ASSIGNMENT 3 – PROCESS COSTING

Part 1. THEORIES AND CONCEPTS

1. In a process costing system, overhead is allocated to departments before being applied to units
of product.
2. In order to use process costing, the output of a processing department should be
homogeneous.
3. In process costing, the same equivalent units figure is used for both materials and conversion
costs.
4. The "costs to be accounted for" portion of the cost reconciliation report includes the cost of
beginning work in process inventory and the cost of ending work in process inventory.
5. The "costs accounted for" portion of the cost reconciliation report includes the cost of ending
work in process inventory and the cost of units transferred out.

6. Process costing would be appropriate for each of the following except:

A. custom furniture manufacturing.
B. oil refining.
C. grain milling.
D. newsprint production.

7. Assume there is no beginning work in process inventory and the ending work in process
inventory is 100% complete with respect to materials costs. The number of equivalent units with
respect to materials costs under the weighted-average method is:
A. the same as the number of units put into production.
B. less than the number of units put into production.
C. the same as the number of units completed.
D. less than the number of units completed.

8 Assume there was no beginning work in process inventory and the ending work in process
inventory is 70% complete with respect to conversion costs. Under the weighted-average
method, the number of equivalent units of production with respect to conversion costs would be:
A. the same as the units completed.
B. less than the units completed.
C. the same as the units started during the period.
D. less than the units started during the period.

9. Equivalent-unit calculations are necessary to allocate manufacturing costs between:

A. units completed and ending work in process.
B. beginning work in process and units completed.
C. units sold and ending work in process.
D. cost of goods manufactured and beginning work in process.
E. cost of goods manufactured and cost of goods sold.

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PART II. APPLICATION OF CONCEPTS

10. Barrett Corporation had 6,500 units of work in process on April 1. During April, 19,100 units
were completed and as of April 30, 5,100 units remained in production. How many units were
started during April?
A. 11,600.
B. 17,700.
C. 20,500.
D. 30,700.
E. None of these.

11. Lester Corporation had 8,200 units of work in process on November 1. During November,
26,800 units were started and as of November 30, 7,900 units remained in production. How
many units were completed during November?
A. 16,100.
B. 26,500.
C. 27,100.
D. 42,800.
E. None of these.

12. Xin Co., had 3,000 units of work in process on April 1 that were 60% complete. During
April, 10,000 units were completed and as of April 30, 4,000 units that were 40% complete
remained in production. How many units were started during April?
A. 8,600.
B. 9,800.
C. 11,000.
D. 12,200.
E. None of these.

13. Unizat Corporation uses the weighted-average method in its process costing system. The
following information pertains to one of the company's processing departments for a recent
month:

All materials are added at the beginning of the process. The cost per equivalent unit for materials
is closest to:
A. $0.86
B. $0.90
C. $1.10
D. $1.18

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14. Hanson Company uses the weighted-average method in its process costing system. The first
processing department, the Welding Department, started the month with 17,000 units in its
beginning work in process inventory that were 60% complete with respect to conversion costs.
The conversion cost in this beginning work in process inventory was $90,780. An additional
84,000 units were started into production during the month and 82,000 units were completed in
the Welding Department and transferred to the next processing department. There were 19,000
units in the ending work in process inventory of the Welding Department that were 40%
complete with respect to conversion costs. A total of $690,780 in conversion costs were incurred
in the department during the month.

The cost per equivalent unit for conversion costs is closest to:
A. $6.707
B. $8.224
C. $8.900
D. $8.723

15. Park 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.

The accounting records indicate that the conversion cost that had been assigned to beginning
work in process inventory was $40,484 and a total of $213,890 in conversion costs were incurred
in the department during January.
The cost per equivalent unit for conversion costs for January in the Molding Department is
closest to:
A. $4.823
B. $4.186
C. $4.650
D. $4.590

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16. Jam Company uses the weighted-average method in its process costing system. Operating
data for the Painting Department for the month of April appear below:

What were the equivalent units for conversion costs in the Painting Department for April?
A. 78,680
B. 77,500
C. 72,300
D. 81,280

17. Fauste Corporation uses the weighted-average method in its process costing system. The
Assembly Department started the month with 10,000 units in its beginning work in process
inventory that were 70% complete with respect to conversion costs. An additional 55,000 units
were transferred in from the prior department during the month to begin processing in the
Assembly Department. During the month 52,000 units were completed in the Assembly
Department and transferred to the next processing department. There were 13,000 units in the
ending work in process inventory of the Assembly Department that were 80% complete with
respect to conversion costs.
What were the equivalent units for conversion costs in the Assembly Department for the month?
A. 58,000
B. 55,400
C. 62,400
D. 52,000

18. Natraj Corporation uses the weighted-average method in its process costing system.
Operating data for the Lubricating Department for the month of October appear below:

