Chap 008

Chapter008ProcessCosting
True/FalseQuestions
1.Processcostingassumesallunitsarehomogeneousandfollowthesamepaththroughthe
productionprocess.
TRUE
AACSB:Analytic
Difficulty:Simple
LearningObjective:1
2.Processcostingisbasedontheassumptionthatallunitsinalargegrouphavethesameunit
cost.
TRUE
AACSB:Analytic
Difficulty:Simple
LearningObjective:1
3.Theequivalentunitconceptappliestobothjobcostingandprocesscosting.
FALSE
AACSB:Analytic
Difficulty:Simple
LearningObjective:1
4.Inequivalentunitterms,twocansofpaintthatare50%fullareequivalenttofourcansof
paintthatare25%full.
TRUE
AACSB:Analytic
Difficulty:Moderate
LearningObjective:1
8-1
5.Theequivalentunitconceptreferstotheactualamountofworkduringtheperiodstatedin
termsoftheworkrequiredtocompleteanequalnumberofwholeunits.
TRUE
AACSB:Analytic
Difficulty:Moderate
LearningObjective:1
6.Thefirststepinassigningcoststoproductsinaprocesscostingsystemistocomputethe
equivalentunitsofproduction(EUP).
FALSE
AACSB:Analytic
Difficulty:Simple
LearningObjective:2
7.ThenumberofunitsinthebeginningWorkinProcessInventoryplustheunitstransferred
outduringtheperiodequalsthenumberofunitsstartedduringtheperiodplusthenumberof
unitsintheendingWorkinProcessInventory.
FALSE
AACSB:Analytic
Difficulty:Moderate
LearningObjective:2
8.Ifmaterialsareaddedcontinuouslythroughouttheproductionprocess,thentheequivalent
unitsformaterialswillalwaysequaltheequivalentunitsfortheconversioncosts.
TRUE
AACSB:Analytic
Difficulty:Moderate
LearningObjective:2
8-2
9.Ifmaterialsareonlyaddedatthebeginningoftheproductionprocess,thenthedegreeof
completionformaterialsintheendingWorkinProcessInventoryisalways100%.
TRUE
AACSB:Analytic
Difficulty:Simple
LearningObjective:2
10.Ifmaterialsareonlyaddedatthebeginningoftheproductionprocess,thenthedegreeof
completionformaterialsintheendingWorkinProcessInventorywillbethesameasthe
degreeofcompletionfortheconversioncosts.
FALSE
AACSB:Analytic
Difficulty:Moderate
LearningObjective:2
11.Ifmaterialsareonlyaddedattheendoftheproductionprocess,thenthedegreeof
completionforunitsintheendingWorkinProcessInventoryisalways0%.
TRUE
AACSB:Analytic
Difficulty:Complex
LearningObjective:2
12.Thenumberofunitstransferredoutcannotbegreaterthantheequivalentnumberofunits
producedduringtheperiod.
FALSE
AACSB:Analytic
Difficulty:Complex
LearningObjective:2
8-3
13.Theweightedaverageapproachtoprocesscostingcombinestheworkandcostsdonein
priorperiodswiththeworkandcostsdoneinthecurrentperiod.
TRUE
AACSB:Analytic
Difficulty:Simple
LearningObjective:2
14.TheendingWorkinProcessInventorybalanceusingthefirstin,firstout(FIFO)
approachtoprocesscostingincludesonlyworkandcostsdoneinthecurrentperiod.
TRUE
AACSB:Analytic
Difficulty:Moderate
LearningObjective:2
15.Thefirstin,firstout(FIFO)approachtoprocesscostingdoesnotaveragethecostsof
productionoverthenumberofequivalentunitsproduced.
FALSE
AACSB:Analytic
Difficulty:Simple
LearningObjective:2
16.Thefourthstepinassigningcoststoproductsusingprocesscostingistocomputethe
inputcost(s)perequivalentunitofproduction.
TRUE
AACSB:Analytic
Difficulty:Simple
LearningObjective:3
8-4
17.Inaweightedaverageprocesscostingsystem,thecostsinthebeginningWorkinProcess
Inventoryarenotusedtocomputethecoststransferredout.
FALSE
AACSB:Analytic
Difficulty:Complex
LearningObjective:3
18.Theproductioncostreportisusedbymanagerstocontroltheflowofcostsandunits
duringtheproductionprocess.
TRUE
AACSB:Analytic
Difficulty:Simple
LearningObjective:4
19.Ingeneral,theproductioncostreportsummarizesthecostsassignedto(a)thejobs
completedduringtheperiodand(b)theendingWorkinProcessInventory.
FALSE
AACSB:Analytic
Difficulty:Simple
LearningObjective:4
20.Thetotalunitstoaccountforontheproductioncostreportisequaltotheunitsinthe
endingWorkinProcessInventoryplustheunitsstartedduringthecurrentperiod.
FALSE
AACSB:Analytic
Difficulty:Moderate
LearningObjective:4
8-5
21.Thetotalcostsaccountedforontheproductionreportisequaltothecoststransferredout
plusthecostsassignedtotheendingWorkinProcessInventory.
TRUE
AACSB:Analytic
Difficulty:Simple
LearningObjective:4
22.Oneadvantageoffirstin,firstout(FIFO)processcostingisthatitseparatescurrent
periodcostsfromthecostsofproductsinthebeginninginventory.
TRUE
AACSB:Analytic
Difficulty:Simple
LearningObjective:5
23.Firstin,firstout(FIFO)processcostingtransfersoutthecostsinbeginninginventory
beforetransferringoutthecostsassociatedwithunitsstartedandcompleted.
TRUE
AACSB:Analytic
Difficulty:Moderate
LearningObjective:5
24.Weightedaverageprocesscostingprovidesbetterinformationabouttheworkdoneinthe
currentperiod.
FALSE
AACSB:Analytic
Difficulty:Simple
LearningObjective:5
8-6
25.Firstin,firstout(FIFO)processcostingrequiresoneadditionalstepinassigningcoststo
theunitstransferredoutandtheendingWorkinProcessInventory.
TRUE
AACSB:Analytic
Difficulty:Simple
LearningObjective:5
26.IfthebeginningWorkinProcessinventoryiszero,firstin,firstout(FIFO)and
weightedaverageprocesscostingwillassignthesameamounttotheunitstransferredout.
TRUE
AACSB:Analytic
Difficulty:Complex
LearningObjective:5
27.Ingeneral,theendingWorkinProcessInventoryvaluecomputedusingfirstin,firstout
(FIFO)willbethesameastheendingvaluecomputedusingweightedaverageprocess
costing.
