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Introduction to Managerial Accounting

Jeannie M. Folk
Ray H. Garrison
Eric Noreen

Systems Design: Process Costing

Multiple Choice Quiz

Which of the following statements is (are) true?

A manufacturer of ink cartridges would ordinarily use process costing rather than job-order costing.

The output of a processing department must be homogeneous in order to use process costing.

If a company uses a process costing system it accumulates costs by processing department rather than by job.

All of the above are true statements.

In a process costing system, the journal entry used to record the transfer of units from Department A, a processing department, to Department B, the next processing department includes a debit to:

Work in Process - Department A and a credit to Work in Process - Department B.

Work in Process - Department B and a credit to Work in Process - Department A.

Work in Process - Department B and a credit to Materials.

Finished Goods and a credit to Work in Process - Department B.

The Renaissance Company uses the weighted-average method in its process costing system. The May 1 work in process inventory in a particular department consisted of 16,000 units, which were 50% complete with respect to conversion costs. The company recorded 59,000 equivalent units of production for conversion costs for May in that department. There were 12,000 units in that department's ending work in process inventory on May 31, which were 75% complete with respect to conversion costs. A total of 50,000 units were completed and transferred out of the department during the month. The number of units started during May in the department was:

42,000 units.

46,000 units.

29,000 units.

54,000 units.

Paist Company uses the weighted-average method in its process costing system. The following data were taken from the company's accounting records:

Beginning work in process inventory
(100% complete as to materials;
70% complete as to conversion)	60,000 units
Started in process during the period	180,000 units
Ending work in process inventory
(100% complete as to materials;
60% complete as to conversion)	40,000 units

The equivalent units of production for conversion costs was:

200,000 units.

204,000 units.

222,000 units.

224,000 units.

Bandana Company, a manufacturer of handkerchiefs, uses the weighted-average method in its process costing system. The company sold 250,000 units during the month of April. There is only one processing department. The following data were taken from the company's accounting records:

Inventory at April 1:
Work in process	None
Finished goods	75,000 units
Inventory at April 30:
Work in process (75% complete
as to conversion costs)	16,000 units
Finished goods	60,000 units

What were the equivalent units of production for conversion costs for April?

153,000

235,000

247,000

251,000

The Vincennes Company uses the weighted-average method in its process costing system. For a particular department, the company had 108,000 equivalent units of production with respect to conversion costs in March. There were 15,000 units in the department's beginning work in process inventory, two thirds complete with respect to conversion costs. During March, 105,000 units were started and 100,000 were completed and transferred out of the department. The ending work in process inventory in the department:

consisted of 5,000 units.

consisted of 10,000 units.

was 40% complete with respect to conversion costs.

was 65% complete with respect to conversion costs.

Conway Company uses the weighted-average method in its process costing system. The following information pertains to Processing Department A for the month of April:

	Number	Cost of
	of units	materials
Beginning work in process	60,000	$20,000
Started in April	160,000	$54,000
Units completed	170,000
Ending work in process	50,000

All materials are added at the beginning of the process. The cost per equivalent unit for materials is closest to:

$0.25.

$0.34.

$0.44.

$1.48.

Pierce Company uses the weighted-average method in its process costing system. The Cutting Department is the second department in its production process. The data below summarize the department's operations in May.

		Percentage
	Units	complete
Beginning work in process inventory	14,200	70%
Transferred in from the prior
department during May	122,000
Ending work in process inventory	9,200	30%

The Cutting Department's production report indicates that the cost per equivalent unit for conversion cost for May was $8.24. How much conversion cost was assigned to the units transferred out of the Cutting Department during May?

$964,574.40

$1,005,280.00

$1,046,480.00

$1,122,288.00

The Batavia Company uses the weighted-average method in its process costing system. The company has only a single processing department. The company's ending work in process inventory on April 30 consisted of 36,000 units. The units in the ending work in process inventory were 100% complete with respect to materials and 60% complete with respect to labor and overhead. If the cost per equivalent unit for April was $5.50 for materials and $8.50 for labor and overhead, the total cost assigned to the ending work in process inventory was:

$302,400.

$320,400.

$504,000.

$381,600.

Fox Valley Manufacturing Company's beginning work in process inventory consisted of 10,000 units, 100% complete with respect to materials cost and 40% complete with respect to conversion costs. The total cost in the beginning inventory was $60,000. During the month, 100,000 units were transferred out. The equivalent unit cost was computed to be $4.00 for materials and $7.40 for conversion costs under the weighted-average method. Given this information, the total cost of the units completed and transferred out was:

$960,000.

$1,020,000.

$1,080,000.

$1,140,000.

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