Question : Matching 133.Match each of the following terms with the phrase that : 1302717

 

 

Matching

 

133.Match each of the following terms with the phrase that most closely describes it. Each answer may be used only once.

 

_____  1.conversion costs

_____  2.cost per equivalent unit

_____  3.equivalent units

_____  4.lost units

_____  5.process costing

_____  6.production cost report

_____  7.total cost accounted for

_____  8.transferred-in cost

_____  9.units accounted for

_____ 10.units to account for

 

A.units in beginning Work in Process inventory plus units started during the period

 

B.partially completed units converted to a comparable number of completed units

 

C.provides a reconciliation of units, a reconciliation of costs, and details of the cost per equivalent unit calculation

 

D.the key value in the production cost report; the average unit cost in a process costing system

 

E.units that are not finished due to evaporation, damage, or theft

 

F.a system of determining costs of units produced that is essentially a system of averaging

 

G.units completed and transferred to the next department plus units in ending Work in Process inventory

 

H.the sum of the costs for labor and overhead

 

I.cost of completed units plus cost of ending Work in Process inventory

 

J.costs incurred in one department that are transferred to the next processing department

 

EXERCISEs

 

134.Neon Lamp Post uses process costing. During June, the Painting Department of Neon Lamp Post completed production of 43,700 LED lamp posts. At the beginning of June, the company had 1,300 posts that were 75 percent complete with respect to material and 50 percent complete with respect to conversion costs. During the month, the company started production of 44,000 posts. How many posts were in Work in Process at the end of June?

 

135.Taylor Tackers uses process costing. It produces a tacker used by movers to seal boxes. Taylor has almost no inventories of material, work in process, or finished goods. The balances are so small that the company treats them as zero for purposes of its accounting reports. During July, the company produced and shipped 13,000 tackers at a cost of $13.50 per tacker. The cost consisted of 20 percent material cost, 25 percent labor cost, and 55 percent manufacturing overhead. Prepare journal entries to record the following:

a.Issuance of direct material

b.Cost of direct labor accrued

c.Application of manufacturing overhead

d.Completion of units in process and their transfer to Finished Goods

e.Cost of goods sold

 

136.Rigid Food Corporation produces gourmet yogurt. The following data pertain to the Mixing Department for the year ended December 31, 2014:

Percentage of Completion

UnitsDirect MaterialConversion Costs

Work in process, January 1              8,000 lb.              25%              15%

Work in process, December 31              6,200 lb.              60%              70%

 

During the year, the company started production of 120,000 pounds. Prepare a unit reconciliation schedule and determine the equivalent units for the Mixing Department for 2014.

 

Answer

Physical Flow%Materials%Conversion

Units in beginning WIP              8,000

Units started              120,000

Units to account for              128,000

 

Units completed              121,800              100              121,800              100              121,800

Units in ending WIP                 6,200                60                  3,720              70                  4,340

Total units accounted for              128,000                            125,520                            126,140

 

 

137.XeroClean Chemicals refines a variety of chemicals for cleaning products and uses process costing. The following data are from the company’s Extracting Department:

Work in process, May 1840,000 gallons

Direct material              100% complete

Conversion costs40% complete

Units started in process during May3,110,000 gallons

Work in process, May 31230,000 gallons

Direct material              100% complete

Conversion costs60% complete

Compute the equivalent units for direct material and equivalent units for conversion costs for the Extracting Department for the month of May.

 

 

 

138.DynaDrip’s Mixing Department opened on June 1, 2014. The company uses process costing. During June, 28,000 units were completed and transferred out of the Mixing Department to the next department. On June 30, 2014, the 3,100 units which remained in the Mixing Department were 60% complete with respect to conversion costs and 100% complete with respect to materials. How many equivalent units of product were there in the Mixing Department during June for both materials and conversion costs?

 

 

 

140.Prince Marinades uses process costing. Its Mixing Department had a beginning inventory of 650 units that had accumulated conversion costs of $16,486. During the period, the Mixing Department incurred conversion costs of $43,400 and started 21,900 new units. Ending inventory consisted of 700 units that were 40% complete with respect to conversion costs. Materials are added at the beginning of the process. Calculate the cost per equivalent unit for conversion costs in the Mixing Department.

