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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
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
4-7
4-8
4-9
4-10
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
4-11
A)
B)
C)
D)
4-12
Direct Step-Down
Yes
Yes
Yes
No
No
Yes
No
No
4-13
4-14
3,000
77,000
8,000
72,000
4-15
4-16
22,000
90,000
97,000
15,000
Materials
$11,000
46,120
$57,120
112,000
$0.51
Materials
15,000
$0.51
$7,650
4-17
4-18
18,000
$3.10
15,000
$2.00
$5.10
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
4-19
Materials
$ 6,000
51,120
$57,120
112,000
$0.51
Materials
4-20
24,000
$0.51
$12,240
10,000
60,000
19,000
51,000
Conversion
$ 19,200
380,060
$399,260
64,300
$6.209
4-21
4-22
95,600
$0.873
4-23
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
Conversion
$ 61,920
194,340
$256,260
61,800
$4.147
4-25
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
Materials
9,000
$3.75
$33,750
9,000
6,300
Conversion
6,300
$1.25
$7,875
Total
$41,625
4-27
250,000
60,000
75,000
235,000
4-28
235,000
12,000
247,000
40,000 *
7,500
47,500
4-29
4-30
6,000
52,000
18,000
40,000
Conversion
40,000
3,600
43,600
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
57,100
5,840
62,940
4-31
4-32
30,000
2,600
32,600
20,000
6,000
26,000
4-33
4-34
102,000
200
102,200
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
41,000
4,620
45,620
4-35
4-36
4,000
10,000
3,000
11,000
5,000
800
5,800
5,200
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
Total
800
600
200
4-37
FIFO
$8.00
$7.30
$8.00
$7.30
4-38
Weighted-Average
$288,000
40,000
$7.20
FIFO
$262,800
36,000
$7.30
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:
+
3,300
67,000
5,600
64,700
$4.70
$304,090
4-39
$19,000
30,000 units
100%
60%
82,000 units
$1.50
$0.75
4-40
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)
4-41
10,000
100,000
5,000
95,000
Materials Conversion
$ 4,000
$ 3,000
20,000
16,000
$24,000
$19,000
100,000
95,000
$0.24
$0.20
Materials Conversion
90,000
90,000
$0.24
$0.20
$21,600
$18,000
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
$ 4,800
20,000
$24,800
4-43
4-44
$ 5,000
74,000
12,000
$67,000
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...........
2,730
$3.91
$10,674.30
4-45
Conversion
Cost
$22,000
$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
75,000
30,000
110,000
5,000
Conversion
$143,000
110,000
$1.30
4-47
Number
of units
20,000
90,000
8,000
Percent complete
with respect to
conversion costs
20%
75%
4-48
0
$0.00
$0
Total
6,000
$50.60
$303,600 $303,600
4-49
17,600
76,000
18,000
111,600
4-50
Conversion
$585,900
111,600
$5.250
15,300
33,000
6,800
55,100
Conversion
$117,914
55,100
$2.140
4-51
4-52
Conversion
10,400
84,000
3,900
98,300
4-53
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
4-54
Conversion
$99,477
43,900
$2.266
4-55
+
+
7,000
60,000
19,000
48,000
4-56
4,200
41,000
17,100
62,300
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:
+
+
7,400
75,200
3,000
79,600
1,480
72,200
2,700
76,380
4-57
+
+
2,000
10,000
3,000
9,000
4-58
300
7,000
1,200
8,500
+
+
8,000
40,000
10,000
38,000
2,000
30,000
30,000
8,000
38,000
4,800
36,800
4-59
4-60
2,600
42,000
7,000
51,600
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....................................................
2,380
49,200
3,430
55,010
4-61
$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
4-62
Units
7,900
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.............................
7,900
6,320
36,000
36,000
0
43,900
2,400
44,720
4-63
Materials Conversion
$0 $330,928 $330,928
43,900
44,720
$0.00
$7.40
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
Departmental costs.......
Employee hours...........
Space occupied.............
Operating Department
Assembl
y
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)
$
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.
4-65
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)
$
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
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
4-67
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)
$
$188,980
13,860
(18,630)
$
0
10,580
$213,420
$506,960 $741,078
12,628
8,050
$527,638 $741,078
4-68
Operating
Department
Prepress Printing
$376,940 $530,110
51
38
98
30
4-69
$27,412
$27,008
(27,412)
$
Operating
Department
Prepress
Printing
$376,940
$530,110 $961,470
15,708
(27,008)
$
0
20,678
$413,326
Total
11,704
6,330
$548,144 $961,470
4-70
4-71
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)
$
$936,256
$936,256
4-72
4-73
Operating
Department
AfterSales
Sales
Total
Departmental costs
before allocation....... $36,550
$70,300 $412,500 $492,780 $1,012,130
Allocation:
General costs (2/43,
27/43, 14/43)*.......... (36,550)
1,700
22,950
11,900
0
Physical plant costs
(38/45, 7/45)**.........
