end of
month:
Materi
$2,925
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
97,5
80
lOMoARcPSD|29171607
als (1,200 × .65
× $3.75)
Labor
(1,200 × .65 ×
$2.80)
2,184
Factor
y overhead (1,200
× .65 × $1.65)
1,287
Total
production costs
accounted for
$103,97
6
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
6,3
96
PRIN.EDWA.16.34 – LO 5:5
AACSB Analytic
ACCT.AICPA.FN.03 – Measurement
BUSPROG.03 – Analytic
IMA-Cost Management
ACCREDITING STANDARDS:
OTHER:
Bloom’s: Applying
56. The Joan Company uses the process cost system and average cost
method. The following production data are for the month of July, 20–.
Production Costs
Work in process, beginning of month:
Materials
$18,500
Labor
8,750
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
lOMoARcPSD|29171607
Factory overhead
4,850
$ 32,100
Costs incurred during month:
Materials
$93,500
Labor
42,450
Factory overhead
33,550
Total
169,500
$201,600
Principles of Cost Accounting 17th Edition
Production Report
Units
In process, beginning of month
4,000
Finished and transferred during month
28,000
Work in process, end of month
10,000
Stage of completion
40%
(a) Prepare a cost of production summary for the month.
(b) Prepare the journal entries to record production for the month
(a)
Joan Company
Cost of Production Summary
For the Month Ended July 31, 20–
ANSWER:
Cost of work in
process,
beginning of
month:
Materials
Labor
$
18,5
00
8,750
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
lOMoARcPSD|29171607
Factory
overhead
4,8
50
$ 32,100
Cost of
production for
month:
Materials
Labor
Factory
overhead
$
93,5
00
42,450
33,55
0
Total costs to be
accounted for
169,500
$201,600
Unit output for
month:
Finished
and transferred
to finished goods
during month
28,000
Equivalent
units of work in
process, end of
month
(10,000
units, one-half
completed)
Total
equivalent
production
Unit cost for
month:
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
4,000
32,000
lOMoARcPSD|29171607
Materials
[($18,500 +
$93,500) /
32,000]
$3.50
Labor
[($8,750 +
$42,450) /
32,000]
1.60
Factory
overhead [($4,850
+ $33,550) /
32,000]
1.20
Total
$6.30
Inventory costs:
Cost of
goods finished
and transferred
to finished goods
during
month (28,000 ×
$6.30)
$176,400
Cost of
work in process,
end of month:
Mater
ials (10,000
× .4 × $3.50)
$14,000
Labor
(10,000 × .4 ×
$1.60)
6,400
Facto
ry overhead
4,8
00
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
25,2
00
lOMoARcPSD|29171607
(10,000 × .4 ×
$1.20)
Total production
costs accounted
for
$201,600
(b)
Work-in-process
93,500
Materials
93,500
To record
requisition of
materials
Work-in-process
42,450
Payroll
42,450
To record
distribution of
labor
Work-in-process
33,550
Factory
overhead
33,550
To record
application of
factory overhead
Finished goods
176,400
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
lOMoARcPSD|29171607
Work-inprocess
176,400
To record the
completion of
goods
Note to instructor: The difficulty of this problem
can be reduced by eliminating requirement (b).
POINTS:
1
DIFFICULTY:
Challenging
LEARNING OBJECTIVES:
ACCREDITING STANDARDS:
PRIN.EDWA.16.34 – LO 5:5
AACSB Analytic
ACCT.AICPA.BB.07 – Critical Thinking
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
Principles of Cost Accounting 17th Edition
57. Bear Printing prints one brochure in two departments on a continuous basis and
uses the average cost method of process cost accounting. The following information
was reported for the month of April, 20–:
Production Costs
Printing
Department
Binding
Department
Work in
process,
beginning of
month:
Cost in
Printing
Department
$18,000
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
lOMoARcPSD|29171607
Materials
$ 9,500
$ 1,000
Labor
8,000
Factory
overhead
7,000
3,000
$24,500
2,000
6,000
Costs
incurred
during month:
Materials
$23,000
$11,000
Labor
13,000
25,000
Factory
overhead
36,000
72,000
Total
16,000
52,000
$96,500
In addition, the cost of production summary for the Binding Department follows:
Bear Printing
Cost of Production Summary–Binding Department
For the Month Ended April 30, 20–
Cost of work in
process, beginning of
month:
Cost in
Printing Department
$18,000
Cost in Binding
Department:
Materials
$1,000
Labor
3,000
Factory
overhead
2,000
6,000
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
$ 24,000
lOMoARcPSD|29171607
Cost of goods
received from
Printing
Department
during month
67,500
Cost of production
for month:
Materials
$11,000
Labor
25,000
Factory
overhead
16,000
52,000
Total costs to be
accounted for
$143,500
Unit output for
month:
Finished and
transferred to
stockroom
during month
7,500
Equivalent
units of work in
process, end
of month (2,000
units, 25% completed)
500
Total
equivalent production
8,000
Unit cost for month:
Materials
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
$
1.50
lOMoARcPSD|29171607
[($1,000 + $11,000) /
8,000]
Labor [($3,000
+ $25,000) / 8,000]
3.50
Factory
overhead [($2,000 +
$25,000) / 8,000]
2.25
Total
$
7.25
Inventory costs:
Cost of goods
finished and
transferred
to stockroom
during month:
Cost in
Printing Dept.