FALSE
AACSB:Analytic
Difficulty:Complex
LearningObjective:5
28.Acompanythatusesfirstin,firstout(FIFO)processcostingtoassignandcontrolcosts,
mustuseFIFOtovalueitsFinishedGoodsInventories.
FALSE
AACSB:Analytic
Difficulty:Complex
LearningObjective:5
8-7
29.ItispossibleforunitsinthebeginningWorkinProcessInventorytoalsobepartofthe
endingWorkinProcessInventory.
TRUE
AACSB:Analytic
Difficulty:Moderate
LearningObjective:5
30.TheTaccountsusedforweightedaverageprocesscostingarethesameastheTaccounts
usedforfirstin,firstout(FIFO)processcosting.
TRUE
AACSB:Analytic
Difficulty:Simple
LearningObjective:5
31.Themorepriceschangeduringaperiod,thegreaterthedifferencebetweenthecosts
assignedtounitstransferredoutusingweightedaveragecostingandthecostsassignedto
unitstransferredoutusingfirstin,firstout(FIFO).
TRUE
AACSB:Analytic
Difficulty:Moderate
LearningObjective:6
32.Firstin,firstout(FIFO)isconsistentwithgenerallyacceptedaccountingprinciples
(GAAP),whereasweightedaveragecostingisnotconsistentwithGAAP.
FALSE
AACSB:Analytic
Difficulty:Simple
LearningObjective:6
8-8
33.Ingeneral,weightedaveragecostingissimplertousewhilefirstin,firstout(FIFO)
costingprovidesgreaterdecisionmakingbenefitstomanagers.
TRUE
AACSB:Analytic
Difficulty:Simple
LearningObjective:6
34.Priordepartmentcostsarethematerial,labor,andoverheadcostsincurredinaprevious
departmentandchargedtoasubsequentdepartmentintheproductionprocess.
TRUE
AACSB:Analytic
Difficulty:Simple
LearningObjective:6
35.Thedegreeofcompletionassociatedwithpriordepartmentcostsisalways100%.
TRUE
AACSB:Analytic
Difficulty:Moderate
LearningObjective:6
36.Inessence,priordepartmentcostsshouldbetreatedasadditionalmaterialcostsinthe
subsequentdepartment.
TRUE
AACSB:Analytic
Difficulty:Moderate
LearningObjective:6
8-9
37.Itispossibleforonedepartmenttouseweightedaveragecostingandanotherdepartment
inthesamecompanytousefirstin,firstout(FIFO)costing.
TRUE
AACSB:Analytic
Difficulty:Simple
LearningObjective:6
38.Priordepartmentcostsareultimatelytheresponsibilityofthelastdepartmentinthe
productionprocess.
FALSE
AACSB:Analytic
Difficulty:Simple
LearningObjective:6
39.Itisnotnecessarytousepredeterminedmanufacturingoverheadratesinprocesscosting
systems.
FALSE
AACSB:Analytic
Difficulty:Moderate
LearningObjective:7
40.Jobcostingrequiresmoredetailedrecordkeepingthanprocesscosting.
TRUE
AACSB:Analytic
Difficulty:Simple
LearningObjective:7
8-10
41.Operationcostingisusedinmanufacturinggoodsthathavesomecommoncharacteristics
andsomeindividualcharacteristics.
TRUE
AACSB:Analytic
Difficulty:Simple
LearningObjective:8
42.Ingeneral,conversioncostsarethesameforeachworkorder(orbatch)inanoperation
costingsystem.
FALSE
AACSB:Analytic
Difficulty:Simple
LearningObjective:8
43.Operationalproductionprocessesusebatchesofunitsascostobjectsinsteadofjobs(job
costing)orunits(processcosting).
TRUE
AACSB:Analytic
Difficulty:Moderate
LearningObjective:8
44.Operationalcostingaccountsformaterialcostslikejobcostingandconversioncostslike
processcosting.
TRUE
AACSB:Analytic
Difficulty:Simple
LearningObjective:8
8-11
45.Workorderstypicallytaketheplaceofjoborderswhenacompanymovesfromajob
costingsystemtoanoperationcostingsystem.
TRUE
AACSB:Analytic
Difficulty:Simple
LearningObjective:8
46.Anautomobilemanufacturerismorelikelytouseaprocesscostingsystemthanan
operationcostingsystem.
FALSE
AACSB:Analytic
Difficulty:Simple
LearningObjective:8
MultipleChoiceQuestions
47.Whichofthefollowingstatementsis(are)trueregardingproductcosting?
(A)Twentycansofpaintthatare25%fullareequivalenttofourcansofpaintthatare
completelyfull.
(B)Theequivalentunitconceptreferstotheactualamountofworkduringtheperiodstated
intermsofwholeunits.
a.OnlyAistrue.
B. OnlyBistrue.
c.BothAandBaretrue.
d.NeitherAnorBistrue.
AACSB:Analytic
Difficulty:Simple
LearningObjective:1
8-12
48.Whichofthefollowingorganizationswouldmostlikelybeaccountedforusingaprocess
costingsystem?
A. Gasolinerefinery
b.Automobileretailer
c.Airplanemanufacturer
d.Publicaccountingfirm
AACSB:Analytic
Difficulty:Simple
LearningObjective:1
49.Thefollowingexamplesbrieflydescribethemanufactureoftwodifferentproducts.
Whichcostingmethod(joborderorprocess)wouldbethebestmethodtouseforeach
project?
I.FredPuetzmanufacturesFred'sWineCooler.Fredoncemadethestatement,"Peoplecan
haveanyflavorofFred'sWineCoolertheywantaslongit'sboysenberry."
II.AhmadAerondoneticsismanufacturingthreespaceshuttlesforthecountryofKricherra.
Eachshuttleisslightlydifferentandproductionwilllastapproximatelytwoyears.
a.
b.
C.
d.
AACSB:Analytic
Difficulty:Moderate
LearningObjective:1
8-13
50.Anequivalentunitofconversioncostsisequaltotheamountofconversioncostsrequired
to
a.startaunit.
B. completeaunit.
c.transferaunitin.
d.transferaunitout.
AACSB:Analytic
Difficulty:Moderate
LearningObjective:2
8-14
51.Whichofthefollowingprocesscostingstepsmustbedonelast?
a.Computetheequivalentunitsofproduction.
B. Computethecostsperequivalentunitofproduction.
c.Measurethephysicalflowofresources.
d.Identifytheproductcoststoaccountfor.