(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
4-75
Total
Departmental costs
before allocation........
$26,220 $78,860 $127,160 $737,860 $970,100
Allocation:
Administration costs
(1/38, 25/38, 12/38)*.
(26,220)
690
17,250
8,280
0
Physical plant costs
(37/43, 6/43)**..........
(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
IT
Operating
Department
Family
Medicine Pediatric
Total
Departmental costs
before allocation.......... $86,184 $45,995
$608,130 $316,290 $1,056,599
Allocation:
Personnel costs (26/342,
128/342, 188/342)*..... (86,184)
6,552
32,256 47,376
0
IT costs (125/281,
156/281)**...................
(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.
4-77
4-78
Operating
Department
Prenatal Pediatric
Total
Departmental costs
before allocation.........
$54,736 $37,449 $383,270 $259,590 $735,045
Allocation:
Administration costs
(21/311, 118/311,
172/311)*...................
(54,736)
3,696
20,768 30,272
0
IT costs (102/211,
109/211)**.................
(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.
4-79
4-80
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
1,750
80,750
4-81
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
+
+
772,000
$0.30
4-83
+
+
40,000
750,000
30,000
760,000
Materials Conversion
760,000
760,000
12,000
772,000
9,000
769,000
Materials Conversion
$ 8,600 $ 4,800
223,000
149,000
$231,600 $153,800
772,000
$0.30
769,000
$0.20
4-84
12,000
$0.30
$3,600
9,000
$0.20
$1,800 $5,400
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
4-85
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
4-87
+
+
300
8,500
8,100
700
4-88
+
+
300
8,500
8,100
700
8,730
$13.01
4-89
+
+
300
8,500
8,100
700
4-90
Conversion
$ 2,900
153,900
$156,800
8,485
$18.48
+
+
300
8,500
8,100
700
Materials Conversion
8,100
8,100
630
8,730
385
8,485
Materials Conversion
$ 3,100 $ 2,900
110,500
153,900
$113,600 $156,800
8,730
$13.01
8,485
$18.48
Materials Conversion
Units transferred out:
Units transferred to the next department...............
Cost per equivalent unit.........................................
Cost of units transferred out..................................
Total
8,100
8,100
$13.01
$18.48
$105,402 $149,685 $255,087
4-91
+
+
300
8,500
8,100
700
Materials Conversion
8,100
8,100
630
8,730
385
8,485
Materials Conversion
$3,100
$2,900
110,500
153,900
$113,600 $156,800
8,730
$13.01
8,485
$18.48
4-92
630
$13.01
$8,198
385
$18.48
$7,115 $15,313
+
+
700
8,000
7,100
1,600
4-93
+
+
700
8,000
7,100
1,600
4-94
+
+
700
8,000
7,100
1,600
Materials
$ 15,700
166,500
$182,200
8,300
$21.95
4-95
+
+
700
8,000
7,100
1,600
4-96
Conversion
$ 4,800
96,300
$101,100
7,340
$13.774
+
+
700
8,000
7,100
1,600
Materials Conversion
7,100
7,100
1,200
8,300
240
7,340
Materials Conversion
$ 15,700 $ 4,800
166,500
96,300
$182,200 $101,100
8,300
$21.952
7,340
$13.774
Materials Conversion
Units transferred out:
Units transferred to the next department.................
Cost per equivalent unit..........................................
Cost of units transferred out....................................