Cost in
Binding Dept.
(7,500 x
$ 9.00)
$ 67,500
(7,500
$ 7.25)
x
54,375
(7,500 x
$16.25)
Total
$121,825
Cost of work in
process, end of
month:
Cost in
Printing Dept. (600
× $14.50)
$
18,000
Cost in Binding
Dept.:
Materials
(2,000 × 25% ×
$
750
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
lOMoARcPSD|29171607
$1.50)
Labor
(2,000 × 25% ×
$3.50)
1,750
Factory
overhead (2,000 ×
25% × $2.25)
1,125
3,625
21,625
Total production
costs accounted for
$143,500
Prepare the journal entries to record production.
Work-in-process
– Printing
Department
23,000
Work-in-process
– Binding
Department
11,000
Material
34,000
s
ANSWER:
To record
requisition of
materials
Work-in-process
– Printing
Department
13,000
Work-in-process
– Binding
Department
25,000
Payroll
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
38,000
lOMoARcPSD|29171607
To record
distribution of
labor
Work-in-process
– Printing
Department
36,000
Work-in-process
– Binding
Department
16,000
Factory
overhead
52,000
To record
application of
factory overhead
Work-in-process
– Binding
Department
67,500
Work-inprocess –
Printing
Department
To record
transfer of
production from
the Printing
Department to the
Binding
Department
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
67,500
lOMoARcPSD|29171607
143,50
0
Finished goods
Work-inprocess –
Binding
Department
143,50
0
To record the
completion of
goods
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
PRIN.EDWA.16.36 – LO 5:7
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.BB.07 – Critical Thinking
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
Principles of Cost Accounting 17th Edition
58. Asia, Inc., manufactures one product in two departments on a continuous basis and uses the avera
process cost accounting. The following information was reported for the month of August,
Production Costs
Cutting
Department
Assembly
Department
Work in process,
beginning of month:
Cost in Cutting
Department
Materials
$
$ 8,600
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
$
585
8,7
lOMoARcPSD|29171607
Labor
4,200
Factory overhead
3,500
1,600
$ 16,300
1,000
3,1
Costs incurred during
month:
Materials
$61,400
$ 5,595
Labor
26,425
12,820
Factory overhead
22,750
Total
110,575
8,064
26,4
$126,875
Production Report
Cutting
Department
In process, beginning of month
1,100
Finished and transferred during month
8,000
Work in process, end of month
1,500
Stage of completion
Assembl
Departme
600
8,000
600
50%
Prepare a cost of production summary for each department for the month.
ANSWER:
Asia, Inc.
Cost of Production Summary–Cutting
Department
For the Month Ended August 31, 20–
Cost of work in
process,
beginning of
month:
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
4
lOMoARcPSD|29171607
Materials
Labor
Factory
overhead
$
8,600
4,200
3,500
$ 16,300
Cost of
production for
month:
Materials
$61,400
Labor
26,425
Factory
overhead
Total costs to be
accounted for
22,750
110,575
$126,875
Unit output for
month:
Finished
and transferred
to Assembly
Department
during
month
8,000
Equivalent
units of work in
process, end of
month
(1,500 units, 50%
completed)
7
Total equivalent
production
8,75
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
lOMoARcPSD|29171607
Unit cost for
month:
Materials
[($8,600 +
$61,400)/ 8,750]
$ 8.00
Labor
[($4,200 +
$26,425) / 8,750]
3.50
Factory
overhead [($3,500
+ $22,750) /
8,750]
3.00
Total
$14.50
Inventory costs:
Cost of
goods finished
and transferred
to Assembly
Department during
month (8,000 ×
$14.50)
$116,000
Cost of work in
process, end of
month:
Materials
(1,500 × 50% ×
$8.00)
Labor
(1,500 × 50% ×
$3.50)
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
$
6,000
2,625
lOMoARcPSD|29171607
Factory
overhead (1,500
× 50% × $3.00)
2,250
10,87
Total production
costs accounted
for
$126,875
Asia, Inc.