AACSB:Analytic
Difficulty:Moderate
LearningObjective:2
52.IftheunitsinthebeginningWorkinProcessInventoryaregreaterthantheunitsinthe
endingWorkinProcessInventory,thentheunitstransferredoutare
A. morethantheunitsstartedduringtheperiod.
b.equaltotheequivalentunitsofproduction.
c.lesstheunitsstartedduringtheperiod.
d.equaltotheactualworkdoneduringtheperiod.
AACSB:Analytic
Difficulty:Simple
LearningObjective:2
53.Whichofthefollowingstatementsconcerningaprocesscostaccountingsystemisfalse?
A. Theunitsinbeginninginventoryplustheunitstransferredoutduringthemonthshould
equaltheunitsintheendinginventoryplustheunitstransferredinduringthemonth.
b.Ifmaterialisusedevenlythroughoutaprocess,thenumberofequivalentmaterialunitswill
equalthenumberofequivalentunitsfortheconversion(processing)costs.
c.Apredeterminedoverheadratemustbeusedinaprocesscostingsystemtoassignindirect
overheadcoststodepartments.
d.Thecostsofoperatingaservicedepartmentareaccumulatedseparatelyandthenchargedto
theworkinprocessoftheproductiondepartmentsinproportiontotheiruseoftheservice.
AACSB:Analytic
Difficulty:Moderate
LearningObjective:2
8-15
54.Inthecomputationofthemanufacturingcostperequivalentunit,theweightedaverage
methodofprocesscostingconsiders
a.currentcostsonly.
B. currentcostspluscostofbeginningWorkinProcessInventory.
c.currentcostspluscostofendingWorkinProcessInventory.
d.currentcostslesscostofbeginningWorkinProcessInventory.
AACSB:Analytic
Difficulty:Moderate
LearningObjective:2
55.InordertocomputeequivalentunitsofproductionusingtheFIFOmethodofprocess
costing,workfortheperiodmustbebrokendowntounits
a.completedduringtheperiodandunitsinendinginventory.
b.startedduringtheperiodandunitstransferredoutduringtheperiod.
C. completedfrombeginninginventory,startedandcompletedduringthemonth,andunitsin
endinginventory.
d.processedduringtheperiodandunitscompletedduringtheperiod.
AACSB:Analytic
Difficulty:Moderate
LearningObjective:2
56.BlueCompanyhasbeginningandendingWorkinProcessInventoriesthatare45%and
10%complete,respectively.Materialsareaddedatthebeginningoftheprocess.Iffirstin,
firstout(FIFO)processcostingisused,thetotalequivalentunitsformaterialswillequalthe
numberofunits
a.transferredoutduringtheperiod.
b.startedandcompletedduringtheperiod.
C. startedintotheprocessduringtheperiod.
d.startedintotheprocessplustheunitsintheendinginventory.
AACSB:Analytic
Difficulty:Moderate
LearningObjective:2
8-16
57.RedCompanyhasbeginningandendingWorkinProcessInventoriesthatare45%and
10%complete,respectively.Materialsareaddedatthebeginningoftheprocess.Ifweighted
averageprocesscostingisused,thetotalequivalentunitsformaterialswillequalthenumber
ofunits
a.transferredoutduringtheperiod.
b.startedandcompletedduringtheperiod.
c.startedintotheprocessduringtheperiod.
D. transferredoutduringtheprocessplustheunitsintheendinginventory.
AACSB:Analytic
Difficulty:Moderate
LearningObjective:2
58.Aformpreparedperiodicallyforeachprocessingdepartmentsummarizing(1)theunits
forwhichthedepartmentisaccountableandthedispositionoftheseunitsand(2)thecosts
chargedtothedepartmentandtheallocationofthesecostsiscalleda
a.scheduleofCostofGoodsManufactured.
B. productionreport.
c.jobordercostsheet.
d.scheduleforCostofGoodsSold.
AACSB:Analytic
Difficulty:Simple
LearningObjective:4
59.Materialsareaddedatthebeginningofaprocessinaprocesscostingsystem.The
beginningWorkinProcessInventorywas30%completeastoconversioncosts.Usingfirst
in,firstout(FIFO)processcosting,thetotalequivalentunitsformaterialare
a.beginninginventorythisperiodforthisprocess.
B. unitsstartedthisperiodinthisprocess.
c.unitsstartedthisperiodinthisprocessplusthebeginninginventory.
d.unitsstartedthisperiodinthisprocessplus70%ofthebeginninginventorythisperiod.
AACSB:Analytic
Difficulty:Moderate
LearningObjective:5
8-17
60.AnerrorwasmadebyROCCompanyincomputingthepercentageofcompletionofthe
currentyear'sendingWorkinProcessInventory.Theerrorresultedintheassignmentofa
lowerpercentageofcompletiontoeachcomponentoftheinventorythanactuallywasthe
case.TherewasnobeginningWorkinProcessInventory.Whatistheeffectofthiserroron
(1)costassignedtocostofgoodscompletedfortheperiodand(2)thecomputationofcosts
perequivalentunit?
a.
b.
c.
D.
AACSB:Analytic
Difficulty:Complex
LearningObjective:5
61.Whichofthefollowingstatementsregardingfirstin,firstout(FIFO)processcosting
is/aretrue?
(A)Firstin,firstout(FIFO)processcostingtransfersoutthecostsinbeginninginventory
beforetransferringoutthecostsassociatedwithunitsstartedandcompleted.
(B)Firstin,firstoutprocesscostingrequiresoneadditionalstepinassigningcoststothe
unitstransferredoutandtheendingWorkinProcessInventory.
A. Aonly.
b.Bonly.
c.BothAandB.
d.NeitherAnorB.
AACSB:Analytic
Difficulty:Simple
LearningObjective:5
8-18
62.Inaproductioncostreportusingprocesscosting,transferredincostsaresimilarto
A. materialaddedatthebeginningoftheprocess.
b.conversioncostsaddedduringtheprocess.
c.coststransferredtothenextprocess.
d.costsincludedinbeginninginventory.
AACSB:Analytic
Difficulty:Moderate
LearningObjective:6
63.Additionalmaterialsareaddedintheseconddepartmentofafourdepartmentproduction
process.However,thisadditiondoesnotincreasethenumberofunitsbeingproducedinthe
seconddepartment,butwill
a.increasetheequivalentunitsofproduction.
B. increasethetotalcostperunit.
c.decreasethevalueofthetransferredincosts.
d.decreasethetotalcoststoaccountfor.