7,100
$21.95
$155,858
Total
7,100
$13.77
$97,794 $253,652
4-97
+
+
700
8,000
7,100
1,600
Materials Conversion
7,100
7,100
1,200
8,300
240
7,340
Materials Conversion
$ 15,700 $ 4,800
166,500
96,300
$182,200 $101,100
8,300
$21.952
7,340
$13.774
4-98
1,200
$21.95
$26,342
240
$13.77
$3,306 $29,648
+
+
700
7,200
6,400
1,500
4-99
+
+
700
7,200
6,400
1,500
4-100
+
+
700
7,200
6,400
1,500
Materials
$ 9,100
96,700
$105,800
7,600
$13.92
4-101
+
+
700
7,200
6,400
1,500
Materials Conversion
6,400
6,400
1,200
7,600
1,050
7,450
Materials Conversion
$ 9,100 $ 5,400
96,700
180,700
$105,800 $186,100
7,600
$13.92
7,450
$24.98
Materials Conversion
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
Total
6,400
$24.98
$159,871 $248,966
4-103
4-104
5,335
$23.17
Materials Conversion
4,400
4,400
935
5,335
275
4,675
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
4,400
$23.17
$38.63
$101,938 $169,976 $271,915
4-105
4-106
Materials Conversion
8,500
8,500
765
9,265
135
8,635
Materials Conversion
$ 4,800 $ 6,200
208,000
280,300
$212,800 $286,500
9,265
$22.97
8,635
$33.18
Total
8,500
8,500
$22.97
$33.18
$195,229 $282,021 $477,250
4-107
Materials Conversion
8,500
8,500
765
9,265
135
8,635
Materials Conversion
$ 4,800 $ 6,200
208,000
280,300
$212,800 $286,500
9,265
$22.97
8,635
$33.18
4-108
765
$22.97
$17,571
135
$33.18
$4,479 $22,050
+
+
300
5,400
4,800
900
4-109
+
+
300
5,400
4,800
900
4-110
+
+
300
5,400
4,800
900
4-111
+
+
300
5,400
4,800
900
4-112
Materials
$ 4,400
120,000
$124,400
5,520
$22.54
+
+
300
5,400
4,800
900
5,295
$17.88
4-113
+
+
300
5,400
4,800
900
Material Conversio
s
n
4,800
4,800
720
5,520
495
5,295
Material Conversio
s
n
$ 4,400
$ 2,200
120,000
92,500
$124,400 $94,700
5,520
$22.54
5,295
$17.88
Material Conversio
s
n
Units transferred out:
Units transferred to the next department..............
Cost per equivalent unit.......................................
4-114
4,800
$22.54
4,800
$17.88
Total
$108,174
$85,847 $194,021
4-115
300
5,400
4,800
900
Material
s
Conversion
4,800
4,800
720
5,520
495
5,295
Material
s
Conversion
$ 4,400
$ 2,200
120,000
92,500
$124,400 $94,700
5,520
$22.54
5,295
$17.88
4-116
720
495
Total
$22.54
$16,226
$17.88
$8,853 $25,079
4-117
4-118
Materials
5,900
845
6,745
6,745
$17.24
4-119
Conversion
5,900
520
6,420
4-120
Conversion
$ 2,900
121,000
$123,900
6,420
$19.30
Materials Conversion
5,900
5,900
845
6,745
520
6,420
Materials Conversion
$ 7,700 $ 2,900
108,600
121,000
$116,300 $123,900
6,745
$17.24
6,420
$19.30
Materials Conversion
Units transferred out:
Units transferred to the next department.................
Cost per equivalent unit..........................................
Cost of units transferred out....................................
Total
5,900
5,900
$17.24
$19.30
$101,730 $113,864 $215,595
4-121
Materials Conversion
5,900
5,900
845
6,745
520
6,420
Materials Conversion
$ 7,700 $ 2,900
108,600
121,000
$116,300 $123,900
6,745
$17.24
6,420
$19.30
4-122
845
520
4-123
7,610
$44.55
4-124
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.............
360
$16.87
$6,073
Total
210
$44.55
$9,355 $15,428
4-125
4-126
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
5,700
$37.33
4-127
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)......................................................
800
Cost per equivalent unit............................................ $19.26
Cost of ending work in process inventory................ $15,406
4-128
Total
300
$37.33
$11,200 $26,606
+
+
600
5,000
4,200
1,400
4-129
+
+
600
5,000
4,200
1,400
4-130
+
+
600
5,000
4,200
1,400
Materials
4,200
1,050
5,250
Materials
$ 3,700
39,000
$42,700
5,250
$8.13
4-131
Labor and
Overhead Percent
Complete
25%
50%
Transferred
In
Materials
Beginning work in process inventory. .
$80,000
$37,600
Cost added during the month...............