Cost of Production Summary–Assembly Depart
For the Month Ended August 31, 20–
Cost of work in
process, beginning of
month:
Cost in Cutting
Department
$
8,700
Cost in
Assembly Department:
Materials
Labor
Factory
overhead
Cost of goods
received from Cutting
Department
during month
Cost of production
for month:
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
$
585
1,600
1,000
3,185
lOMoARcPSD|29171607
Materials
$ 5,595
Labor
12,820
Factory
overhead
8,064
Total costs to be
accounted for
Unit output for
month:
Finished and
transferred to
stockroom
during month
Equivalent
units of work in
process, end
of month (600
units, 40% completed)
Total
equivalent production
Unit cost for month:
Materials
[($585 + $5,595) /
8,240]
Labor [($1,600
+ $12,820) / 8,240]
Factory
overhead [($1,000 +
$8,064) / 8,240]
Total
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
1.1
lOMoARcPSD|29171607
Inventory costs:
Cost of goods
finished and
transferred
to stockroom
during month:
Cost in
Cutting Dept.
(8,000 x
$14.50)
Cost in
Assembly Dept.
(8,000
x $ 3.60)
Total
$116,000
28,800
(8,000 x
$18.10)
Cost of work in
process, end of
month:
Cost in Cutting
Dept. (600 × $14.50)
$
8,700
Cost in
Assembly Dept.:
Materials
(600 × 40% × $.75)
$180
Labor
(600 × 40% × $1.75)
420
Factory
overhead (600 × 40%
× $1.10)
264
864
Total production
costs accounted for
Note to instructor: Difficulty could be modified by requiring the c
summary for one department only.
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
lOMoARcPSD|29171607
POINTS:
1
DIFFICULTY:
Challenging
LEARNING OBJECTIVES:
PRIN.EDWA.16.36 – LO 5:7
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.BB.07 – Critical Thinking
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
Principles of Cost Accounting 17th Edition
59. Gordon Products manufactures one product in two departments on a continuous basis and uses t
method of process cost accounting. The following information was reported for the month of M
Production Costs
Department
Department
A
B
Work in process,
beginning
of month:
Cost in
Department A
$
Materials
$ 4,200
$ 1,900
Labor
3,500
1,600
Factory
overhead
1,800
$
9,500
750
Costs incurred
during month:
Materials
$74,425
$60,225
Labor
56,625
51,650
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4,
lOMoARcPSD|29171607
Factory
overhead
35,200
166,250
Total
17,000
12
$175,750
Production Report
Department A
In process, beginning of month
Department
1,600
200
Finished and transferred
during month
Work in process, end of month
18,000
17,000
1,000
1,200
Stage of completion
50%
a)
Prepare a cost of production summary for Department A for the
month.
b)
Prepare a cost of production summary for Department B for the
month.
c)
Prepare the journal entries to record production.
6
(a)
Gordon Products
Cost of Production Summary–Department A
For the Month Ended May 31, 20–
ANSWER:
Cost of work in
process,
beginning of
month:
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
lOMoARcPSD|29171607
Materials
Labor
Factory
overhead
$
4,200
3,500
1,800
$
9,500
Cost of
production for
month:
Materials
$74,425
Labor
56,625
Factory
overhead
Total costs to be
accounted for
35,200
166,250
$175,750
Unit output for
month:
Finished
and transferred
to Department B
during
month
18,000
Equivalent
units of work in
process, end of
month
(1,000 units, 50%
completed)
5
Total
equivalent
production
18,500
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
lOMoARcPSD|29171607
Unit cost for
month:
Materials
[($4,200 +
$74,425) /
18,500]
$4.25
Labor
[($3,500 +
$56,625) /
18,500]
3.25
Factory
overhead [($1,800
+ $35,200) /
18,500]
2.0
Total
$9.50
Inventory costs:
Cost of
goods finished
and transferred
to
Department
B during
month:
(18,000
× $9.50)
$171,000
Cost of work in
process, end of
month:
Materials
(1,000 × .5 ×
$4.25)
Labor
(1,000 × .5 ×
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
$
2,125
1,625
lOMoARcPSD|29171607
$3.25)
Factory
overhead (1,000
× .5 × $2.00)
1,000
4,75
Total production
costs accounted
for
$175,750
(b)
Gordon Products
Cost of Production Summary–Department B
For the Month Ended May 31, 20–
Cost of work in process,
beginning of month:
Cost in Dept. A
$
1,900
Cost in Dept. B:
Materials
$1,900
Labor
1,600
Factory
overhead
750
4,250
Cost of goods received
from Dept A.