AACSB:Analytic
Difficulty:Moderate
LearningObjective:6
64.UnderwhichofthefollowingconditionswilltheFIFOmethodproducethesamecostof
goodsmanufacturedastheweightedaveragemethod?
a.Thereisnoendinginventory.
B. Thereisnobeginninginventory.
c.Thebeginningandendinginventoriesareequal.
d.Thebeginningandendinginventoriesareboth50%complete.
AACSB:Analytic
Difficulty:Moderate
LearningObjective:6
8-19
65.Whichofthefollowingstatementsis(are)true?
I.Forcostcontrol,theFIFOmethodofprocesscostingisbetterthantheweightedaverage
method.
II.Theweightedaveragemethodofprocesscostingassignsmorecosttounitscompleted
(transferredout)thantheFIFOmethod.
A. Ionly.
b.IIonly.
c.BothIandII.
d.NeitherInorII.
AACSB:Analytic
Difficulty:Simple
LearningObjective:6
66.Whichofthefollowingstatementsis(are)false?
(A)Operationscostingaccountsformaterialcostslikejobcostingandconversioncostslike
processcosting.
(B)Anautomobilemanufacturerismorelikelytouseanoperationscostingsystemthana
processcostingsystem.
a.Aonly.
b.Bonly.
C. BothAandB.
d.NeitherAnorB.
AACSB:Analytic
Difficulty:Moderate
LearningObjective:8
8-20
67.Operationscostingsystemsareusedwhentheproductshave
a.usedastandardizedmethodthatisrepeatedlyperformed.
b.commoncharacteristicsandnoindividualcharacteristics.
c.individualcharacteristicsandnocommoncharacteristics.
d.beenmassproducedinacontinuousproductionprocess.
E. somecommoncharacteristicsandsomeindividualcharacteristics.
AACSB:Analytic
Difficulty:Simple
LearningObjective:8
8-21
68.Anoperationscostingsystemis
a.identicaltoaprocesscostingsystemexceptthatactualcostisusedformanufacturing
overhead.
B. thesameasaprocesscostingsystemexceptthatmaterialsareallocatedonthebasisof
batchesofproduction.
c.thesameasajobordercostingsystemexceptthatmaterialsareaccountedforinthesame
wayastheyareinaprocesscostingsystem.
d.thesameasajobordercostingsystemexceptthatnooverheadallocationsaremadesince
actualcostsareusedthroughout.
e.asysteminwhichmanufacturingactivitiesarefinelydividedintoindividual,discretesteps
oroperations.
AACSB:Analytic
Difficulty:Simple
LearningObjective:8
69.Predeterminedmanufacturingoverheadratesareusedinallofthefollowingcosting
systemsexcept
a.jobcosting.
b.processcosting.
c.operationscosting.
D. merchandisecosting.
AACSB:Analytic
Difficulty:Simple
LearningObjective:8
8-22
70.TheBlueCorporationstartedandcompleted4,800unitsduringFebruary.Bluestartedthe
monthwith700unitsinprocess(40%complete)andendedthemonthwith400unitsin
process(40%complete).HowmanyunitsweretransferredtotheFinishedGoodsInventory
duringFebruary?
A. 5,500.
b.5,380.
c.5,100.
d.4,400.
e.4,100.
f.Someotheranswer_______________.
4,800+700 400=5,100
AACSB:Analytic
Difficulty:Moderate
LearningObjective:2
8-23
71.TheALGManufacturingCompanyhasgatheredthefollowinginformationforthemonth
ofSeptember:
6,000unitsinthebeginningWorkinProcessInventory(75%completeastomaterials,1/3
completewithrespecttotheconversioncosts)
60,000unitswerestartedintoproduction
50,000unitswerecompletedandtransferredtothenextdepartment
TheendingWorkinProcessInventoryiscompleteastomaterialsbutonly3/8complete
withrespecttoconversioncosts.
Whataretheequivalentunitsofproduction(EUP)formaterialsinthemonthofSeptember
assumingALGusesweightedaverageprocesscosting?
a.52,000
b.64,500
C. 66,000
d.61,500
e.Someotheranswer_______________.
50,000+16,000=66,000
AACSB:Analytic
Difficulty:Moderate
LearningObjective:2
8-24
72.TheALGManufacturingCompanyhasgatheredthefollowinginformationforthemonth
ofSeptember:
6,000unitsinthebeginningWorkinProcessInventory(75%completeastomaterials,1/3
completewithrespecttotheconversioncosts)
60,000unitswerestartedintoproduction
50,000unitswerecompletedandtransferredtothenextdepartment
TheendingWorkinProcessInventoryiscompleteastomaterialsbutonly3/8complete
withrespecttoconversioncosts.
Whataretheequivalentunitsofproduction(EUP)fortheconversioncostsinthemonthof
SeptemberassumingALGusesweightedaverageprocesscosting?
a.64,500
B. 56,000
c.61,500
d.54,000
50,000+16,000 3/8=56,000
AACSB:Analytic
Difficulty:Moderate
LearningObjective:2
73.ABCCompanyhasabeginningWorkinProcessInventoryof25,000units(40%
complete).Duringtheperiod,110,000unitswerestartedandtheendingWorkinProcess
Inventoryconsistedof20,000units(80%).Whataretheequivalentunitsforconversioncosts
usingweightedaverageprocesscosting?
a.110,000
b.115,000
c.121,000
D. 131,000
e.someotheranswer_______________.
Startedandcompleted(115,000)+Endinginventory(.80 20,000)=131,000
AACSB:Analytic
Difficulty:Simple
LearningObjective:2
8-25
8-26
74.TheWiscoCompanyhasaprocesscostsystem.Allmaterialsareplacedinprocesswhen
theprocessisfirstbegun.AtthebeginningofSeptember,therewerenounitsofproductin
process.DuringSeptember50,000unitswerestarted;5,000ofthesewerestillinprocessat
theendofSeptemberandwere3/5finished.TheequivalentunitsofmaterialinSeptember
were
a.40,000
b.45,000
c.48,000
D. 50,000
50,000
AACSB:Analytic
Difficulty:Simple
LearningObjective:2
75.TheWiscoCompanyhasaprocesscostsystem.Allmaterialsareplacedinprocesswhen
theprocessisfirstbegun.AtthebeginningofSeptember,therewerenounitsofproductin
process.DuringSeptember50,000unitswerestarted;5,000ofthesewerestillinprocessat
theendofSeptemberandwere3/5finished.Theequivalentunitsfortheconversioncostsin
Septemberwere
a.40,000
b.45,000
C. 48,000
d.50,000
45,000+5,000(.60)=48,000
AACSB:Analytic
Difficulty:Simple
LearningObjective:2
8-27
76.DepartmentBhadabeginninginventoryof400units,1/4completed;anendinginventory
of300units,2/3completed,andreceived900unitsduringtheperiodfromDepartmentA.