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What were the equivalent units for conversion costs in the Lubricating Department for October?
A. 41,220
B. 38,400
C. 37,800
D. 41,520

19. Sala 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.

The Fitting Department's cost per equivalent unit for conversion cost for March was $2.64.
How much conversion cost was assigned to the units transferred out of the Fitting Department
during March?
A. $118,800.00
B. $131,472.00
C. $126,508.80
D. $143,616.00

20. Yimron Corporation uses the weighted-average method in its process costing system.
Information for the month of March concerning Department A, the first stage of the company's
production process, follows:

Materials are added at the beginning of the process. The ending work in process is 50% complete
with respect to conversion costs. What cost would be recorded for the ending work in process
inventory?
A. $3,400
B. $1,700
C. $4,400
D. $2,200

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21. Tesla Corporation, which adds materials at the beginning of production, uses a weighted-
average process-costing system. Consider the data that follow.

The company's cost per equivalent unit for materials is:

A. $1.24.
B. $1.66.
C. $1.67.
D. $2.05.
E. some other amount.

22. Peach Company uses a weighted-average process-costing system. Company records

disclosed that the firm completed 40,000 units during the month and had 10,000 units in process
at month-end, 20% complete. Conversion costs associated with the beginning work-in-process
inventory amounted to $231,000, and amounts that relate to the current month totaled $966,000.
If conversion is incurred uniformly throughout manufacturing, Peach's equivalent-unit cost is:
A. $23.00.
B. $23.94.
C. $24.15.
D. $28.50.
E. some other amount.

USE THE FOLLOWING INFORMATION TO ANSWER 23-24.

Universal Manufacturing uses a weighted-average process-costing system. All materials are
introduced at the start of manufacturing, and conversion costs are incurred evenly throughout the
process. The company's beginning and ending work-in-process inventories totaled 10,000 units
and 15,000 units, respectively, with the latter units being 2/3 complete at the end of the period.
Universal started 30,000 units into production and completed 25,000 units. Manufacturing costs
follow.
Beginning work in process: Materials, $60,000; conversion cost, $150,000
Current costs: Materials, $180,000; conversion cost, $480,000

23. Universal's equivalent-unit cost for materials is:

A. $4.50.
B. $6.00.
C. $8.00.
D. $9.60.
E. some other amount.

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24. Universal's equivalent-unit cost for conversion cost is:
A. $13.71.
B. $18.00.
C. $21.00.
D. $25.20.
E. some other amount.

USE THE FOLLOWING INFORMATION TO ANSWER NUMBERS 25-30.

Southern Lake Chemical manufactures a product called Zubek. Direct materials are added at the
beginning of the process, and conversion activity occurs uniformly throughout production. The
beginning work-in-process inventory is 60% complete with respect to conversion; the ending
work-in-process inventory is 20% complete. The following data pertain to May:

25. Using the weighted-average method of process costing, the equivalent units of direct
materials total:
A. 68,000.
B. 69,400.
C. 74,000.
D. 75,000.
E. some other amount.

26. Using the weighted-average method of process costing, the equivalent units of conversion
activity total:
A. 60,400.
B. 68,000.
C. 69,400.
D. 74,000.
E. some other amount.

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27. Using the weighted-average method of process costing, the cost per unit of direct materials
is:
A. $1.17.
B. $1.18.
C. $1.20.
D. $1.28.
E. some other amount.

28. Using the weighted-average method of process costing, the cost per unit of conversion
activity is:
A. $2.50.
B. $2.53.
C. $2.70.
D. $2.76.
E. some other amount.

29. Using the weighted-average method of process costing, the cost of goods completed and
transferred during May is:
A. $249,560.
B. $250,240.
C. $258,400.
D. $263,840.
E. some other amount.

30. Using the weighted-average method of process costing, the total costs remaining in work in
process on May 31 are:
A. $0.
B. $12,040.
C. $17,480.
D. $25,640.
E. some other amount.

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CASE

Marcellus Corporation, which uses the weighted-average method of process costing, reported the
following as of February 1:

Conversations with the production supervisor revealed that materials are introduced at the start
of the process and conversion cost is incurred evenly throughout manufacturing. The company
started 29,000 units during the month. Goods in process at the beginning and end of February
totaled 3,000 units and 5,000 units, respectively, the latter batch being 60% complete.
Just prior to leaving on vacation, a trusted staff assistant was asked to compute the cost of
February's ending work-in-process inventory. Her calculations showed a huge rise in unit cost
when compared with the February 1 figures, soaring to $250 [($470,000 + $280,000)  3,000
units (5,000 units  60%)].

Required:
A. Did the staff assistant make any errors in her calculations? Explain.
B. Analyze the company's production volume and determine the proper equivalent-unit figures
for February.
C. Calculate the proper unit costs for February.
D. Calculate the cost of the February 28 work-in-process inventory.
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