during month
Cost of production for
month:
Materials
$60,225
Labor
51,650
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
lOMoARcPSD|29171607
Factory overhead
Total costs to be
accounted for
Unit output for month:
Finished and
transferred to stockroom
during month
Equivalent units of
work in process, end
of month (1,200 units,
60% completed)
Total
equivalent production
Unit cost for month:
Materials [($1,900
+ $60,225) / 17,720]
Labor [($1,600 +
$51,650) / 17,720]
Factory overhead
[($750 + $17,000) /
17,720]
Total
Inventory costs:
Cost of goods
finished and transferred
to
stockroom during
month:
Downloaded by SG Mon (shynnemonzbsma1@gmail.com)
17,000
lOMoARcPSD|29171607
Cost in Dept.
A (17,000 × $9.50)
$161,500
Cost in Dept.
B (17,000 × 7.52)
127,840
Total
(17,000 × $17.02)
Cost of work in process,
end of month:
Cost in Dept. A
(1,200 × $9.50)
$
11,400
Cost in Dept. B:
Materials
(1,200 × 60% × $3.51)
$2,527
Labor (1,200
× 60% × $3.01)
2,167
Factory
overhead
(1,200
× 60% × $1.00)
720
Total production costs
accounted for
* Rounding Difference
(c)
Work-in-process –
Department A
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74,425
5,414
lOMoARcPSD|29171607
Work-in-process –
Department B
60,225
Materials
134,65
To record requisition
of materials
Work-in-process –
Department A
56,625
Work-in-process –
Department B
51,650
Payroll
108,27
To record
distribution of labor
Work-in-process –
Department A
35,200
Work-in-process –
Department B
17,000
Factory
overhead
52,200
To record application
of factory overhead
Work-in-process –
Department A
Work-inprocess – Department
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171,000
171,00
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B
To record transfer of
production from
Department A to
Department B
Finished goods
289,340
Work-inprocess – Department
B
289,34
To record the
completion of goods
POINTS:
1
DIFFICULTY:
Challenging
LEARNING OBJECTIVES:
PRIN.EDWA.16.36 – LO 5:7
ACCREDITING STANDARDS:
AACSB Analytic
ACCT.AICPA.BB.07 – Critical Thinking
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
Principles of Cost Accounting 17th Edition
60. Bear Printing prints one brochure in two departments on a continuous basis and
uses the average cost method of process cost accounting. The following information
was reported for the month of April, 20–:
Production Costs
Printing
Department
Binding
Department
Work in
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process,
beginning
of month:
Cost in
Printing
Department
Materials
$18,000
$ 9,500
Labor
8,000
Factory
overhead
7,000
$ 1,000
3,000
$24,500
2,000
6,000
Costs
incurred
during
month:
Materials
$23,000
$11,000
Labor
13,000
25,000
Factory
overhead
36,000
Total
72,000
16,000
52,000
$96,500
In addition, the cost of production summary for the Binding Department follows:
Bear Printing
Cost of Production Summary–Binding Department
For the Month Ended April 30, 20–
Cost of work in
process, beginning of
month:
Cost in
Printing Department
$18,000
Cost in Binding
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lOMoARcPSD|29171607
Department:
Materials
$1,000
Labor
3,000
Factory
overhead
2,000
6,000
$ 24,000
Cost of goods
received from
Printing
Department
during month
67,500
Cost of production
for month:
Materials
$11,000
Labor
25,000
Factory
overhead
16,000
Total costs to be
accounted for
52,000
$143,500
Unit output for
month:
Finished and
transferred to
stockroom
during month
Equivalent
units of work in
process, end
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7,500
lOMoARcPSD|29171607
of month (2,000
units, 25% completed)
500
Total
equivalent production
8,000
Unit cost for month:
Materials
[($1,000 + $11,000) /
8,000]
$
Labor [($3,000
+ $25,000) / 8,000]
1.50
3.50
Factory
overhead [($2,000 +
$25,000) / 8,000]
2.25
Total
$
7.25
Inventory costs:
Cost of goods
finished and
transferred
to stockroom
during month:
Cost in
Printing Dept.