WhatwastheequivalentunitproductionofDepartmentB,assumingweightedaverage
processcosting?
a.800units.
b.900units.
c.1,100units.
D. 1,200units.
e.1,400units.
1,000+(300 2/3)=1,200
AACSB:Analytic
Difficulty:Simple
LearningObjective:2
8-28
77.SussexCorporation'sproductioncyclestartsintheMixingDepartment.Thefollowing
informationisavailableforApril:
MaterialsareaddedatthebeginningoftheprocessintheMixingDepartment.Whatarethe
equivalentunitsofproductionforthemonthofApril,assumingSussexusestheweighted
averagemethod?
a.
b.
C.
d.
e.
Materials:255,000(startedandcompleted)+25,000(endinginventory)=280,000
Conversioncosts:255,000+25,000(.60)=270,000
AACSB:Analytic
Difficulty:Complex
LearningObjective:2
8-29
78.DepartmentAhadnoWorkinProcessatthebeginningoftheperiod,1,000unitswere
completedduringtheperiod,200unitswere50%completedattheendoftheperiod,andthe
followingmanufacturingcostsweredebitedtothedepartmentalWorkinProcessaccount
duringtheperiod
Assumingthatalldirectmaterialsareplacedinprocessatthebeginningofproductionand
DepartmentAusesweightedaverageprocesscosting,whatisthetotalcostofthe
departmentalWorkinProcessInventoryattheendoftheperiod?
a.$3,650
B. $2,900
c.$2,000
d.$1,825
Materials:$12,000/1,200=$10.00perunit
Conversioncosts:($5,500+4,400)/1,100=$9.00
Endinginventory:200($10.00)+100($9.00)=$2,900
AACSB:Analytic
Difficulty:Complex
LearningObjective:3
8-30
79.Read,Inc.institutedanewprocessinOctober2008.DuringOctober,10,000unitswere
startedinDepartmentA.Oftheunitsstarted,8,000weretransferredtoDepartmentB,and
2,000remainedinWorkinProcessatOctober31,2008.TheWorkinProcessatOctober31,
2008,was100%completeastomaterialcostsand50%completeastoconversioncosts.
Materialcostsof$27,000andconversioncostsof$36,000werechargedtoDepartmentAin
October.WhatwerethetotalcoststransferredtoDepartmentBassumingDepartmentAuses
weightedaverageprocesscosting?
a.$46,900
B. $53,600
c.$56,000
d.$57,120
[($27,000/10,000) 8,000]+[($36,000/9,000) 8,000]=$21,600+32,000=$53,600
AACSB:Analytic
Difficulty:Complex
LearningObjective:3
80.TheVivaCompanyhad20,000unitsinprocessonDecember31,2008whichwas80%
completeastomaterialsbutonly40%completeastoconversioncosts.Thecompany's
recordsshow40,000unitsweretransferredtotheFinishedGoodsInventoryduringJanuary
2009.OnJanuary31,2009,15,000unitswereonhandwhichwere30%completeasto
conversioncostsand60%completeastomaterials.Whataretheequivalentunitsof
productionfortheconversioncostsinJanuary,assumingVivausesfirstin,firstout(FIFO)?
a.34,000
b.35,000
C. 36,500
d.41,500
Beginninginventory(20,000 .60)+startedandcompleted(20,000)+endinginventory
(15,000 .30)=36,500
AACSB:Analytic
Difficulty:Moderate
LearningObjective:3
8-31
81.RSTCompanyincurred$126,000inmaterialcostsduringJuly.Additionally,the12,000
unitsintheWorkinProcessInventoryonJuly01hadmaterialsassignedtothemof$32,000,
eventhoughtheywereonly5%completeastomaterials.Noadditionalunitswerestarted
duringJuly,andtherewerenoincompleteunitsonhandonJuly31.Whatisthematerialcost
perunitforJuly,assumingRSTusesweightedaverageprocesscosting?
a.$10.50
b.$11.59
C. $13.17
d.$15.49
($126,000+32,000)/12,000=$13.17
AACSB:Analytic
Difficulty:Simple
LearningObjective:3
82.BeattieCompanycompletedandtransferredout2,300unitsinMay2008.Therewere200
unitsintheWorkinProcessInventoryonMay31,2008,30%completeastoconversion
costsand100%completeastomaterials.Themonth'schargesforconversioncostsand
materialcostswere$9,440and$6,250,respectively.Therewasnobeginninginventoryon
May01,2008.WhatisthecostoftheworktransferredoutduringMay?
a.$8,510
B. $14,950
c.$15,690
d.$16,250
Startedandcompletedunits=2,300
EUP(mat'l)=2,300+200=2,500;EUP(conversioncosts)=2,300+60=2,360
Unitcost(mat'l)=$6,250/2,500=$2.50;EUP(CC)=$9,440/2,360=$4.00
2,300($2.50+4.00)=$14,950
AACSB:Analytic
Difficulty:Complex
LearningObjective:3
8-32
83.SussexCorporation'sproductioncyclestartsintheMixingDepartment.Thefollowing
informationisavailableforApril:
MaterialsareaddedatthebeginningoftheprocessintheMixingDepartment.Whatarethe
equivalentunitsofproductionforthemonthofApril,assumingSussexusesfirstin,firstout
(FIFO),processcosting.
a.
B.
c.
d.
e.
Materials=215,000+25,000=240,000
Conversioncosts=40,000(.75)+215,000+25,000(.60)=260,000
AACSB:Analytic
Difficulty:Simple
LearningObjective:5
8-33
TheWISCOCompanyusesaweightedaverageprocesscostingsystem.Thefollowingdata
areavailable:
84.Equivalentunitsofproductionformaterialare
a.16,000.
b.17,000.
c.19,000.
D. 20,000.
e.Someotheranswer______.
16,000+4,000=20,000
AACSB:Analytic
Difficulty:Simple
LearningObjective:2
85.Equivalentunitsofproductionforlaborandoverheadare
a.16,000.
B. 17,000.
c.19,000.
d.20,000.
e.Someotheranswer_________.