 

 

141.Erie Lake Fishing processes trout for various distributors and uses process costing. The two departments involved are Cleaning and Packing. The table below summarizes the data related to trout processed in the Cleaning Department during June:

Pounds ofPercent

TroutComplete*

Work in process, June 112,00050%

Started into processing during June235,000  —

Work in process, June 3014,00045%

*Labor and overhead only

 

All materials are added at the beginning of the process in the Cleaning Department. Prepare a reconciliation of units and a computation of equivalent units for June for the Cleaning Department.

 

 

 

142.Red Mountain Coffee uses process costing. At the start of January, there were 14,000 pounds of coffee beans in its Roasting Department’s Work in Process account that were 90 percent complete with respect to material and 25 percent complete with respect to conversion costs. The cost of the beans totaled $23,040 for material and $31,200 for conversion costs. During the month, production on 120,000 pounds of coffee beans was started by the Roasting Department and it incurred material costs of $76,000 and labor and overhead costs of $118,080. The cost per equivalent unit totaled $0.80 for material and $1.20 for labor and overhead. The cost of items completed was $97,600 for materials and $146,400 for labor and overhead. The 12,000 pounds in ending Work in Process are 15 percent complete with respect to material and 20 percent complete with respect to conversion costs.

 

a.Prepare a reconciliation of units.

b.How much is the cost of ending Work in Process inventory?

143.Pest Be Gone uses process costing. Its Mixing Department had 7,500 units in beginning inventory. Associated with these units were $20,200 in direct materials and $25,000 in conversion costs. During the period, the department incurred $79,800 in direct materials and $151,800 in conversion costs and started 50,000 units. Ending inventory consisted of 2,000 units that were 100% complete with respect to materials and 60% complete with respect to conversion costs.

 

a.Calculate the equivalent units for materials and conversion costs.

b.Calculate the cost per equivalent unit for materials and conversion costs.

c.Calculate the cost of units transferred out.

d.Calculate the cost of the ending Work in Process.

 

 

 

144.Air Tracts produces solar-powered robots in a continuous production process. The company uses process costing. 85 percent of materials are added at the beginning of production and the other 15 percent are added immediately before transfer to the finished goods warehouse. Conversion costs are added evenly throughout the process. At the end of March, there were 10 robots in process, 70 percent complete as to labor and overhead. 95 robots were completed during the month. The direct materials cost per equivalent unit during March was $2,000, the labor cost per equivalent unit was $750, and the overhead per equivalent unit was $1,500.

 

a.Determine the cost of the ending Work in Process inventory.

b.Determine the cost of items completed and transferred to Finished Goods Inventory.

 

145.Ideal Cuisine uses process costing. The balance in the beginning Work in Process inventory account for its Cooking Department for direct labor was $14,000. During the month of October, an additional $129,370 of direct labor was incurred, while 15,750 meals were completed and moved to the Packaging Department. At the end of October, 450 meals were in process that were 40 percent complete. At the start of October, the company had 200 meals that were 10 percent complete. Calculate the cost per equivalent unit for labor assuming that labor is added uniformly throughout the production process.

 

 

 

146.During July, Store-All Containers completed 20,000 units. There were 10,000 units in ending Work in Process in the Molding Department that were 30 percent complete with respect to labor and overhead and 100 percent complete with respect to material. During the month of July, the company incurred $250,000 of material cost, $120,000 of labor cost, and $160,000 of manufacturing overhead. Costs per equivalent unit for material, labor, and manufacturing overhead are equal to $10, $6, and $8, respectively. The company uses process costing. Calculate the amount of material cost, labor cost, and overhead cost in beginning Work in Process inventory in the Molding Department.

 

147.On November 1, Ranger Toys’ Packaging Department had Work in Process inventory of 6,000 units that were 75% complete with respect to materials and 30% complete with respect to conversion costs. Ranger uses process costing. The cost of the beginning units was $93,525, of which $60,000 was transferred-in from previous departments, $26,775 in materials, and $6,750 in labor and overhead. During November, 125,000 units were transferred into the Packaging Department. These units had accumulated costs in previous departments of $1,218,560. The Packaging Department incurred costs of $756,225 for materials and $488,010 for conversion costs in November and transferred 130,000 units out of the department. The 1,000 units remaining in ending inventory are 50% complete with respect to materials and 20% complete with respect to conversion costs.

 

a.Calculate the cost per equivalent unit for transferred-in costs, material, and conversion costs in the Packaging Department.

b.Calculate the cost of the units transferred out of the Packaging Department.

c.Calculate the cost of the ending Work in Process inventory in the Packaging Department.

 

148.Sunny Green Tea manufactures loose green tea that it packages into 8-ounce bags sold to retail stores. It uses a process costing system. At the start of September, there were 7,000 pounds of tea in the Drying Department that were 100 percent complete with respect to direct material and 30 percent complete with respect to conversion costs (labor and overhead). During the month, the company began production of 215,000 units. Ending Work in Process Inventory consisted of 5,000 pounds of tea that were 100 percent complete with respect to material and 60 percent complete with respect to conversion costs. Costs for the Drying Department follow for September:

Beginning Work

in ProcessCosts Added

Direct material              $ 2,800              $  46,040

Direct labor              4,000              85,000

Manufacturing overhead                 5,000                  71,000

Total               $11,800              $202,040

 

a.Calculate the cost per equivalent unit for materials and conversion costs.

b.Calculate the cost of items completed in September and the cost of ending Work in Process.

 

 

149.Capstone Readers started its production operations on April 1. During April, the Printing Department completed 8,000 books. There were 4,400 books in process in the Printing Department on April 30 that were 85% complete with respect to materials and 10% complete with respect to conversion costs. During April, the department accumulated materials costs of $55,765 and conversion costs of $80,180.

 

a.Calculate the cost of the goods transferred out of the Printing Department.

b.What is the value of the ending Work in Process inventory in the Printing Department?

 

 

 

150.Bamboo Tiles is a producer of bamboo tiles used in flooring. The company uses process costing. The bamboo is softened, cut, sanded, and treated prior to sale. Material is added in the beginning of the Softening Department and conversion costs are added evenly throughout processing.

Bamboo Tiles began the month of August with 14,000 linear feet of bamboo in process that were 100 percent complete as to materials and 60 percent complete as to labor and overhead. The production workers started 120,000 linear feet into production during the month of August, and 8,000 remained in Work in Process inventory at August 31 that were 50 percent complete as to conversion costs. The cost data are as follows:

 

Beginning Work in Process:

Direct materials              $ 74,000

Direct labor              31,000

Manufacturing overhead              41,000

Costs added during August:

Direct materials              $  86,800

Direct labor              215,000

Manufacturing overhead              233,000

 

Prepare a production cost report for the month of August.

 

 

151.On August 1, Candle World’s Packaging Department had Work in Process inventory of 8,620 units, which had been transferred in from the Finishing Department. Candle World uses process costing. These units had accumulated costs of $211,621 in previous departments. The conversion costs added in the Packaging Department totaled $15,947 during August.

During August, 27,000 units were transferred into the Packaging Department. These units had accumulated costs of $677,098 in the previous departments. The Packaging Department incurred $51,389 in conversion costs during the month. 900 units remained in ending inventory on August 31. These units were 80% complete with respect to conversion costs. Calculate the cost per equivalent unit for transferred-in costs and for conversion costs for the Packaging Department.

 

 

152.Harry’s Sandwich Shop uses a process costing system for its foot-long sub sandwiches and carries no beginning or ending Work in Process inventories. During 2014, the company produced and sold 5,000 subs and incurred the following costs:

 

TotalPer equivalent unit

Direct material              $  5,600              $1.12

Direct labor              8,800              1.76

Manufacturing overhead                 7,200                1.44

Total              $21,600              $4.32

 

The current selling price is $6.25 per sub and the gross profit for 2014 was ($6.25 × 5,000) ? ($4.32 × 5,000) = $9,650. Sales projections for 2015 at the current price look flat, but the manager believes that if the sales price is reduced to $5.80, sales volume would increase by 600 units. