Chapter 4 Systems Design: Process Costing
True/False Questions
1. In a process costing system, the costs of one processing department become part of the
costs of the next processing department.
Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 1 Level: Easy
2. The equivalent units of production will be the same under the weighted-average and
the FIFO method if there is no beginning work in process inventory.
Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 2,5 Level: Medium
3. Under the weighted-average method, the equivalent units used to compute the unit
costs of ending inventories relate only to work done during the current period.
Ans: False AACSB: Analytic
AICPA FN: Reporting LO: 2
AICPA BB: Critical Thinking
Level: Hard
4. In order to equitably allocate costs in a process costing system, dissimilar products are
restated in terms of equivalent units by weighting the number of units produced by
their market values.
Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Easy
5. In a process costing system, units transferred to the next processing department are
presumed to be 100% complete with respect to the work performed by the transferring
department.
Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Easy
6. Under a weighted-average process costing system when all materials are added at the
beginning of the production process, the equivalent units for materials is equal to the
units completed and transferred out.
Ans: False AACSB: Analytic
AICPA FN: Reporting LO: 2
AICPA BB: Critical Thinking
Level: Hard
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-7
Chapter 4 Systems Design: Process Costing
7. In calculating cost per equivalent unit under the weighted-average method, prior
period costs are combined with current period costs.
Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 3 Level: Easy
8. The equivalent units of production for a department using the FIFO process costing
method is equal to the number of units completed plus the equivalent units in the
ending inventory.
Ans: False AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 5 Level: Hard
9. The step-down method of cost allocation is more accurate than the direct method since
the step-down method considers services that service departments provide to each
other.
Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4B LO: 8,9 Level: Easy
10. The step-down method and the direct method of cost allocation will result in the same
amount of service department cost being allocated to a given operating department,
although the step-down method is easier to apply than the direct method.
Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4B LO: 8,9 Level: Medium
11. The order in which the costs of service departments are allocated will affect the
amounts allocated to an operating department when the direct method is used.
Ans: False AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4B LO: 8 Level: Medium
12. The units in beginning work in process inventory plus the units started into production
must equal the units transferred out of the department plus the units in ending work in
process inventory.
Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 10 Level: Easy
4-8
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
13. In a process costing system, direct labor cost combined with manufacturing overhead
cost is known as conversion cost.
Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 10 Level: Easy
14. Process costing is employed in industries that produce basically homogeneous
products such as bricks, flour, or cement but would not be appropriate for assemblytype operations such as those that manufacture computers.
Ans: False AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 10 Level: Medium
15. Process costing is used where many different products are produced each period to
customer specifications.
Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 10 Level: Easy
Multiple Choice Questions
16. Which of the following statements related to job-order costing and process costing are
true?
A) Under both costing methods, manufacturing overhead costs are included in the
computation of unit product costs.
B) Under both costing methods, the journal entry to record the completion of
production will involve crediting a work in process account.
C) Under both costing methods, the journal entry to record the cost of goods sold
will involve crediting the finished goods account.
D) All of the above are true.
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 1 Level: Hard
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-9
Chapter 4 Systems Design: Process Costing
17. The completion of goods is recorded as a decrease in the work in process inventory
account when using:
A)
B)
C)
D)
Job-order costing Process costing
Yes
No
Yes
Yes
No
Yes
No
No
Ans: B AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 1 Level: Easy Source: CPA, adapted
18. In process costing, a separate work in process account is kept for each:
A) individual order.
B) equivalent unit.
C) processing department.
D) cost category (i.e., materials, conversion cost).
Ans: C AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 1 Level: Easy
19. The weighted-average method of process costing differs from the FIFO method of
process costing in that the weighted-average method:
A) does not consider the degree of completion of beginning work in process
inventory when computing equivalent units of production.
B) considers ending work in process inventory to be fully complete.
C) will always yield a higher cost per equivalent unit.
D) All of the above.
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 2,3,5,6 Level: Hard
4-10
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
20. Which of the following are needed to compute equivalent units for conversion costs
under the weighted-average method of process costing?
A)
B)
C)
D)
Percentage completion of
beginning work in process
Yes
No
Yes
No
Percentage completion of
ending work in process
Yes
Yes
No
No
Ans: B AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Easy
21. Malcolm Company uses a weighted-average process costing system. All materials at
Malcolm are added at the beginning of the production process. The equivalent units
for materials at Malcolm would be the sum of:
A) units in ending work in process and the units started.
B) units in beginning work in process and the units started.
C) units in ending work in process and the units started and completed.
D) units in beginning work in process and the units started and completed.
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Hard
22. In the computation of costs per equivalent unit, the weighted-average method of
process costing considers:
A) costs incurred during the current period only.
B) costs incurred during the current period plus cost of ending work in process
inventory.
C) costs incurred during the current period plus cost of beginning work in process
inventory.
D) costs incurred during the current period less cost of beginning work in process
inventory.
Ans: C AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 3 Level: Easy Source: CPA, adapted
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-11
Chapter 4 Systems Design: Process Costing
23. Which of the following are needed to compute the cost per equivalent unit for
materials under the weighted-average method of process costing?
A)
B)
C)
D)
Material cost assigned to beginning
work in process last period
Yes
No
Yes
No
Material cost added to production
during the current period
Yes
Yes
No
No
Ans: A AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 3 Level: Medium
24. Under which of the following conditions will the FIFO method of process costing
result in the same amount of cost being transferred to the next department as the
weighted-average method?
A) When the beginning and ending inventories are each fifty percent complete.
B) When there is no beginning inventory.
C) When there is no ending inventory.
D) When units in the beginning inventory are all completed and transferred at the
same time.
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 4,7 Level: Hard
Source: CMA, adapted
25. In order to compute equivalent units of production using the FIF0 method of process
costing, work for the period must be broken down into parts:
A) completed during the period and units in ending inventory.
B) completed from beginning inventory, started and completed during the month,
and units in ending inventory.
C) started during the period and units transferred out during the period.
D) processed during the period and units completed during the period.
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium
Source: CPA, adapted
4-12
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
26. Which of the following methods of allocating service departments take into account
all of the effects of interdepartmental services?
A)
B)
C)
D)
Direct Step-Down
Yes
Yes
Yes
No
No
Yes
No
No
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4B LO: 8,9 Level: Medium
27. All of the following statements are correct when referring to process costing except:
A) Process costing would be appropriate for a jeweler who makes custom jewelry
to order.
B) A process costing system has the same basic purposes as a job-order costing
system.
C) Units produced are indistinguishable from each other.
D) Costs are accumulated by department.
Ans: A AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 10 Level: Medium
28. For which of the following would it be best to use an operation costing system?
A) home remodeling
B) automobile production
C) cement used for roadways
D) trash bags used for yard waste
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 10 Level: Medium
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-13
Chapter 4 Systems Design: Process Costing
29. Health Beverage Company uses a process costing system to collect costs related to the
production of its celery flavored cola. The cola is first processed in a Mixing
Department at Health and is then transferred out and finished up in the Bottling
Department. The finished cases of cola are then transferred to Finished Goods
Inventory. The following information relates to Health's two departments for the
month of January:
Mixing Bottling
Cases of cola in work in process, January 1 ..................... 10,000
3,000
Cases of cola completed/transferred out during January.. 77,000
?
Cases of cola in work in process, January 31 ................... 4,000
8,000
How many cases of cola were completed and transferred to Finished Goods Inventory
during January?
A) 66,000
B) 71,000
C) 72,000
D) 74,000
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 1 Level: Medium
Solution:
To solve for units transferred:
+ Work in process, beginning ................................................
+ Units started into production during the month ..................
− Work in process, ending .....................................................
= Units completed and transferred out during the month ......
4-14
3,000
77,000
8,000
72,000
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
30. The Assembly Department started the month with 83,000 units in its beginning work
in process inventory. An additional 334,000 units were transferred in from the prior
department during the month to begin processing in the Assembly Department. There
were 34,000 units in the ending work in process inventory of the Assembly
Department.
How many units were transferred to the next processing department during the month?
A) 417,000
B) 285,000
C) 451,000
D) 383,000
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 1 Level: Easy
Solution:
To solve for units transferred:
+ Work in process, beginning ............................................ 83,000
+ Units started into production during the month .............. 334,000
− Work in process, ending ................................................. 34,000
=Units completed and transferred out during the month ... 383,000
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-15
Chapter 4 Systems Design: Process Costing
31. Colby Company has a process costing system in which the weighted-average method
is used. The company adds all materials at the beginning of the process in the Molding
Department, which is the first of two stages of its production process. Information
concerning the materials used in the Molding Department during March is as follows:
Units
Work in process at March 1 ............................................ 22,000
Units started during March .............................................. 90,000
Units completed and transferred to next department
during March................................................................ 97,000
Materials
Costs
$11,000
$46,120
What was the materials cost of the work in process inventory at March 31?
A) $11,220
B) $7,500
C) $5,100
D) $7,650
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2,3 Level: Medium Source: CPA, adapted
4-16
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Solution:
To solve for ending work in process:
+ Work in process, beginning .................................................
+ Units started into production during the month ...................
− Units completed and transferred out during the month .......
= Work in process, ending ......................................................
22,000
90,000
97,000
15,000
Equivalent units of production
Materials
Transferred to next department ..........................................
97,000
Ending work in process (materials: 15,000 units × 100%
complete) ........................................................................
15,000
Equivalent units of production ...........................................
112,000
Cost per Equivalent Unit
Cost of beginning work in process .....................................
Cost added during the period..............................................
Total cost (a) .......................................................................
Materials
$11,000
46,120
$57,120
Equivalent units of production (b) ......................................
Cost per equivalent unit, (a) ÷ (b) ......................................
112,000
$0.51
Materials
Ending work in process inventory:
Equivalent units of production (materials: 15,000 units ×
100% complete; conversion: 15,000 units × %
complete) ........................................................................
Cost per equivalent unit ......................................................
Cost of ending work in process inventory ..........................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
15,000
$0.51
$7,650
4-17
Chapter 4 Systems Design: Process Costing
32. Barnett Company uses the weighted-average method in its process costing system.
The company adds materials at the beginning of the process in Department M.
Conversion costs were 75% complete with respect to the 4,000 units in work in
process at May 1 and 50% complete with respect to the 6,000 units in work in process
at May 31. During May, 12,000 units were completed and transferred to the next
department. An analysis of the costs relating to work in process at May 1 and to
production activity for May follows:
Materials Conversion
Work in process 5/1 .......................
$13,800
$3,740
Costs added during May ................
$42,000
$26,260
The total cost per equivalent unit for May was:
A) $5.02
B) $5.10
C) $5.12
D) $5.25
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2,3 Level: Medium
Solution:
Equivalent units of production
Materials Conversion
Transferred to next department .........................
12,000
12,000
Ending work in process (materials: 6,000 units
× 100% complete; conversion: 6,000 units ×
50% complete) ...............................................
6,000
3,000
Equivalent units of production ..........................
18,000
15,000
Cost per Equivalent Unit
Materials Conversion Total
Cost of beginning work in process .................... $13,800
$ 3,740
Cost added during the period.............................
42,000
26,260
Total cost (a) ...................................................... $55,800
$30,000
Equivalent units of production (b) .....................
Cost per equivalent unit, (a) ÷ (b) .....................
4-18
18,000
$3.10
15,000
$2.00
$5.10
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
33. Maurice Company uses the weighted-average method in its process costing system.
The company adds materials at the beginning of the process in the Forming
Department, which is the first of two stages of its production process. Information
concerning the materials used in the Forming Department in April follows:
Units
Work in process at April 1 .............................................. 12,000
Units started during April ................................................ 100,000
Units completed and transferred to next department
during April.................................................................. 88,000
Materials
Costs
$6,000
$51,120
What was the materials cost of the work in process at April 30?
A) $6,120
B) $11,040
C) $12,000
D) $12,240
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2,3 Level: Medium Source: CPA, adapted
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-19
Chapter 4 Systems Design: Process Costing
Solution:
To solve for ending work in process:
+ Work in process, beginning ............................................ 12,000
+ Units started into production during the month .............. 100,000
− Units completed and transferred out during the month .. 88,000
= Work in process, ending ................................................. 24,000
Equivalent units of production
Materials
Transferred to next department ..........................................
88,000
Ending work in process (materials: 24,000 units × 100%
complete) ........................................................................
24,000
Equivalent units of production ...........................................
112,000
Cost per Equivalent Unit
Cost of beginning work in process .....................................
Cost added during the period..............................................
Total cost (a) .......................................................................
Materials
$ 6,000
51,120
$57,120
Equivalent units of production (b) ......................................
Cost per equivalent unit, (a) ÷ (b) ......................................
112,000
$0.51
Materials
Ending work in process inventory:
Equivalent units of production (materials: 24,000 units ×
100% complete) ..............................................................
Cost per equivalent unit ......................................................
Cost of ending work in process inventory ..........................
4-20
24,000
$0.51
$12,240
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
34. Destry Company uses the weighted-average method in its process costing system. The
first processing department, the Welding Department, started the month with 10,000
units in its beginning work in process inventory that were 30% complete with respect
to conversion costs. The conversion cost in this beginning work in process inventory
was $19,200. An additional 60,000 units were started into production during the
month. There were 19,000 units in the ending work in process inventory of the
Welding Department that were 70% complete with respect to conversion costs. A total
of $380,060 in conversion costs were incurred in the department during the month.
What would be the cost per equivalent unit for conversion costs for the month?
(Round off to three decimal places.)
A) $6.400
B) $6.334
C) $6.209
D) $4.811
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2,3 Level: Medium
Solution:
To solve for units transferred:
+ Work in process, beginning .................................................
+ Units started into production during the month ...................
− Work in process, ending ......................................................
= Units completed and transferred out during the month .......
10,000
60,000
19,000
51,000
Equivalent units of production
Conversion
Transferred to next department ........................................
51,000
Ending work in process (conversion: 19,000 units × 70%
complete) ......................................................................
13,300
Equivalent units of production .........................................
64,300
Cost per Equivalent Unit
Conversion
Cost of beginning work in process ...................................
$ 19,200
Cost added during the period............................................
380,060
Total cost (a) .....................................................................
$399,260
Equivalent units of production (b) ....................................
Cost per equivalent unit, (a) ÷ (b) ....................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
64,300
$6.209
4-21
Chapter 4 Systems Design: Process Costing
35. Limber Company uses the weighted-average method in its process costing system.
Operating data for the first processing department for the month of June appear below:
Percent
Complete with
Respect to
Units
Conversion
Beginning work in process inventory ........ 18,000
80%
Started into production during June .......... 81,000
Ending work in process inventory ............. 17,000
80%
According to the company's records, the conversion cost in beginning work in process
inventory was $15,264 at the beginning of June. Additional conversion costs of
$68,208 were incurred in the department during the month.
What was the cost per equivalent unit for conversion costs for the month? (Round off
to three decimal places.)
A) $0.873
B) $0.696
C) $0.842
D) $1.060
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2,3 Level: Medium
4-22
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Solution:
To solve for units transferred:
+ Work in process, beginning .......................................................................
18,000
+ Units started into production during the month .........................................
81,000
− Work in process, ending ............................................................................
17,000
= Units completed and transferred out during the month .............................
82,000
Equivalent units of production
Transferred to next department ..........................................
Ending work in process
(conversion: 17,000 units × 80% complete) ...................
Equivalent units of production ...........................................
Conversion
82,000
13,600
95,600
Cost per Equivalent Unit
Conversion
Cost of beginning work in process .....................................
$15,264
Cost added during the period..............................................
68,208
Total cost (a) .......................................................................
$83,472
Equivalent units of production (b) ......................................
Cost per equivalent unit, (a) ÷ (b) ......................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
95,600
$0.873
4-23
Chapter 4 Systems Design: Process Costing
36. Roy Company manufactures a product in Departments A and B. Materials are added at
the beginning of the process in Department B. Roy uses the weighted-average method
in its process costing system. Conversion costs for Department B were 50% complete
with respect to the 6,000 units in the beginning work in process and 75% complete
with respect to the 8,000 units in the ending work in process. A total of 12,000 units
were completed and transferred out of Department B during February. An analysis of
the costs in Department B for February follows:
Transferred In Materials Conversion
Work in process, February 1 .........
$12,000
$2,500
$1,000
Costs added during February.........
$29,000
$5,500
$5,000
The total cost per equivalent unit during February was closest to:
A) $2.75
B) $2.78
C) $2.82
D) $2.85
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2,3 Level: Medium Source: CPA, adapted
Solution:
Transferred to next department .........................
Ending work in process:
Materials: 8,000 units × 100% complete ........
Conversion: 8,000 units × 75% complete ......
Equivalent units of production ..........................
Work in process, beginning ..
Cost added during the month
Total cost (a) .........................
Equivalent units (above) (b) .
Cost per equivalent unit
(a) ÷ (b)..............................
4-24
Materials
12,000
8,000
20,000
Transferred
In
Materials
$12,000
$2,500
29,000
5,500
$41,000
$8,000
20,000
20,000
$2.05
Conversion
12,000
$0.40
6,000
18,000
Conversion
$1,000
5,000
$6,000
18,000
Total
$0.33
$2.78
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
37. Hammoudi Company uses the weighted-average method in its process costing system.
The first processing department, the Welding Department, started the month with
16,000 units in its beginning work in process inventory that were 90% complete with
respect to conversion costs. The conversion cost in this beginning work in process
inventory was $61,920. An additional 53,000 units were started into production during
the month and 45,000 units were completed in the Welding Department and
transferred to the next processing department. There were 24,000 units in the ending
work in process inventory of the Welding Department that were 70% complete with
respect to conversion costs. A total of $194,340 in conversion costs were incurred in
the department during the month.
What would be the cost per equivalent unit for conversion costs for the month?
(Round off to three decimal places.)
A) $4.300
B) $4.147
C) $2.524
D) $3.667
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2,3 Level: Medium
Solution:
Equivalent units of production
Conversion
Transferred to next department ......................................................
45,000
Ending work in process
(conversion: 24,000 units × 70% complete) ...............................
16,800
Equivalent units of production .......................................................
61,800
Cost per Equivalent Unit
Cost of beginning work in process .................................................
Cost added during the period..........................................................
Total cost (a) ...................................................................................
Conversion
$ 61,920
194,340
$256,260
Equivalent units of production (b)..................................................
Cost per equivalent unit, (a) ÷ (b) ..................................................
61,800
$4.147
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-25
Chapter 4 Systems Design: Process Costing
38. Paquet Company uses the weighted-average method in its process costing system. The
Molding Department is the second department in its production process. The data
below summarize the department's operations in January.
Percent
Complete with
Respect to
Units
Conversion
7,700
40%
Beginning work in process inventory ....................
Transferred in from the prior .................................
department during January .................................... 56,000
Completed and transferred to the next ..................
department during January .................................... 58,400
Ending work in process inventory ......................... 5,300
90%
The accounting records indicate that the conversion cost that had been assigned to
beginning work in process inventory was $16,940 and a total of $347,320 in
conversion costs were incurred in the department during January.
What was the cost per equivalent unit for conversion costs for January in the Molding
Department? (Round off to three decimal places.)
A) $5.500
B) $5.666
C) $5.766
D) $6.202
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2,3 Level: Medium
Solution:
Units transferred out .....................................................................
Add: equivalent units in the ending inventory (5300 × 90%
complete)...................................................................................
Equivalent units of production .....................................................
Cost in the beginning inventory ...................................................
Cost added during the month ........................................................
Total cost ......................................................................................
$364,260 ÷ 63,170 units = $5.766 per unit
4-26
58,400
4,770
63,170
$ 16,940
347,320
$364,260
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
39. Jimmy Company uses the weighted-average method in its process costing system. The
ending work in process inventory consists of 9,000 units. The ending work in process
inventory is 100% complete with respect to materials and 70% complete with respect
to labor and overhead. If the cost per equivalent unit for the period is $3.75 for
material and $1.25 for labor and overhead, what is the balance of the ending work in
process inventory account?
A) $41,625
B) $33,750
C) $45,000
D) $31,500
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2,4 Level: Medium
Solution:
Ending work in process:
Materials: 9,000 units × 100% complete ....
Conversion: 9,000 units × 70% complete ..
Ending work in process:
Equivalent units of production ...........
Cost per equivalent unit ......................
Cost of ending work in process ..........
Materials
9,000
$3.75
$33,750
9,000
6,300
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Conversion
6,300
$1.25
$7,875
Total
$41,625
4-27
Chapter 4 Systems Design: Process Costing
40. Lawton Company produces canned tomato soup in a single processing department and
has a process costing system in which it uses the weighted-average method. The
company sold 250,000 units in the month of January. Data concerning inventories
follow:
Units
Inventory at January 1:
Work in process ............................................................
None
Finished goods.............................................................. 75,000
Inventory at January 31:
Work in process (conversion 75% complete) .............. 16,000
Finished goods.............................................................. 60,000
What were the equivalent units for conversion costs for January?
A) 235,000
B) 247,000
C) 251,000
D) 253,000
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium Source: CPA, adapted
Solution:
To calculate units transferred out:
Units sold
+ Ending finished goods inventory...........
− Beginning finished goods inventory .....
= Units transferred out ..............................
250,000
60,000
75,000
235,000
Units transferred out .........................................................
Ending work in process (16,000 units × 75% complete)..
Equivalent units of production .........................................
4-28
235,000
12,000
247,000
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
41. Jersey Company has a process costing system in which it uses the weighted-average
method. The equivalent units for conversion costs for the month were 47,500 units.
The beginning work in process inventory consisted of 15,000 units, 60% complete
with respect to conversion costs. The ending work in process inventory consisted of
10,000 units, 75% complete with respect to conversion costs. The number of units
started during the month was:
A) 25,000 units
B) 34,000 units
C) 35,000 units
D) 40,000 units
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Hard
Solution:
Units transferred out ............................................................
Ending work in process (10,000 units × 75% complete).....
Equivalent units for conversion costs ..................................
* Solve backwards: 47,500 − 7,500 = 40,000
40,000 *
7,500
47,500
Units in beginning inventory .................... 15,000
+ Units started........................................... 35,000 *
− Units in ending inventory ...................... 10,000
= Units transferred out .............................. 40,000
* Solve backwards: Units started = 40,000 −15,000 + 10,000 = 35,000
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-29
Chapter 4 Systems Design: Process Costing
42. Boswal Company uses the weighted-average method in its process costing system.
The Assembly Department started the month with 6,000 units in its beginning work in
process inventory that were 80% complete with respect to conversion costs. An
additional 52,000 units were transferred in from the prior department during the month
to begin processing in the Assembly Department. There were 18,000 units in the
ending work in process inventory of the Assembly Department that were 20%
complete with respect to conversion costs.
What were the equivalent units for conversion costs in the Assembly Department for
the month?
A) 43,600
B) 40,000
C) 38,800
D) 64,000
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
Solution:
To solve for units transferred:
Work in process, beginning ................................................
+ Units started into production during the month ..............
− Work in process, ending .................................................
= Units completed and transferred out during the month ..
Transferred to next department .......................................
Ending work in process (18,000 units × 20% complete)
Equivalent units of production ........................................
4-30
6,000
52,000
18,000
40,000
Conversion
40,000
3,600
43,600
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
43. Jolly Company uses the weighted-average method in its process costing system.
Operating data for the Painting Department for the month of April appear below:
Beginning work in process inventory .............................
Transferred in from the prior department during April ..
Ending work in process inventory ..................................
Units
4,700
59,700
7,300
Percent
Complete
with
Respect to
Conversion
90%
80%
What were the equivalent units for conversion costs in the Painting Department for
April?
A) 62,940
B) 62,300
C) 65,540
D) 57,100
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
Solution:
Units in beginning inventory ....................
+ Units started into production .................
− Units in ending inventory ......................
= Units transferred out ..............................
4,700
59,700
7,300
57,100
Equivalent units transferred out....................................
Add: Equivalent units in the ending work in process
inventory (7,300 units × 80% complete) ..................
Equivalent units for conversion costs ...........................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
57,100
5,840
62,940
4-31
Chapter 4 Systems Design: Process Costing
44. Parks Company uses the weighted-average method in its process costing system. At
the start of the year, the company had 5,000 units in process in Department A that
were 60% complete with respect to conversion costs. At the end of the year, 6,500
units were in process, 40% complete with respect to conversion costs. During the year,
30,000 units were completed and transferred on to the next department. The equivalent
units for conversion costs would be:
A) 32,600 units
B) 29,600 units
C) 33,000 units
D) 30,000 units
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Easy
Solution:
Equivalent units transferred out.....................................
Add: Equivalent units in the ending work in process
inventory (6,500 units × 40% complete) ...................
Equivalent units for conversion costs ............................
4-32
30,000
2,600
32,600
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
45. Bart Co. adds materials at the beginning of the process in Department M. The
company uses the weighted-average method in its process costing system. The
following information pertains to Department M's work in process during April:
Work in process, April 1 (conversion 60% complete) ....
Started in April ................................................................
Completed .......................................................................
Work in process, April 30 (conversion 75% complete) ..
Units
3,000
25,000
20,000
8,000
The equivalent units for conversion cost are:
A) 26,000
B) 25,000
C) 24,200
D) 21,800
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium Source: CPA, adapted
Solution:
Equivalent units transferred out....................................
Add: Equivalent units in the ending work in process
inventory (8,000 units × 75% complete) ..................
Equivalent units for conversion costs ...........................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
20,000
6,000
26,000
4-33
Chapter 4 Systems Design: Process Costing
46. Fatas Corporation uses the weighted-average method in its process costing system.
The Assembly Department started the month with 8,000 units in its beginning work in
process inventory that were 20% complete with respect to conversion costs. An
additional 95,000 units were transferred in from the prior department during the month
to begin processing in the Assembly Department. During the month 102,000 units
were completed in the Assembly Department and transferred to the next processing
department. There were 1,000 units in the ending work in process inventory of the
Assembly Department that were 20% complete with respect to conversion costs.
What were the equivalent units for conversion costs in the Assembly Department for
the month?
A) 102,200
B) 100,600
C) 102,000
D) 88,000
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Easy
Solution:
Equivalent units transferred out......................................
Add: Equivalent units in the ending work in process
inventory (1,000 units × 20% complete) ....................
Equivalent units for conversion costs .............................
4-34
102,000
200
102,200
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
47. Natiello Corporation uses the weighted-average method in its process costing system.
Operating data for the Lubricating Department for the month of October appear
below:
Percent
Complete
with Respect
Units to Conversion
9,100
20%
Beginning work in process inventory ..............................
Transferred in from the prior department during
October......................................................................... 38,500
Completed and transferred to the next department
during October ............................................................. 41,000
Ending work in process inventory ................................... 6,600
70%
What were the equivalent units for conversion costs in the Lubricating Department for
October?
A) 41,000
B) 43,120
C) 36,000
D) 45,620
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Easy
Solution:
Units in beginning inventory ..................
+ Units started into production ..................
− Units in ending inventory .......................
= Units transferred out ...............................
9,100
38,500
6,600
41,000
Equivalent units transferred out..................................
Add: Equivalent units in the ending work in process
inventory (6,600 units × 70% complete) ................
Equivalent units for conversion costs .........................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
41,000
4,620
45,620
4-35
Chapter 4 Systems Design: Process Costing
48. Kew Company uses the weighted-average method in its process costing system. The
company had 3,000 units in work in process at April 1 that were 60% complete with
respect to conversion cost. During April, 10,000 units were completed. At April 30,
4,000 units remained in work in process and they were 40% complete with respect to
conversion cost. Direct materials are added at the beginning of the process. How many
units were started during April?
A) 9,000
B) 9,800
C) 10,000
D) 11,000
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium Source: CPA, adapted
Solution:
To solve for units started into production:
+ Work in process, ending .....................................................
+ Units completed and transferred out during the month ......
− Work in process, beginning ................................................
= Units started into production during the month ..................
4-36
4,000
10,000
3,000
11,000
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
49. Pelican Corporation uses a weighted-average process costing system to collect costs
related to production. The following selected information relates to production for
March:
Units completed and transferred out .........
Units in work in process, March 31 ..........
Equivalent units, materials ........................
Equivalent units, conversion costs ............
5,000
800
5,800
5,200
Costs in work in process on March 1 ....................
Costs added to production during March ..............
Total cost ...............................................................
Materials Conversion
$ 2,900
$ 4,680
71,050
131,040
$73,950
$135,720
All materials at Pelican are added at the beginning of the production process.
Conversion costs are incurred uniformly over the production process. What total
amount of cost should be assigned to the units in work in process at the end of March?
A) $14,840
B) $15,420
C) $24,920
D) $25,860
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 3,4 Level: Hard
Solution:
Total cost ..................................................
÷ Equivalent units ........................................
= Cost per equivalent unit ...........................
× Ending inventory
Materials: 800 units × $12.75 ...............
Conversion costs: *200 units × $26.10 .
Materials
$73,950
5,800
$12.75
Conversion
$135,720
5,200
$26.10
$10,200
$5,220 $15,420
Units in work in process, March 31 ...............................................................
Less: Uncompleted as to conversion (5,800 total − 5,200 equivalent units) .
Equivalent units in ending work in process: conversion ...............................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Total
800
600
200
4-37
Chapter 4 Systems Design: Process Costing
50. Kwan Manufacturing Company uses a process costing system. All materials at Kwan
are added at the beginning of the production process. For the month of October,
equivalent units for materials were 40,000 under the weighted-average method and
36,000 under the FIFO method. Kwan's costs for October were as follows:
Cost in beginning work in process (October 1) ............... $ 25,200
Cost added to production during October ....................... 262,800
Total cost ......................................................................... $288,000
What are Kwan’s equivalent costs per equivalent unit for October for materials under
both process costing methods?
A)
B)
C)
D)
Weighted-Average
$6.57
$6.57
$7.20
$7.20
FIFO
$8.00
$7.30
$8.00
$7.30
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 3,6 Level: Medium
Solution:
Total cost ..........................
÷ Equivalent units .............
Cost per equivalent unit ....
4-38
Weighted-Average
$288,000
40,000
$7.20
FIFO
$262,800
36,000
$7.30
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
51. Safia Corporation uses the weighted-average method in its process costing system.
The Fitting Department is the second department in its production process. The data
below summarize the department's operations in March.
Beginning work in process inventory ......................
Transferred in from the prior department during
March ...................................................................
Ending work in process inventory ...........................
Percent
Complete with
Respect to
Units
Conversion
3,300
40%
67,000
5,600
30%
The Fitting Department's cost per equivalent unit for conversion cost for March was
$4.70.
How much conversion cost was assigned to the units transferred out of the Fitting
Department during March?
A) $330,410.00
B) $314,900.00
C) $304,090.00
D) $297,886.00
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 4 Level: Medium
Solution:
+
−
=
×
Units in beginning inventory ..................
Units transferred in .................................
Units in ending inventory .......................
Units transferred out ...............................
Cost per equivalent unit ..........................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
3,300
67,000
5,600
64,700
$4.70
$304,090
4-39
Chapter 4 Systems Design: Process Costing
52. The following data were taken from the accounting records of the Mixing Department
of Kappa Company which uses the weighted-average method in its process costing
system:
Beginning work in process inventory:
Cost...............................................................................
Units .............................................................................
Percentage completion with respect to materials .........
Percentage completion with respect to conversion ......
Units completed and transferred out ...............................
Cost per equivalent unit:
Material ........................................................................
Conversion ...................................................................
$19,000
30,000 units
100%
60%
82,000 units
$1.50
$0.75
The cost of units transferred out was:
A) $184,500
B) $149,500
C) $167,500
D) $145,000
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 4 Level: Medium
Solution:
Cost computation for units transferred out:
82,000 units × ($1.50 + $0.75) = $184,500
4-40
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
53. Wit Company uses the weighted-average method in its process costing system.
Information for the month of May concerning Department A, the first stage of the
company's production process follows:
Work in process, beginning .......................
Current costs added ...................................
Total costs..................................................
Equivalent units .........................................
Costs per equivalent unit ...........................
Goods completed .......................................
Work in process, ending ............................
Materials Conversion
$ 4,000
$ 3,000
20,000
16,000
$24,000
$19,000
100,000
95,000
$0.24
$0.20
90,000 units
10,000 units
Material costs are added at the beginning of the process. The ending work in process is
50% complete with respect to conversion costs. How would the costs be distributed?
A)
B)
C)
D)
Goods completed and transferred out Ending work in process
$39,600
$3,400
$39,600
$4,400
$43,000
$0
$44,000
$3,400
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 4 Level: Medium Source: CPA, adapted
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-41
Chapter 4 Systems Design: Process Costing
Solution:
Transferred to next department ...........
Ending work in process:
Materials: 10,000 units × 100%
complete ........................................
Conversion: 10,000 units × 50%
complete ........................................
Equivalent units of production ............
10,000
100,000
5,000
95,000
Work in process, beginning .................
Cost added during the month ...............
Total cost (a) ........................................
Equivalent units (above) (b) ................
Cost per equivalent unit (a) ÷ (b) ........
Materials Conversion
$ 4,000
$ 3,000
20,000
16,000
$24,000
$19,000
100,000
95,000
$0.24
$0.20
Units transferred out ............................
Cost per equivalent unit .......................
Cost transferred out .............................
Materials Conversion
90,000
90,000
$0.24
$0.20
$21,600
$18,000
Equivalent units of production:
ending work in process ....................
Cost per equivalent unit .......................
Cost of ending work in process ...........
4-42
Materials Conversion
90,000
90,000
Total
$39,600
Materials
Conversion
Total
10,000
$0.24
$2,400
5,000
$0.20
$1,000
$3,400
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
54. Lap Company uses the weighted-average method in its process costing system. The
beginning work in process inventory in a particular department consisted of 80,000
units, 100% complete with respect to materials and 25% complete with respect to
conversion costs. The total dollar value of this inventory was $226,000. During the
month, 150,000 units were transferred out of the department. The costs per equivalent
unit for the month were $2.00 for materials and $3.50 for conversion costs. The value
of the units completed and transferred out of the department was:
A) $681,000
B) $765,000
C) $821,000
D) $825,000
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 4 Level: Medium
Solution:
150,000 units × ($2.00 + $3.50) = $825,000
55. Bly Company uses the weighted-average method in its process costing system. During
March, Bly Company's Department Y costs per equivalent unit were as follows:
Materials ................ $1
Conversion............. $3
Transferred-in ........ $5
There were 4,000 units (40% complete with respect to conversion cost and 0%
complete with respect to materials cost) in Work in Process at March 31. The total
costs assigned to the March 31, Work in Process inventory should be:
A) $36,000
B) $28,800
C) $27,200
D) $24,800
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 4 Level: Hard Source: CPA, adapted
Solution:
Ending work in process: Conversion costs (4,000 × 40%) × $3 ....
Transferred in costs (4,000 × $5) ...................................................
Total cost: Work in process, March 31 ..........................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
$ 4,800
20,000
$24,800
4-43
Chapter 4 Systems Design: Process Costing
56. The following information was provided by Fystro Corporation for the month of
March. Fystro uses the weighted-average method in its process costing system.
Total cost transferred out during March ................ $74,000
Cost in Work in Process, March 1 ......................... $12,000
Cost in Work in Process, March 31 ....................... $5,000
How much cost did Fystro add to production during March?
A) $57,000
B) $62,000
C) $67,000
D) $81,000
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 4 Level: Medium
Solution:
Work in process, ending ......................................................
+ Cost transferred out during the month .............................
− Work in process, beginning .............................................
= Cost added to production during the month .....................
4-44
$ 5,000
74,000
12,000
$67,000
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
57. Rangan Corporation uses the weighted-average method in its process costing system.
The Molding Department is the second department in its production process. The data
below summarize the department's operations in January.
Units
Beginning work in process inventory ........ 2,100
Transferred in from the prior department
during January........................................ 76,000
Completed and transferred to the next
department during January..................... 74,200
Ending work in process inventory ............. 3,900
Percent
Complete with
Respect to
Conversion
50%
70%
The Molding Department's cost per equivalent unit for conversion cost for January
was $3.91.
How much conversion cost was assigned to the ending work in process inventory in
the Molding Department for January?
A) $10,674.30
B) $15,249.00
C) $4,574.70
D) $4,105.50
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 4 Level: Easy
Solution:
Equivalent units in ending inventory: 3,900 units × 70%
complete ..............................................................................
Conversion costs in ending work in process inventory ..........
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
2,730
× $3.91
$10,674.30
4-45
Chapter 4 Systems Design: Process Costing
58. Merckley Company has a process costing system and uses the FIFO method. For May,
the company's beginning work in process inventory was 80% complete with respect to
conversion, and the ending work in process inventory was 50% complete with respect
to conversion. Information on units processed and conversion costs incurred during
May follow:
Conversion
Units
Cost
25,000
$22,000
Work in process inventory on May 1 .....................
Units started into production, and costs incurred
during the month ................................................ 135,000
Units completed and transferred to finished
goods during the month ...................................... 100,000
Work in process inventory on May 31 ................... 60,000
$143,000
The amount of conversion cost in the ending work in process inventory was:
A) $33,000
B) $38,100
C) $39,000
D) $45,000
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 5,6,7 Level: Medium
Source: CMA, adapted
4-46
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Solution:
Equivalent Units of Production
Conversion
To complete beginning work in process (conversion:
25,000 units × 20% complete).......................................
Units started and completed during the period (135,000
units started − 60,000 units in ending inventory) ..........
75,000
Ending work in process (60,000 units × 50% complete) ..
Equivalent units of production ..........................................
30,000
110,000
5,000
Cost per Equivalent Unit
Cost added during the period (a) .......................................
Equivalent units of production (b) ....................................
Cost per equivalent unit (a) ÷ (b) ......................................
Conversion
$143,000
110,000
$1.30
Costs of Ending Work in Process Inventory and Units Transferred Out
Conversion
Ending work in process inventory:
Equivalent units of production ..........................................
30,000
Cost per equivalent unit ....................................................
$1.30
Cost of ending work in process inventory ........................
$39,000
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-47
Chapter 4 Systems Design: Process Costing
59. Doofus Music Company manufactures air guitars and uses a FIFO process costing
system to collect costs related to its production. Doofus only accounts for conversion
costs because the only direct material, air, has no cost. The following information
relates to September production:
Work in process, September 1 .......
Units started into production .........
Work in process, September 30 .....
Number
of units
20,000
90,000
8,000
Percent complete
with respect to
conversion costs
20%
75%
Conversion cost in work in process on September 1........... $ 263,120
Conversion cost added to production during September..... 5,262,400
Total cost ............................................................................. $5,525,520
What amount of cost should Doofus assign to the units (guitars) in work in process on
September 30?
A) $125,580
B) $303,600
C) $318,780
D) $343,200
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 5,6,7 Level: Hard
4-48
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Solution:
Equivalent Units of Production
Materials Conversion
To complete beginning work in process
(materials: 20,000 units × 100%
complete; conversion: 20,000 units ×
80% complete) ..........................................
Units started and completed during the
period (90,000 units started − 8,000 units
in ending inventory) .................................
Ending work in process (materials: 8,000
units × 0% complete; conversion: 8,000
units × 75% complete) ..............................
Equivalent units of production .....................
20,000
16,000
82,000
82,000
0
102,000
6,000
104,000
Cost per Equivalent Unit
Cost added during the period (a) ..................
Equivalent units of production (b) ...............
Cost per equivalent unit (a) ÷ (b) .................
Materials Conversion
$0 $5,262,400
102,000
104,000
$0.00
$50.60
Costs of Ending Work in Process Inventory
and Units Transferred Out
Materials Conversion
Ending work in process inventory:
Equivalent units of production .....................
Cost per equivalent unit ...............................
Cost of ending work in process inventory ...
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
0
$0.00
$0
Total
6,000
$50.60
$303,600 $303,600
4-49
Chapter 4 Systems Design: Process Costing
60. Edwin Company uses the FIFO method in its process costing system. The first
processing department, the Welding Department, started the month with 22,000 units
in its beginning work in process inventory that were 20% complete with respect to
conversion costs. The conversion cost in this beginning work in process inventory was
$24,200. An additional 96,000 units were started into production during the month.
There were 20,000 units in the ending work in process inventory of the Welding
Department that were 90% complete with respect to conversion costs. A total of
$585,900 in conversion costs were incurred in the department during the month.
What would be the cost per equivalent unit for conversion costs? (Round off to three
decimal places.)
A) $6.103
B) $5.170
C) $5.500
D) $5.250
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 5,6 Level: Medium
Solution:
Equivalent Units of Production
Conversion
To complete beginning work in process (22,000 units × 80%
complete) ...............................................................................
Units started and completed during the period (96,000 units
started − 20,000 units in ending inventory) ...........................
Ending work in process (20,000 units × 90% complete) ..........
Equivalent units of production ..................................................
17,600
76,000
18,000
111,600
Cost per Equivalent Unit
Cost added during the period (a) ...............................................
Equivalent units of production (b).............................................
Cost per equivalent unit (a) ÷ (b) ..............................................
4-50
Conversion
$585,900
111,600
$5.250
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
61. Makridakis Corporation uses the FIFO method in its process costing system.
Operating data for the Casting Department for the month of September appear below:
Percent
Complete
with Respect
Units to Conversion
Beginning work in process inventory .............................. 17,000
10%
Transferred in from the prior department during
September .................................................................... 50,000
Ending work in process inventory ................................... 17,000
40%
According to the company's records, the conversion cost in beginning work in process
inventory was $3,434 at the beginning of September. Additional conversion costs of
$117,914 were incurred in the department during the month.
What would be the cost per equivalent unit for conversion costs for September?
(Round off to three decimal places.)
A) $2.020
B) $1.811
C) $2.140
D) $2.358
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 5,6 Level: Medium
Solution:
Equivalent Units of Production
Conversion
To complete beginning work in process (17,000 units ×
90% complete) ............................................................
Units started and completed during the period (50,000
units started − 17,000 units in ending inventory) .......
Ending work in process (17,000 units × 40% complete)
Equivalent units of production .......................................
15,300
33,000
6,800
55,100
Cost per Equivalent Unit
Cost added during the period (a) ....................................
Equivalent units of production (b)..................................
Cost per equivalent unit (a) ÷ (b) ...................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Conversion
$117,914
55,100
$2.140
4-51
Chapter 4 Systems Design: Process Costing
62. Krumbly Company uses the FIFO method in its process costing system. At the
beginning of the month, Department D's work in process inventory contained 2,000
units. These units were fully complete with respect to materials and 40% complete
with respect to conversion costs, with a total cost at that point of $3,600. During the
month, conversion costs amounted to $8 per equivalent unit. If all 2,000 units are fully
complete by the end of the month, their total cost by that time will be:
A) $19,600
B) $10,000
C) $13,200
D) $9,000
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 5,6 Level: Medium
Solution:
Cost from beginning inventory......................................................................
$ 3,600
Cost to finish beginning inventory: (1 − 40%) = 60% ×
2,000 = 1,200 EU × $8 cost per EU ...........................................................
9,600
Total cost of units from beginning inventory ................................................
$13,200
4-52
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
63. Inka Corporation uses the FIFO method in its process costing system. The first
processing department, the Forming Department, started the month with 13,000 units
in its beginning work in process inventory that were 20% complete with respect to
conversion costs. The conversion cost in this beginning work in process inventory was
$4,160. An additional 97,000 units were started into production during the month and
97,000 units were completed and transferred to the next processing department. There
were 13,000 units in the ending work in process inventory of the Forming Department
that were 30% complete with respect to conversion costs. A total of $136,637 in
conversion costs were incurred in the department during the month.
What would be the cost per equivalent unit for conversion costs for the month?
(Round off to three decimal places.)
A) $1.390
B) $1.600
C) $1.409
D) $1.280
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 5,6 Level: Medium
Solution:
Equivalent Units of Production
To complete beginning work in process (13,000 units × 80% complete)
Units started and completed during the period (97,000 units started −
13,000 units in ending inventory) .........................................................
Ending work in process (13,000 units × 30% complete) ..........................
Equivalent units of production ..................................................................
Conversion
10,400
84,000
3,900
98,300
Cost per Equivalent Unit
Cost added during the period (a) ...............................................................
Equivalent units of production (b) ............................................................
Cost per equivalent unit (a) ÷ (b) ..............................................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Conversion
$136,637
98,300
$1.390
4-53
Chapter 4 Systems Design: Process Costing
64. Qvr Corporation uses the FIFO method in its process costing system. Operating data
for the Cutting Department for the month of March appear below:
Units
Beginning work in process inventory .............................. 2,500
Transferred in from the prior department during March . 45,000
Completed and transferred to the next department
during March................................................................ 40,500
Ending work in process inventory ................................... 7,000
Percent Complete
with Respect to
Conversion
60%
70%
According to the company's records, the conversion cost in beginning work in process
inventory was $3,600 at the beginning of March. Additional conversion costs of
$99,477 were incurred in the department during the month.
What would be the cost per equivalent unit for conversion costs for March? (Round
off to three decimal places.)
A) $2.211
B) $2.400
C) $2.170
D) $2.266
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 5,6 Level: Medium
Solution:
Equivalent Units of Production
Conversion
To complete beginning work in process (2,500 units × 40%
complete) ................................................................................
Units started and completed during the period (45,000 units
started − 7,000 units in ending inventory) ..............................
Ending work in process (7,000 units × 70% complete) .............
Equivalent units of production ...................................................
1,000
38,000
4,900
43,900
Cost per Equivalent Unit
Cost added during the period (a) ................................................
Equivalent units of production (b)..............................................
Cost per equivalent unit (a) ÷ (b) ...............................................
4-54
Conversion
$99,477
43,900
$2.266
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
65. Marston Company uses the FIFO method in its process costing system. The equivalent
units for March for conversion costs totaled 37,500 units. The beginning work in
process inventory in March consisted of 15,000 units, 60% complete with respect to
conversion costs. The ending work in process inventory in March consisted of 10,000
units, 75% complete with respect to conversion costs. The number of units started
during the month was:
A) 41,500 units
B) 34,000 units
C) 25,000 units
D) 72,500 units
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 5 Level: Hard
Solution:
Equivalent Units of Production Calculation:
To complete beginning work in process (15,000 units × 40%
complete) ............................................................................................. 6,000
Units started and completed during the period (? units started − 10,000
units in ending inventory) ....................................................................
?
Ending work in process (10,000 units × 75% complete) ........................ 7,500
Equivalent units of production ................................................................ 37,500
To solve for Units started and completed during the period, solve algebraically:
6,000 + ? + 7,500 = 37,500
? = 24,000
Next:
Units started and completed = units started – 10,000 units from ending inventory
24,000 = units started – 10,000
= 34,000
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-55
Chapter 4 Systems Design: Process Costing
66.Catin Company uses the FIFO method in its process costing system. The Assembly
Department started the month with 7,000 units in its beginning work in process
inventory that were 40% complete with respect to conversion costs. An additional
60,000 units were transferred in from the prior department during the month to begin
processing in the Assembly Department. There were 19,000 units in the ending work
in process inventory of the Assembly Department that were 90% complete with
respect to conversion costs.
What were the equivalent units for conversion costs in the Assembly Department for
the month?
A) 48,000
B) 72,000
C) 62,300
D) 65,100
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium
Solution:
+
+
−
=
To solve for units transferred:
Work in process, beginning ...............................................
Units started into production during the month .................
Work in process, ending ....................................................
Units completed and transferred out during the month .....
7,000
60,000
19,000
48,000
Equivalent Units of Production
Conversion
To complete beginning work in process (7,000 units × 60%
complete) .............................................................................
Units started and completed during the period (60,000 units
started − 19,000 units in ending inventory) .........................
Ending work in process (19,000 units × 90% complete) ........
Equivalent units of production ................................................
4-56
4,200
41,000
17,100
62,300
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
67. Kavadias Corporation uses the FIFO method in its process costing system. Operating
data for the Enameling Department for the month of May appear below:
Beginning work in process inventory ........
Transferred in from the prior .....................
department during May .............................
Ending work in process inventory .............
Units
7,400
Percent Complete
with Respect to
Conversion
80%
75,200
3,000
90%
What were the equivalent units for conversion costs in the Enameling Department for
May?
A) 79,600
B) 82,300
C) 76,380
D) 70,800
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium
Solution:
+
+
−
=
To solve for units transferred:
Work in process, beginning ...............................................
Units started into production during the month .................
Work in process, ending ....................................................
Units completed and transferred out during the month .....
7,400
75,200
3,000
79,600
Equivalent Units of Production
Conversion
To complete beginning work in process (7,400 units × 20%
complete) ................................................................................
Units started and completed during the period (75,200 units
started − 3,000 units in ending inventory) ..............................
Ending work in process (3,000 units × 90% complete) .............
Equivalent units of production ...................................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
1,480
72,200
2,700
76,380
4-57
Chapter 4 Systems Design: Process Costing
68. Kale Company uses the FIFO method in its process costing system. At the beginning
of March, the inventory in the Blending Processing Center consisted of 3,000 units,
90% complete with respect to conversion costs. At the end of the month, the inventory
consisted of 2,000 units that were 60% complete with respect to conversion costs. If
10,000 units were transferred to the next processing center during the period, the
equivalent units for conversion costs would be:
A) 8,500 units
B) 11,500 units
C) 10,500 units
D) 9,500 units
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium
Solution:
+
+
−
=
To solve for units started into production:
Work in process, ending ....................................................
Units completed and transferred out during the month .....
Work in process, beginning ...............................................
Units started into production during the month .................
2,000
10,000
3,000
9,000
Equivalent Units of Production
Conversion
To complete beginning work in process (3,000 units × 10%
complete) ................................................................................
Units started and completed during the period (9,000 units
started − 2,000 units in ending inventory) ..............................
Ending work in process (2,000 units × 60% complete) .............
Equivalent units of production ...................................................
4-58
300
7,000
1,200
8,500
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
69. Billings Company uses the FIFO method in its process costing system. On July 1,
Department A had 10,000 units in process that were 80% complete with respect to
conversion. On July 31 the department had 8,000 units in process that were 60%
complete with respect to conversion. The department transferred 40,000 units out
during the month, of which 10,000 units came from the beginning work in process
inventory, and 30,000 units were started and completed during the month. All
materials are added at the beginning of the process in Department A. What are the
equivalent units for the month for materials and conversion, respectively?
A) 38,000 units, and 36,800 units
B) 38,000 units, and 38,000 units
C) 48,000 units, and 44,800 units
D) 48,000 units, and 48,000 units
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium
Source: CMA, adapted
Solution:
+
+
−
=
To solve for units started into production:
Work in process, ending ....................................................
Units completed and transferred out during the month .....
Work in process, beginning ...............................................
Units started into production during the month .................
8,000
40,000
10,000
38,000
Equivalent Units of Production
Materials Conversion
To complete beginning work in process (materials:
10,000 units × 0% complete; conversion: 10,000
units × 20% complete) ................................................
Units started and completed during the period (38,000
units started − 8,000 units in ending inventory) .........
Ending work in process (materials: 8,000 units × 100%
complete; conversion: 8,000 units × 60% complete)..
Equivalent units of production .......................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
0
2,000
30,000
30,000
8,000
38,000
4,800
36,800
4-59
Chapter 4 Systems Design: Process Costing
70. Gadroy Corporation uses the FIFO method in its process costing system. The Grinding
Department started the month with 13,000 units in its beginning work in process
inventory that were 80% complete with respect to conversion costs. An additional
52,000 units were transferred in from the prior department during the month to begin
processing in the Grinding Department. During the month 55,000 units were
completed in the Grinding Department and transferred to the next processing
department. There were 10,000 units in the ending work in process inventory of the
Grinding Department that were 70% complete with respect to conversion costs.
What were the equivalent units for conversion costs in the Grinding Department for
the month?
A) 62,000
B) 49,000
C) 55,000
D) 51,600
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium
Solution:
Equivalent Units of Production
Conversion
To complete beginning work in process (13,000 units × 20%
complete) ..............................................................................
Units started and completed during the period (52,000 units
started − 10,000 units in ending inventory) ..........................
Ending work in process (10,000 units × 70% complete) .........
Equivalent units of production .................................................
4-60
2,600
42,000
7,000
51,600
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
71. Outiniki Company uses the FIFO method in its process costing system. Operating data
for the Brazing Department for the month of November appear below:
Percent
Complete with
Respect to
Units
Conversion
3,400
30%
Beginning work in process inventory ..........................
Transferred in from the prior department during
November................................................................. 54,100
Completed and transferred to the next department
during November ..................................................... 52,600
Ending work in process inventory ............................... 4,900
70%
What were the equivalent units for conversion costs in the Brazing Department for
November?
A) 55,010
B) 55,600
C) 56,030
D) 52,600
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium
Solution:
Equivalent Units of Production
Conversion
To complete beginning work in process (3,400 units × 70%
complete) ................................................................................
Units started and completed during the period (54,100 units
started − 4,900 units in ending inventory) ..............................
Ending work in process (4,900 units × 70% complete) .............
Equivalent units of production ...................................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
2,380
49,200
3,430
55,010
4-61
Chapter 4 Systems Design: Process Costing
72. Steven Company uses the FIFO method in its process costing system. The following
data were taken from the accounting records of a particular department for last month:
Beginning work in process inventory: (10,000 units;
materials 100% complete, conversion 60% complete) ..........
Units completed and transferred out during the month .............
Cost per equivalent unit:
Material ..................................................................................
Conversion .............................................................................
$17,500
60,000 units
$2.50
$2.00
The cost of units transferred out of the department during the month is:
A) $270,000
B) $242,500
C) $254,500
D) $250,500
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 7 Level: Medium
Solution:
EU
Total
Cost
Total Materials Conversion
Transferred to the next department:
From beginning work in process* .. 10,000
0
4,000
From started and completed during
month .......................................... 50,000
50,000
50,000
Total EU this period ....................... 60,000
50,000
54,000
Cost per EU ....................................
$2.50
$2.00
Cost from current period (EU ×
Cost per EU) ...............................
$125,000
$108,000 $233,000
Cost from beginning work in
process ........................................
17,500
Total cost of units transferred out
of the department during current
month ..........................................
$250,500
*(Materials=100% complete; 0% needed to complete with respect to materials;
Conversion=60% complete; (1 − 0.6) = 40% × 10,000 units to complete units with
respect to conversion)
4-62
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
73. Teboul Corporation uses the FIFO method in its process costing system. Operating
data for the Curing Department for the month of March appear below:
Units
Beginning work in process inventory .................... 7,900
Transferred in from the prior department during
March ................................................................. 40,000
Completed and transferred to the next department
during March...................................................... 43,900
Ending work in process inventory ......................... 4,000
Percent Complete
with Respect to
Conversion
20%
60%
According to the company's records, the conversion cost in beginning work in process
inventory was $11,850 at the beginning of March. The cost per equivalent unit for
conversion costs for March was $7.40.
How much conversion cost would be assigned to the units completed and transferred
out of the department during March?
A) $325,018
B) $313,168
C) $296,000
D) $324,860
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 7 Level: Medium
Solution:
Equivalent Units of Production
Materials Conversion
To complete beginning work in process
(materials: 7,900 units × 100% complete;
conversion: 7,900 units × 80% complete) ........
Units started and completed during the period
(40,000 units started − 4,000 units in ending
inventory) .........................................................
Ending work in process (materials: 4,000 units ×
% complete; conversion: 4,000 units × 60%
complete) ..........................................................
Equivalent units of production .............................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
7,900
6,320
36,000
36,000
0
43,900
2,400
44,720
4-63
Chapter 4 Systems Design: Process Costing
Cost per Equivalent Unit
Cost added during the period (a)..........................
Equivalent units of production (b) .......................
Cost per equivalent unit (a) ÷ (b) .........................
Materials Conversion
$0 $330,928 $330,928
43,900
44,720
$0.00
$7.40
Costs of Ending Work in Process Inventory and
Units Transferred Out
Materials Conversion
Ending work in process inventory:
Equivalent units of production .............................
Cost per equivalent unit .......................................
Cost of ending work in process inventory ...........
Units transferred out:
Cost in beginning inventory.................................
Cost to complete the units in beginning
inventory:
Equivalent units of production required to
complete the beginning inventory ....................
Cost per equivalent unit .......................................
Cost to complete the units in beginning
inventory ..........................................................
Cost of units started and completed this period:
Units started and completed this period ...............
Cost per equivalent unit .......................................
Cost of units started and completed this period ...
Cost of units transferred out.................................
4-64
Total
0
$0.00
$0
2,400
$7.40
$17,760 $17,760
$0
$11,850 $ 11,850
7,900
$0.00
6,320
$7.40
$0
$46,768
36,000
$0.00
$0
46,768
36,000
$7.40
$266,400 266,400
$325,018
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
74. Koehl Corporation uses the direct method to allocate service department costs to
operating departments. The company has two service departments, Administrative and
Facilities, and two operating departments, Assembly and Wholesaling.
Service Department
Administrative Facilities
Departmental costs ...... $19,440
$71,340
Employee hours ...........
4,000
2,000
Space occupied ............
3,000
1,000
Operating Department
Assembly Wholesaling
$185,580
$392,950
22,000
14,000
39,000
2,000
Administrative costs are allocated on the basis of employee hours and Facilities costs
are allocated on the basis of space occupied. The total Wholesaling Department cost
after the allocations of service department costs is closest to:
A) $403,990
B) $396,430
C) $403,642
D) $402,601
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4B LO: 8 Level: Easy
Solution:
Service Department
AdminFacilistrative
ities
Departmental costs
before allocation ....
Allocation:
Administrative costs
(22/36, 14/36) * .....
Facilities costs
(39/41, 2/41)** ......
Total cost after
allocation................
$19,440
$71,340
(19,440)
(71,340)
$
0
$
0
Operating
Department
AssemWholebly
saling
$185,580
$392,950
11,880
7,560
67,860
3,480
$265,320
$403,990
Total
$669,310
$669,310
* Based on the employee hours in the two operating departments, which are 22,000
hours + 14,000 hours = 36,000 hours
**Based on the space occupied by the two operating departments, which is 39,000 +
2,000 = 41,000.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-65
Chapter 4 Systems Design: Process Costing
75. Behrend Clinic uses the direct method to allocate service department costs to
operating departments. The clinic has two service departments, Personnel and Support,
and two operating departments, Prenatal and Pediatrics.
Service Department
Personnel
Support
Departmental costs ...... $29,200
$55,040
Employee hours ........... 5,000
1,000
Space occupied ............ 3,000
2,000
Operating Department
Prenatal
Pediatrics
$242,050
$423,200
26,000
14,000
35,000
8,000
Personnel Department costs are allocated on the basis of employee hours and Support
Department costs are allocated on the basis of space occupied in square feet. The total
Pediatrics Department cost after the allocations of service department costs is closest
to:
A) $441,260
B) $443,660
C) $433,440
D) $444,471
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4B LO: 8 Level: Easy
Solution:
Service Department
Personnel Support
Departmental
costs before
allocation ...........
Allocation:
Personnel costs
(26/40, 14/40)*
Support costs
(35/43, 8/43)**
Total cost after
allocation ...........
$29,200
$55,040
(29,200)
(55,040)
$
0
$
0
Operating Department
Prenatal Pediatrics Total
$242,050
$423,200
18,980
10,220
44,800
10,240
$305,830
$443,660
$749,490
$749,490
* Based on the employee hours in the two operating departments, which are 26,000
hours + 14,000 hours = 40,000 hours
**Based on the space occupied by the two operating departments, which is 35,000 +
8,000 = 43,000.
4-66
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
76. Stoltz Corporation uses the direct method to allocate service department costs to
operating departments. The company has two service departments, Data Processing
and Personnel, and two operating departments, Assembly and Finishing.
Departmental costs ..........
Computer workstations ...
Employees .......................
Service Department
Data
Processing Personnel
$26,488
$18,630
37
12
35
11
Operating
Department
Assembly Finishing
$188,980 $506,980
45
41
46
35
Data Processing Department costs are allocated on the basis of computer workstations
and Personnel Department costs are allocated on the basis of employees. The total
amount of Data Processing Department cost allocated to the two operating
departments is closest to:
A) $23,245
B) $26,488
C) $61,567
D) $16,874
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4B LO: 8 Level: Easy
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-67
Chapter 4 Systems Design: Process Costing
Solution:
Operating
Department
Service Department
Data
Processing Personnel Assembly Finishing Total
Departmental costs before
allocation .............
Allocation:
Data processing costs (45/86,
41/86)* ................
Personnel costs (46/81,
35/81)** ..............
Total cost after allocation
$26,488
$18,630
(26,488)
$
0
$188,980
13,860
(18,630)
$
0
10,580
$213,420
$506,960 $741,078
12,628
8,050
$527,638 $741,078
* Based on the number of computer workstations in the two operating departments,
which are 45 + 41 = 86
**Based on the number of employees in the two operating departments, which is 46 +
35 = 81
4-68
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
77. The direct method is used by Marrero Publishing, Inc., to allocate service department
costs to operating departments. The company has two service departments,
Information Technology and Personnel, and two operating departments, Prepress and
Printing.
Service Department
Information
Technology Personnel
Departmental costs .........
$27,412
$27,008
Computer workstations...
28
19
Employees ......................
27
14
Operating
Department
Prepress Printing
$376,940 $530,110
51
38
98
30
Information Technology Department costs are allocated on the basis of computer
workstations and Personnel Department costs are allocated on the basis of employees.
The total Prepress Department cost after service department allocations is closest to:
A) $406,961
B) $413,326
C) $402,881
D) $410,563
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4B LO: 8 Level: Easy
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-69
Chapter 4 Systems Design: Process Costing
Solution:
Service Department
Information
Technology
Personnel
Departmental costs before
allocation ..........
Allocation:
Information technology
costs (51/89, 38/89)*
..........................
Personnel costs (98/128,
30/128)** .........
Total cost after allocation
..........................
$27,412
$27,008
(27,412)
(27,008)
$
0
$
0
Operating
Department
Prepress
Printing
$376,940
$530,110 $961,470
15,708
11,704
20,678
6,330
$413,326
Total
$548,144 $961,470
* Based on the number of computer workstations in the two operating departments,
which are 51 + 38 = 89
**Based on the number of employees in the two operating departments, which is 98 +
30 = 128
4-70
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
78. Kolinski Surgical Hospital uses the direct method to allocate service department costs
to operating departments. The hospital has two service departments,
Telecommunications and Administration, and two operating departments, Surgery and
Recovery.
Operating
Service Department
Department
Telecomm- Adminisunications
tration
Surgery Recovery
Departmental costs .........
$26,344
$27,472
$282,750 $599,690
Telecommunications
ports ............................
31
14
40
34
Employees ......................
30
11
74
27
Telecommunications Department costs are allocated on the basis of the number of
telecommunications ports in departments and Administration Department costs are
allocated on the basis of employees. The total Surgery Department cost after service
department allocations is closest to:
A) $317,118
B) $314,853
C) $310,244
D) $305,921
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4B LO: 8 Level: Easy
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-71
Chapter 4 Systems Design: Process Costing
Solution:
Service Department
Telecom- Adminismunications tration
Departmental costs
before allocation ..
Allocation:
Telecommunication
costs (40/74,
34/74) * ...............
Administration
costs (74/101,
27/101)** ............
Total cost after
allocation .............
Operating
Department
Surgery
Recovery Total
$26,344
$27,472 $282,750
$599,690
(26,344)
14,240
12,104
20,128
7,344
0 $317,118
$619,138
(27,472)
$
0
$
$936,256
$936,256
* Based on the number of telecommunication ports in the two operating departments,
which are 40 + 34 = 74
**Based on the number of employees in the two operating departments, which is 74 +
27 = 101
4-72
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
79. Dainels Corporation uses the step-down method to allocate service department costs to
operating departments. The company has two service departments, General
Management and Physical Plant, and two operating departments, Sales and AfterSales. Data concerning those departments follow:
Operating
Service Department
Department
General
Physical
AfterManagement
Plant
Sales
Sales
Departmental costs ......... $36,550
$70,300
$412,500 $492,780
Employee time ................
5,000
2,000
27,000
14,000
Space occupied ...............
1,000
1,000
38,000
7,000
General Management Department costs are allocated first on the basis of employee
time and Physical Plant Department costs are allocated second on the basis of space
occupied. The total After-Sales Department cost after allocations is closest to:
A) $516,196
B) $515,880
C) $503,980
D) $513,911
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4B LO: 9 Level: Easy
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-73
Chapter 4 Systems Design: Process Costing
Solution:
Service Department
General Physical
Mgmt
Plant
Departmental costs
before allocation .......
Allocation:
General costs (2/43,
27/43, 14/43)* ..........
Physical plant costs
(38/45, 7/45)** .........
$36,550
(36,550)
Operating
Department
AfterSales
Sales
Total
$70,300 $412,500 $492,780 $1,012,130
1,700
22,950
11,900
0
(72,000)
60,800
11,200
0
Total costs after
allocation ..................
$
0
$
0 $496,250 $515,880 $1,012,130
*Based on the employee time in Physical Plant and the two operating departments,
which are 2,000 + 27,000 + 14,000 = 43,000.
**Based on the space occupied by the two operating departments, 38,000 + 7,000 =
45,000.
4-74
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
80. Cervetti, Inc., allocates service department costs to operating departments using the
step-down method. The company has two service departments, Administration and
Physical Plant, and two operating departments, Assembly and Testing. Data
concerning those departments follow:
Operating
Service Department
Department
Physical
Administration
Plant
Assembly Testing
Departmental costs ..
$26,220
$78,860
$127,160 $737,860
Employee time .........
4,000
1,000
25,000
12,000
Space occupied ........
9,000
1,000
37,000
6,000
Administration Department costs are allocated first on the basis of employee time and
Physical Plant Department costs are allocated second on the basis of space occupied.
The total Testing Department cost after allocations is closest to:
A) $754,279
B) $757,240
C) $748,960
D) $757,368
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4B LO: 9 Level: Easy
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-75
Chapter 4 Systems Design: Process Costing
Solution:
Operating
Department
Service Department
AdminiPhysical
stration
Plant
Assembly Testing
Departmental costs
before allocation .......
Allocation:
Administration costs
(1/38, 25/38, 12/38)*
Physical plant costs
(37/43, 6/43)**..........
$26,220
(26,220)
Total
$78,860 $127,160 $737,860 $970,100
690
17,250
8,280
0
(79,550)
68,450
11,100
0
Total costs after
allocation ...................
$
0 $
0 $212,860 $757,240 $970,100
*Based on the employee time in Physical Plant and the two operating departments,
which are 1,000 + 25,000 + 12,000 = 38,000.
**Based on the space occupied by the two operating departments, 37,000 + 6,000 =
43,000.
4-76
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
81. Reddicks Clinic uses the step-down method to allocate service department costs to
operating departments. The clinic has two service departments, Personnel and
Information Technology (IT), and two operating departments, Family Medicine and
Pediatric. Data concerning those departments follow:
Operating
Service Department
Department
Family
Personnel
IT
Medicine Pediatric
Departmental costs .
$86,184
$45,995
$608,130 $316,290
Employees ..............
18
26
128
188
PCs..........................
19
26
125
156
Personnel costs are allocated first on the basis of employees and IT costs are allocated
second on the basis of PCs. The total Pediatric Department cost after allocations is
closest to:
A) $345,462
B) $393,099
C) $392,838
D) $383,307
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4B LO: 9 Level: Easy
Solution:
Service Department
Personnel
Departmental costs
before allocation .........
Allocation:
$86,184 $45,995
Personnel costs (26/342,
128/342, 188/342)* ..... (86,184)
IT costs (125/281,
156/281)** ..................
IT
Operating
Department
Family
Medicine Pediatric
Total
$608,130 $316,290 $1,056,599
6,552
32,256
47,376
0
(52,547)
23,375
29,172
0
Total costs after
allocation ..................... $
0 $
0
$663,761 $392,838 $1,056,599
*Based on the employees in IT and the two operating departments, which are 26 + 128
+ 188 = 342.
**Based on PCs of the two operating departments, 125 + 156 = 281.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-77
Chapter 4 Systems Design: Process Costing
82. Rondo Children's Clinic allocates service department costs to operating departments
using the step-down method. The clinic has two service departments, Administration
and Information Technology (IT), and two operating departments, Prenatal and
Pediatric. Data concerning those departments follow:
Operating
Service Department
Department
Administration
IT
Prenatal Pediatric
Departmental costs ..
$54,736
$37,449
$383,270 $259,590
Employees ...............
15
21
118
172
PCs...........................
15
21
102
109
Administration costs are allocated first on the basis of employees and IT costs are
allocated second on the basis of PCs. The total Pediatric Department cost after
allocations is closest to:
A) $311,117
B) $280,845
C) $304,995
D) $311,400
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4B LO: 9 Level: Easy
4-78
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Solution:
Service Department
Administration
IT
Departmental costs
before allocation ........
Allocation:
Administration costs
(21/311, 118/311,
172/311)* ...................
Operating
Department
Prenatal Pediatric
Total
$54,736 $37,449 $383,270 $259,590 $735,045
(54,736)
IT costs (102/211,
109/211)** .................
3,696
20,768
30,272
0
(41,145)
19,890
21,255
0
Total costs after
allocation ....................
$
0 $
0 $423,928 $311,117 $735,045
*Based on the employee time in IT and the two operating departments, which are 21 +
118 + 172 = 311.
**Based on the number of PCs of the two operating departments, 102 + 109 = 211.
Use the following to answer questions 83-86:
Kota Toy Company manufactures lizard dolls in two departments, Molding and Hairification.
In the Molding Department, plastic is injected into a lizard-shaped mold. The dolls that come
out of the molds are then transferred to the Hairification Department where hair is applied.
Kota uses a weighted-average process cost system to collect costs in both departments.
On January 1, the Molding Department had 4,000 dolls in process. These dolls were 100%
complete with respect to direct materials and 70% complete with respect to conversion cost.
During January, Molding completed 79,000 dolls. On January 31, Molding had 7,000 dolls in
work in process. These dolls were 100% complete with respect to direct materials and 25%
complete with respect to conversion cost.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-79
Chapter 4 Systems Design: Process Costing
83. How many dolls were started in the Molding Department during January?
A) 75,000
B) 76,000
C) 82,000
D) 86,000
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 1 Level: Medium
Solution:
Beginning work in process inventory... 4,000
+ Units started into production ............. 82,000 *
− Units completed and transferred ....... 79,000
= Ending work in process inventory .... 7,000
* 4000 + Units started into production − 79,000 = 7,000
Units started into production = 82,000
84. What account would Kota debit to record the transfer of dolls out of the Molding
Department?
A) Work in Process–Hairification
B) Finished Goods
C) Manufacturing Overhead
D) Work in Process–Molding
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 1 Level: Easy
4-80
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
85. What are the Molding Department's equivalent units related to materials for January?
A) 79,000
B) 86,000
C) 89,000
D) 93,000
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
Solution:
Transferred to next department ...........
Ending work in process:
Materials: 7,000 dolls × 100% .........
Equivalent units of production ............
Materials
79,000
7,000
86,000
86. What are the Molding Department's equivalent units related to conversion costs for
January?
A) 77,950
B) 80,750
C) 83,750
D) 84,250
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
Solution:
Transferred to next department............
Ending work in process:
Conversion: 7,000 dolls × 25% ........
Equivalent units of production ............
Conversion
79,000
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
1,750
80,750
4-81
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 87-89:
Yoder Company uses the weighted-average method in its process costing system. The
following data pertain to operations in the first processing department for a recent month:
Work in process, beginning:
Units in process ............................................................
Percent complete with respect to materials ..................
Percent complete with respect to conversion ...............
Costs in the beginning inventory:
Materials cost ............................................................
Conversion cost .........................................................
Units started into production during the month ..............
Units completed and transferred out during the month ...
Costs added to production during the month:
Materials cost ...............................................................
Conversion cost ............................................................
Work in process, ending:
Units in process ............................................................
Percent complete with respect to materials ..................
Percent complete with respect to conversion ...............
40,000
70%
60%
$8,600
$4,800
750,000
?
$223,000
$149,000
30,000
40%
30%
87. How many units were completed and transferred to the next department during the
month?
A) 750,000 units
B) 790,000 units
C) 760,000 units
D) 740,000 units
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
Solution:
+
+
−
=
4-82
To solve for units transferred:
Work in process, beginning .............................................. 40,000
Units started into production during the month ................ 750,000
Work in process, ending ................................................... 30,000
Units completed and transferred out during the month .... 760,000
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
88. What was the cost per equivalent unit for materials during the month?
A) $0.30
B) $0.25
C) $0.20
D) $0.15
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 3 Level: Medium
Solution:
+
+
−
=
To solve for units transferred:
Work in process, beginning .............................................. 40,000
Units started into production during the month ................ 750,000
Work in process, ending ................................................... 30,000
Units completed and transferred out during the month .... 760,000
Equivalent units of production
Materials
Transferred to next department .............................................
760,000
Ending work in process (30,000 units × 40% complete) ......
12,000
Equivalent units of production ..............................................
772,000
Cost per Equivalent Unit
Materials
Cost of beginning work in process ....................................... $ 8,600
Cost added during the period ................................................
223,000
Total cost (a) ......................................................................... $231,600
Equivalent units of production (b) ........................................
Cost per equivalent unit, (a) ÷ (b) .........................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
772,000
$0.30
4-83
Chapter 4 Systems Design: Process Costing
89. How much cost, in total, was assigned to the ending work in process inventory?
A) $2,600
B) $4,300
C) $15,000
D) $5,400
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 4 Level: Medium
Solution:
+
+
−
=
To solve for units transferred:
Work in process, beginning ...............................................
Units started into production during the month .................
Work in process, ending ....................................................
Units completed and transferred out during the month .....
40,000
750,000
30,000
760,000
Equivalent units of production
Transferred to next department ................................
Ending work in process (materials: 30,000 units × 40%
complete; conversion: 30,000 units × 30% complete)
Equivalent units of production .................................
Materials Conversion
760,000
760,000
12,000
772,000
9,000
769,000
Cost per Equivalent Unit
Cost of beginning work in process ...........................
Cost added during the period ...................................
Total cost (a).............................................................
Equivalent units of production (b) ...........................
Cost per equivalent unit, (a) ÷ (b) ............................
Materials Conversion
$ 8,600 $ 4,800
223,000
149,000
$231,600 $153,800
772,000
$0.30
769,000
$0.20
Materials Conversion Total
Ending work in process inventory:
Equivalent units of production (materials: 30,000 units × 40%
complete; conversion: 30,000 units × 30% complete)
Cost per equivalent unit............................................
Cost of ending work in process inventory ................
4-84
12,000
$0.30
$3,600
9,000
$0.20
$1,800 $5,400
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 90-91:
Onitsha Corporation uses a weighted-average process costing system to collect costs related
to production. The following selected information relates to production for June:
Units started into production ..........................
Units completed and transferred out ..............
Equivalent units, materials .............................
Equivalent units, conversion costs .................
25,000
20,000
28,000
26,000
Materials Conversion
Costs in work in process on June 1 ................
$ 6,720
$ 9,100
Costs added to production during June ..........
57,120
88,400
Total cost ........................................................ $63,840
$97,500
All materials at Onitsha are added at the beginning of the production process. Conversion
costs are incurred uniformly over the production process.
90. How many partially completed units were in work in process inventory at the
beginning of June?
A) 3,000
B) 5,000
C) 7,000
D) 8,000
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Hard
Solution:
Since all materials are added at the beginning of the production process, the
“equivalent units, materials” of 28,000 units represents the number of units that were
in ending work in process inventory plus the units completed transferred out.
Thus:
Beginning work in process inventory .............................. 3,000 *
+ Units started into production ........................................... 25,000
= Equivalent units ............................................................... 28,000
* Beginning work in process inventory + 25,000 = 28,000
Beginning work in process inventory = 3,000
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-85
Chapter 4 Systems Design: Process Costing
91. What total amount of cost should be assigned to the units completed and transferred
out during June?
A) $102,510
B) $108,800
C) $120,600
D) $136,000
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 3,4 Level: Hard
Solution:
Work in process, beginning .................
Cost added during the month ...............
Total cost (a) ........................................
Equivalent units (above) (b) ................
Cost per equivalent unit (a) ÷ (b) ........
Materials Conversion
$ 6,720
$ 9,100
57,120
88,400
$63,840
$97,500
28,000
26,000
$2.28
$3.75
Materials Conversion
Total
Units transferred out ............................
20,000
20,000
Cost per equivalent unit .......................
$2.28
$3.75
Cost transferred out .............................
$45,600
$75,000 $120,600
4-86
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 92-96:
Aple Corporation uses the weighted-average method in its process costing system. This
month, the beginning inventory in the first processing department consisted of 300 units. The
costs and percentage completion of these units in beginning inventory were:
Materials costs ...................
Conversion costs ...............
Cost Percent Complete
$3,100
70%
$2,900
50%
A total of 8,500 units were started and 8,100 units were transferred to the second processing
department during the month. The following costs were incurred in the first processing
department during the month:
Materials costs ..................... $110,500
Conversion costs ................. $153,900
The ending inventory was 90% complete with respect to materials and 55% complete with
respect to conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all cases,
select the answer that is the closest to the answer you computed. To reduce rounding error,
carry out all computations to at least three decimal places.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-87
Chapter 4 Systems Design: Process Costing
92. What are the equivalent units for conversion costs for the month in the first processing
department?
A) 385
B) 8,800
C) 8,100
D) 8,485
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning ...............................................
Units started into production during the month .................
Units completed and transferred out during the month .....
Work in process, ending ....................................................
300
8,500
8,100
700
Equivalent units of production
Transferred to next department ............................................
Ending work in process (materials: 700 units × 90%
complete; conversion: 700 units × 55% complete).............
Equivalent units of production .............................................
4-88
Conversion
8,100
385
8,485
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
93. The cost per equivalent unit for materials for the month in the first processing
department is closest to:
A) $12.91
B) $12.66
C) $12.56
D) $13.01
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 3 Level: Medium
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning ...............................................
Units started into production during the month .................
Units completed and transferred out during the month .....
Work in process, ending ....................................................
300
8,500
8,100
700
Equivalent units of production
Transferred to next department .........................................
Ending work in process (materials: 700 units × 90%
complete; conversion: 700 units × 55% complete) .......
Equivalent units of production ..........................................
Materials
8,100
630
8,730
Cost per Equivalent Unit
Materials
Cost of beginning work in process.................................... $ 3,100
Cost added during the period ............................................
110,500
Total cost (a) ..................................................................... $113,600
Equivalent units of production (b) ....................................
Cost per equivalent unit, (a) ÷ (b) .....................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
8,730
$13.01
4-89
Chapter 4 Systems Design: Process Costing
94. The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
A) $17.82
B) $19.40
C) $18.14
D) $18.48
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 3 Level: Medium
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning .............................................
Units started into production during the month ...............
Units completed and transferred out during the month ...
Work in process, ending ..................................................
300
8,500
8,100
700
Equivalent units of production
Transferred to next department ......................................
Ending work in process (700 units × 55% complete) ....
Equivalent units of production .......................................
Conversion
8,100
385
8,485
Cost per Equivalent Unit
Conversion
Cost of beginning work in process ................................
$ 2,900
Cost added during the period .........................................
153,900
Total cost (a) ..................................................................
$156,800
Equivalent units of production (b) .................................
Cost per equivalent unit, (a) ÷ (b) ..................................
4-90
8,485
$18.48
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
95. The total cost transferred from the first processing department to the next processing
department during the month is closest to:
A) $264,400
B) $277,138
C) $270,400
D) $255,093
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 4 Level: Medium
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning .............................................
Units started into production during the month ...............
Units completed and transferred out during the month ...
Work in process, ending ..................................................
300
8,500
8,100
700
Equivalent units of production
Transferred to next department .............................
Ending work in process (materials: 700 units × 90%
complete; conversion: 700 units × 55% complete)
Equivalent units of production ..............................
Materials Conversion
8,100
8,100
630
8,730
385
8,485
Cost per Equivalent Unit
Cost of beginning work in process ........................
Cost added during the period ................................
Total cost (a)..........................................................
Equivalent units of production (b) ........................
Cost per equivalent unit, (a) ÷ (b) .........................
Materials Conversion
$ 3,100 $ 2,900
110,500
153,900
$113,600 $156,800
8,730
$13.01
8,485
$18.48
Materials Conversion Total
Units transferred out:
Units transferred to the next department ...............
Cost per equivalent unit.........................................
Cost of units transferred out ..................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
8,100
$13.01
$105,402
8,100
$18.48
$149,685 $255,087
4-91
Chapter 4 Systems Design: Process Costing
96. The cost of ending work in process inventory in the first processing department
according to the company's cost system is closest to:
A) $19,841
B) $15,313
C) $22,045
D) $12,125
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 4 Level: Medium
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning .............................................
Units started into production during the month ...............
Units completed and transferred out during the month ...
Work in process, ending ..................................................
300
8,500
8,100
700
Equivalent units of production
Transferred to next department .............................
Ending work in process (materials: 700 units × 90% complete;
conversion: 700 units × 55% complete) ..............
Equivalent units of production ..............................
Materials Conversion
8,100
8,100
630
8,730
385
8,485
Cost per Equivalent Unit
Cost of beginning work in process ........................
Cost added during the period ................................
Total cost (a)..........................................................
Equivalent units of production (b) ........................
Cost per equivalent unit, (a) ÷ (b) .........................
Materials Conversion
$3,100
$2,900
110,500
153,900
$113,600 $156,800
8,730
$13.01
8,485
$18.48
Materials Conversion Total
Ending work in process inventory:
Equivalent units of production (materials: 700 units × 90%
complete; conversion: 700 units × 55% complete)
Cost per equivalent unit.........................................
Cost of ending work in process inventory .............
4-92
630
$13.01
$8,198
385
$18.48
$7,115 $15,313
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 97-102:
Buklin Corporation uses the weighted-average method in its process costing system. This
month, the beginning inventory in the first processing department consisted of 700 units. The
costs and percentage completion of these units in beginning inventory were:
Materials costs ...................
Conversion costs ...............
Cost
Percent Complete
$15,700
85%
$4,800
45%
A total of 8,000 units were started and 7,100 units were transferred to the second processing
department during the month. The following costs were incurred in the first processing
department during the month:
Materials costs ...................
Conversion costs ...............
$166,500
$96,300
The ending inventory was 75% complete with respect to materials and 15% complete with
respect to conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all cases,
select the answer that is the closest to the answer you computed. To reduce rounding error,
carry out all computations to at least three decimal places.
97. How many units are in ending work in process inventory in the first processing
department at the end of the month?
A) 1,600
B) 700
C) 7,300
D) 900
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Easy
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning .............................................
Units started into production during the month ...............
Units completed and transferred out during the month ...
Work in process, ending ..................................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
700
8,000
7,100
1,600
4-93
Chapter 4 Systems Design: Process Costing
98. What are the equivalent units for conversion costs for the month in the first processing
department?
A) 7,340
B) 8,700
C) 7,100
D) 240
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning .............................................
Units started into production during the month ...............
Units completed and transferred out during the month ...
Work in process, ending ..................................................
700
8,000
7,100
1,600
Equivalent units of production
Transferred to next department ...........................................
Ending work in process (1,600 units × 15% complete) ......
Equivalent units of production ............................................
4-94
Conversion
7,100
240
7,340
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
99. The cost per equivalent unit for materials for the month in the first processing
department is closest to:
A) $21.95
B) $20.94
C) $19.14
D) $20.06
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 3 Level: Medium
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning .............................................
Units started into production during the month ...............
Units completed and transferred out during the month ...
Work in process, ending ..................................................
700
8,000
7,100
1,600
Equivalent units of production
Transferred to next department ...........................................
Ending work in process (1,600 units × 75% complete) ......
Equivalent units of production ............................................
Materials
7,100
1,200
8,300
Cost per Equivalent Unit
Materials
Cost of beginning work in process .....................................
$ 15,700
Cost added during the period ..............................................
166,500
Total cost (a) ....................................................................... $182,200
Equivalent units of production (b) ......................................
Cost per equivalent unit, (a) ÷ (b) .......................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
8,300
$21.95
4-95
Chapter 4 Systems Design: Process Costing
100. The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
A) $13.12
B) $11.62
C) $14.46
D) $13.77
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 3 Level: Medium
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning .............................................
Units started into production during the month ...............
Units completed and transferred out during the month ...
Work in process, ending ..................................................
700
8,000
7,100
1,600
Equivalent units of production
Transferred to next department ...........................................
Ending work in process (1,600 units × 15% complete) ......
Equivalent units of production ............................................
Conversion
7,100
240
7,340
Cost per Equivalent Unit
Conversion
Cost of beginning work in process .....................................
$ 4,800
Cost added during the period ..............................................
96,300
Total cost (a) ....................................................................... $101,100
Equivalent units of production (b) ......................................
Cost per equivalent unit, (a) ÷ (b) .......................................
4-96
7,340
$13.774
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
101. The total cost transferred from the first processing department to the next processing
department during the month is closest to:
A) $310,816
B) $262,800
C) $283,300
D) $253,655
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 4 Level: Medium
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning .............................................
Units started into production during the month ...............
Units completed and transferred out during the month ...
Work in process, ending ..................................................
700
8,000
7,100
1,600
Equivalent units of production
Transferred to next department ...............................
Ending work in process (materials: 1,600 units × 75%
complete; conversion: 1,600 units × 15% complete)
Equivalent units of production ................................
Materials Conversion
7,100
7,100
1,200
8,300
240
7,340
Cost per Equivalent Unit
Cost of beginning work in process .........................
Cost added during the period ..................................
Total cost (a) ...........................................................
Equivalent units of production (b) ..........................
Cost per equivalent unit, (a) ÷ (b) ...........................
Materials Conversion
$ 15,700 $ 4,800
166,500
96,300
$182,200 $101,100
8,300
$21.952
7,340
$13.774
Materials Conversion Total
Units transferred out:
Units transferred to the next department.................
Cost per equivalent unit ..........................................
Cost of units transferred out....................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
7,100
$21.95
$155,858
7,100
$13.77
$97,794 $253,652
4-97
Chapter 4 Systems Design: Process Costing
102. The cost of ending work in process inventory in the first processing department
according to the company's cost system is closest to:
A) $57,162
B) $42,871
C) $29,648
D) $8,574
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 4 Level: Medium
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning .............................................
Units started into production during the month ...............
Units completed and transferred out during the month ...
Work in process, ending ..................................................
700
8,000
7,100
1,600
Equivalent units of production
Transferred to next department ................................
Ending work in process (materials: 1,600 units × 75%
complete; conversion: 1,600 units × 15% complete)
Equivalent units of production .................................
Materials Conversion
7,100
7,100
1,200
8,300
240
7,340
Cost per Equivalent Unit
Cost of beginning work in process ..........................
Cost added during the period ...................................
Total cost (a) ............................................................
Equivalent units of production (b) ...........................
Cost per equivalent unit, (a) ÷ (b) ............................
Materials Conversion
$ 15,700 $ 4,800
166,500
96,300
$182,200 $101,100
8,300
$21.952
7,340
$13.774
Materials Conversion Total
Ending work in process inventory:
Equivalent units of production (materials: 1,600 units × 75%
complete; conversion: 1,600 units × 15% complete)
Cost per equivalent unit ...........................................
Cost of ending work in process inventory ...............
4-98
1,200
$21.95
$26,342
240
$13.77
$3,306 $29,648
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 103-106:
Cavalerio Corporation uses the weighted-average method in its process costing system. This
month, the beginning inventory in the first processing department consisted of 700 units. The
costs and percentage completion of these units in beginning inventory were:
Materials costs ...................
Conversion costs ...............
Cost Percent Complete
$9,100
80%
$5,400
25%
A total of 7,200 units were started and 6,400 units were transferred to the second processing
department during the month. The following costs were incurred in the first processing
department during the month:
Materials costs ...................
Conversion costs ...............
$96,700
$180,700
The ending inventory was 80% complete with respect to materials and 70% complete with
respect to conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all cases,
select the answer that is the closest to the answer you computed. To reduce rounding error,
carry out all computations to at least three decimal places.
103. How many units are in ending work in process inventory in the first processing
department at the end of the month?
A) 800
B) 1,500
C) 900
D) 6,500
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Easy
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning ...............................................
Units started into production during the month .................
Units completed and transferred out during the month .....
Work in process, ending ....................................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
700
7,200
6,400
1,500
4-99
Chapter 4 Systems Design: Process Costing
104. What are the equivalent units for conversion costs for the month in the first processing
department?
A) 7,900
B) 7,450
C) 6,400
D) 1,050
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning ...............................................
Units started into production during the month .................
Units completed and transferred out during the month .....
Work in process, ending ....................................................
700
7,200
6,400
1,500
Equivalent units of production
Transferred to next department ..............................................
Ending work in process (1,500 units × 70% complete) .........
Equivalent units of production ...............................................
4-100
Conversion
6,400
1,050
7,450
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
105. The cost per equivalent unit for materials for the month in the first processing
department is closest to:
A) $12.72
B) $13.92
C) $13.39
D) $12.24
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 3 Level: Medium
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning ...............................................
Units started into production during the month .................
Units completed and transferred out during the month .....
Work in process, ending ....................................................
700
7,200
6,400
1,500
Equivalent units of production
Transferred to next department ..............................................
Ending work in process (1,500 units × 80% complete) .........
Equivalent units of production ...............................................
Materials
6,400
1,200
7,600
Cost per Equivalent Unit
Materials
Cost of beginning work in process ........................................ $ 9,100
Cost added during the period .................................................
96,700
Total cost (a) .......................................................................... $105,800
Equivalent units of production (b) .........................................
Cost per equivalent unit, (a) ÷ (b) ..........................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
7,600
$13.92
4-101
Chapter 4 Systems Design: Process Costing
106. The total cost transferred from the first processing department to the next processing
department during the month is closest to:
A) $291,900
B) $307,318
C) $248,966
D) $277,400
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 4 Level: Medium
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning ...............................................
Units started into production during the month .................
Units completed and transferred out during the month .....
Work in process, ending ....................................................
700
7,200
6,400
1,500
Equivalent units of production
Transferred to next department ...............................
Ending work in process (materials: 1,500 units × 80%
complete; conversion: 1,500 units × 70% complete)
Equivalent units of production ................................
Materials Conversion
6,400
6,400
1,200
7,600
1,050
7,450
Cost per Equivalent Unit
Cost of beginning work in process .........................
Cost added during the period ..................................
Total cost (a) ...........................................................
Equivalent units of production (b) ..........................
Cost per equivalent unit, (a) ÷ (b) ...........................
Materials Conversion
$ 9,100 $ 5,400
96,700
180,700
$105,800 $186,100
7,600
$13.92
7,450
$24.98
Materials Conversion Total
Units transferred out:
Units transferred to the next department.................
Cost per equivalent unit ..........................................
Cost of units transferred out....................................
4-102
6,400
$13.92
$89,095
6,400
$24.98
$159,871 $248,966
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 107-109:
Escoffier Corporation uses the weighted-average method in its process costing system. This
month, the beginning inventory in the first processing department consisted of 500 units. The
costs and percentage completion of these units in beginning inventory were:
Materials costs ...................
Conversion costs ...............
Cost
Percent Complete
$11,400
80%
$2,200
10%
A total of 5,000 units were started and 4,400 units were transferred to the second processing
department during the month. The following costs were incurred in the first processing
department during the month:
Materials costs ...................
Conversion costs ...............
$112,200
$178,400
The ending inventory was 85% complete with respect to materials and 25% complete with
respect to conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all cases,
select the answer that is the closest to the answer you computed. To reduce rounding error,
carry out all computations to at least three decimal places.
107. What are the equivalent units for conversion costs for the month in the first processing
department?
A) 5,500
B) 4,675
C) 4,400
D) 275
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
Solution:
Equivalent units of production
Conversion
Transferred to next department ............................................
4,400
Ending work in process (1,100 units × 25% complete) .......
275
Equivalent units of production .............................................
4,675
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-103
Chapter 4 Systems Design: Process Costing
108. The cost per equivalent unit for materials for the month in the first processing
department is closest to:
A) $22.47
B) $23.17
C) $21.03
D) $20.40
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 3 Level: Medium
Solution:
Equivalent units of production
Materials
Transferred to next department .........................................
4,400
Ending work in process (1,100 units × 85% complete) ....
935
Equivalent units of production ..........................................
5,335
Cost per Equivalent Unit
Materials
Cost of beginning work in process .................................... $ 11,400
Cost added during the period ............................................
112,200
Total cost (a)...................................................................... $123,600
Equivalent units of production (b) ....................................
Cost per equivalent unit, (a) ÷ (b) .....................................
4-104
5,335
$23.17
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
109. The total cost transferred from the first processing department to the next processing
department during the month is closest to:
A) $304,200
B) $290,600
C) $271,916
D) $339,895
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 4 Level: Medium
Solution:
Equivalent units of production
Transferred to next department ...............................
Ending work in process (materials: 1,100 units × 85%
complete; conversion: 1,100 units × 25% complete)
Equivalent units of production ................................
Materials Conversion
4,400
4,400
935
5,335
275
4,675
Cost per Equivalent Unit
Cost of beginning work in process .........................
Cost added during the period ..................................
Total cost (a) ...........................................................
Equivalent units of production (b) ..........................
Cost per equivalent unit, (a) ÷ (b) ...........................
Units transferred out:
Units transferred to the next department.................
Cost per equivalent unit ..........................................
Cost of units transferred out....................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Materials Conversion
$ 11,400 $ 2,200
112,200
178,400
$123,600 $180,600
5,335
4,675
$23.17
$38.63
Materials Conversion Total
4,400
$23.17
$101,938
4,400
$38.63
$169,976 $271,915
4-105
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 110-111:
Fuchs Corporation uses the weighted-average method in its process costing system. This
month, the beginning inventory in the first processing department consisted of 300 units. The
costs and percentage completion of these units in beginning inventory were:
Materials costs ...................
Conversion costs ...............
Cost Percent Complete
$4,800
65%
$6,200
60%
A total of 9,100 units were started and 8,500 units were transferred to the second processing
department during the month. The following costs were incurred in the first processing
department during the month:
Materials costs ...................
Conversion costs ...............
$208,000
$280,300
The ending inventory was 85% complete with respect to materials and 15% complete with
respect to conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all cases,
select the answer that is the closest to the answer you computed. To reduce rounding error,
carry out all computations to at least three decimal places.
4-106
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
110. The total cost transferred from the first processing department to the next processing
department during the month is closest to:
A) $477,250
B) $527,782
C) $499,300
D) $488,300
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2,3,4 Level: Medium
Solution:
Equivalent units of production
Transferred to next department .............................
Ending work in process (materials: 900 units × 85%
complete; conversion: 900 units × 15% complete)
Equivalent units of production ..............................
Materials Conversion
8,500
8,500
765
9,265
135
8,635
Cost per Equivalent Unit
Cost of beginning work in process ........................
Cost added during the period ................................
Total cost (a)..........................................................
Equivalent units of production (b) ........................
Cost per equivalent unit, (a) ÷ (b) .........................
Materials Conversion
$ 4,800 $ 6,200
208,000
280,300
$212,800 $286,500
9,265
$22.97
8,635
$33.18
Cost of Ending Work in Process Inventory and Units
Transferred Out
Materials Conversion Total
Units transferred out:
Units transferred to the next department ...............
Cost per equivalent unit.........................................
Cost of units transferred out ..................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
8,500
$22.97
$195,229
8,500
$33.18
$282,021 $477,250
4-107
Chapter 4 Systems Design: Process Costing
111. The cost of ending work in process inventory in the first processing department
according to the company's cost system is closest to:
A) $50,532
B) $7,580
C) $22,050
D) $42,952
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2,3,4 Level: Medium
Solution:
Equivalent units of production
Transferred to next department ..............................
Ending work in process (materials: 900 units × 85% complete;
conversion: 900 units × 15% complete) ...............
Equivalent units of production ...............................
Materials Conversion
8,500
8,500
765
9,265
135
8,635
Cost per Equivalent Unit
Cost of beginning work in process .........................
Cost added during the period .................................
Total cost (a)...........................................................
Equivalent units of production (b) .........................
Cost per equivalent unit, (a) ÷ (b) ..........................
Materials Conversion
$ 4,800 $ 6,200
208,000
280,300
$212,800 $286,500
9,265
$22.97
8,635
$33.18
Cost of Ending Work in Process Inventory and Units
Transferred Out
Materials Conversion Total
Ending work in process inventory:
Equivalent units of production (materials: 900 units × 85%
complete; conversion: 900 units × 15% complete)
Cost per equivalent unit..........................................
Cost of ending work in process inventory ..............
4-108
765
$22.97
$17,571
135
$33.18
$4,479 $22,050
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 112-117:
Guerin Corporation uses the weighted-average method in its process costing system. This
month, the beginning inventory in the first processing department consisted of 300 units. The
costs and percentage completion of these units in beginning inventory were:
Materials costs ...................
Conversion costs ...............
Cost Percent Complete
$4,400
55%
$2,200
35%
A total of 5,400 units were started and 4,800 units were transferred to the second processing
department during the month. The following costs were incurred in the first processing
department during the month:
Materials costs ...................
Conversion costs ...............
$120,000
$92,500
The ending inventory was 80% complete with respect to materials and 55% complete with
respect to conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all cases,
select the answer that is the closest to the answer you computed. To reduce rounding error,
carry out all computations to at least three decimal places.
112. How many units are in ending work in process inventory in the first processing
department at the end of the month?
A) 5,100
B) 300
C) 900
D) 600
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Easy
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning ...............................................
Units started into production during the month .................
Units completed and transferred out during the month .....
Work in process, ending ....................................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
300
5,400
4,800
900
4-109
Chapter 4 Systems Design: Process Costing
113. What are the equivalent units for materials for the month in the first processing
department?
A) 4,800
B) 5,700
C) 720
D) 5,520
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning ...............................................
Units started into production during the month .................
Units completed and transferred out during the month .....
Work in process, ending ....................................................
300
5,400
4,800
900
Equivalent units of production
Transferred to next department ..............................................
Ending work in process (900 units × 80% complete) ............
Equivalent units of production ...............................................
4-110
Materials
4,800
720
5,520
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
114. What are the equivalent units for conversion costs for the month in the first processing
department?
A) 4,800
B) 5,295
C) 495
D) 5,700
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning ...............................................
Units started into production during the month .................
Units completed and transferred out during the month .....
Work in process, ending ....................................................
300
5,400
4,800
900
Equivalent units of production
Conversion
Transferred to next department .............................................. 4,800
Ending work in process (900 units × 55% complete) ............ 495
Equivalent units of production ............................................... 5,295
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-111
Chapter 4 Systems Design: Process Costing
115. The cost per equivalent unit for materials for the month in the first processing
department is closest to:
A) $21.05
B) $21.82
C) $22.54
D) $21.74
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 3 Level: Medium
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning ...............................................
Units started into production during the month .................
Units completed and transferred out during the month .....
Work in process, ending ....................................................
300
5,400
4,800
900
Equivalent units of production
Transferred to next department ..............................................
Ending work in process (900 units × 80% complete) ............
Equivalent units of production ...............................................
Materials
4,800
720
5,520
Cost per Equivalent Unit
Materials
Cost of beginning work in process ........................................
$ 4,400
Cost added during the period .................................................
120,000
Total cost (a) .......................................................................... $124,400
Equivalent units of production (b) .........................................
Cost per equivalent unit, (a) ÷ (b) ..........................................
4-112
5,520
$22.54
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
116. The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
A) $16.61
B) $17.89
C) $18.78
D) $17.47
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 4 Level: Medium
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning ...............................................
Units started into production during the month .................
Units completed and transferred out during the month .....
Work in process, ending ....................................................
300
5,400
4,800
900
Equivalent units of production
Transferred to next department .....................................
Ending work in process (materials: 900 units × 80%
complete; conversion: 900 units × 55% complete)....
Equivalent units of production ......................................
Conversion
4,800
495
5,295
Cost per Equivalent Unit
Conversion
Cost of beginning work in process ...............................
$ 2,200
Cost added during the period ........................................
92,500
Total cost (a) .................................................................
$94,700
Equivalent units of production (b) ................................
Cost per equivalent unit, (a) ÷ (b) .................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
5,295
$17.88
4-113
Chapter 4 Systems Design: Process Costing
117. The cost of ending work in process inventory in the first processing department
according to the company's cost system is closest to:
A) $25,079
B) $36,379
C) $20,008
D) $29,103
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 4 Level: Medium
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning ...............................................
Units started into production during the month .................
Units completed and transferred out during the month .....
Work in process, ending ....................................................
300
5,400
4,800
900
Equivalent units of production
Transferred to next department ...........................
Ending work in process (materials: 900 units × 80%
complete; conversion: 900 units × 55% complete)
Equivalent units of production ............................
Materials Conversion
4,800
4,800
720
5,520
495
5,295
Cost per Equivalent Unit
Cost of beginning work in process ......................
Cost added during the period ..............................
Total cost (a)........................................................
Equivalent units of production (b) ......................
Cost per equivalent unit, (a) ÷ (b) .......................
Materials Conversion
$ 4,400
$ 2,200
120,000
92,500
$124,400
$94,700
5,520
$22.54
5,295
$17.88
Materials Conversion Total
Units transferred out:
Units transferred to the next department .............
Cost per equivalent unit.......................................
Cost of units transferred out ................................
4-114
4,800
$22.54
$108,174
4,800
$17.88
$85,847 $194,021
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
118. The cost of ending work in process inventory in the first processing department
according to the company’s cost system is closest to:
A) $25,079
B) $36,379
C) $20,008
D) $29,103
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 4 Level: Medium
Solution:
To solve for ending work in process:
+ Work in process, beginning ...............................................
+ Units started into production during the month .................
− Units completed and transferred out during the month .....
= Work in process, ending ....................................................
Equivalent units of production
Transferred to next department ..............................
Ending work in process (materials: 900 units × 80% complete;
conversion: 900 units × 55% complete) ...............
Equivalent units of production ...............................
300
5,400
4,800
900
Materials Conversion
4,800
4,800
720
5,520
495
5,295
Cost per Equivalent Unit
Cost of beginning work in process .........................
Cost added during the period .................................
Total cost (a)...........................................................
Equivalent units of production (b) .........................
Cost per equivalent unit, (a) ÷ (b) ..........................
Materials Conversion
$ 4,400
$ 2,200
120,000
92,500
$124,400
$94,700
5,520
$22.54
5,295
$17.88
Cost of Ending Work in Process Inventory and Units
Transferred Out
Materials Conversion Total
Ending work in process inventory:
Equivalent units of production (materials: 900 units × 80%
complete; conversion: 900 units × 55% complete)
Cost per equivalent unit..........................................
Cost of ending work in process inventory ..............
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
720
$22.54
$16,226
495
$17.88
$8,853 $25,079
4-115
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 119-124:
Hall Corporation uses the weighted-average method in its process costing system. Data
concerning the first processing department for the most recent month are listed below:
Beginning work in process inventory:
Units in beginning work in process inventory .....................
Materials costs......................................................................
Conversion costs ..................................................................
Percent complete with respect to materials ..........................
Percent complete with respect to conversion .......................
Units started into production during the month ......................
Units transferred to the next department during the month ....
Materials costs added during the month ..................................
Conversion costs added during the month ..............................
Ending work in process inventory:
Units in ending work in process inventory ..........................
Percent complete with respect to materials ..........................
Percent complete with respect to conversion .......................
500
$7,700
$2,900
75%
25%
6,700
5,900
$108,600
$121,000
1,300
65%
40%
Note: Your answers may differ from those offered below due to rounding error. In all cases,
select the answer that is the closest to the answer you computed. To reduce rounding error,
carry out all computations to at least three decimal places.
119. What are the equivalent units for materials for the month in the first processing
department?
A) 845
B) 6,745
C) 7,200
D) 5,900
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
Solution:
Equivalent units of production
Materials
Transferred to next department ...................................................
5,900
Ending work in process (1,300 units × 65% complete) ..............
845
Equivalent units of production ....................................................
6,745
4-116
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
120. What are the equivalent units for conversion costs for the month in the first processing
department?
A) 5,900
B) 6,420
C) 7,200
D) 520
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
Solution:
Equivalent units of production
Conversion
Transferred to next department .....................................................
5,900
Ending work in process (1,300 units × 40% complete) ................
520
Equivalent units of production ......................................................
6,420
121. The cost per equivalent unit for materials for the month in the first processing
department is closest to:
A) $15.08
B) $16.15
C) $16.10
D) $17.24
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 3 Level: Medium
Solution:
Equivalent units of production
Materials
Transferred to next department ...............................................
5,900
Ending work in process (1,300 units × 65% complete) ..........
845
Equivalent units of production ................................................
6,745
Cost per Equivalent Unit
Materials
Cost of beginning work in process .......................................... $ 7,700
Cost added during the period .................................................. 108,600
Total cost (a)............................................................................ $116,300
Equivalent units of production (b) ..........................................
Cost per equivalent unit, (a) ÷ (b) ...........................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
6,745
$17.24
4-117
Chapter 4 Systems Design: Process Costing
122. The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
A) $20.27
B) $19.30
C) $18.85
D) $17.21
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 3 Level: Medium
Solution:
Equivalent units of production
Transferred to next department .................................................
Ending work in process (1,300 units × 40% complete) ............
Equivalent units of production ..................................................
Conversion
5,900
520
6,420
Cost per Equivalent Unit
4-118
Cost of beginning work in process ...........................................
Cost added during the period ....................................................
Total cost (a) .............................................................................
Conversion
$ 2,900
121,000
$123,900
Equivalent units of production (b) ............................................
Cost per equivalent unit, (a) ÷ (b) .............................................
6,420
$19.30
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
123. The total cost transferred from the first processing department to the next processing
department during the month is closest to:
A) $240,200
B) $263,095
C) $215,592
D) $229,600
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 4 Level: Medium
Solution:
Equivalent units of production
Transferred to next department ...............................
Ending work in process (materials: 1,300 units × 65%
complete; conversion: 1,300 units × 40% complete)
Equivalent units of production ................................
Materials Conversion
5,900
5,900
845
6,745
520
6,420
Cost per Equivalent Unit
Cost of beginning work in process .........................
Cost added during the period ..................................
Total cost (a) ...........................................................
Equivalent units of production (b) ..........................
Cost per equivalent unit, (a) ÷ (b) ...........................
Materials Conversion
$ 7,700 $ 2,900
108,600
121,000
$116,300 $123,900
6,745
$17.24
6,420
$19.30
Materials Conversion Total
Units transferred out:
Units transferred to the next department.................
Cost per equivalent unit ..........................................
Cost of units transferred out....................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
5,900
$17.24
$101,730
5,900
$19.30
$113,864 $215,595
4-119
Chapter 4 Systems Design: Process Costing
124. The cost of ending work in process inventory in the first processing department
according to the company's cost system is closest to:
A) $47,503
B) $19,001
C) $24,604
D) $30,877
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 4 Level: Medium
Solution:
Equivalent units of production
Transferred to next department ..............................
Ending work in process (materials: 1,300 units × 65% complete;
conversion: 1,300 units × 40% complete) ............
Equivalent units of production ...............................
Materials Conversion
5,900
5,900
845
6,745
520
6,420
Cost per Equivalent Unit
Cost of beginning work in process .........................
Cost added during the period .................................
Total cost (a)...........................................................
Equivalent units of production (b) .........................
Cost per equivalent unit, (a) ÷ (b) ..........................
Materials Conversion
$ 7,700 $ 2,900
108,600
121,000
$116,300 $123,900
6,745
$17.24
6,420
$19.30
Materials Conversion Total
Ending work in process inventory:
Equivalent units of production (materials: 1,300 units × 65%
complete; conversion: 1,300 units × 40% complete)
4-120
845
520
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 125-126:
Kumari Corporation uses the weighted-average method in its process costing system. Data
concerning the first processing department for the most recent month are listed below:
Beginning work in process inventory:
Units in beginning work in process inventory .....................
Materials costs......................................................................
Conversion costs ..................................................................
Percent complete with respect to materials ..........................
Percent complete with respect to conversion .......................
Units started into production during the month ......................
Units transferred to the next department during the month ....
Materials costs added during the month ..................................
Conversion costs added during the month ..............................
Ending work in process inventory:
Units in ending work in process inventory ..........................
Percent complete with respect to materials ..........................
Percent complete with respect to conversion .......................
200
$2,900
$6,400
85%
70%
7,800
7,400
$128,000
$332,600
600
60%
35%
Note: Your answers may differ from those offered below due to rounding error. In all cases,
select the answer that is the closest to the answer you computed. To reduce rounding error,
carry out all computations to at least three decimal places.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-121
Chapter 4 Systems Design: Process Costing
125. The total cost transferred from the first processing department to the next processing
department during the month is closest to:
A) $491,328
B) $469,900
C) $460,600
D) $454,478
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2,3,4 Level: Medium
Solution:
Equivalent units of production
Materials Conversion
Transferred to next department ..............................
7,400
7,400
Ending work in process (materials: 600 units ×
60% complete; conversion: 600 units × 35%
complete) ............................................................
360
210
Equivalent units of production ...............................
7,760
7,610
Cost per Equivalent Unit
Materials Conversion
Cost of beginning work in process ......................... $ 2,900 $ 6,400
Cost added during the period.................................. 128,000
332,600
Total cost (a) ........................................................... $130,900 $339,000
Equivalent units of production (b) ..........................
Cost per equivalent unit, (a) ÷ (b) ..........................
7,760
$16.87
7,610
$44.55
Materials Conversion Total
Units transferred out:
Units transferred to the next department ................
7,400
7,400
Cost per equivalent unit .......................................... $16.87
$44.55
Cost of units transferred out ................................... $124,827 $329,645 $454,473
4-122
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
126. The cost of ending work in process inventory in the first processing department
according to the company's cost system is closest to:
A) $15,428
B) $36,850
C) $22,110
D) $12,897
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2,3,4 Level: Medium
Solution:
Equivalent units of production
Materials Conversion
Transferred to next department .............................
7,400
7,400
Ending work in process (materials: 600 units ×
60% complete; conversion: 600 units × 35%
complete) ...........................................................
360
210
Equivalent units of production ..............................
7,760
7,610
Cost per Equivalent Unit
Materials Conversion
Cost of beginning work in process ....................... $ 2,900 $ 6,400
Cost added during the period ................................ 128,000
332,600
Total cost (a) ......................................................... $130,900 $339,000
Equivalent units of production (b) ........................
Cost per equivalent unit, (a) ÷ (b) .........................
7,760
$16.87
7,610
$44.55
Materials Conversion
Ending work in process inventory: .......................
Equivalent units of production (materials: 600
units × 60% complete; conversion: 600 units ×
35% complete) ..................................................
Cost per equivalent unit ........................................
Cost of ending work in process inventory ............
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
360
$16.87
$6,073
Total
210
$44.55
$9,355 $15,428
4-123
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 127-129:
Loxham Corporation uses the weighted-average method in its process costing system. Data
concerning the first processing department for the most recent month are listed below:
Beginning work in process inventory:
Units in beginning work in process inventory ....................
400
Materials costs.....................................................................
$6,900
Conversion costs .................................................................
$2,500
Percent complete with respect to materials .........................
80%
Percent complete with respect to conversion ......................
15%
Units started into production during the month .....................
6,000
Units transferred to the next department during the month ...
5,400
Materials costs added during the month ................................. $112,500
Conversion costs added during the month ............................. $210,300
Ending work in process inventory:
Units in ending work in process inventory .........................
1,000
Percent complete with respect to materials .........................
80%
Percent complete with respect to conversion ......................
30%
Note: Your answers may differ from those offered below due to rounding error. In all cases,
select the answer that is the closest to the answer you computed. To reduce rounding error,
carry out all computations to at least three decimal places.
127. What are the equivalent units for materials for the month in the first processing
department?
A) 800
B) 6,400
C) 5,400
D) 6,200
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
4-124
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Solution:
Equivalent units of production
Transferred to next department .........................................
Ending work in process (materials: 1,000 units × 80%
complete; conversion: 1,000 units × 30% complete) ....
Equivalent units of production ..........................................
Materials
5,400
800
6,200
128. The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
A) $39.20
B) $37.33
C) $33.25
D) $36.89
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 3 Level: Medium
Solution:
Equivalent units of production
Conversion
Transferred to next department .........................................
5,400
Ending work in process (1,000 units × 30% complete) ....
300
Equivalent units of production ..........................................
5,700
Cost per Equivalent Unit
Cost of beginning work in process ...................................
Cost added during the period ............................................
Total cost (a) .....................................................................
Conversion
$ 2,500
210,300
$212,800
Equivalent units of production (b) ....................................
Cost per equivalent unit, (a) ÷ (b) .....................................
5,700
$37.33
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-125
Chapter 4 Systems Design: Process Costing
129. The cost of ending work in process inventory in the first processing department
according to the company's cost system is closest to:
A) $16,977
B) $56,591
C) $45,273
D) $26,606
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 4 Level: Medium
Solution:
Equivalent units of production
Materials Conversion
Transferred to next department ................................
5,400
5,400
Ending work in process (materials: 1,000 units ×
80% complete; conversion: 1,000 units × 30%
complete) ..............................................................
800
300
Equivalent units of production .................................
6,200
5,700
Cost per Equivalent Unit
Materials Conversion
Cost of beginning work in process .......................... $ 6,900 $ 2,500
Cost added during the period ................................... 112,500
210,300
Total cost (a) ............................................................ $119,400 $212,800
Equivalent units of production (b) ...........................
Cost per equivalent unit, (a) ÷ (b) ............................
6,200
$19.26
5,700
$37.33
Materials Conversion
Ending work in process inventory:
Equivalent units of production (materials: 1,000
units × 80% complete; conversion: 1,000 units ×
30% complete) .....................................................
Cost per equivalent unit ...........................................
Cost of ending work in process inventory ...............
4-126
800
$19.26
$15,406
Total
300
$37.33
$11,200 $26,606
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 130-132:
Doz Corporation uses the weighted-average method in its process costing system. This month,
the beginning inventory in the first processing department consisted of 600 units. The costs
and percentage completion of these units in beginning inventory were:
Materials costs ...................
Conversion costs ...............
Cost
Percent Complete
$3,700
60%
$11,900
45%
A total of 5,000 units were started and 4,200 units were transferred to the second processing
department during the month. The following costs were incurred in the first processing
department during the month:
Materials costs ...................
Conversion costs ...............
$39,000
$166,100
The ending inventory was 75% complete with respect to materials and 35% complete with
respect to conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all cases,
select the answer that is the closest to the answer you computed. To reduce rounding error,
carry out all computations to at least three decimal places.
130. How many units are in ending work in process inventory in the first processing
department at the end of the month?
A) 900
B) 800
C) 1,400
D) 4,400
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Easy
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning ...............................................
Units started into production during the month .................
Units completed and transferred out during the month .....
Work in process, ending ....................................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
600
5,000
4,200
1,400
4-127
Chapter 4 Systems Design: Process Costing
131. What are the equivalent units for conversion costs for the month in the first processing
department?
A) 5,600
B) 4,690
C) 4,200
D) 490
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning ...............................................
Units started into production during the month .................
Units completed and transferred out during the month .....
Work in process, ending ....................................................
600
5,000
4,200
1,400
Equivalent units of production
Transferred to next department ............................................
Ending work in process (1,400 units × 35% complete) .......
Equivalent units of production .............................................
4-128
Conversion
4,200
490
4,690
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
132. The cost per equivalent unit for materials for the month in the first processing
department is closest to:
A) $7.43
B) $6.96
C) $8.13
D) $7.63
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 3 Level: Medium
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning ...............................................
Units started into production during the month .................
Units completed and transferred out during the month .....
Work in process, ending ....................................................
600
5,000
4,200
1,400
Equivalent units of production
Transferred to next department .........................................
Ending work in process (1,400 units × 75% complete) ....
Equivalent units of production ..........................................
Materials
4,200
1,050
5,250
Cost per Equivalent Unit
Cost of beginning work in process ....................................
Cost added during the period ............................................
Total cost (a)......................................................................
Materials
$ 3,700
39,000
$42,700
Equivalent units of production (b) ....................................
Cost per equivalent unit, (a) ÷ (b) .....................................
5,250
$8.13
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-129
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 133-134:
L.A. Company uses the weighted-average method in its process costing system. The
following information for the assembly department was obtained from the accounting records
for September (all materials are added at the beginning of the process):
Labor and
Overhead Percent
Complete
25%
Work in process inventory, Sept. 1 .....
Transferred in during the month .........
Work in process inventory, Sept. 30 ...
Number
of Units
40,000
100,000
20,000
Beginning work in process inventory .
Cost added during the month ..............
Transferred
In
Materials
$80,000
$37,600
$251,000 $122,400
50%
Labor and
Overhead
$5,000
$66,500
133. The equivalent units for material for the month are:
A) 100,000 units
B) 120,000 units
C) 140,000 units
D) 160,000 units
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
4-130
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Solution:
+
+
−
=
To solve for units transferred:
Work in process, beginning .............................................
Units started into production during the month ...............
Work in process, ending ..................................................
Units completed and transferred out during the month ...
40,000
100,000
20,000
120,000
Equivalent units of production
Transferred to next department ............................................
Ending work in process (20,000 units × 100% complete) ...
Equivalent units of production .............................................
Materials
120,000
20,000
140,000
134. The cost per equivalent unit for labor and overhead for the month is:
A) $0.50
B) $0.125
C) $0.52
D) $0.55
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 3 Level: Medium
Solution:
+
+
−
=
To solve for units transferred:
Work in process, beginning .............................................
Units started into production during the month ...............
Work in process, ending ..................................................
Units completed and transferred out during the month ...
40,000
100,000
20,000
120,000
Equivalent units of production
Transferred to next department ..............................................
Ending work in process (20,000 units × 50% complete) .......
Equivalent units of production ...............................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Labor and
Overhead
120,000
10,000
130,000
4-131
Chapter 4 Systems Design: Process Costing
Cost per Equivalent Unit
Cost of beginning work in process ........................................
Cost added during the period .................................................
Total cost (a) ..........................................................................
Labor and
Overhead
$ 5,000
66,500
$71,500
Equivalent units of production (b) .........................................
Cost per equivalent unit, (a) ÷ (b) ..........................................
130,000
$0.55
Use the following to answer questions 135-136:
Iyer Corporation uses the weighted-average method in its process costing system. Data
concerning the first processing department for the most recent month are listed below:
Beginning work in process inventory:
Units in beginning work in process inventory .......................
800
Materials costs........................................................................ $13,900
Conversion costs ....................................................................
$7,200
Percent complete with respect to materials ............................
85%
Percent complete with respect to conversion .........................
20%
Units started into production during the month ........................
7,200
Units transferred to the next department during the month ......
6,100
Materials costs added during the month .................................... $115,700
Conversion costs added during the month ................................ $240,600
Ending work in process inventory:
Units in ending work in process inventory ............................
1,900
Percent complete with respect to materials ............................
75%
Percent complete with respect to conversion .........................
10%
Note: Your answers may differ from those offered below due to rounding error. In all cases,
select the answer that is the closest to the answer you computed. To reduce rounding error,
carry out all computations to at least three decimal places.
4-132
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
135. What are the equivalent units for conversion costs for the month in the first processing
department?
A) 8,000
B) 6,290
C) 6,100
D) 190
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
Solution:
Equivalent units of production
Conversion
Transferred to next department ........................................................
6,100
Ending work in process (1,900 units × 10% complete) ...................
190
Equivalent units of production .........................................................
6,290
136. The cost per equivalent unit for materials for the month in the first processing
department is closest to:
A) $16.20
B) $17.22
C) $14.46
D) $15.38
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 3 Level: Medium
Solution:
Equivalent units of production
Transferred to next department .........................................
Ending work in process (1,900 units × 75% complete) ....
Equivalent units of production ..........................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Materials
6,100
1,425
7,525
4-133
Chapter 4 Systems Design: Process Costing
Cost per Equivalent Unit
Cost of beginning work in process ...................................
Cost added during the period ............................................
Total cost (a) .....................................................................
Materials
$ 13,900
115,700
$129,600
Equivalent units of production (b) ....................................
Cost per equivalent unit, (a) ÷ (b) .....................................
7,525
$17.22
Use the following to answer questions 137-138:
Jones Corporation uses the weighted-average method in its process costing system. Data
concerning the first processing department for the most recent month are listed below:
Beginning work in process inventory:
Units in beginning work in process inventory .....................
Materials costs......................................................................
Conversion costs ..................................................................
Percent complete with respect to materials ..........................
Percent complete with respect to conversion .......................
Units started into production during the month ......................
Units transferred to the next department during the month ....
Materials costs added during the month ..................................
Conversion costs added during the month ..............................
Ending work in process inventory:
Units in ending work in process inventory ..........................
Percent complete with respect to materials ..........................
Percent complete with respect to conversion .......................
500
$8,500
$14,700
85%
55%
5,300
4,400
$79,100
$210,700
1,400
50%
30%
Note: Your answers may differ from those offered below due to rounding error. In all cases,
select the answer that is the closest to the answer you computed. To reduce rounding error,
carry out all computations to at least three decimal places.
137. The cost per equivalent unit for materials for the month in the first processing
department is closest to:
A) $15.51
B) $13.64
C) $15.10
D) $17.18
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2,3 Level: Medium
4-134
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Solution:
Equivalent units of production
Transferred to next department .........................................
Ending work in process (1,400 units × 50% complete) ....
Equivalent units of production ..........................................
Materials
4,400
700
5,100
Cost per Equivalent Unit
Cost of beginning work in process ...................................
Cost added during the period ............................................
Total cost (a) .....................................................................
Materials
$ 8,500
79,100
$87,600
Equivalent units of production (b) ....................................
Cost per equivalent unit, (a) ÷ (b) .....................................
5,100
$17.18
138. The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
A) $43.71
B) $49.10
C) $46.76
D) $38.86
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2,3 Level: Medium
Solution:
Equivalent units of production
Conversion
Transferred to next department .........................................
4,400
Ending work in process (1,400 units × 30% complete) ....
420
Equivalent units of production ..........................................
4,820
Cost per Equivalent Unit
Cost of beginning work in process ...................................
Cost added during the period ............................................
Total cost (a) .....................................................................
Conversion
$ 14,700
210,700
$225,400
Equivalent units of production (b) ....................................
Cost per equivalent unit, (a) ÷ (b) .....................................
4,820
$46.76
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-135
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 139-142:
(Appendix 4A) The following data relate to the Mixing Department of Dillard Company for a
recent month:
Beginning work in process inventory ....
Units started into production ..................
Units completed and transferred out ......
Ending work in process inventory..........
Units
10,000
50,000
51,000
9,000
Percent Complete
with Respect to
Processing
65%
30%
All materials are added at the beginning of the mixing process.
139. Assuming that Dillard Company uses the FIFO method, the equivalent units for
materials would be:
A) 47,200
B) 50,000
C) 51,000
D) 59,000
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium
Solution:
Equivalent Units of Production
To complete beginning work in process (10,000 units × 0%) ...
Units started and completed during the period (50,000 units
started − 9,000 units in ending inventory) .............................
Ending work in process (9,000 units × 100% complete) ...........
Equivalent units of production ...................................................
4-136
Materials
0
41,000
9,000
50,000
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
140. Assuming that Dillard Company uses the FIFO method, the equivalent units for
processing would be:
A) 47,200
B) 50,200
C) 51,000
D) 60,000
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium
Solution:
Equivalent Units of Production
Conversion
To complete beginning work in process (10,000 units × 35%) .
3,500
Units started and completed during the period (50,000 units
started − 9,000 units in ending inventory) .............................
41,000
Ending work in process (9,000 units × 30% complete) .............
2,700
Equivalent units of production ...................................................
47,200
141. Assuming that Dillard Company uses the weighted-average method, the equivalent
units for materials would be:
A) 50,000
B) 51,000
C) 53,700
D) 60,000
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
Solution:
Equivalent units of production
Materials
Transferred to next department ......................................................................
51,000
Ending work in process (9,000 units × 100% complete) ...............................
9,000
Equivalent units of production .......................................................................
60,000
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-137
Chapter 4 Systems Design: Process Costing
142. Assuming that Dillard Company uses the weighted-average method, the equivalent
units for processing would be:
A) 53,700
B) 51,000
C) 50,200
D) 47,200
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
Solution:
Equivalent units of production
Conversion
Transferred to next department .........................................
51,000
Ending work in process (9,000 units × 30% complete) ....
2,700
Equivalent units of production ..........................................
53,700
Use the following to answer questions 143-146:
(Appendix 4A) Activities in the Sargent Company's Assembly Department for the month of
March follow:
Work-in-process inventory, March 1 .....
Started into production during March ....
Work-in-process inventory, March 31 ...
4-138
Units Materials
7,000
70%
66,000
5,000
45%
Percent
Complete with
Respect to
Labor &
Overhead
35%
30%
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
143. The equivalent units for materials for March, using the weighted-average method,
would be:
A) 66,000
B) 68,000
C) 70,250
D) 71,000
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
Solution:
+
+
−
=
To solve for units transferred:
Work in process, beginning ...............................................
Units started into production during the month .................
Work in process, ending ....................................................
Units completed and transferred out during the month .....
7,000
66,000
5,000
68,000
Equivalent units of production
Transferred to next department ..............................................
Ending work in process (5,000 units × 45% complete) .........
Equivalent units of production ...............................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Materials
68,000
2,250
70,250
4-139
Chapter 4 Systems Design: Process Costing
144. The equivalent units for labor and overhead for March, using the weighted-average
method, would be:
A) 69,500
B) 68,000
C) 67,500
D) 71,000
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
Solution:
+
+
−
=
To solve for units transferred:
Work in process, beginning ...............................................
Units started into production during the month .................
Work in process, ending ....................................................
Units completed and transferred out during the month .....
7,000
66,000
5,000
68,000
Equivalent units of production
Transferred to next department .........................................
Ending work in process (5,000 units × 30% complete) ....
Equivalent units of production ..........................................
4-140
Labor and
Overhead
68,000
1,500
69,500
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
145. The equivalent units for materials for March using the FIFO method, would be:
A) 68,000
B) 65,350
C) 71,000
D) 67,000
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium
Solution:
+
+
−
=
To solve for units transferred:
Work in process, beginning ...............................................
Units started into production during the month .................
Work in process, ending ....................................................
Units completed and transferred out during the month .....
7,000
66,000
5,000
68,000
Equivalent Units of Production
To complete beginning work in process (7,000 units × 30%) ...........
Units started and completed during the period (66,000 units started
− 5,000 units in ending inventory) .................................................
Ending work in process (5,000 units × 45% complete) .....................
Equivalent units of production ...........................................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Materials
2,100
61,000
2,250
65,350
4-141
Chapter 4 Systems Design: Process Costing
146. The equivalent units for labor and overhead for March using the FIFO method, would
be:
A) 62,950
B) 65,050
C) 66,000
D) 67,050
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 5 Level: Medium
Solution:
+
+
−
=
To solve for units transferred:
Work in process, beginning ...............................................
Units started into production during the month .................
Work in process, ending ....................................................
Units completed and transferred out during the month .....
7,000
66,000
5,000
68,000
Equivalent Units of Production
Labor and
Overhead
To complete beginning work in process (7,000 units × 65%) ........
4,550
Units started and completed during the period (66,000 units
started − 5,000 units in ending inventory) ..................................
61,000
Ending work in process (5,000 units × 30% complete) ..................
1,500
Equivalent units of production ........................................................
67,050
Use the following to answer questions 147-148:
Bronson Company has a process costing system and uses the weighted-average method. The
company had 6,000 units in work in process on January 1 that were 60% complete with
respect to conversion costs. During January 20,000 units were completed. On January 31,
8,000 units remained in work in process that were 40% complete with respect to conversion
costs. Materials are added at the beginning of the process.
4-142
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
147. The equivalent units for January for conversion costs were:
A) 19,600
B) 22,400
C) 23,200
D) 25,600
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium Source: CPA, adapted
Solution:
Equivalent units of production
Transferred to next department .........................................
Ending work in process (8,000 units × 40% complete) ....
Equivalent units of production ..........................................
Conversion
20,000
3,200
23,200
148. How many units were started into production during January?
A) 18,000
B) 19,600
C) 20,000
D) 22,000
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium Source: CPA, adapted
Solution:
+
+
−
=
To solve for units started into production:
Work in process, ending ..................................................
Units completed and transferred out during the month ...
Work in process, beginning .............................................
Units started into production during the month ...............
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
8,000
20,000
6,000
22,000
4-143
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 149-150:
The following information relates to the Blending Department of Kedakai Products Company
for the month of May. Kedakai uses a weighted-average process costing system.
Work in process, beginning (May 1):
Units in process ..........................................................................................
30,000
Percent complete with respect to materials ................................................
100%
Percent complete with respect to conversion .............................................
10%
Units completed and transferred out during May .........................................
290,000
Work in process, ending (May 31):
Units in process ..........................................................................................
17,000
Percent complete with respect to materials ................................................
100%
Percent complete with respect to conversion .............................................
80%
149. What are the Blending Department's equivalent units related to materials for May?
A) 260,000
B) 277,000
C) 290,000
D) 307,000
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
Solution:
Equivalent units of production
Transferred to next department .........................................
Ending work in process (17,000 units × 100% complete)
Equivalent units of production ..........................................
4-144
Materials
290,000
17,000
307,000
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
150. What are the Blending Department's equivalent units related to conversion costs for
May?
A) 266,400
B) 290,400
C) 293,400
D) 303,600
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 2 Level: Medium
Solution:
Equivalent units of production
Conversion
Transferred to next department .........................................
290,000
Ending work in process (17,000 units × 80% complete) ..
13,600
Equivalent units of production ..........................................
303,600
Use the following to answer questions 151-152:
Bettie Corporation uses a weighted-average process costing system to collect costs related to
production. The following selected information relates to production for October:
Units completed and transferred out .....................
Equivalent units: work in process, October 31 .....
Total equivalent units ............................................
Materials Conversion
50,000
50,000
10,000
4,000
60,000
54,000
Costs in work in process on October 1 ..................
Costs added to production during October ............
Total cost ...............................................................
Materials Conversion
$ 9,000
$ 5,400
243,000
513,000
$252,000
$518,400
All materials at Bettie are added at the beginning of the production process.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-145
Chapter 4 Systems Design: Process Costing
151. What total amount of cost should be assigned to the units completed and transferred
out during October?
A) $642,000
B) $677,500
C) $690,000
D) $691,900
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 3,4 Level: Medium
Solution:
Total cost ...................................................
Equivalent units .........................................
Cost per equivalent unit.............................
× # of units completed and transferred out
Total cost of units completed and
transferred out ........................................
Materials Conversion
$252,000
$518,400
÷ 60,000
÷ 54,000
$4.20
$9.60
50,000
50,000
$210,000
Total
$480,000 $690,000
152. What total amount of cost should be assigned to the units in work in process on
October 31?
A) $78,500
B) $80,400
C) $135,500
D) $138,000
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 3,4 Level: Medium
Solution:
Materials Conversion
Total
Total cost ................................................... $252,000
$518,400
Equivalent units ......................................... ÷ 60,000
÷ 54,000
Cost per equivalent unit.............................
$4.20
$9.60
× # of equivalent units in ending work in
process ...................................................
10,000
4,000
Total cost of ending work in process ........ $42,000
$38,400 $80,400
4-146
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 153-154:
(Appendix 4A) Owens Company uses a process costing system. For March, the beginning
work in process inventory consisted of 60,000 units that were 60% complete with respect to
processing. The ending work in process inventory for the month consisted of units that were
20% complete with respect to processing. A summary of unit and cost data for the month
follows:
Work in process inventory on March 1 .....
Units started into production and costs
incurred during the month .....................
Units completed and transferred out .........
Units Processing Cost
60,000
$35,000
190,000
200,000
$700,000
153. Assuming that Owens Company uses the weighted-average method, which of the
following is closest to the cost per equivalent unit for processing cost for March?
A) $4.08
B) $3.87
C) $3.68
D) $3.50
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 3 Level: Medium
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning ............................................... 60,000
Units started into production during the month ................. 190,000
Units completed and transferred out during the month ..... 200,000
Work in process, ending .................................................... 50,000
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-147
Chapter 4 Systems Design: Process Costing
Equivalent units of production
Processing
Cost
Transferred to next department ..............................................
200,000
Ending work in process (50,000 units × 20% complete) .......
Equivalent units of production ...............................................
10,000
210,000
Cost per Equivalent Unit
Conversion
Cost of beginning work in process ........................................
$ 35,000
Cost added during the period .................................................
700,000
Total cost (a) .......................................................................... $735,000
Equivalent units of production (b) .........................................
Cost per equivalent unit, (a) ÷ (b) ..........................................
210,000
$3.50
154. Assuming that Owens Company uses the FIFO method, which of the following is
closest to the cost per equivalent unit for processing cost for March?
A) $3.23
B) $3.98
C) $4.02
D) $4.22
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting Appendix: 4A LO: 6 Level: Hard
4-148
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Solution:
+
+
−
=
To solve for ending work in process:
Work in process, beginning ............................................... 60,000
Units started into production during the month ................. 190,000
Units completed and transferred out during the month ..... 200,000
Work in process, ending .................................................... 50,000
Equivalent Units of Production
Processing
Cost
To complete beginning work in process (60,000 units ×
40%) ...................................................................................
Units started and completed during the period (190,000
units started − 50,000 units in ending inventory) ...............
140,000
Ending work in process (50,000 units × 20% complete) .......
Equivalent units of production ...............................................
10,000
174,000
24,000
Cost per Equivalent Unit
Cost added during the period (a)............................................
Equivalent units of production (b) .........................................
Cost per equivalent unit (a) ÷ (b) ...........................................
Conversion
$700,000
174,000
$4.02
Use the following to answer questions 155-156:
The following information relates to the Assembly Department of Jataca Corporation for the
month of November. Jataca uses a weighted-average process costing system. All materials at
Jataca are added at the beginning of the production process.
Work in process, November 1 .......
Units started into production .........
Work in process, November 30 .....
Number of
Units
4,000
317,000
10,000
Percent Complete
with Respect to
Conversion
40%
90%
On November 1, the work in process inventory account contained $6,400 of material cost and
$4,400 of conversion cost. Cost per equivalent unit for November was $1.50 for materials and
$2.80 for conversion costs.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-149
Chapter 4 Systems Design: Process Costing
155. What total amount of cost should be assigned to the units transferred out during
November?
A) $1,337,300
B) $1,348,100
C) $1,369,500
D) $1,380,300
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 4 Level: Medium
Solution:
+
+
−
=
To solve for units transferred:
Work in process, beginning ..............................................
Units started into production during the month ................
Work in process, ending ...................................................
Units completed and transferred out during the month ....
4,000
317,000
10,000
311,000
Equivalent units of production
Transferred to next department ............................
Ending work in process (materials: 10,000 units
× 100% complete; conversion: 10,000 units ×
90% complete) .................................................
Equivalent units of production .............................
Cost per equivalent unit (given)...........................
Materials Conversion
311,000
311,000
10,000
321,000
9,000
320,000
$1.50
$2.80
Materials Conversion
Units transferred out:
Units transferred to the next department.............. 311,000
Cost per equivalent unit .......................................
$1.50
Cost of units transferred out................................. $466,500
4-150
311,000
$2.80
$870,800 $1,337,300
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
156. What total amount of cost should be assigned to the units in work in process on
November 30?
A) $17,800
B) $38,700
C) $40,200
D) $43,000
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 4 Level: Medium
Solution:
+
+
−
=
To solve for units transferred:
Work in process, beginning ..............................................
Units started into production during the month ................
Work in process, ending ...................................................
Units completed and transferred out during the month ....
4,000
317,000
10,000
311,000
Equivalent units of production
Transferred to next department ...........................
Ending work in process (materials: 10,000 units
× 100% complete; conversion: 10,000 units ×
90% complete) ................................................
Equivalent units of production ............................
Cost per equivalent unit (given)..........................
Materials Conversion
311,000
311,000
10,000
321,000
9,000
320,000
$1.50
$2.80
Cost of Ending Work in Process Inventory and
Units Transferred Out
Materials Conversion
Ending work in process inventory:
Equivalent units of production (materials:
10,000 units × 100% complete; conversion:
10,000 units × 90% complete) ........................
Cost per equivalent unit ......................................
Cost of ending work in process inventory ..........
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
10,000
$1.50
$15,000
9,000
$2.80
$25,200 $40,200
4-151
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 157-162:
(Appendix 4A) Moureaux Corporation uses the FIFO method in its process costing system.
Data concerning the first processing department for the most recent month are listed below:
Beginning work in process inventory:
Units in beginning work in process inventory ............
Materials costs.............................................................
Conversion costs .........................................................
Percent complete with respect to materials .................
Percent complete with respect to conversion ..............
Units started into production during the month .............
Units transferred to the next department during the
month ..........................................................................
Materials costs added during the month .........................
Conversion costs added during the month .....................
Ending work in process inventory:
Units in ending work in process inventory .................
Percent complete with respect to materials .................
Percent complete with respect to conversion ..............
600
$7,800
$10,700
65%
50%
5,700
5,000
$92,400
$160,000
1,300
70%
40%
Note: Your answers may differ from those offered below due to rounding error. In all cases,
select the answer that is the closest to the answer you computed. To reduce rounding error,
carry out all computations to at least three decimal places.
4-152
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
157. What are the equivalent units for materials for the month in the first processing
department?
A) 910
B) 5,520
C) 6,300
D) 4,400
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 5 Level: Medium
Solution:
Equivalent Units of Production
To complete beginning work in process (600 units × 35%) ......
Units started and completed during the period (5,700 units
started − 1,300 units in ending inventory) .............................
Ending work in process (1,300 units × 70% complete) .............
Equivalent units of production ...................................................
Materials
210
4,400
910
5,520
158. What are the equivalent units for conversion costs for the month in the first processing
department?
A) 520
B) 6,300
C) 4,400
D) 5,220
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 5 Level: Medium
Solution:
Equivalent Units of Production
To complete beginning work in process (600 units × 50%) ........
Units started and completed during the period (5,700 units
started − 1,300 units in ending inventory) ...............................
Ending work in process (1,300 units × 40% complete) ...............
Equivalent units of production .....................................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Conversion
300
4,400
520
5,220
4-153
Chapter 4 Systems Design: Process Costing
159. The cost per equivalent unit for materials for the month in the first processing
department is closest to:
A) $20.00
B) $14.67
C) $16.74
D) $18.48
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 6 Level: Medium
Solution:
Equivalent Units of Production
To complete beginning work in process (600 units × 35%) ......
Units started and completed during the period (5,700 units
started − 1,300 units in ending inventory) .............................
Ending work in process (1,300 units × 70% complete) .............
Equivalent units of production ...................................................
Materials
210
4,400
910
5,520
Cost per Equivalent Unit
Cost added during the period (a)................................................
Equivalent units of production (b) .............................................
Cost per equivalent unit (a) ÷ (b) ...............................................
4-154
Materials
$92,400
5,520
$16.74
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
160. The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
A) $30.65
B) $32.18
C) $32.00
D) $35.67
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 6 Level: Medium
Solution:
Equivalent Units of Production
Conversion
To complete beginning work in process (600 units × 50%) ......
300
Units started and completed during the period (5,700 units
started − 1,300 units in ending inventory) .............................
4,400
Ending work in process (1,300 units × 40% complete) .............
520
Equivalent units of production ...................................................
5,220
Cost per Equivalent Unit
Conversion
Cost added during the period (a)................................................ $160,000
Equivalent units of production (b) .............................................
5,220
Cost per equivalent unit (a) ÷ (b) ...............................................
$30.65
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-155
Chapter 4 Systems Design: Process Costing
161. The total cost transferred from the first processing department to the next processing
department during the month is closest to:
A) $270,900
B) $252,400
C) $239,726
D) $298,557
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 7 Level: Medium
Solution:
Equivalent Units of Production
Materials Conversion
To complete beginning work in process
(materials: 600 units × 35% complete;
conversion: 600 units × 50% complete) .........
Units started and completed during the period
(5,700 units started − 1,300 units in ending
inventory) .......................................................
Ending work in process (materials: 1,300 units
× 70% complete; conversion: 1,300 units ×
40% complete) ...............................................
Equivalent units of production ...........................
210
300
4,400
4,400
910
5,520
520
5,220
Cost per Equivalent Unit
Cost added during the period (a)........................
Equivalent units of production (b) .....................
Cost per equivalent unit (a) ÷ (b) .......................
4-156
Materials Conversion
$92,400 $160,000
5,520
5,220
$16.74
$30.65
Total
$47.39
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Units transferred out:
Cost in beginning inventory...............................
$7,800
Cost to complete the units in beginning inventory:
Equivalent units of production required to
complete the beginning inventory ..................
210
Cost per equivalent unit .....................................
$16.74
Cost to complete the units in beginning
inventory ........................................................
$3,515
Cost of units started and completed this period:
Units started and completed this period .............
4,400
Cost per equivalent unit .....................................
$16.74
Cost of units started and completed this period . $73,652
Cost of units transferred out...............................
$10,700
$ 18,500
300
$30.65
$9,195
4,400
$30.65
$134,866
12,710
208,518
$239,728
162. The cost of ending work in process inventory in the first processing department
according to the company's cost system is closest to:
A) $61,607
B) $24,643
C) $31,171
D) $43,125
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 7 Level: Medium
Solution:
Equivalent Units of Production
Materials Conversion
To complete beginning work in process (materials:
600 units × 35%; conversion: 600 units × 50%)
Units started and completed during the period
(5,700 units started − 1,300 units in ending
inventory) ...........................................................
Ending work in process (materials: 1,300 units ×
70% complete; conversion: 1,300 units × 40%
complete) ............................................................
Equivalent units of production ...............................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
210
300
4,400
4,400
910
5,520
520
5,220
4-157
Chapter 4 Systems Design: Process Costing
Cost per Equivalent Unit
Cost added during the period (a)............................
Equivalent units of production (b) .........................
Cost per equivalent unit (a) ÷ (b) ...........................
Materials Conversion
$92,400 $160,000
5,520
5,220
$16.74
$30.65
Costs of Ending Work in Process Inventory and
Units Transferred Out
Materials Conversion
Ending work in process inventory:
Equivalent units of production ...............................
Cost per equivalent unit .........................................
Cost of ending work in process inventory .............
910
$16.74
$15,233
520
$30.65
$15,939 $31,171
Use the following to answer questions 163-165:
(Appendix 4A) Prochino Corporation uses the FIFO method in its process costing system.
Data concerning the first processing department for the most recent month are listed below:
Beginning work in process inventory:
Units in beginning work in process inventory .....................
Materials costs......................................................................
Conversion costs ..................................................................
Percent complete with respect to materials ..........................
Percent complete with respect to conversion .......................
Units started into production during the month ......................
Units transferred to the next department during the month ....
Materials costs added during the month ..................................
Conversion costs added during the month ..............................
Ending work in process inventory:
Units in ending work in process inventory ..........................
Percent complete with respect to materials ..........................
Percent complete with respect to conversion .......................
900
$9,500
$4,100
75%
25%
9,800
8,600
$112,900
$143,000
2,100
80%
45%
Note: Your answers may differ from those offered below due to rounding error. In all cases,
select the answer that is the closest to the answer you computed. To reduce rounding error,
carry out all computations to at least three decimal places.
4-158
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
163. What are the equivalent units for materials for the month in the first processing
department?
A) 1,680
B) 9,605
C) 10,700
D) 7,700
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 5 Level: Medium
Solution:
Equivalent Units of Production
Materials
To complete beginning work in process (900 units × 25%
complete) ................................................................................
Units started and completed during the period (9,800 units
started − 2,100 units in ending inventory) .............................
Ending work in process (2,100 units × 80% complete) .............
Equivalent units of production ...................................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
225
7,700
1,680
9,605
4-159
Chapter 4 Systems Design: Process Costing
164. The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
A) $18.22
B) $16.63
C) $15.34
D) $16.11
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 6 Level: Medium
Solution:
Equivalent Units of Production
Conversion
To complete beginning work in process (900 units × 75%
complete) ...................................................................................
Units started and completed during the period (9,800 units
started − 2,100 units in ending inventory) ................................
Ending work in process (2,100 units × 45% complete) ................
Equivalent units of production ......................................................
675
7,700
945
9,320
Cost per Equivalent Unit
Cost added during the period (a)...................................................
Equivalent units of production (b) ................................................
Cost per equivalent unit (a) ÷ (b) ..................................................
4-160
Conversion
$143,000
9,320
$15.34
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
165. The total cost transferred from the first processing department to the next processing
department during the month is closest to:
A) $255,900
B) $269,500
C) $235,249
D) $289,938
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 6 Level: Medium
Solution:
Equivalent Units of Production
Materials Conversion
To complete beginning work in process
(materials: 900 units × 25% complete;
conversion: 900 units × 75% complete) ........
Units started and completed during the period
(9,800 units started − 2,100 units in ending
inventory) ......................................................
Ending work in process (materials: 2,100 units
× 80% complete; conversion: 2,100 units ×
45% complete) ..............................................
Equivalent units of production ..........................
225
675
7,700
7,700
1,680
9,605
945
9,320
Cost per Equivalent Unit
Cost added during the period (a).......................
Equivalent units of production (b) ....................
Cost per equivalent unit (a) ÷ (b) ......................
Materials Conversion
$112,900 $143,000
9,605
9,320
$11.75
$15.34
Units transferred out:
Cost in beginning inventory..............................
$9,500
Cost to complete the units in beginning inventory:
Equivalent units of production required to
complete the beginning inventory .................
225
Cost per equivalent unit ....................................
$11.75
Cost to complete the units in beginning
inventory .......................................................
$2,645
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Total
$27.10
$4,100 $ 13,600
675
$15.34
$10,357
13,001
4-161
Chapter 4 Systems Design: Process Costing
Cost of units started and completed this period:
Units started and completed this period............
Cost per equivalent unit ....................................
Cost of units started and completed this period
Cost of units transferred out..............................
7,700
$11.75
$90,508
7,700
$15.34
$118,144
208,652
$235,253
Use the following to answer questions 166-167:
(Appendix 4A) Malmedy Company uses the FIFO method in its process costing system. The
following data pertain to operations in the first processing department for a recent month:
Work in process, beginning:
Units in process .................................................................
Percent complete with respect to materials .......................
Percent complete with respect to conversion ....................
Costs in the beginning inventory:
Materials cost ....................................................................
Conversion cost .................................................................
Units started into production during the month ...................
Units completed and transferred out during the month ........
Costs added to production during the month:
Materials cost ....................................................................
Conversion cost .................................................................
Work in process, ending:
Units in process .................................................................
Percent complete with respect to materials .......................
Percent complete with respect to conversion ....................
?
75%
50%
$2,300
$3,600
25,200
24,000
$98,750
$220,500
2,000
80%
45%
166. How many units were in the beginning work in process inventory?
A) 600 units
B) 1,000 units
C) 800 units
D) 1,400 units
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 5 Level: Medium
Solution:
+ Work in process, ending ....................................................
+ Units completed and transferred out during the month .....
− Units started into production during the month .................
= Work in process, beginning ...............................................
4-162
2,000
24,000
25,200
800
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
167. What was the cost per equivalent unit for materials during the month?
A) $3.95
B) $4.50
C) $2.00
D) $5.00
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 6 Level: Hard
Solution:
To complete beginning work in process (800 units × 25%) .......
Units started and completed during the period (25,200 units
started − 2,000 units in ending inventory)...............................
Ending work in process (2,000 units × 80% complete) ..............
Equivalent units of production ....................................................
23,200
1,600
25,000
Cost per Equivalent Unit
Cost added during the period (a) .................................................
Equivalent units of production (b) ..............................................
Cost per equivalent unit (a) ÷ (b) ................................................
$98,750
25,000
$3.95
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
200
4-163
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 168-169:
(Appendix 4A) Quochang Corporation uses the FIFO method in its process costing system.
Data concerning the first processing department for the most recent month are listed below:
Beginning work in process inventory:
Units in beginning work in process inventory .............
Materials costs..............................................................
Conversion costs ..........................................................
Percent complete with respect to materials ..................
Percent complete with respect to conversion ...............
Units started into production during the month ..............
Materials costs added during the month ..........................
Conversion costs added during the month ......................
Ending work in process inventory:
Units in ending work in process inventory ..................
Percent complete with respect to materials ..................
Percent complete with respect to conversion ...............
400
$6,900
$6,900
60%
35%
5,700
$142,800
$242,800
900
70%
45%
Note: Your answers may differ from those offered below due to rounding error. In all cases,
select the answer that is the closest to the answer you computed. To reduce rounding error,
carry out all computations to at least three decimal places.
4-164
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
168. How many units were started AND completed during the month in the first processing
department?
A) 5,200
B) 4,800
C) 6,100
D) 5,700
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 5 Level: Medium
Solution:
+
+
−
=
To solve for units transferred:
Work in process, beginning ...............................................
Units started into production during the month .................
Work in process, ending ....................................................
Units completed and transferred out during the month .....
400
5,700
900
5,200
Since there were 400 units in beginning work in process, these were not started AND
completed, so the 400 should be subtracted from the total units completed and
transferred out during the month (5,200 – 400 = 4,800) to arrive at the total units
which were both started and completed during the month.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-165
Chapter 4 Systems Design: Process Costing
169. The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
A) $46.69
B) $46.65
C) $44.43
D) $49.29
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 6 Level: Medium
Solution:
Conversion
To complete beginning work in process (400 units × 65%
complete) .................................................................................
Units started and completed during the period (5,700 units
started − 900 units in ending inventory)..................................
Ending work in process (900 units × 45% complete) .................
Equivalent units of production ....................................................
260
4,800
405
5,465
Cost per Equivalent Unit
Conversion
Cost added during the period (a) ................................................. $242,800
Equivalent units of production (b) ..............................................
5,465
Cost per equivalent unit (a) ÷ (b) ................................................
$44.43
4-166
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 170-171:
(Appendix 4A) Noguti Corporation uses the FIFO method in its process costing system. Data
concerning the first processing department for the most recent month are listed below:
Beginning work in process inventory:
Units in beginning work in process inventory .............
Materials costs..............................................................
Conversion costs ..........................................................
Percent complete with respect to materials ..................
Percent complete with respect to conversion ...............
Units started into production during the month ..............
Units transferred to the next department during the
month ...........................................................................
Materials costs added during the month ..........................
Conversion costs added during the month
Ending work in process inventory: .................................
Units in ending work in process inventory ..................
Percent complete with respect to materials ..................
Percent complete with respect to conversion ...............
200
$1,800
$2,100
70%
40%
7,300
7,000
$82,700
$174,600
500
50%
45%
Note: Your answers may differ from those offered below due to rounding error. In all cases,
select the answer that is the closest to the answer you computed. To reduce rounding error,
carry out all computations to at least three decimal places.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-167
Chapter 4 Systems Design: Process Costing
170. What are the equivalent units for materials for the month in the first processing
department?
A) 250
B) 7,500
C) 7,110
D) 6,800
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 5 Level: Medium
Solution:
Equivalent Units of Production
Materials
To complete beginning work in process (200 units × 30%
complete)
Units started and completed during the period (7,300 units
started − 500 units in ending inventory) ................................
Ending work in process (500 units × 50% complete) ................
Equivalent units of production ...................................................
4-168
60
6,800
250
7,110
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
171. The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
A) $26.25
B) $25.66
C) $24.44
D) $24.94
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 6 Level: Medium
Solution:
Equivalent Units of Production
Conversion
To complete beginning work in process (200 units × 60%
complete) ..................................................................................
Units started and completed during the period (7,300 units
started − 500 units in ending inventory) ..................................
Ending work in process (500 units × 45% complete) ..................
Equivalent units of production .....................................................
120
6,800
225
7,145
Cost per Equivalent Unit
Conversion
Cost added during the period (a).................................................. $174,600
Equivalent units of production (b) ...............................................
7,145
Cost per equivalent unit (a) ÷ (b) .................................................
$24.44
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-169
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 172-173:
(Appendix 4A) Outinki Corporation uses the FIFO method in its process costing system. Data
concerning the first processing department for the most recent month are listed below:
Beginning work in process inventory:
Units in beginning work in process inventory .............
Materials costs..............................................................
Conversion costs ..........................................................
Percent complete with respect to materials ..................
Percent complete with respect to conversion ...............
Units started into production during the month ..............
Units transferred to the next department during the
month ...........................................................................
Materials costs added during the month ..........................
Conversion costs added during the month ......................
Ending work in process inventory:
Units in ending work in process inventory ..................
Percent complete with respect to materials ..................
Percent complete with respect to conversion ...............
700
$8,600
$8,800
75%
45%
7,800
6,800
$97,600
$172,900
1,700
90%
25%
Note: Your answers may differ from those offered below due to rounding error. In all cases,
select the answer that is the closest to the answer you computed. To reduce rounding error,
carry out all computations to at least three decimal places.
4-170
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
172. What are the equivalent units for conversion costs for the month in the first processing
department?
A) 6,910
B) 425
C) 8,500
D) 6,100
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 5 Level: Medium
Solution:
Equivalent Units of Production
Conversion
To complete beginning work in process (700 units × 55%
complete) ...................................................................................
Units started and completed during the period (7,800 units
started − 1,700 units in ending inventory) ................................
Ending work in process (1,700 units × 25% complete) ................
Equivalent units of production ......................................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
385
6,100
425
6,910
4-171
Chapter 4 Systems Design: Process Costing
173. The cost per equivalent unit for materials for the month in the first processing
department is closest to:
A) $14.35
B) $12.51
C) $16.38
D) $11.48
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 6 Level: Medium
Solution:
Equivalent Units of Production
Materials
To complete beginning work in process (700 units × 25%
complete) .....................................................................................
Units started and completed during the period (7,800 units started
− 1,700 units in ending inventory) ..............................................
Ending work in process (1,700 units × 90% complete) ..................
Equivalent units of production ........................................................
175
6,100
1,530
7,805
Cost per Equivalent Unit
Cost added during the period (a).....................................................
Equivalent units of production (b) ..................................................
Cost per equivalent unit (a) ÷ (b) ....................................................
Materials
$97,600
7,805
$12.50
Use the following to answer questions 174-175:
(Appendix 4A) Sumptuous Beer Company manufactures beer in two departments, Fermenting
and Bottling. In the Fermenting Department, ingredients are placed in a large vat and
fermented for three days. The beer is then transferred over to Bottling where it is further
purified and bottled. Sumptuous uses a FIFO process cost system to collect costs in both
departments.
On May 1, the Fermenting Department had 32,000 gallons (units) in process. These gallons
were 100% complete with respect to materials (ingredients) and 80% complete with respect to
conversion cost. During May, Fermenting started an additional 460,000 gallons into
production. On May 31, Fermenting had 18,000 gallons in work in process. These gallons
were 100% complete with respect to materials and 60% complete with respect to conversion
cost.
4-172
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
174. What are the Fermenting Department's equivalent units (gallons) of production related
to materials for May?
A) 442,000
B) 460,000
C) 474,000
D) 492,000
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 5 Level: Hard
Solution:
Equivalent Units of Production
Materials
To complete beginning work in process (32,000 units × 0%
complete) ......................................................................................
Units started and completed during the period (460,000 units
started − 18,000 units in ending inventory) .................................
Ending work in process (18,000 units × 100% complete) ...............
Equivalent units of production .........................................................
0
442,000
18,000
460,000
175. What are the Fermenting Department's equivalent units (gallons) of production related
to conversion costs for May?
A) 459,200
B) 474,800
C) 477,200
D) 478,400
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 5 Level: Hard
Solution:
Equivalent Units of Production
Conversion
To complete beginning work in process (32,000 units × 20%
complete) .....................................................................................
Units started and completed during the period (460,000 units
started − 18,000 units in ending inventory) ................................
Ending work in process (18,000 units × 60% complete) ................
Equivalent units of production ........................................................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
6,400
442,000
10,800
459,200
4-173
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 176-177:
(Appendix 4A) Lahania Corporation uses a FIFO process costing system to collect costs
related to production. The following selected information relates to production for April:
Equivalent units:
Units in process, April 1........................................
Units started and completed during April .............
Units in process, April 31......................................
Total equivalent units ............................................
Materials Conversion
0
2,500
32,000
32,000
8,000
1,500
40,000
36,000
Costs in work in process on April 1 ......................
Costs added to production during April ................
Total cost ...............................................................
Materials Conversion
$ 50,400
$126,000
169,600
529,200
$220,000
$655,200
All materials at Lahania are added at the beginning of the production process. Conversion
costs are incurred uniformly over the production process. During April, Lahania completed
44,000 units.
4-174
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
176. What total amount of cost should be assigned to the units completed and transferred
out during April?
A) $642,830
B) $819,230
C) $833,360
D) $1,009,760
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 6,7 Level: Hard
Solution:
Equivalent Units of Production
To complete beginning work in process ............................
Units started and completed during the period ..................
Ending work in process ......................................................
Equivalent units of production ...........................................
Materials Conversion
0
2,500
32,000
32,000
8,000
1,500
40,000
36,000
Cost per Equivalent Unit
Materials Conversion
Cost added during the period (a) ........................................ $169,600 $529,200
Equivalent units of production (b) ..................................... 40,000
36,000
Cost per equivalent unit (a) ÷ (b) .......................................
$4.24
$14.70
Units transferred out:
Cost in beginning inventory ............................................... $50,400 $126,000
Cost to complete the units in beginning inventory:
Equivalent units of production required to complete the
beginning inventory........................................................
0
2,500
Cost per equivalent unit .....................................................
$4.24
$14.70
Cost to complete the units in beginning inventory ............
$0 $36,750
Cost of units started and completed this period:
Units started and completed this period ............................. 32,000
32,000
Cost per equivalent unit .....................................................
$4.24
$14.70
Cost of units started and completed this period ................. $135,680 $470,400
Cost of units transferred out ............................................... $186,080 $633,150
Total cost of units transferred out = $186,080 + $633,150 =$819,230.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-175
Chapter 4 Systems Design: Process Costing
177. What total amount of cost should be assigned to the units in work in process on April
30?
A) $55,970
B) $71,300
C) $151,520
D) $179,930
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 6,7 Level: Medium
Solution:
Equivalent Units of Production:
Materials Conversion
To complete beginning work in process ..................
0
2,500
Units started and completed during the period ........
Ending work in process ............................................
Equivalent units of production .................................
32,000
8,000
40,000
32,000
1,500
36,000
Cost per Equivalent Unit:
Materials Conversion Total
Cost added during the period (a) .............................. $169,600 $529,200
Equivalent units of production (b) ...........................
40,000
36,000
Cost per equivalent unit (a) ÷ (b) .............................
$4.24
$14.70 $18.94
Costs of Ending Work in Process Inventory and Units Transferred Out:
Materials Conversion
Ending work in process inventory:
Equivalent units of production .................................
8,000
1,500
Cost per equivalent unit ...........................................
$4.24
$14.70
Cost of ending work in process inventory ............... $33,920 $22,050 $55,970
4-176
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 178-179:
(Appendix 4A) The following information relates to the Cutting Department of Kittina
Corporation for the month of February. Kittina uses a FIFO process costing system. All
materials at Kittina are added at the beginning of the production process.
Work in process, February 1 .........
Units started into production .........
Work in process, February 28 .......
Number of
units
18,000
160,000
7,000
Percentage complete
with respect to
conversion
10%
40%
On February 1, the work in process inventory account contained $55,620 of material cost and
$123,120 of conversion cost. Cost per equivalent unit for February was $3.10 for materials
and $7.50 for conversion costs.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-177
Chapter 4 Systems Design: Process Costing
178. What total amount of cost should be assigned to the units completed and transferred
out during February?
A) $1,743,300
B) $1,812,600
C) $1,814,040
D) $1,922,040
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 7 Level: Hard
Solution:
Equivalent Units of Production
Materials Conversion
To complete beginning work in process
(materials: 18,000 units × 0% complete;
conversion: 18,000 units × 90% complete) ......
0
Units started and completed during the period
(160,000 units started − 7,000 units in ending
inventory) ......................................................... 153,000
Ending work in process (materials: 7,000 units ×
100% complete; conversion: 7,000 units ×
40% complete) .................................................
7,000
Equivalent units of production ............................. 160,000
16,200
153,000
2,800
172,000
Cost per Equivalent Unit
Materials Conversion
Cost added during the period (a).......................... $496,000 $1,290,000
Equivalent units of production (b) ....................... 160,000
172,000
Cost per equivalent unit (a) ÷ (b) .........................
$3.10
$7.50
Units transferred out:
Cost in beginning inventory................................. $55,620
Cost to complete the units in beginning inventory:
Equivalent units of production required to
complete the beginning inventory ....................
0
Cost per equivalent unit .......................................
$3.10
Cost to complete the units in beginning
inventory ..........................................................
$0
4-178
$10.60
$123,120 $ 178,740
16,200
$7.50
$121,500
121,500
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Cost of units started and completed this period:
Units started and completed this period ............... 153,000
153,000
Cost per equivalent unit .......................................
$3.10
$7.50
Cost of units started and completed this period ... $474,300 $1,147,500 1,621,800
Cost of units transferred out.................................
$1,922,040
179. What total amount of cost should be assigned to the units in work in process on
February 28?
A) $29,680
B) $42,700
C) $44,520
D) $53,200
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 7 Level: Hard
Solution:
Equivalent Units of Production
Materials Conversion
To complete beginning work in process (materials:
18,000 units × 0% complete; conversion: 18,000 units
× 90% complete) ...........................................................
Units started and completed during the period (160,000
units started − 7,000 units in ending inventory) ............
Ending work in process (materials: 7,000 units × 100%
complete; conversion: 7,000 units × 40% complete) ....
Equivalent units of production ..........................................
0
16,200
153,000
153,000
7,000
160,000
2,800
172,000
Cost per Equivalent Unit
Materials Conversion
Cost added during the period (a)....................................... $496,000 $1,290,000
Equivalent units of production (b) .................................... 160,000
172,000
Cost per equivalent unit (a) ÷ (b) ......................................
$3.10
$7.50
Materials Conversion
Ending work in process inventory:
Equivalent units of production ..........................................
Cost per equivalent unit ....................................................
Cost of ending work in process inventory ........................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
7,000
$3.10
$21,700
Total
2,800
$7.50
$21,000 $42,700
4-179
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 180-181:
(Appendix 4B) Zorn Company has a Custodial Services department which services the
company's Maintenance department and its two operating departments. Costs of the Custodial
Services department are allocated to other departments on the basis of square feet of space
occupied. The amount of space occupied by each department is given below:
Custodial Services .............
Maintenance ......................
Operating Department 1 ....
Operating Department 2 ....
500 square feet
2,000 square feet
10,000 square feet
8,000 square feet
Budgeted costs in the Custodial Services department total $36,000.
180. If Zorn Company uses the step-down method and allocates the Custodial Services
costs first, the amount of this cost allocated to the Maintenance department would be
closest to:
A) $3,512
B) $3,600
C) $9,000
D) $0
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 9 Level: Medium
Solution:
Department:
Square Feet Percent
Maintenance .....................................................................
2,000
10%
Operating Department 1...................................................
10,000
50%
Operating Department 2...................................................
8,000
40%
Total square feet...............................................................
20,000 100%
Total Custodial Services costs .........................................
× % to Maintenance .........................................................
Custodial Services costs allocated to Maintenance .........
4-180
$36,000
10%
$3,600
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
181. The amount of Custodial Services department cost allocated to Operating Department
2 under the direct method would be closest to:
A) $14,400
B) $14,049
C) $16,000
D) $9,000
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 8 Level: Medium
Solution:
Department:
Square Feet Percent
Operating Department 1..............................
10,000
56%
Operating Department 2..............................
8,000
44%
Total square feet..........................................
18,000 100%
Total Custodial Services costs ....................
× % to Operating Department 2 ..................
Custodial Services costs allocated to
Operating Department 2 ..........................
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
$36,000
44%
$16,000
4-181
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 182-183:
(Appendix 4B) Kahuna Financial Services Corporation has two service departments and two
operating departments. Selected information on the four departments for last year are as
follows:
CPU Hours
Service departments:
Data Processing ..............
Cafeteria .........................
Operating departments:
Investments ....................
Loans ..............................
Number of
Employees
–
1,000
15
–
15,000
9,000
114
171
Kahuna allocates Data Processing cost first on the basis of CPU hours. Kahuna then allocates
Cafeteria cost on the basis of the number of employees. Operating costs in Data Processing
for last year were $870,000. Operating costs in Cafeteria for last year were $200,000. No
distinction is made between variable and fixed costs.
4-182
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
182. If service department costs are allocated using the direct method, how much service
cost will be allocated from Data Processing to Investments?
A) $435,000
B) $522,000
C) $528,000
D) $543,750
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 8 Level: Medium
Solution:
Service Department
Data
Processing Cafeteria
Departmental costs
before allocation ....
Allocation:
Data processing costs
(15/24, 9/24)*.........
Cafeteria costs
(114/285,
171/285)** .............
Total costs after
allocation ................
Operating
Department
Investments
Loans
$870,000 $200,000
(870,000)
(200,000)
$
0 $
Total
$1,070,000
$543,750 $326,250
0
80,000 120,000
0
0 $623,750 $446,250 $1,070,000
*Data processing costs are allocated on the basis of CPU hours: 15 + 9 = 24.
**Cafeteria costs are allocated on the basis of the number of employees: 114 + 171 =
285.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-183
Chapter 4 Systems Design: Process Costing
183. If service department costs are allocated using the step-down method, how much
service cost will be allocated from Data Processing to Loans?
A) $313,200
B) $316,800
C) $326,250
D) $330,000
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 9 Level: Medium
Solution:
Service Department
Data
Processing Cafeteria
Operating
Department
Investments
Loans
Total
Departmental costs
before allocation ............ $870,000 $200,000
$1,070,000
Allocation:
Data processing costs
(1/25, 15/25, 9/25)* ....... (870,000) 34,800 $522,000 $313,200
0
Cafeteria costs (114/285,
171/285)** .....................
(234,800)
93,920 140,880
0
Total costs after
allocation ........................ $
0$
0 $615,920 $454,080 $1,070,000
*Data processing costs are allocated on the basis of CPU hours: 15 + 9 + 1 = 25.
**Cafeteria costs are allocated on the basis of the number of employees: 114 + 171 =
285.
Use the following to answer questions 184-185:
(Appendix 4B) Greek Corporation has two service departments (Sigma and Delta) that
provide service to each other and to two operating departments (Chi and Omega). Sigma
provides 25% of its service to Delta, 15% of its service to Chi, and 60% of its service to
Omega. Delta provides 8% of its service to Sigma, 69% of its service to Chi, and 23% of its
service to Omega. Operating costs in Sigma are $90,000. Operating costs in Delta are
$50,000. Cost allocations are made starting with Sigma. No distinction is made between
variable and fixed costs.
4-184
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
184. If service department costs are allocated using the direct method, what is the total
amount of service cost that will be allocated to Omega?
A) $84,500
B) $70,675
C) $72,125
D) $73,075
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 8 Level: Medium
Solution:
Service
Department
Sigma
Delta
Departmental costs before
allocation
Allocation:
Sigma costs (15/75, 60/75)*
Delta costs (69/92, 23/92)**
Total costs after allocation
Operating
Department
Chi
Omega
$90,000 $50,000
(90,000)
$
(50,000)
0 $
0
Total
$140,000
$18,000 $72,000
0
37,500 12,500
0
$55,500 $84,500 $140,000
*Sigma department costs allocation: 15% + 60% = 75%.
**Delta department costs allocation: 69% + 23% = 92%.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-185
Chapter 4 Systems Design: Process Costing
185. If service department costs are allocated using the step-down method, what is the total
amount of service cost that will be allocated to Chi?
A) $48,000
B) $67,875
C) $63,525
D) $64,125
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 9 Level: Medium
Solution:
Service
Department
Sigma Delta
Operating
Department
Chi
Omega
Total
Departmental costs before
allocation ................................ $90,000 $50,000
$140,000
Allocation:
Sigma costs (25%, 15%,
60%)* ..................................... (90,000) 22,500 $13,500 $54,000
0
Delta costs (69/92, 23/92)** ...
(72,500) 54,375 18,125
0
Total costs after allocation ...... $
0 $
0 $67,875 $72,125 $140,000
*Sigma department costs allocation: 15% + 60% + 25% = 100%.
**Delta department costs allocation: 69% + 23% = 92%.
Use the following to answer questions 186-187:
(Appendix 4B) Seidell Corporation has two service departments, Administrative and
Facilities, and two operating departments, Assembly and Customer Solutions.
Departmental costs ...
Employee hours ........
Space occupied .........
Service Department
Administrative
Facilities
$43,560 $54,720
4,000
2,000
1,000
2,000
Operating Department
Customer
Assembly
Solutions
$561,960
$253,030
27,000
17,000
37,000
1,000
The company uses the direct method to allocate service department costs to operating
departments. Administrative costs are allocated on the basis of employee hours and Facilities
costs are allocated on the basis of space occupied.
4-186
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
186. The total amount of Administrative Department cost allocated to the Assembly
Department is closest to:
A) $26,730
B) $25,568
C) $42,414
D) $23,522
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 8 Level: Easy
Solution:
Service
Department
Operating
Department
Customer
Admin. Facilities Assembly Solutions
Total
Departmental costs before
allocation ......................... $43,560 $54,720 $561,960 $253,030 $913,270
Allocation:
Admin. costs (27/44,
17/44)* ............................ (43,560)
26,730
16,830
0
Facilities costs (37/38,
1/38)** ............................
(54,720)
53,280
1,440
0
Total costs after allocation $
0 $
0 $641,970 $271,300 $913,270
*Administration costs are allocated on the basis of employee hours: 27 + 17 = 44.
**Facilities costs are allocated on the basis of space occupied: 37 + 1 = 38.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-187
Chapter 4 Systems Design: Process Costing
187. The total Customer Solutions Department cost after the allocations of service
department costs is closest to:
A) $269,175
B) $254,470
C) $270,593
D) $271,300
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 8 Level: Easy
Solution:
Service
Department
Operating Department
Customer
Admin. Facilities Assembly Solutions
Departmental costs before
allocation ......................... $43,560 $54,720 $561,960
Allocation:
Admin. costs (27/44,
17/44)* ............................ (43,560)
26,730
Facilities costs (37/38,
1/38)** ............................
(54,720)
53,280
Total costs after allocation . $
0 $
0 $641,970
Total
$253,030 $913,270
16,830
0
1,440
0
$271,300 $913,270
*Administrative costs are allocated on the basis of employee hours: 27 + 17 = 44.
**Facilities costs are allocated on the basis of space occupied: 37 + 1 = 38.
4-188
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 188-189:
(Appendix 4B) Maute Clinic has two service departments, Administrative and Support, and
two operating departments, Adult Medicine and Pediatrics.
Departmental costs ...
Employee hours ........
Space occupied .........
Service Department
Administrative
Support
$23,600 $51,480
3,000
2,000
3,000
2,000
Operating Department
Adult
Medicine Pediatrics
$259,690
$288,790
26,000
14,000
38,000
6,000
The clinic uses the direct method to allocate service department costs to operating
departments. Administrative Department costs are allocated on the basis of employee hours
and Support Department costs are allocated on the basis of space occupied in square feet.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-189
Chapter 4 Systems Design: Process Costing
188. The total amount of Administrative Department cost allocated to the Adult Medicine
Department is closest to:
A) $13,636
B) $14,610
C) $20,382
D) $15,340
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 8 Level: Easy
Solution:
Service
Department
Admin. Support
Departmental costs before
allocation ........................... $23,600 $51,480
Allocation:
Admin. costs (26/40,
14/40)* .............................. (23,600)
Support costs (38/44,
6/44)** ..............................
(51,480)
Total costs after allocation . $
0 $
0
Operating
Department
Adult
Medicine Pediatrics
Total
$259,690 $288,790 $623,560
15,340
8,260
0
44,460
7,020
0
$319,490 $304,070 $623,560
*Administration costs are allocated on the basis of employee hours: 26 + 14 = 40.
**Support costs are allocated on the basis of space occupied: 38 + 6 = 44.
4-190
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
189. The total Pediatrics Department cost after the allocations of service department costs
is closest to:
A) $302,436
B) $304,070
C) $304,136
D) $295,810
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 8 Level: Easy
Solution:
Service
Department
Admin. Support
Departmental costs before
allocation ........................... $23,600 $51,480
Allocation:
Admin. costs (26/40,
14/40)* .............................. (23,600)
Support costs (38/44,
6/44)** ..............................
(51,480)
Total costs after allocation . $
0 $
0
Operating
Department
Adult
Medicine Pediatrics
Total
$259,690 $288,790 $623,560
15,340
8,260
0
44,460
7,020
0
$319,490 $304,070 $623,560
*Administration costs are allocated on the basis of employee hours: 26 + 14 = 40.
**Support costs are allocated on the basis of space occupied: 38 + 6 = 44.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-191
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 190-191:
(Appendix 4B) Ockey Corporation uses the direct method to allocate service department costs
to operating departments. The company has two service departments, Information Technology
and Personnel, and two operating departments, Fabrication and Customization.
Departmental costs ...
Computer
workstations ..........
Employees ................
Service Department
Information
Technology Personnel
$26,880
$21,525
37
34
18
13
Operating Department
FabriCustomication
zation
$251,210 $447,000
43
73
37
32
Information Technology Department costs are allocated on the basis of computer workstations
and Personnel Department costs are allocated on the basis of employees.
190. The total amount of Information Technology Department cost allocated to the two
operating departments is closest to:
A) $26,880
B) $15,929
C) $58,119
D) $21,943
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 8 Level: Easy
Solution:
All of the Information Technology Department cost will be allocated to the two
operating departments.
4-192
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
191. The total Fabrication Department cost after service department allocations is closest
to:
A) $270,110
B) $277,969
C) $280,623
D) $274,308
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 8 Level: Easy
Solution:
Service
Operating
Department
Department
Info.
Tech. Personnel Fabrication Custom.
Departmental costs before
allocation .......................... $26,880 $21,525
Allocation:
Info. Tech. costs (43/80,
37/80)* ............................. (26,880)
Personnel costs (73/105,
32/105)** .........................
(21,525)
Total costs after allocation $
0 $
0
Total
$251,210 $447,000 $746,615
14,448
12,432
0
14,965
6,560
0
$280,623 $465,992 $746,615
*Information technology costs are allocated on the basis of number of computer
workstations: 26 + 14 = 40.
**Personnel costs are allocated on the basis of employees: 38 + 6 = 44.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-193
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 192-193:
(Appendix 4B) Romain Surgical Hospital uses the direct method to allocate service
department costs to operating departments. The hospital has two service departments,
Information Technology and Administration, and two operating departments, Surgery and
Recovery.
Departmental costs ...
Computer
workstations ..........
Employees ................
Service Department
Information AdminiTechnology stration
$25,956
$36,356
20
15
17
13
Operating Department
Surgery
$563,640
Recovery
$588,200
54
95
30
27
Information Technology Department costs are allocated on the basis of computer workstations
and Administration Department costs are allocated on the basis of employees.
192. The total amount of Information Technology Department cost allocated to the two
operating departments is closest to:
A) $18,019
B) $109,015
C) $21,587
D) $25,956
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 8 Level: Easy
Solution:
All of the Information Technology Department cost will be allocated to the two
operating departments.
4-194
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
193. The total Surgery Department cost after service department allocations is closest to:
A) $598,249
B) $608,636
C) $602,727
D) $605,827
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 8 Level: Easy
Solution:
Service
Department
Info.
Tech. Admin.
Operating
Department
Surgery Recovery
Total
Departmental costs before
allocation .......................... $25,956 $36,356 $563,640 $588,200 $1,214,152
Allocation:
Info. Tech. costs (54/84,
30/84)* ............................. (25,956)
16,686
9,270
0
Administration costs
(95/122, 27/122)**...........
(36,356)
28,310
8,046
0
Total costs after allocation $
0$
0 $608,636 $605,516 $1,214,152
*Administration costs are allocated on the basis of computer workstations: 54 + 30 =
84.
**Support costs are allocated on the basis of employees: 95 + 27 = 122.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-195
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 194-195:
(Appendix 4B) Strzelecki Corporation uses the step-down method to allocate service
department costs to operating departments. The company has two service departments,
Service Department A and Service Department B, and two operating departments, Operating
Department X and Operating Department Y. Data concerning those departments follow:
Service Department
Service
Service
Department Department
A
B
Departmental costs ... $37,800
$45,780
Allocation base A .....
5,000
1,000
Allocation base B .....
5,000
2,000
Operating Department
Operating
Operating
Department Department
X
Y
$247,360
$304,330
29,000
15,000
39,000
3,000
Service Department A costs are allocated first on the basis of allocation base A and Service
Department B costs are allocated second on the basis of allocation base B.
4-196
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
194. In the first step of the allocation, the amount of Service Department A cost allocated to
the Operating Department X is closest to:
A) $24,360
B) $21,924
C) $16,948
D) $24,914
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 9 Level: Easy
Solution:
Service Department
Service Service
Dept. A Dept. B
Departmental costs
before allocation ............ $37,800
Allocation:
Serv. Dept. A costs (1/45,
29/45, 15/45)* ................ (37,800)
Serv. Dept. B costs
(39/42, 3/42)**...............
Total costs after
allocation ........................ $
0
Operating
Department
Oper.
Oper.
Dept. X Dept.Y
Total
$45,780 $247,360 $304,330 $635,270
840
24,360
12,600
0
(46,620)
43,290
3,330
0
$
0 $315,010 $320,260 $635,270
*Service Department A costs are allocated on the basis of allocation base A: 1 + 29 +
15 = 45.
**Service Department B costs are allocated on the basis of allocation base B: 39 + 3 =
42.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-197
Chapter 4 Systems Design: Process Costing
195. The total Operating Department Y cost after allocations is closest to:
A) $320,486
B) $318,473
C) $320,260
D) $307,660
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 9 Level: Easy
Solution:
Service
Department
Service Service
Dept. A Dept. B
Operating
Department
Oper.
Oper.
Dept. X Dept.Y
Total
Departmental costs before
allocation ............................ $37,800 $45,780 $247,360 $304,330 $635,270
Allocation:
Serv. Dept. A costs (1/45,
29/45, 15/45)* .................... (37,800)
840
24,360 12,600
0
Serv. Dept. B costs (39/42,
3/42)** ...............................
(46,620)
43,290
3,330
0
Total costs after allocation .. $
0 $
0 $315,010 $320,260 $635,270
*Service Department A costs are allocated on the basis of allocation base A: 1 + 29 +
15 = 45.
**Service Department B costs are allocated on the basis of allocation base B: 39 + 3 =
42.
4-198
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 196-197:
(Appendix 4B) Yamane Corporation, a manufacturer, uses the step-down method to allocate
service department costs to operating departments. The company has two service departments,
Administration and Facilities, and two operating departments, Assembly and Finishing. Data
concerning those departments follow:
Departmental costs ...
Labor hours ..............
Space occupied .........
Service Department
Administrative
Facilities
$22,620 $67,440
3,000
2,000
7,000
1,000
Operating Department
Assembly
$105,520
21,000
32,000
Finishing
$427,780
16,000
3,000
Administration Department costs are allocated first on the basis of labor hours and Facilities
Department costs are allocated second on the basis of space occupied.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-199
Chapter 4 Systems Design: Process Costing
196. In the first step of the allocation, the amount of Administration Department cost
allocated to the Assembly Department is closest to:
A) $4,476
B) $12,838
C) $11,310
D) $12,180
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 9 Level: Easy
Solution:
Service
Operating
Department
Department
Admin. Facilities Assembly Finishing
Departmental costs before
allocation ........................... $22,620 $67,440
Allocation:
Admin. costs (2/39, 21/39,
16/39)* .............................. (22,620)
1,160
Facilities costs (32/35,
3/35)** ..............................
(68,600)
Total costs after allocation . $
0 $
0
Total
$105,520 $427,780 $623,360
12,180
9,280
0
62,720
5,880
0
$180,420 $442,940 $623,360
*Administration costs are allocated on the basis of labor hours: 2 + 21 + 16 = 39.
**Facilities costs are allocated on the basis of space occupied: 32 + 3 = 35.
4-200
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
197. The total Finishing Department cost after allocations is closest to:
A) $443,342
B) $433,660
C) $441,102
D) $442,940
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 9 Level: Easy
Solution:
Service
Operating
Department
Department
Admin. Facilities Assembly Finishing
Total
Departmental costs before
allocation .............................. $22,620 $67,440 $105,520 $427,780 $623,360
Allocation:
Admin. costs (2/39, 21/39,
16/39)* ................................. (22,620)
1,160
12,180
9,280
0
Facilities costs (32/35,
3/35)** .................................
(68,600)
62,720
5,880
0
Total costs after allocation .... $
0 $
0 $180,420 $442,940 $623,360
*Administration costs are allocated on the basis of labor hours: 2 + 21 + 16 = 39.
**Facilities costs are allocated on the basis of space occupied: 32 + 3 = 35.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-201
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 198-199:
(Appendix 4B) Muckenfuss Clinic uses the step-down method to allocate service department
costs to operating departments. The clinic has two service departments, Personnel and
Information Technology (IT), and two operating departments, Family Medicine and Geriatric
Medicine. Data concerning those departments follow:
Service Department
Departmental costs ...
Employees ................
PCs ...........................
Personnel
$66,930
11
11
IT
$11,678
27
27
Operating Department
Family
Geriatric
Medicine
Medicine
$563,940
$82,310
104
160
85
87
Personnel costs are allocated first on the basis of employees and IT costs are allocated second
on the basis of PCs.
4-202
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
198. In the first step of the allocation, the amount of Personnel Department cost allocated to
the Family Medicine Department is closest to:
A) $23,920
B) $58,405
C) $23,049
D) $26,366
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 9 Level: Easy
Solution:
Service
Department
Personnel
Departmental costs before
allocation ...........................
Allocation:
Personnel costs (27/291,
104/291, 160/291)* ...........
IT costs (85/172, 87/172)**
Total costs after allocation .
IT
Operating
Department
Family Geriatric
Medicine Medicine
Total
$66,930 $11,678 $563,940 $82,310 $724,858
(66,930)
$
6,210
23,920 36,800
0
(17,888)
8,840
9,048
0
0 $
0 $596,700 $128,158 $724,858
*Personnel costs are allocated on the basis of employees: 27 + 104 + 160 = 291.
**IT costs are allocated on the basis of number of PCs: 85 + 87 = 172.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-203
Chapter 4 Systems Design: Process Costing
199. The total Geriatric Medicine Department cost after allocations is closest to:
A) $122,608
B) $128,781
C) $128,158
D) $91,358
Ans: C AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 9 Level: Easy
Solution:
Service
Department
Personnel
IT
Operating
Department
Family Geriatric
Medicine Medicine
Total
Departmental costs before
allocation .......................... $66,930 $11,678 $563,940 $82,310 $724,858
Allocation:
Personnel costs (27/291,
104/291, 160/291)* .......... (66,930)
6,210
23,920 36,800
0
IT costs (85/172, 87/172)**
.........................................
(17,888)
8,840
9,048
0
Total costs after allocation $
0 $
0 $596,700 $128,158 $724,858
*Personnel costs are allocated on the basis of employees: 27 + 104 + 160 = 291.
**IT costs are allocated on the basis of number of PCs: 85 + 87 = 172.
4-204
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
Use the following to answer questions 200-201:
(Appendix 4B) Blondell Legal Services, LLC, uses the step-down method to allocate service
department costs to operating departments. The firm has two service departments, Personnel
and Information Technology (IT), and two operating departments, Family Law and Corporate
Law. Data concerning those departments follow:
Service Department
Departmental costs ...
Employees ................
PCs ...........................
Personnel
$85,284
11
12
IT
$29,703
25
26
Operating Department
Family
Corporate
Law
Law
$883,360
$189,010
121
163
112
137
Personnel costs are allocated first on the basis of employees and IT costs are allocated second
on the basis of PCs.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-205
Chapter 4 Systems Design: Process Costing
200. In the first step of the allocation, the amount of Personnel Department cost allocated to
the Family Law Department is closest to:
A) $32,248
B) $70,252
C) $36,336
D) $33,396
Ans: D AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 9 Level: Easy
Solution:
Service
Department
Personnel
Departmental costs before
allocation ..........................
Allocation:
Personnel costs (25/309,
121/309, 163/309)* ..........
IT costs (112/249,
137/249)** .......................
Total costs after allocation
IT
Operating
Department
Family Corporate
Law
Law
Total
$85,284 $29,703 $883,360 $189,010 $1,187,357
(85,284)
$
6,900
33,396
44,988
0
(36,603)
16,464
20,139
0
0 $
0 $933,220 $254,137 $1,187,357
*Personnel costs are allocated on the basis of employees: 25 + 121 + 163 = 309.
**IT costs are allocated on the basis of number of PCs: 112 + 137 = 249.
4-206
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
201. The total Corporate Law Department cost after allocations is closest to:
A) $254,137
B) $246,630
C) $254,301
D) $209,149
Ans: A AACSB: Analytic AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 9 Level: Easy
Solution:
Service
Department
Personnel
Departmental costs before
allocation ..........................
Allocation:
Personnel costs (25/309,
121/309, 163/309)* ..........
IT costs (112/249,
137/249)** .......................
Total costs after allocation
IT
Operating
Department
Family Corporate
Law
Law
Total
$85,284 $29,703 $883,360 $189,010 $1,187,357
(85,284)
$
6,900
33,396
44,988
0
(36,603)
16,464
20,139
0
0 $
0 $933,220 $254,137 $1,187,357
*Personnel costs are allocated on the basis of employees: 25 + 121 + 163 = 309.
**IT costs are allocated on the basis of number of PCs: 112 + 137 = 249.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-207
Chapter 4 Systems Design: Process Costing
Essay Questions
202. Bayas Corporation uses processing costing. A number of transactions that occurred in
November are listed below.
(1) Raw materials that cost $39,800 are withdrawn from the storeroom for use in the
Mixing Department. All of these raw materials are classified as direct labor.
(2) Direct labor costs of $16,100 are incurred, but not yet paid, in the Mixing
Department.
(3) Manufacturing overhead of $45,700 is applied in the Mixing Department using the
department's predetermined overhead rate.
(4) Units with a carrying cost of $87,600 finish processing in the Mixing Department
and are transferred to the Drying Department for further processing.
(5) Units with a carrying cost of $111,300 finish processing in the Drying Department,
the final step in the production process, and are transferred to the finished goods
warehouse.
(6) Finished goods with a carrying cost of $98,200 are sold.
Required:
Prepare journal entries for each of the transactions listed above.
Ans:
(1) Work in Process-Mixing Department
Raw Materials
(2) Work in Process-Mixing Department
Salaries and Wages Payable
(3) Work in Process-Mixing Department
Manufacturing Overhead
(4) Work in Process-Drying Department
Work in Process-Mixing Department
(5) Finished Goods
Work in Process-Drying Department
(6) Cost of Goods Sold
Finished Goods
AACSB: Analytic AICPA BB: Critical Thinking
LO: 1 Level: Easy
4-208
$39,800
$39,800
$16,100
$16,100
$45,700
$45,700
$87,600
$87,600
$111,300
$111,300
$98,200
$98,200
AICPA FN: Reporting
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
203. During August, the following transactions were recorded at Goyer Corporation. The
company uses processing costing.
(1) Raw materials that cost $24,500 are withdrawn from the storeroom for use in the
Assembly Department. All of these raw materials are classified as direct labor.
(2) Direct labor costs of $29,000 are incurred, but not yet paid, in the Assembly
Department.
(3) Manufacturing overhead of $58,900 is applied in the Assembly Department using
the department's predetermined overhead rate.
(4) Units with a carrying cost of $101,200 finish processing in the Assembly
Department and are transferred to the Painting Department for further processing.
(5) Units with a carrying cost of $106,100 finish processing in the Painting
Department, the final step in the production process, and are transferred to the
finished goods warehouse.
(6) Finished goods with a carrying cost of $95,100 are sold.
Required:
Prepare journal entries for each of the transactions listed above.
Ans:
(1) Work in Process-Assembly Department
Raw Materials
(2) Work in Process-Assembly Department
Salaries and Wages Payable
(3) Work in Process-Assembly Department
Manufacturing Overhead
(4) Work in Process-Painting Department
Work in Process-Assembly Department
(5) Finished Goods
Work in Process-Painting Department
(6) Cost of Goods Sold
Finished Goods
AACSB: Analytic AICPA BB: Critical Thinking
LO: 1 Level: Easy
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
$24,500
$24,500
$29,000
$29,000
$58,900
$58,900
$101,200
$101,200
$106,100
$106,100
$95,100
$95,100
AICPA FN: Reporting
4-209
Chapter 4 Systems Design: Process Costing
204. Kamp Company uses the weighted-average method in its process costing. Information
about units processed during a recent month in the Curing Department follow:
Beginning work in process inventory ........
Units started into production .....................
Units completed and transferred out .........
Ending work in process inventory .............
Units
10,000
150,000
140,000
20,000
Conversion Percent
Completion
30%
40%
The beginning work in process inventory had $4,600 in conversion cost. During the
month, the Department incurred an additional $210,000 in conversion cost.
Required:
a.
b.
c.
d.
Determine the equivalent units of production for conversion for the month.
Determine the cost per equivalent unit of production for conversion for the month.
Determine the total conversion cost transferred out during the month.
Determine the conversion cost assigned to the ending work in process inventory.
Ans:
a. Units transferred out ..............................................
Add: equivalent units in the ending inventory ......
Equivalent units of production ..............................
140,000
8,000
148,000
b. Cost in the beginning inventory ............................
Cost added during the month ................................
Total cost ...............................................................
$214,600 ÷ 148,000 units = $1.45 per unit
$ 4,600
210,000
$214,600
c. 140,000 units × $1.45 per unit = $203,000
d. 20,000 units × 40% × $1.45 per unit = $11,600
AACSB: Analytic AICPA BB: Critical Thinking
LO: 2,3,4 Level: Medium
4-210
AICPA FN: Reporting
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
205. Timberline Associates uses the weighted-average method in its process costing
system. The following data are for the first processing department for a recent month:
Work in process, beginning:
Units in process ........................................................
2,400
Percent complete with respect to materials ..............
75%
Percent complete with respect to conversion ...........
50%
Costs in the beginning inventory:
Materials cost ...........................................................
$8,400
Conversion cost ........................................................
$7,200
Units started into production during the month...........
20,800
Units completed and transferred out ...........................
22,200
Costs added to production during the month:
Materials cost ........................................................... $97,400
Conversion cost ........................................................ $129,600
Work in process, ending:
Units in process ........................................................
1,000
Percent complete with respect to materials ..............
80%
Percent complete with respect to conversion ...........
60%
Required:
a.
b.
c.
d.
Determine the equivalent units of production.
Determine the costs per equivalent unit.
Determine the cost of ending work in process inventory.
Determine the cost of the units transferred to the next department.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-211
Chapter 4 Systems Design: Process Costing
Ans:
a.
Transferred to next department ...........
Ending work in process:
Materials: 1,000 units × 80% ...........
Conversion: 1,000 units × 60% ........
Equivalent units of production ............
b.
Materials Conversion
22,200
22,200
800
23,000
Work in process, beginning ................
Cost added during the month ..............
Total cost (a) .......................................
Equivalent units (above) (b) ................
Cost per equivalent unit (a) ÷ (b) ........
Materials Conversion
$ 8,400
$ 7,200
97,400
129,600
$105,800
$136,800
23,000
22,800
$4.60
$6.00
Units transferred out............................
Cost per equivalent unit ......................
Cost transferred out .............................
Materials Conversion
Total
22,200
22,200
$4.60
$6.00
$102,120
$133,200 $235,320
c.
d.
Equivalent units of production:
ending work in process ....................
Cost per equivalent unit ......................
Cost of ending work in process ...........
Materials
Conversion
Total
800
$4.60
$3,680
600
$6.00
$3,600
$7,280
AACSB: Analytic AICPA BB: Critical Thinking
LO: 2,3,4 Level: Hard
4-212
600
22,800
AICPA FN: Reporting
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
206. Avignon Inc. uses the weighted-average method in its process costing system. The
following data concern the operations of the company's first processing department for
a recent month.
Work in process, beginning:
Units in process ..................................................
900
Percent complete with respect to materials ........
80%
Percent complete with respect to conversion .....
10%
Costs in the beginning inventory:
Materials cost .....................................................
$6,768
Conversion cost ..................................................
$3,186
Units started into production during the month.....
10,000
Units completed and transferred out .....................
10,100
Costs added to production during the month:
Materials cost ..................................................... $97,104
Conversion cost .................................................. $356,940
Work in process, ending:
Units in process ..................................................
800
Percent complete with respect to materials ........
90%
Percent complete with respect to conversion .....
20%
Required:
a.
b.
c.
d.
Determine the equivalent units of production.
Determine the costs per equivalent unit.
Determine the cost of ending work in process inventory.
Determine the cost of the units transferred to the next department.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-213
Chapter 4 Systems Design: Process Costing
Ans:
a.
Units transferred to next department ......
Ending work in process:
Materials: 800 units × 90% .................
Conversion: 800 units × 20% ..............
Equivalent units of production ............
b.
Cost of beginning work in process ..........
Cost added during the month ..................
Total cost .................................................
Equivalent units .......................................
Cost per equivalent unit...........................
Materials Conversion
10,100
10,100
720
10,820
Materials Conversion
$ 6,768
$ 3,186
97,104
356,940
$103,872
$360,126
10,820
10,260
$9.60
$35.10
c. Ending work in process:
Equivalent units of production ................
Cost per equivalent unit...........................
Cost of ending work in process
inventory ..............................................
Materials Conversion
720
160
$9.60
$35.10
d.
Materials Conversion
Total
10,100
10,100
$9.60
$35.10
$96,960
$354,510 $451,470
Units completed and transferred out .......
Cost per equivalent unit...........................
Cost of units transferred out ....................
$6,912
AACSB: Analytic AICPA BB: Critical Thinking
LO: 2,3,4 Level: Medium
4-214
160
10,260
$5,616
Total
$12,528
AICPA FN: Reporting
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
207. Bansal Inc. uses the weighted-average method in its process costing system. The
following data concern the operations of the company's first processing department for
a recent month.
Work in process, beginning:
Units in process ..................................................
300
Percent complete with respect to materials ........
60%
Percent complete with respect to conversion .....
60%
Costs in the beginning inventory:
Materials cost .....................................................
$342
Conversion cost ..................................................
$4,518
Units started into production during the month.....
22,000
Units completed and transferred out .....................
21,800
Costs added to production during the month:
Materials cost ..................................................... $45,963
Conversion cost .................................................. $538,602
Work in process, ending:
Units in process ..................................................
500
Percent complete with respect to materials ........
50%
Percent complete with respect to conversion .....
20%
Required:
Using the weighted-average method:
a. Determine the equivalent units of production for materials and conversion costs.
b. Determine the cost per equivalent unit for materials and conversion costs.
c. Determine the cost of units transferred out of the department during the month.
d. Determine the cost of ending work in process inventory in the department.
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Chapter 4 Systems Design: Process Costing
Ans:
Weighted-average method:
a.
Units transferred to next department ......
Ending work in process:
Materials: 500 units × 50% ..................
Conversion: 500 units × 20% ..............
Equivalent units of production ............
b.
Materials Conversion
21,800
21,800
250
22,050
Cost of beginning work in process ..........
Cost added during the month ..................
Total cost .................................................
Equivalent units .......................................
Cost per equivalent unit...........................
Materials Conversion
$ 342
$ 4,518
45,963
538,602
$46,305
$543,120
22,050
21,900
$2.10
$24.80
c. Ending work in process:
Equivalent units of production ................
Cost per equivalent unit...........................
Cost of ending work in process ...............
Materials Conversion
250
100
$2.10
$24.80
$525
$2,480
d.
Materials Conversion
Total
21,800
21,800
$2.10
$24.80
$45,780
$540,640 $586,420
Units completed and transferred out .......
Cost per equivalent unit...........................
Cost of units transferred out ....................
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4-216
100
21,900
Total
$3,005
AICPA FN: Reporting
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
208. Whitney Company uses the weighted-average method in its process costing system.
The following data were taken from the records of the first processing department for
a recent month.
Work in process, beginning:
Units in process ..................................................
10
Percent complete with respect to materials ........
60%
Percent complete with respect to conversion .....
30%
Costs in the beginning inventory:
Materials cost .....................................................
$1,200
Conversion cost ..................................................
$3,000
Units started into production during the month.....
150
Costs added to production during the month:
Materials cost ..................................................... $42,460
Conversion cost .................................................. $137,400
Work in process, ending:
Units in process ..................................................
20
Percent complete with respect to materials ........
40%
Percent complete with respect to conversion .....
20%
Required:
a. How many units were transferred to the next department during the month?
b. What were the equivalent units of production for materials and for conversion
costs for the month?
c. What were the costs per equivalent unit of production for materials and for
conversion costs for the month?
d. What was the cost of the ending work in process inventory in the department at the
end of the month?
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Chapter 4 Systems Design: Process Costing
Ans:
Weighted-average method:
a. Units in beginning inventory .....................
+ Units started into production .................
− Units in ending inventory ......................
= Units transferred out ..............................
b.
10
150
20
140
Materials Conversion
Transferred to next department ..................
140
140
Work in process, ending ............................
8
4
Equivalent units of production...................
148
144
c.
Work in process, beginning .......................
Cost added during the month .....................
Total cost (a) ..............................................
Equivalent units (above) (b) ......................
Cost per equivalent unit (a) ÷ (b) ...............
Materials Conversion
$ 1,200
$ 3,000
42,460
137,400
$43,660
$140,400
148
144
$295
$975
Ending work in process equivalent units ...
Cost per equivalent unit .............................
Cost of ending work in process .................
Materials Conversion
Total
8
4
$295
$975
$2,360
$3,900 $6,260
d.
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AICPA FN: Reporting
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
209. Mccabe Corporation uses the weighted-average method in its process costing. The
following data pertain to its Assembly Department for November.
Percent Complete
Units Materials Conversion
800
55%
10%
Work in process, November 1 ...................
Units started into production during
November............................................... 8,200
Units completed during November and
transferred to the next department ......... 7,300
Work in process, November 30 ................. 1,700
75%
25%
Required:
Compute the equivalents units of production for both materials and conversion costs
for the Assembly Department for November using the weighted-average method.
Ans:
Weighted-average method:
Units transferred to the next department .........
Work in process, November 30:
1,700 units × 75%.........................................
1,700 units × 25%.........................................
Equivalent units of production ........................
Materials Conversion
7,300
7,300
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1,275
8,575
425
7,725
AICPA FN: Reporting
4-219
Chapter 4 Systems Design: Process Costing
210. The following data have been provided by Cutts Corporation, which uses the
weighted-average method in its process costing. The data are for the company's
Shaping Department for February.
Units
Work in process, February 1 ....................
300
Units started into production during
February ................................................ 5,200
Units completed during February and
transferred to the next department ........ 4,800
Work in process, February 28 ..................
700
Percent Complete
Materials Conversion
50%
10%
50%
40%
Required:
Compute the equivalents units of production for both materials and conversion costs
for the Shaping Department for February using the weighted-average method.
Ans:
Weighted-average method:
Materials Conversion
Units transferred to the next department ...............
4,800
4,800
Work in process, February 28:
700 units × 50%..................................................
350
700 units × 40%..................................................
280
Equivalent units of production ...........................
5,150
5,080
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4-220
AICPA FN: Reporting
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
211. Camelin Inc. uses the weighted-average method in its process costing system. The
following data concern the operations of the company's first processing department for
a recent month.
Work in process, beginning:
Units in process .............................................................
600
Percent complete with respect to materials ...................
60%
Percent complete with respect to conversion ................
70%
Units started into production during the month................ 20,000
Work in process, ending:
Units in process .............................................................
800
Percent complete with respect to materials ...................
80%
Percent complete with respect to conversion ................
50%
Required:
Using the weighted-average method, determine the equivalent units of production for
materials and conversion costs.
Ans:
Weighted-average method:
Transferred to next department ...........
Work in process, ending:
Materials: 800 units × 80% ..............
Conversion: 800 units × 50% ...........
Equivalent units of production .........
Materials Conversion
19,800
19,800
640
20,440
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400
20,200
AICPA FN: Reporting
4-221
Chapter 4 Systems Design: Process Costing
212. Poirrier Corporation uses process costing. The following data pertain to its Assembly
Department for May.
Units in process, May 1: materials 75% complete,
conversion 30% complete ...............................................
700
Units started into production during May ........................... 5,500
Units completed and transferred to the next department .... 4,600
Units in process, May 31: materials 85% complete,
conversion 65% complete ............................................... 1,600
Required:
Determine the equivalent units of production for the Assembly Department for May
using the weighted-average method.
Ans:
Weighted-average method:
Transferred to next department ............
Work in process, ending:
Materials: 1,600 units × 85% ............
Conversion: 1,600 units × 65% ........
Equivalent units of production..........
Materials Conversion
4,600
4,600
1,360
5,960
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1,040
5,640
AICPA FN: Reporting
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
213. Greenham Corporation uses the weighted-average method in its process costing. The
following data pertain to its Materials Preparation Department for March.
Units in process, March 1: materials 75% complete,
conversion 60% complete .................................................
400
Units started into production during March ......................... 6,800
Units completed and transferred to the next department ...... 6,300
Units in process, March 31: materials 55% complete,
conversion 10% complete .................................................
900
Required:
Determine the equivalent units of production for the Materials Preparation Department
for March using the weighted-average method.
Ans:
Weighted-average method:
Transferred to next department ............
Work in process, ending:
Materials: 900 units × 55% ...............
Conversion: 900 units × 10% ...........
Equivalent units of production..........
Materials Conversion
6,300
6,300
495
6,795
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90
6,390
AICPA FN: Reporting
4-223
Chapter 4 Systems Design: Process Costing
214. Jahncke Inc. uses the weighted-average method in its processing costing. The
following data concern the company's Assembly Department for the month of April.
Work in process, April 1 .................................
Cost added to production in the Assembly
Department during April ..............................
Equivalent units of production for April .........
Materials Conversion
$3,600
$1,902
$103,882
8,810
$278,010
8,720
Required:
Compute the costs per equivalent unit for the Assembly Department for April.
Ans:
Weighted-average method:
Work in process, April 1 .......................................
Cost added during the month in the Assembly
Department.........................................................
Total cost ...............................................................
Equivalent units of production ..............................
Cost per equivalent unit .........................................
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4-224
Materials Conversion
$ 3,600
$ 1,902
103,882
$107,482
8,810
$12.20
278,010
$279,912
8,720
$32.10
AICPA FN: Reporting
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
215. Holling Inc. uses the weighted-average method in its processing costing. The
following data concern the company's Mixing Department for the month of December.
Work in process, December 1 .........................................
Cost added to production in the Mixing Department
during December..........................................................
Equivalent units of production for December .................
Materials Conversion
$7,530
$8,528
$225,900
9,300
$283,632
8,800
Required:
Compute the cost per equivalent unit for materials and conversion for the Mixing
Department in December.
Ans:
Weighted-average method:
Work in process, December 1 .........................................
Cost added during the month in the Mixing Department
Total cost .........................................................................
Equivalent units of production ........................................
Cost per equivalent unit ...................................................
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Materials Conversion
$ 7,530
$ 8,528
225,900
283,632
$233,430
$292,160
9,300
8,800
$25.10
$33.20
AICPA FN: Reporting
4-225
Chapter 4 Systems Design: Process Costing
216. Hutchcroft Corporation uses the weighted-average method in its processing costing.
The following data concern the company's Assembly Department for the month of
December.
Materials Conversion
Cost per equivalent unit ...................................................
$24.30
$27.10
Equivalent units in ending work in process.....................
630
225
During the month, 6,200 units were completed and transferred from the Assembly
Department to the next department.
Required:
Determine the cost of ending work in process inventory and the cost of units
transferred out of the department during December using the weighted-average
method.