16,000+4,000(.25)=17,000
AACSB:Analytic
Difficulty:Simple
LearningObjective:2
8-34
86.Unitcostofmaterialis
a.$2.20.
b.$2.07.
c.$1.85.
D. $1.76.
e.Someotheranswer_________.
$35,200/20,000=$1.76
AACSB:Analytic
Difficulty:Simple
LearningObjective:3
87.Unitcostoflaborandoverheadis
a.$2.34.
B. $2.20.
c.$1.97.
d.$1.87.
e.Someotheranswer__________.
$37,400/17,000=$2.20
AACSB:Analytic
Difficulty:Simple
LearningObjective:3
8-35
88.Totalcostofthe16,000unitsfinishedis
A. $63,360.
b.$67,320.
c.$72,640.
d.$65,120.
e.Someotheranswer__________.
16,000 (1.76+2.20)=$63,360
AACSB:Analytic
Difficulty:Moderate
LearningObjective:3
8-36
89.Totalcostofthe4,000unitsoftheendinginventory
a.$15,840.
b.$14,520.
C. $9,240.
d.$8,910.
e.Someotheranswer________.
4,000(1.76)+1,000(2.20)=$9,240
AACSB:Analytic
Difficulty:Moderate
LearningObjective:3
TheFinishingDepartmenthad5,000incompleteunitsinitsbeginningWorkinProcess
Inventorywhichwere100%completeastomaterialsand30%completeastoconversion
costs.15,000unitswerereceivedfromthepreviousdepartment.TheendingWorkinProcess
Inventoryconsistedof2,000unitswhichwere50%completeastomaterialsand30%
completeastoconversioncosts.TheFinishingDepartmentusesfirstin,firstout(FIFO)
processcosting.
90.Howmanyunitsweretransferredoutduringtheperiod?
a.12,000
b.13,000
C. 18,000
d.20,000
5,000+15,000 2,000=18,000
AACSB:Analytic
Difficulty:Simple
LearningObjective:5
8-37
91.TheHowmanyunitswerestartedandcompletedduringtheperiod?
a.12,000
B. 13,000
c.18,000
d.20,000
15,000 2,000=13,000
AACSB:Analytic
Difficulty:Simple
LearningObjective:5
92.Whataretheequivalentunitsofproductionformaterialsduringtheperiod?
a.12,000
b.13,000
C. 14,000
d.15,000
Beginninginventory(0)+startedandcompleted(13,000)+endinginventory(1,000)=
14,000
AACSB:Analytic
Difficulty:Moderate
LearningObjective:5
8-38
93.Whataretheequivalentunitsofproductionfortheconversioncostsduringtheperiod?
a.14,500
b.15,100
c.16,500
D. 17,100
5,000(.70)+13,000+2,000(.30)=17,100
AACSB:Analytic
Difficulty:Moderate
LearningObjective:5
8-39
ThedebitstoWorkinProcessforDepartment#2forthemonthofAprilofthecurrentyear,
togetherwithinformationconcerningproduction,arepresentedbelow.Alldirectmaterials
comefromDepartment#1.Theunitscompletedincludethe1,200inprocessatthebeginning
oftheperiod.Department#2usesFIFOcosting.
94.WhatarethetotalcoststobeaccountedforontheproductioncostreportforDepartment
#2fortheperiod?
a.$16,400
B. $17,600
c.$11,600
d.$12,660
$1,200+3,600+8,000+4,800=$17,600
AACSB:Analytic
Difficulty:Simple
LearningObjective:4
95.Determinetheequivalentunitsofproductionforconversioncosts.
a.500
b.5,500
c.5,900
D. 6,400
e.6,900
1,200(.75)+5,000+1,000(.50)=6,400
AACSB:Analytic
Difficulty:Moderate
LearningObjective:5
8-40
96.Theconversioncostsperequivalentunitsis
a.$1.00
b.$1.50
C. $2.00
d.$2.55
($8,000+4,800)/6,400=$2.00
AACSB:Analytic
Difficulty:Moderate
LearningObjective:5
97.TheunitcostofProductXstartedinthepriorperiodandcompletedinthecurrentperiod
is
a.$2.00
B. $2.50
c.$2.55
d.$3.45
[$1,200+(900)(2.00)]/1,200=$2.50
AACSB:Analytic
Difficulty:Complex
LearningObjective:5
8-41
98.TheunitcostofProductXstartedandcompletedinthecurrentperiodis
a.$2.00
b.$2.50
c.$2.55
D. $2.60
($3,600/6,000)+$2.00=$2.60
AACSB:Analytic
Difficulty:Complex
LearningObjective:5
8-42
99.Thecostofgoodstransferredtofinishedgoodsis
a.$17,660
B. $16,000
c.$13,000
d.$12,800
[$1,200+900(2.00)]+[5,000 ($2.60)]=$16,000
AACSB:Analytic
Difficulty:Complex
LearningObjective:5
100.ThecostoftheendingWorkinProcessInventoryis
a.$2,600
B. $1,600
c.$600
d.$1,000
1,000($.60)+500($2.00)=$1,600
AACSB:Analytic
Difficulty:Moderate
LearningObjective:5
8-43
UsethefollowinginformationfortheFGHManufacturingCompany'smaterialcosts
101.Whichcostingmethodhasthelowestmaterialcostperunit?
A. Firstin,firstout(FIFO)
b.Weightedaverage
c.Bothmethodshavethesameunitcost
FIFO=$80,000/33,000=$2.424
WA=($80,000+$20,000)/33,000 7,000)=$3.846
AACSB:Analytic
Difficulty:Complex
LearningObjective:6
102.IfFGHsold20,000unitsduringthecurrentperiodandusedweightedaveragecosting,
woulditsnetincomebehigherorlowerthanifitusedFIFO?WoulditsendingWorkin
ProcessInventorybehigherorlowerifFGHusedweightedaverageinsteadofFIFO?
A.
b.
c.
d.
Weightedaverageassignsmorematerialcoststotheendinginventoryandthus,lesstocostof
goodssold.
AACSB:Analytic
Difficulty:Complex
LearningObjective:6
8-44
103.Howmanyunitswerestartedandcompletedduringthecurrentperiod?
A. 13,000
b.20,000
c.26,000
d.27,000
20,000 7,000=13,000
AACSB:Analytic
Difficulty:Moderate
LearningObjective:6
104.Ifweightedaveragecostingisused,howmanyequivalentunitsofmaterialsareinthe
endingWorkinProcessInventory?
a.7,000
B. 13,000
c.20,000
d.26,000
e.someotheranswer_______________
33,000 20,000=13,000
AACSB:Analytic
Difficulty:Moderate
LearningObjective:6
8-45
105.Whichoneofthefollowingalternativescorrectlyclassifiesthebusinessapplicationto
theappropriatecostingsystem(CMAadapted,12/96)?
a.
b.
c.
d.
E.
AACSB:Analytic
Difficulty:Simple
LearningObjective:1
106.Inprocess2,materialGisaddedwhenabatchis60%complete.Endingworkinprocess
units,whichare50%complete,wouldbeincludedinthecomputationofequivalentunitsfor:
(CPAadapted,5/90)
A.
b.
c.
d.
AACSB:Analytic
Difficulty:Simple
LearningObjective:1
8-46
107.AprocesscostingsystemwasusedforadepartmentthatbeganoperationsinJanuary
2008.Approximatelythesamenumberofphysicalunits,atthesamedegreeofcompletion,
wereinworkinprocessattheendofbothJanuaryandFebruary.Monthlyconversioncosts
areallocatedbetweenendingworkinprocessandunitscompleted.ComparedtotheFIFO
method,wouldtheweightedaveragemethodusethesameoragreaternumberofequivalent
unitstocalculatethemonthlyallocations?(CPAadapted,5/91)
a.
b.
c.
D.
AACSB:Analytic
Difficulty:Simple
LearningObjective:6
108.Inaprocesscostingsystem,theapplicationoffactoryoverheadusuallywouldbe
recordedasanincreasein:(CPAadapted,5/92)
a.Finishedgoodsinventorycontrol
b.Factoryoverheadcontrol
c.Costofgoodssold
D. Workinprocessinventorycontrol
AACSB:Analytic
Difficulty:Simple
LearningObjective:2
8-47
109.YarnCo.'sinventoriesinprocesswereatthefollowingstagesofcompletionatApril30,
2007:
Equivalentunitsofproductionamountedto:(CPAadapted,5/92)
A. 150
b.180
c.330
d.350
(100*.9)+(50*.8)+(200*.1)=150
AACSB:Analytic
Difficulty:Moderate
LearningObjective:2
8-48
110.ThefollowinginformationpertainstoLapCo.'sPaloDivisionforthemonthofApril:
Allmaterialsareaddedatthebeginningoftheprocess.Usingtheweightedaveragemethod,
thecostperequivalentunitofmaterialsis:(CPAadapted,5/94)
a.$0.59
b.$0.55
c.$0.45
d.$0.43
E. $0.48
($5,500+18,000)/(48,780)=$0.48
AACSB:Analytic
Difficulty:Moderate
LearningObjective:3
8-49
111.Incomputingthecurrentperiod'smanufacturingcostperequivalentunit,theFIFO
methodofprocesscostingconsiders:(CPAadapted,11/92)
A. onlycurrentperiodcosts.
b.currentperiodcostspluscostofbeginningworkinprocessinventory
c.currentperiodcostslesscostofbeginningworkinprocessinventory
d.currentperiodcostsplusthecostofendingworkinprocessinventory
AACSB:Analytic
Difficulty:Simple
LearningObjective:5
KimbethManufacturingusesprocesscostingtocontrolcostsinthemanufactureofDust
Sensorsfortheminingindustry.Thefollowinginformationpertainstooperationsfor
November2008.(adaptedfromJune1995CMAExam)
Thebeginninginventorywas60%completeastomaterialsand20%completeasto
conversioncosts.Theendinginventorywas90%completeastomaterialsand40%complete
astoconversioncosts.
CostspertainingtoNovemberareasfollows:
Beginninginventory:directmaterials,$54,560;directlabor,$20,320;manufacturing
overhead,$15,240
Costsincurredduringthemonth:directmaterials,$468,000;directlabor,$182,880;
manufacturingoverhead,$391,160
8-50
112.WhatistheequivalentunitcostformaterialsassumingKimbethusesfirstin,firstout
(FIFO)processcosting?
a.$4.12
B. $4.50
c.$4.60
d.$4.80
e.$5.46
$468,000/[(16,000 .40)+76,000+(24,000 .90)]=$4.50
AACSB:Analytic
Difficulty:Moderate
LearningObjective:6
113.WhatistheequivalentunitcostfortheconversioncostsassumingKimbethusesfirstin,
firstout(FIFO)processcosting?
a.$5.65
B. $5.83
c.$6.00
d.$6.20
e.$6.62
($182,880+391,160)/[(16,000 .80)+76,000+(24,000 .40)]=$5.83
AACSB:Analytic
Difficulty:Moderate
LearningObjective:6
8-51
114.WhatarethetotalcostsintheendingWorkinProcessInventoryassumingKimbethuses
firstin,firstout(FIFO)processcosting?
A. $153,168
b.$154,800
c.$155,328
d.$156,960
e.$159,648
[21,600($4.50)]+[9,600($5.83)]=$153,168
AACSB:Analytic
Difficulty:Complex
LearningObjective:6
8-52
115.WhatistheequivalentunitcostformaterialsassumingKimbethusesweightedaverage
processcosting?
a.$4.12
b.$4.50
C. $4.60
d.$4.80
e.$5.46
($54,560+468,000)/[92,000+(24,000 .90)]=$4.60
AACSB:Analytic
Difficulty:Moderate
LearningObjective:6
116.WhatistheequivalentunitcostfortheconversioncostsassumingKimbethuses
a.$5.65
b.$5.83
C. $6.00
d.$6.20
e.$6.62
($20,320+15,240+182,880+391,160)/[92,000+(24,000 .40)]=$6.00
AACSB:Analytic
Difficulty:Moderate
LearningObjective:6
8-53
117.WhatarethetotalcostsintheendingWorkinProcessInventoryassumingKimbethuses
a.$86,400
b.$153,960
c.$154,800
d.$155,328
E. $156,960
[21,600($4.60)]+[9,600($6.00)]=$156,960
AACSB:Analytic
Difficulty:Complex
LearningObjective:6
8-54
EssayQuestions
118.TheSt.VincentManufacturingCompanyproducesasingleproductinasingle
processingdepartment.Thematerialisaddedwhen25%oftheconversioncostshavebeen
added.
TheWorkinProcessInventoryaccountonApril30thappearedasfollows:
Duringthemonth,thecompanyfinishedandtransferred72,000unitsoutoftheWorkin
ProcessInventory.9,000unitswereinprocessatthebeginningofthemonthandwere40%
complete.8,000unitswereinprocessattheendofthemonth,andwere70%complete.The
companyusesfirstin,firstout(FIFO)processcosting.