(7,500 x
$ 9.00)
Cost in
Binding Dept.
(7,500
x $ 7.25)
$ 67,500
54,375
(7,500 x
$16.25)
Total
Cost of work in
process, end of
month:
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$121,825
lOMoARcPSD|29171607
Cost in
Printing Dept. (600
× $14.50)
$
18,000
Cost in Binding
Dept.:
Materials
(2,000 × 25% ×
$1.50)
$
750
Labor
(2,000 × 25% ×
$3.50)
1,750
Factory
overhead (2,000 ×
25% × $2.25)
1,125
3,625
Total production
costs accounted for
21,625
$143,500
Prepare the Statement of Cost of Goods Manufactured.
Bear Printing
Statement of Cost of Goods Manufactured
For the Month Ended April 30, 20–
ANSWER:
Materials
$ 34,000
Labor
38,000
Overhead
52,000
Total
$124,000
Add work
in process
inventories,
April 1*
48,500
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lOMoARcPSD|29171607
$172,500
Less
work in
process
inventories,
April 30**
50,625
Cost of goods
manufactured
during the
month
$121,825
* $24,500 + $18,000 + $6,000 = $48,500
** Total Printing Department costs – costs of products
transferred to Binding = Ending WIP – Printing $96,500 –
$67,500 = $29,000 + $21,625 = $50,625
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJEC
TIVES:
PRIN.EDWA.16.36 – LO 5:7
ACCREDITING ST
ANDARDS:
AACSB Analytic
ACCT.AICPA.BB.07 – Critical Thinking
BUSPROG.03 – Analytic
IMA-Cost Management
OTHER:
Bloom’s: Applying
Principles of Cost Accounting 17th Edition
61. Howard Corporation has two production departments. Curing has 12,000 units in
process at the beginning of the period, 3 / 4 complete. During the period, 45,000
units were received from Crushing, 48,000 units were transferred to Finished Goods,
and 9,000 units were in process at the end of the period, 2/ 3 complete. Cost
information was as follows:
Cost of beginning Work in Process:
Cost in Crushing
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$ 21,640
lOMoARcPSD|29171607
Cost in Curing:
Materials
8,810
Labor
1,190
Factory overhead
2,420
Costs during the month:
Cost of goods received from Crushing
$ 85,520
Cost in Curing:
Materials
53,830
Labor
10,690
Factory overhead
17,560
Total costs to be
accounted for
$201,660
a. Determine the unit cost for the month in Curing.
b. Determine the total cost of the products transferred to Finished Goods.
c. Determine the total cost of the ending Work in Process inventory.
a.
Unit output for
month:
ANSWER:
Finished and
transferred to
Finished Goods
Equivalent
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48,000
lOMoARcPSD|29171607
units of production
of Work in
Proces
s (9,000 units x 2
/ 3 completed)
6,000
Total
equivalent
production
54,000
Unit cost per
month:
Cost from
Crushing Department
Beginni
ng inventory
(12,000 units)
$ 21,6
40
Transfe
rred in this month
(45,000 units)
85,520
Average
cost per unit
(57,000 units)
107,16
0
$1.88
Cost in
Curing:
Materia
ls {(8,810 +
53,830) / 54,000]
$1.16
Labor
[(1,190 + 10,690) /
.22
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lOMoARcPSD|29171607
54,000]
Factory
overhead [(2,420 +
17,560) / 54,000]
.37
$1.75
b.
Cost of goods
transferred to
Finished Goods:
Cost in
Crushing (48,000 x
1.88)
$ 90,2
40
Cost in Curing
(48,000 x 1.75)
84,000
Total
finished and
transferred to
Finished Goods
$174,2
40
c.
Cost of Work in
Process, end of
month:
Cost in
Crushing (9,000 x
$1.88)
$ 16,9
20
Materials
(9,000 x 2 / 3 x
$1.16)
6,960
Labor
(9,000 x 2 / 3 x
1,320
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$.22)
Factory
overhead (9,000 x 2
/ 3 x .37)
2,220
Total
costs in Work in
Process, end of
month
27,420
Total production
costs accounted for
$201,6
60
POINTS:
1
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
ACCREDITING STANDARDS:
OTHER:
PRIN.EDWA.16.37 – LO 5:8
AACSB Analytic
ACCT.AICPA.BB.07 – Critical Thinking
BUSPROG.03 – Analytic
IMA-Cost Management
Bloom’s: Applying
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