Ans:
Weighted-average method:
Transferred to the next department:
6,200 units at $51.40 per unit .....................................................................
$318,680
Work in process, December 31:
Materials, 630 EUs at $24.30 per EU.........................................................
$15,309
Conversion, 225 EUs at $27.10 per EU .....................................................
6,098
Total work in process, December 31 ..........................................................
$21,407
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AICPA FN: Reporting
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
217. Lorona Inc. has provided the following data concerning the Assembly Department for
the month of June. The company uses the weighted-average method in its processing
costing.
Materials Conversion
Cost per equivalent unit .........................................
$8.10
$28.50
Equivalent units in ending work in process...........
1,330
1,235
During the month, 7,400 units were completed and transferred from the Assembly
Department to the next department.
Required:
Determine the cost of ending work in process inventory and the cost of units
transferred out of the department during June using the weighted-average method.
Ans:
Weighted-average method:
Transferred to the next department:
7,400 units × $36.60 per unit .......................... $270,840
Work in process, June 30:
Materials, 1,330 EUs at $8.10 per EU............. $10,773
Conversion, 1,235 EUs at $28.50 per EU .......
35,198
Total work in process, June 30 ........................ $45,971
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AICPA FN: Reporting
4-227
Chapter 4 Systems Design: Process Costing
218. Dalsace Inc. uses the FIFO method in its process costing system. The following data
concern the operations of the company's first processing department for a recent
month.
Work in process, beginning:
Units in process............................................................
Percent complete with respect to materials .................
Percent complete with respect to conversion ...............
Costs in the beginning inventory:
Materials cost ...............................................................
Conversion cost ...........................................................
Units started into production during the month ..............
Units completed and transferred out ...............................
Costs added to production during the month:
Materials cost ...............................................................
Conversion cost ...........................................................
Work in process, ending:
Units in process............................................................
Percent complete with respect to materials .................
Percent complete with respect to conversion ...............
400
60%
40%
$1,944
$4,512
15,000
14,500
$119,053
$418,950
900
90%
40%
Required:
Using the FIFO method:
a. Determine the equivalent units of production for materials and conversion costs.
b. Determine the cost per equivalent unit for materials and conversion costs.
c. Determine the cost of ending work in process inventory.
d. Determine the cost of units transferred out of the department during the month.
4-228
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Chapter 4 Systems Design: Process Costing
Ans:
FIFO method:
a.
Materials Conversion
To complete the beginning work in process:
Materials: 400 units × (100% − 60%) ....................
160
Conversion: 400 units × (100% − 40%).................
240
Units started and completed (14,500 − 400) .............
14,100
14,100
Ending work in process:
Materials: 900 units × 90% ....................................
810
Conversion: 900 units × 40% .................................
360
Equivalent units of production ...............................
15,070
14,700
b.
Materials Conversion
Cost added during the month .................................... $119,053
$418,950
Equivalent units of production ..................................
15,070
14,700
Cost per equivalent unit.............................................
$7.90
$28.50
c.
Materials Conversion
Ending work in process:
Equivalent units of production ..................................
Cost per equivalent unit.............................................
Cost of ending work in process .................................
d.
810
$7.90
$6,399
360
$28.50
$10,260
Total
$16,659
Materials Conversion
Total
Cost from the beginning inventory............................
$1,944
$4,512
$6,456
Cost to complete the units in beginning inventory:
Equivalent units to complete ..................................
160
240
Cost per equivalent unit .........................................
$7.90
$28.50
Cost to complete.....................................................
$1,264
$6,840
$8,104
Cost of units started and completed:
Units started and completed ...................................
14,100
14,100
Cost per equivalent unit .........................................
$7.90
$28.50
Cost of units started and completed ....................... $111,390
$401,850 $513,240
Total cost of units transferred out .............................
$527,800
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AICPA FN: Reporting
4-229
Chapter 4 Systems Design: Process Costing
219. Engsbye Inc. uses the FIFO method in its process costing system. The following data
concern the operations of the company's first processing department for a recent
month.
Work in process, beginning:
Units in process............................................................
Percent complete with respect to materials .................
Percent complete with respect to conversion ...............
Costs in the beginning inventory:
Materials cost ...............................................................
Conversion cost ...........................................................
Units started into production during the month ..............
Units completed and transferred out ...............................
Costs added to production during the month:
Materials cost ...............................................................
Conversion cost ...........................................................
Work in process, ending:
Units in process............................................................
Percent complete with respect to materials .................
Percent complete with respect to conversion ...............
200
80%
10%
$800
$406
20,000
20,000
$96,000
$413,648
200
80%
50%
Required:
Using the FIFO method:
a. Determine the equivalent units of production for materials and conversion costs.
b. Determine the cost per equivalent unit for materials and conversion costs.
c. Determine the cost of ending work in process inventory.
d. Determine the cost of units transferred out of the department during the month.
4-230
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Chapter 4 Systems Design: Process Costing
Ans:
FIFO method:
a.
Materials Conversion
To complete the beginning work in process:
Materials: 200 units × (100% − 80%) .........
40
Conversion: 200 units × (100% − 10%)......
180
Units started and completed (20,000 − 200) ..
19,800
19,800
Ending work in process:
Materials: 200 units × 80% .........................
160
Conversion: 200 units × 50% ......................
100
Equivalent units of production .......................
20,000
20,080
b.
Cost added during the month .........................
Equivalent units of production .......................
Cost per equivalent unit..................................
Materials Conversion
$96,000
$413,648
20,000
20,080
$4.80
$20.60
c. Ending work in process:
Materials Conversion
Equivalent units of production ................
160
100
Cost per equivalent unit...........................
$4.80
$20.60
Cost of ending work in process ...............
$768
$2,060
d.
Total
$2,828
Materials Conversion
Total
Cost from the beginning inventory..........
$800
$406
$1,206
Cost to complete the units in beginning
inventory:
Equivalent units to complete ................
40
180
Cost per equivalent unit .......................
$4.80
$20.60
Cost to complete...................................
$192
$3,708
$3,900
Cost of units started and completed:
Units started and completed .................
19,800
19,800
Cost per equivalent unit .......................
$4.80
$20.60
Cost of units started and completed ..... $95,040
$407,880 $502,920
Total cost of units transferred out ...........
$508,026
AACSB: Analytic AICPA BB: Critical Thinking
Appendix: 4A LO: 5,6,7 Level: Hard
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AICPA FN: Reporting
4-231
Chapter 4 Systems Design: Process Costing
220. Lenning Corporation uses the FIFO method in its process costing. The following data
pertain to its Assembly Department for July.
Units
Work in process, July 1 .............................
300
Units started into production during July .. 6,100
Units completed during July and
transferred to the next department ......... 5,600
Work in process, July 31 ...........................
800
Percent Complete
Materials Conversion
75%
10%
90%
85%
Required:
Compute the equivalent units of production for both materials and conversion costs for
the Assembly Department for July using the FIFO method.
Ans:
FIFO method:
Materials Conversion
Work in process, July 1:
300 units × (100% − 75%) ......................
300 units × (100% − 10%) ......................
Units started and completed in July ...........
Work in process, July 31:
800 units × 90% ......................................
800 units × 85% ......................................
Equivalent units of production ...................
75
5,300
720
6,095
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4-232
270
5,300
680
6,250
AICPA FN: Reporting
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
221. The following data pertain to the Milling Department of Malmberg Corporation for
June. The company uses the FIFO method in its process costing.
Percent Complete
Units Materials Conversion
Work in process, June 1 .............................
800
80%
35%
Units started into production during June .. 9,400
Units completed during June and
transferred to the next department .......... 8,300
Work in process, June 30 ........................... 1,900
75%
40%
Required:
Compute the equivalents units of production for both materials and conversion costs
for the Milling Department for June using the FIFO method.
Ans:
FIFO method:
Materials Conversion
Work in process, June 1:
800 units × (100% − 80%) ..........................................................................
160
800 units × (100% − 35%) .......................................................................... 520
Units started and completed in June ..............................................................
7,500
7,500
Work in process, June 30:
1,900 units × 75% .......................................................................................
1,425
1,900 units × 40% ....................................................................................... 760
Equivalent units of production .......................................................................
9,085
8,780
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Appendix: 4A LO: 5 Level: Medium
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AICPA FN: Reporting
4-233
Chapter 4 Systems Design: Process Costing
222. Fuchs Inc. uses the FIFO method in its process costing system. The following data
concern the operations of the company's first processing department for a recent
month.
Work in process, beginning:
Units in process............................................................
Percent complete with respect to materials .................
Percent complete with respect to conversion ...............
Units started into production during the month ..............
Work in process, ending:
Units in process............................................................
Percent complete with respect to materials .................
Percent complete with respect to conversion ...............
800
70%
10%
14,000
800
60%
40%
Required:
Using the FIFO method, determine the equivalent units of production for materials and
conversion costs.
Ans:
FIFO method:
Materials Conversion
To complete the beginning work in process:
Materials: 800 units × (100% − 70%).................
Conversion: 800 units × (100% − 10%) .............
Units started and completed (14,000 − 800) ..........
Ending work in process:
Materials: 800 units × 60% .................................
Conversion: 800 units × 40% .............................
Equivalent units of production ...............................
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4-234
240
13,200
720
13,200
480
13,920
320
14,240
AICPA FN: Reporting
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
223. Clarks Corporation uses the FIFO method in its process costing. The following data
pertain to its Assembly Department for August.
Units in process, August 1: materials 85% complete,
conversion 20% complete ...........................................
Units started into production during August ...................
Units completed and transferred to the next department
Units in process, August 31: materials 90% complete,
conversion 60% complete ...........................................
700
9,400
8,300
1,800
Required:
Determine the equivalent units of production for the Assembly Department for August
using the FIFO method.
Ans:
FIFO method:
Materials Conversion
To complete the beginning work in process:
Materials: 700 units × (100% − 85%)..............
Conversion: 700 units × (100% − 20%) ..........
Units started and completed (8,300 – 700) .........
Ending work in process:
Materials: 1,800 units × 90% ...........................
Conversion: 1,800 units × 60% .......................
Equivalent units of production ............................
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105
7,600
560
7,600
1,620
9,325
1,080
9,240
AICPA FN: Reporting
4-235
Chapter 4 Systems Design: Process Costing
224. The following data have been provided by Corby Corporation for the Circuit Prep
Department. The company uses the FIFO method in its process costing.
Units in process, May 1: materials 60% complete, conversion
45% complete ............................................................................
Units started into production during May .....................................
Units started and completed during May ......................................
Units completed and transferred to the next department during
May............................................................................................
Units in process, May 31: materials 80% complete, conversion
40% complete ............................................................................
500
8,900
7,800
8,300
1,100
Required:
Determine the equivalent units of production for the Circuit Prep Department for May
using the FIFO method.
Ans:
FIFO method:
Materials Conversion
To complete the beginning work in process:
Materials: 500 units × (100% − 60%).................
Conversion: 500 units × (100% − 45%) .............
Units started and completed ...................................
Ending work in process:
Materials: 1,100 units × 80% ..............................
Conversion: 1,100 units × 40% ..........................
Equivalent units of production ...............................
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4-236
200
7,800
275
7,800
880
8,880
440
8,515
AICPA FN: Reporting
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
225. Zubris Corporation uses the FIFO method in its processing costing. The following
data concern the company's Assembly Department for the month of July.
Work in process, July 1 ..............................
Cost added to production in the Assembly
Department during July ..........................
Equivalent units of production for July .....
Materials Conversion
$4,761
$5,365
$26,496
2,070
$34,040
1,850
Required:
Compute the costs per equivalent unit for the Assembly Department for July using the
FIFO method.
Ans:
FIFO method:
Materials Conversion
Cost added during July .............................. $26,496
$34,040
Equivalent units of production ...................
2,070
1,850
Cost per equivalent unit .............................
$12.80
$18.40
AACSB: Analytic AICPA BB: Critical Thinking
Appendix: 4A LO: 6 Level: Easy
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
AICPA FN: Reporting
4-237
Chapter 4 Systems Design: Process Costing
226. Rauzman Corporation uses the FIFO method in its processing costing. The following
data concern the company's Mixing Department for the month of August.
Materials Conversion
Work in process, August 1 .................................. $25,641
$15,300
Cost added to production in the Mixing
Department during August .............................. $170,940
$179,775
Equivalent units of production for August .........
7,770
7,650
Required:
Compute the cost per equivalent unit for materials and conversion for the Mixing
Department for August using the FIFO method.
Ans:
FIFO method:
Materials Conversion
Cost added during the month ......... $170,940
$179,775
Equivalent units .............................
7,770
7,650
Cost per equivalent unit .................
$22.00
$23.50
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Appendix: 4A LO: 6 Level: Easy
4-238
AICPA FN: Reporting
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
227. Crone Corporation uses the FIFO method in its processing costing system. The
following data concern the company's Assembly Department for the month of
October.
Cost in beginning work in process inventory ........ $1,920
Units started and completed this month ................ 3,130
Cost per equivalent unit .........................................
Equivalent units required to complete the units in
beginning work in process inventory .................
Equivalent units in ending work in process
inventory ............................................................
Materials Conversion
$9.50
$20.40
360
140
330
264
Required:
Determine the cost of ending work in process inventory and the cost of units
transferred out of the department during October using the FIFO method.
Ans:
FIFO method:
Transferred to the next department:
From the beginning work in process inventory:
Cost in beginning work in process inventory ........... $ 1,920
Cost to complete these units:
Materials, 360 EUs at $9.50 per EU ......................
3,420
Conversion, 140EUs at $20.40 per EU .................
2,856
Total cost from beginning inventory ........................
8,196
Units started and completed this month, 3,130 units at
$29.90 per unit .........................................................
93,587
Total cost transferred to the next department .............. $101,783
Work in process, October 31:
Materials, 330 EUs at $9.50 per EU ............................
Conversion, 264 EUs at $20.40 per EU .......................
Total work in process, October 31 ...............................
AACSB: Analytic AICPA BB: Critical Thinking
Appendix: 4A LO: 7 Level: Medium
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
$3,135
5,386
$8,521
AICPA FN: Reporting
4-239
Chapter 4 Systems Design: Process Costing
228. The following data has been provided by Glasco Inc., a company that uses the FIFO
method in its processing costing system. The data concern the company's Shaping
Department for the month of June.
Cost in beginning work in process inventory .................. $1,690
Units started and completed this month .......................... 4,110
Cost per equivalent unit .......................................
Equivalent units required to complete the units
in beginning work in process inventory...........
Equivalent units in ending work in process
inventory ..........................................................
Materials Conversion
$12.50
$45.70
460
260
220
176
Required:
Determine the cost of ending work in process inventory and the cost of the units
transferred out of the department during June using the FIFO method.
Ans:
FIFO method:
Transferred to the next department:
From the beginning work in process inventory:
Cost in beginning work in process inventory ..
Cost to complete these units:
Materials, at 460 EUs $12.50 per EU ...........
Conversion, at 260 EUs $45.70 per EU .......
Total cost from beginning inventory ...............
Units started and completed this month, 4,110
units at $58.20 per unit ....................................
Total cost transferred to the next department .....
Work in process, June 30:
Materials, 220 EUs at $12.50 per EU .................
Conversion, 176 EUs at $45.70 per EU ..............
Total work in process, June 30 ...........................
AACSB: Analytic AICPA BB: Critical Thinking
Appendix: 4A LO: 7 Level: Medium
4-240
$
1,690
5,750
11,882
19,322
239,202
$258,524
$ 2,750
8,043
$10,793
AICPA FN: Reporting
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
229. Central Medical Clinic has two service departments, Building Services and Energy,
and three operating departments, Pediatrics, Geriatrics, and Surgery. Central allocates
the cost of Building Services on the basis of square feet and Energy on the basis of
patient days. No distinction is made between variable and fixed costs. Budgeted
operating data for the year just completed follow:
Service
Departments
Building
Services Energy
Budgeted costs
before allocation .
Square feet .............
Patient days ............
$20,000 $10,000
1,000
4,000
0
0
Operating Departments
Pediatrics Geriatrics
$90,000
6,000
5,500
Surgery
$60,000 $100,000
18,000
12,000
7,700
8,800
Required:
a. Prepare a schedule to allocate service department costs to operating departments
by the direct method (round all dollar amounts to the nearest whole dollar).
b. Prepare a schedule to allocate service department costs to operating departments
by the step-down method, allocating Building Services first (round all amounts to
the nearest whole dollar).
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
4-241
Chapter 4 Systems Design: Process Costing
Ans:
a. Direct Method:
Budgeted costs
before allocation
Allocation of
Building
Services:
Pediatrics:
6,000/36,000 ×
$20,000 ...........
Geriatrics:18,000
/36,000 ×
$20,000 ...........
Surgery:
12,000/36,000
× $20,000 ........
Allocation of
Energy:
Pediatrics:
5,500/22,000 ×
$10,000 ...........
Geriatrics:
7,700/22,000 ×
$10,000 ...........
Surgery:
8,800/22,000 ×
$10,000 ...........
Costs after
allocation ............
4-242
Building
Services
Energy
$20,000
$10,000
Pediatrics Geriatrics
$90,000
Surgery
$60,000 $100,000
(20,000)
3,333
10,000
6,667
(10,000)
2,500
3,500
4,000
$0
$0
$95,833
$73,500 $110,667
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
b. Step Method
Budgeted costs
before allocation
Allocation of
Building
Services:
Energy:
4,000/40,000 ×
$20,000 ...........
Pediatrics:
6,000/40,000 ×
$20,000 ...........
Geriatrics:
18,000/40,000
× $20,000 ........
Surgery:
12,000/40,000
× $20,000 ........
Allocation of
Energy:
Pediatrics:
5,500/22,000 ×
$12,000 ...........
Geriatrics:
7,700/22,000 ×
$12,000 ...........
Surgery:
8,800/22,000 ×
$12,000 ...........
Costs after
allocation ............
Building
Services
Energy
$20,000
$10,000
Pediatrics Geriatrics
$90,000
Surgery
$60,000 $100,000
(20,000)
2,000
3,000
9,000
6,000
(12,000)
3,000
4,200
4,800
$0
$0
$96,000
AACSB: Analytic AICPA BB: Critical Thinking
Appendix: 4B LO: 8,9 Level: Medium
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
$73,200 $110,800
AICPA FN: Reporting
4-243
Chapter 4 Systems Design: Process Costing
230. Cerce Corporation uses the direct method to allocate service department costs to
operating departments. The company has two service departments, Administrative and
Facilities, and two operating departments, Assembly and Finishing.
Departmental costs ...
Employee hours ........
Space occupied–
square feet .............
Service Department
Administrative Facilities
$29,440 $46,740
5,000
2,000
2,000
2,000
Operating Department
Assembly Finishing
$258,880 $320,280
29,000
17,000
30,000
8,000
Administrative Department costs are allocated on the basis of employee hours and
Facilities Department costs are allocated on the basis of space occupied.
Required:
Allocate the service department costs to the operating departments using the direct
method.
Ans:
Allocation rate for administrative costs
= Cost to be allocated ÷ Allocation base
= $29,440 ÷ (29,000 + 17,000) = $0.64
Allocation rate for facilities costs
= Cost to be allocated ÷ Allocation base
= $46,740 ÷ (30,000 + 8,000) = $1.23
Administrative Facilities Assembly Finishing
Departmental costs ...............
$29,440 $46,740 $258,880 $320,280
Allocation:
Administrative costs ..........
(29,440)
18,560
10,880
Facilities costs ...................
(46,740)
36,900
9,840
Total costs after allocation
$
0 $
0 $314,340 $341,000
AACSB: Analytic AICPA BB: Critical Thinking
Appendix: 4B LO: 8 Level: Easy
4-244
AICPA FN: Reporting
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
231. Sandven Corporation uses the direct method to allocate its two service department
costs to its two operating departments. Data concerning those departments follow:
Service
Service
Operating
Operating
Department Department Department Department
A
B
X
Y
Departmental costs ....
$34,300
$66,230
$161,710
$503,220
Allocation base A ......
5,000
1,000
32,000
17,000
Allocation base B ......
8,000
2,000
32,000
5,000
Service Department A costs are allocated on the basis of allocation base A and Service
Department B costs are allocated on the basis of allocation base B.
Required:
Allocate the service department costs to the operating departments using the direct
method.
Ans:
Allocation rate for Service Department A costs
= Cost to be allocated ÷ Allocation base
= $34,300 ÷ (32,000 + 17,000) = $0.70
Allocation rate for Service Department B costs
= Cost to be allocated ÷ Allocation base
= $66,230 ÷ (32,000 + 5,000) = $1.79
Service
Service
Operating
Operating
Department Department Department Department
A
B
X
Y
Departmental costs .......
$34,300
$66,230
$161,710
$503,220
Service Department A ..
(34,300)
22,400
11,900
Service Department B ..
(66,230)
57,280
8,950
Total costs after
allocation ..................
$
0
$
0
$241,390
$524,070
AACSB: Analytic AICPA BB: Critical Thinking
Appendix: 4B LO: 8 Level: Easy
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
AICPA FN: Reporting
4-245
Chapter 4 Systems Design: Process Costing
232. The direct method is used by Kurpinski Clinic to allocate its service department costs
to its operating departments. Data concerning those departments follow:
Departmental costs .
Computers ..............
Employees ..............
Operating
Departments
Service Departments
Information
Technology Personnel
$34,650
$31,356
22
17
15
15
Pediatrics Prenatal
$566,960 $688,220
44
46
75
42
Information Technology costs are allocated on the basis of computers and Personnel
costs are allocated on the basis of employees.
Required:
Allocate the service department costs to the operating departments using the direct
method.
Ans:
Allocation rate for Information Technology costs
= Cost to be allocated ÷ Allocation base
= $34,650 / (44 + 46) = $385.00
Allocation rate for Personnel costs
= Cost to be allocated ÷ Allocation base
= $31,356 / (75 + 42) = $268.00
Departmental costs ..
Information
Technology ..........
Personnel .................
Total costs after
allocation .............
Service Departments
Information
Technology Personnel
$34,650
$31,356
(34,650)
(31,356)
$
0
$
0
AACSB: Analytic AICPA BB: Critical Thinking
Appendix: 4B LO: 8 Level: Easy
4-246
Operating Departments
Pediatrics
Prenatal
$566,960 $688,220
16,940
20,100
17,710
11,256
$604,000 $717,186
AICPA FN: Reporting
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
233. Mercik Consultancy uses the direct method to allocate its service department costs to
its operating departments. The company has two service departments, Information
Technology and Administration, and two operating departments, Corporate Practice
and Government Practice. Data concerning those departments follow:
Departmental costs .
Computers ..............
Employees ..............
Service Departments
Information AdminiTechnology
stration
$26,244 $21,696
39
14
32
10
Operating Departments
Corporate Government
Practice
Practice
$226,170
$477,980
51
30
70
26
Information Technology Department costs are allocated on the basis of computers and
Administration Department costs are allocated on the basis of employees.
Required:
Allocate the service department costs to the operating departments using the direct
method.
Ans:
Allocation rate for Information Technology costs
= Cost to be allocated ÷ Allocation base = $26,244 / (51 + 30) = $324.00
Allocation rate for Administration costs
= Cost to be allocated ÷ Allocation base = $21,696 / (70 + 26) = $226.00
Departmental costs .
Information
Technology .........
Administration .......
Total costs after
allocation ............
Information
Technology Administration
$26,244
$21,696
(26,244)
(21,696)
$
0
$
AACSB: Analytic AICPA BB: Critical Thinking
Appendix: 4B LO: 8 Level: Easy
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0
Corporate
Practice
$226,170
Government
Practice
$477,980
16,524
15,820
9,720
5,876
$258,514
$493,576
AICPA FN: Reporting
4-247
Chapter 4 Systems Design: Process Costing
234. Bazin Corporation has two service departments, Service Department A and Service
Department B, and two operating departments, Operating Department X and
Operating Department Y.
Service
Service
Operating
Department Department Department
A
B
X
Departmental costs .
$31,280
$55,640
$161,490
Allocation base A ...
4,000
1,000
26,000
Allocation base B ...
6,000
2,000
30,000
Operating
Department
Y
$399,350
19,000
2,000
The company uses the step-down method to allocate service department costs to
operating departments. Service Department A costs are allocated first on the basis of
allocation base A and Service Department B costs are allocated second on the basis of
allocation base B.
Required:
Allocate the service department costs to the operating departments using the stepdown method.
Ans:
Departmental costs ................
Service Department A costs ..
Service Department B costs ..
Total costs after allocation ....
Service
Department
A
$31,280
(31,280)
$
0
Service
Department
B
$55,640
680
(56,320)
$
0
Operating
Department
X
$161,490
17,680
52,800
$231,970
Operating
Department
Y
$399,350
12,920
3,520
$415,790
Allocation rate for Service Department A costs
= Cost to be allocated / Allocation base
= $31,280 / (1,000 + 26,000 + 19,000) = $0.68
Allocation rate for Service Department B costs
= Cost to be allocated / Allocation base
= ($55,640 + $680) / (30,000 + 2,000) = $1.76
AACSB: Analytic AICPA BB: Critical Thinking
Appendix: 4B LO: 9 Level: Easy
4-248
AICPA FN: Reporting
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
235. Coakley Corporation uses the step-down method to allocate service department costs
to operating departments. The company has two service departments, Administration
and Facilities, and two operating departments, Assembly and Finishing.
Departmental costs
Employee time ......
Space occupied ......
Service Department
Administration Facilities
$22,260 $69,130
4,000
1,000
6,000
1,000
Operating Department
Assembly Finishing
$137,520 $900,750
25,000
16,000
34,000
9,000
Administration Department costs are allocated first on the basis of employee time and
Facilities Department costs are allocated second on the basis of space occupied.
Required:
Allocate the service department costs to the operating departments using the stepdown method.
Ans:
Departmental costs ................
Administration costs .............
Facilities costs .......................
Total costs after allocation ....
Administration Facilities Assembly Finishing
$22,260 $69,130 $137,520 $900,750
(22,260)
530
13,250
8,480
(69,660)
55,080
14,580
$
0 $
0 $205,850 $923,810
Allocation rate for Administration Department costs
= Cost to be allocated ÷ Allocation base
= $22,260 ÷ (1,000 + 25,000 + 16,000) = $0.53
Allocation rate for Facilities Department costs
= Cost to be allocated ÷ Allocation base
= ($69,130 + $530) ÷ (34,000 + 9,000) = $1.62
AACSB: Analytic AICPA BB: Critical Thinking
Appendix: 4B LO: 9 Level: Easy
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AICPA FN: Reporting
4-249
Chapter 4 Systems Design: Process Costing
236. Georgeson Emergency Care Hospital uses the step-down method to allocate service
department costs to operating departments. The hospital has two service departments,
Administration and Information Technology (IT), and two operating departments,
Emergency Room and Intensive Care.
Departmental costs .
Employees ..............
Computers ..............
Service Department
Administration
IT
$13,340 $15,805
4
5
4
4
Operating Department
Emergency Intensive
Room
Care
$597,700 $396,240
142
83
65
46
Administration Department costs are allocated first on the basis of employees and IT
Department costs are allocated second on the basis of computers.
Required:
Allocate the service department costs to the operating departments using the stepdown method.
Ans:
Departmental costs ........
Administration costs .....
IT costs ..........................
Total costs after
allocation ...................
Administration
$13,340
(13,340)
$
0
Emergency
IT
Room
$15,805
$597,700
290
8,236
(16,095)
9,425
Intensive
Care
$396,240
4,814
6,670
$
$407,724
0
$615,361
Allocation rate for Administration Department costs
= Cost to be allocated ÷ Allocation base
= $13,340 ÷ (5 + 142 + 83) = $58
Allocation rate for IT Department costs
= Cost to be allocated ÷ Allocation base
= ($15,805 + $290) ÷ (65 + 46) = $145
AACSB: Analytic AICPA BB: Critical Thinking
Appendix: 4B LO: 9 Level: Easy
4-250
AICPA FN: Reporting
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 4 Systems Design: Process Costing
237. Lester Natal Clinic uses the step-down method to allocate service department costs to
operating departments. The clinic has two service departments, Administration and
Information Technology (IT), and two operating departments, Prenatal Care and
Postnatal Care.
Departmental costs .
Employees ..............
Computers ..............
Service Department
Administration
IT
$20,448 $22,506
2
3
2
2
Operating Department
Prenatal
Postnatal
Care
Care
$570,720 $369,880
131
79
45
42
Administration Department costs are allocated first on the basis of employees and IT
Department costs are allocated second on the basis of computers.
Required:
Allocate the service department costs to the operating departments using the stepdown method.
Ans:
Departmental costs ............
Administration costs .........
IT costs ..............................
Total costs after allocation
Administration
$20,448
(20,448)
$0
IT
$22,506
288
(22,794)
$0
Prenatal
Care
$570,720
12,576
11,790
$595,086
Postnatal
Care
$369,880
7,584
11,004
$388,468
Allocation rate for Administration Department costs
= Cost to be allocated ÷ Allocation base
= $20,448 ÷ (3 + 131 + 79) = $96
Allocation rate for IT Department costs
= Cost to be allocated ÷ Allocation base
= ($22,506 + $288) ÷ (45 + 42) = $262
AACSB: Analytic AICPA BB: Critical Thinking
Appendix: 4B LO: 9 Level: Easy
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
AICPA FN: Reporting
4-251
Chapter 4 Systems Design: Process Costing
4-252
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