$251,000 $122,400
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
4-132
+
+
40,000
100,000
20,000
120,000
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:
+
+
40,000
100,000
20,000
120,000
Labor and
Overhead
120,000
10,000
130,000
4-133
Labor and
Overhead
$ 5,000
66,500
$71,500
130,000
$0.55
4-134
Materials
6,100
1,425
7,525
4-135
Materials
$ 13,900
115,700
$129,600
7,525
$17.22
4-136
Materials
4,400
700
5,100
Materials
$ 8,500
79,100
$87,600
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
4,820
$46.76
4-137
Units
Beginning work in process inventory..... 10,000
Units started into production................... 50,000
Units completed and transferred out....... 51,000
Ending work in process inventory.......... 9,000
Percent Complete
with Respect to
Processing
65%
30%
4-138
Materials
0
41,000
9,000
50,000
4-139
Units Materials
Work-in-process inventory, March 1....... 7,000
70%
Started into production during March..... 66,000
Work-in-process inventory, March 31..... 5,000
45%
4-140
Percent
Complete with
Respect to
Labor &
Overhead
35%
30%
+
+
7,000
66,000
5,000
68,000
Materials
68,000
2,250
70,250
4-141
+
+
7,000
66,000
5,000
68,000
4-142
+
+
7,000
66,000
5,000
68,000
Materials
2,100
61,000
2,250
65,350
4-143
+
+
7,000
66,000
5,000
68,000
4-144
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:
+
+
8,000
20,000
6,000
22,000
4-145
4-146
Materials
290,000
17,000
307,000
4-147
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
4-148
$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:
+
+
4-149
10,000
210,000
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
4-150
+
+
140,000
10,000
174,000
24,000
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.
4-151
+
+
4,000
317,000
10,000
311,000
$1.50
$2.80
Materials Conversion
Units transferred out:
Units transferred to the next department.............. 311,000
311,000
Cost per equivalent unit.......................................
$1.50
$2.80
Cost of units transferred out................................. $466,500 $870,800 $1,337,300
4-152
+
+
4,000
317,000
10,000
311,000
$1.50
$2.80
9,000
$2.80
$25,200 $40,200
4-153
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.
4-154
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.....................................................
Conversion
300
4,400
520
5,220
4-155
Materials
210
4,400
910
5,520
4-156
Materials
$92,400
5,520
$16.74
Conversion
$160,000
5,220
$30.65
4-157
210
300
4,400
4,400
910
5,520
520
5,220
4-158
Total
$47.39
$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...............................
210
300
4,400
4,400
910
5,520
520
5,220
4-159
520
$30.65
$15,939 $31,171
4-160
225
7,700
1,680
9,605
4-161
675
7,700
945
9,320
4-162
Conversion
$143,000
9,320
$15.34
225
675
7,700
7,700
1,680
9,605
945
9,320
$27.10
13,001
Total
$4,100 $ 13,600
675
$15.34
$10,357
4-163
7,700
$11.75
$90,508
7,700
$15.34
$118,144
208,652
$235,253
4-164
2,000
24,000
25,200
800
23,200
1,600
25,000
$98,750
25,000
$3.95
200
4-165
4-166
+
+
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.
4-167
260
4,800
405
5,465
4-168
4-169
4-170
60
6,800
250
7,110
120
6,800
225
7,145
4-171
4-172
385
6,100
425
6,910
4-173
175
6,100
1,530
7,805
Materials
$97,600
7,805
$12.50
4-174
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........................................................
6,400
442,000
10,800
459,200
4-175
4-176
4-177
32,000
8,000
40,000
32,000
1,500
36,000
4-178
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.
4-179
16,200
153,000
2,800
172,000
4-180
$10.60
$123,120 $ 178,740
16,200
$7.50
$121,500
121,500
16,200
153,000
2,800
172,000
Total
2,800
$7.50
$21,000 $42,700
4-181
4-182
$36,000
10%
$3,600
$36,000
44%
$16,000
4-183
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.
4-184
Operating
Department
Investments
Loans
Total
Departmental costs
before allocation..... $870,000 $200,000
$1,070,000
Allocation:
Data processing costs
(15/24, 9/24)*......... (870,000)
$543,750 $326,250
0
Cafeteria costs
(114/285,
171/285)**.............
(200,000)
80,000 120,000
0
Total costs after
allocation................ $
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.
4-185
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.
4-186
Operating
Department
Chi
Omega
$90,000 $50,000
Total
$140,000
(90,000)
$
$18,000 $72,000
0
(50,000) 37,500 12,500
0
0 $
0 $55,500 $84,500 $140,000
4-187
Operating
Department
Chi
Omega
Total
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.
4-188
Operating
Department
Customer
Admin. Facilities Assembly Solutions
Total
4-189
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
1,440
0
$271,300 $913,270
4-190
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.
4-191
Operating
Department
Adult
Medicine Pediatrics
Total
4-192
Operating
Department
Adult
Medicine Pediatrics
Total
4-193
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.
4-194
Total
14,448
12,432
14,965
6,560
0
$280,623 $465,992 $746,615
4-195
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.
4-196
Operating
Department
Surgery Recovery
Total
4-197
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.