Required:
(A)Computetheequivalentunitsofproduction(EUP)formaterialsandconversioncostsin
April.
(B)ComputetheunitconversioncostsandunitmaterialcostsforApril.
(C)ComputethetotalcosttransferredoutoftheWorkinProcessInventoryduringthemonth
ofApril.
(D)ComputethecostoftheendinginventoryforApril.
8-55
(A)
(B)Materials=$5,325/71,000=$.075;Conversioncosts=($10,863+15,012)/74,000=$.35
(C)
(D)
AACSB:Analytic
Difficulty:Moderate
LearningObjective:2
LearningObjective:3
8-56
119.TheClarkeChemicalCompanyproducesaspecialkindofbodyoilthatiswidelyused
byprofessionalsportstrainers.Theoilisproducedinthreeprocesses:Refining,Blending,and
Mixing.Rawoilmaterialsareintroducedatthebeginningoftherefiningprocess.A
"mountainairscent"materialisaddedintheblendingprocesswhenprocessingis50%
completed.
ThefollowingWorkinProcessaccountfortheRefiningDepartmentisavailableforthe
monthofJuly2008.TheJuly1WorkinProcessInventorycontains$1,500inmaterialcosts.
ThefollowingWorkinProcessaccountfortheBlendingDepartmentisavailableforthe
monthofJuly2008.TheJuly1WorkinProcessinventorycontains$5,920inmaterialcosts,
and$1.56/unitincoststransferredinfromtheRefiningDepartment.
TheClarkeChemicalCompanyusesfirstin,firstout(FIFO)costingfortheRefining
DepartmentandweightedaveragecostingfortheBlendingDepartment.
Required:
Part1:RefiningDepartment
(A)Computetheequivalentunitsofproduction.
(B)Computethematerialcostperunitandtheconversioncostperunit.
(C)Preparethe"totalcostaccountedfor"sectionoftheJuly2008ProductionReport.
(D)ComputetheJuly31WorkinProcessInventorybalance.
Part2:BlendingDepartment
(E)Computetheequivalentunitsofproduction.
8-57
(F)AssumethatthecoststransferredfromtheRefiningDepartmenttotheBlending
Departmentwere$48,200.ComputetheunitcostsintheBlendingDepartmentforthemonth
ofJuly.(HINT:Therearethree!!)
(G)ComputethecoststransferredoutforJuly2008.
(H)ComputetheJuly31WorkinProcessInventorybalance.
8-58
(A)
(B)Materials=$12,300/30,000=$.41;Conversioncosts=($14,500+21,750)/29,000=
$1.25
(C)
(D)
(E)
(F)Transferredin:[($1.56 8,000)+48,200]/37,000=$1.64
Materials:($5,920+20,810)/33,000=$.81
Conversioncosts:[($22,850 5,920 12,480)+5,748+11,600]/34,600=$.63
(G)33,000($1.64+.81+.63)=$101,640
(H)
8-59
AACSB:Analytic
Difficulty:Complex
LearningObjective:3
LearningObjective:5
120.BradyProductsmanufacturesasiliconepastewaxthatgoesthroughthreeprocessing
departments:cracking,blending,andpacking.Allrawmaterialsareintroducedatthestartof
workinthecrackingdepartment,withconversioncostsbeingincurreduniformlyineach
department.TheWorkinProcessTaccountforthecrackingdepartmentforJulyis:
WorkinProcessInventory(CrackingDepartment)
Thebeginningbalanceinventoryconsistsof$43,400inmaterialscost.Bradyusesthe
weightedaveragemethodtoaccountforitsoperations.
Required:
(A)Definetheterm"equivalentunitsofproduction."
(B)Iscostaccumulationeasierunderaprocesscostingsystemorajobordercostingsystem?
Whyorwhynot?
(C)PrepareaproductionreportforthecrackingdepartmentforJuly.
8-60
(A)Equivalentunitsofarethenumberofcompletephysicalunitsinwhichunitsin
inventoriesareequalintermsofworkdonetodate.Inotherwords,equivalentunitsof
productionrepresenttheactualworkdoneduringperiod.
(B)Jobcostingrequiresmorerecordkeeping(e.g.,detailedsubsidiaryledgersforeach
individualjob)whileprocesscostingrequiresmoreestimates(e.g.,degreeofcompletion,cost
flowassumption,andequivalentunitsofproduction).
(C)
Materialsperunit=($43,400+397,600)/315,000=$1.40
Conversioncostsperunit=($20,300+189,700)/300,000=$.70
Transferredout:270,000($1.40+.70)=$567,000
AACSB:Analytic
Difficulty:Moderate
LearningObjective:2
8-61
121.LeisureTime(LT)Sportsmanufacturesanddistributestwotypesoftennisrackets:Ace
Master(AM)andSmashSupreme(SS).BothtypesofracketsgothroughOperations1and3.
SSalsogoesthroughOperation2,whichaddsalayerofgraphiteforadditionalstrength.All
materialisaddedatthebeginningoftheirrespectiveoperations.
ThefollowinginformationrelatestoaworkorderfromDiscountWarehouse,Inc.for30,000
unitsofAM(Workorder#286)and8,000unitsofSS(Workorder#354).
Required:
Assumethatthereare3,000unitsofAMand2,000unitsofSSinOperation3attheendof
thereportingperiod45%and65%completerespectively.Computetheendinginventoryfor
Operation#3.
AACSB:Analytic
Difficulty:Moderate
LearningObjective:2
8-62
122.GreggIndustriesusesthreeoperationsinsequencetomanufactureanassortmentof
flowerbaskets.Ineachoperation,thesameprocedures,time,andcostsareusedtoperform
thatoperation,regardlessofthebasketstylebeingproduced.DuringMarch,abatchof500
basketsofstyleDandabatchof800basketsofstyleFwereputthroughthefirstoperation.
Allmaterialsforabatchareintroducedatthebeginningoftheoperationforthatbatch.The
costsshownbelowwereincurredinMarchforthefirstoperation:
Therewerenoinventoriesatthebeginningofthemonth;400unitsofStyleDand600units
ofStyleFweretransferredtothenextoperation.Theendinginventorieswere30%and60%
completeforStylesDandF,respectively.
Required:Whatisthetotalcostoftheendinginventoryinprocessforoperation#1?
AACSB:Analytic
Difficulty:Moderate
LearningObjective:2
8-63

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