4-198
Operating
Department
Oper.
Oper.
Dept. X Dept.Y
Total
840
24,360
12,600
(46,620)
43,290
3,330
4-199
Operating
Department
Oper.
Oper.
Dept. X Dept.Y
Total
4-200
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.
4-201
Total
4-202
Total
4-203
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.
4-204
IT
Operating
Department
Family Geriatric
Medicine Medicine
Total
4-205
IT
Operating
Department
Family Geriatric
Medicine Medicine
Total
4-206
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.
4-207
IT
Operating
Department
Family Corporate
Law
Law
Total
4-208
IT
Operating
Department
Family Corporate
Law
Law
Total
(85,284)
6,900
33,396
44,988
(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.
4-209
4-210
$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
$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
4-211
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
4-212
4-213
Materials Conversion
22,200
22,200
800
23,000
Materials Conversion
$ 8,400
$ 7,200
97,400
129,600
$105,800
$136,800
23,000
22,800
$4.60
$6.00
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
4-214
600
22,800
4-215
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
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
$6,912
4-216
160
10,260
$5,616
Total
$12,528
4-217
Materials Conversion
21,800
21,800
250
22,050
Materials Conversion
$ 342
$ 4,518
45,963
538,602
$46,305
$543,120
22,050
21,900
$2.10
$24.80
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
4-218
100
21,900
Total
$3,005
4-219
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
Materials Conversion
Total
8
4
$295
$975
$2,360
$3,900 $6,260
d.
4-220
Materials Conversion
7,300
7,300
1,275
8,575
425
7,725
4-221
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
AACSB: Analytic AICPA BB: Critical Thinking
LO: 2 Level: Easy
4-222
Materials Conversion
19,800
19,800
640
20,440
400
20,200
AICPA FN: Reporting
4-223
Materials Conversion
4,600
4,600
1,360
5,960
4-224
1,040
5,640
AICPA FN: Reporting
Materials Conversion
6,300
6,300
495
6,795
90
6,390
AICPA FN: Reporting
4-225
4-226
Materials Conversion
$ 7,530
$ 8,528
225,900
283,632
$233,430
$292,160
9,300
8,800
$25.10
$33.20
4-227
Materials Conversion
$24.30
$27.10
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
AACSB: Analytic AICPA BB: Critical Thinking
LO: 4 Level: Medium
4-228
Materials Conversion
$8.10
$28.50
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
AACSB: Analytic AICPA BB: Critical Thinking
LO: 4 Level: Medium
4-229
4-230
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
4-231
4-232
Materials Conversion
$96,000
$413,648
20,000
20,080
$4.80
$20.60
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
4-233
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
4-234
270
5,300
680
6,250
4-235
4-236
240
13,200
720
13,200
480
13,920
320
14,240
105
7,600
560
7,600
1,620
9,325
1,080
9,240
4-237
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...............................
AACSB: Analytic AICPA BB: Critical Thinking
Appendix: 4A LO: 5 Level: Medium
4-238
200
7,800
275
7,800
880
8,880
440
8,515
4-239
4-240
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
$3,135
5,386
$8,521
4-241
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
4-242
1,690
5,750
11,882
19,322
239,202
$258,524
$ 2,750
8,043
$10,793
AICPA FN: Reporting
$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).
4-243
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............
4-244
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
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
$73,200 $110,800
4-245
Departmental costs....
Employee hours........
Space occupied
square feet..............
Service Department
Administrative Facilities
$29,440 $46,740
5,000
2,000
2,000
Operating Department
Assembly Finishing
$258,880 $320,280
29,000
17,000
2,000
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
Departmental costs................
Allocation:
Administrative costs..........
Facilities costs....................
Total costs after allocation.
(46,740)
$
0
4-246
18,560
10,880
36,900
9,840
$314,340 $341,000
4-247
Service Departments
Information
Technology Personnel
Departmental costs.
$34,650
$31,356
Computers..............
22
17
Employees..............
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)
$
4-248
Operating Departments
Pediatrics
Prenatal
$566,960 $688,220
16,940
20,100
17,710
11,256
$604,000 $717,186
AICPA FN: Reporting
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)
$
Corporate
Practice
$226,170
Government
Practice
$477,980
16,524
15,820
9,720
5,876
$258,514
$493,576
4-249
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)
$
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
4-250
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....
4-251
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)
$
Emergency
IT
Room
$15,805
$597,700
290
8,236
(16,095)
9,425
Intensive
Care
$396,240
4,814
6,670
$407,724
$615,361
4-252
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
4-253
4-254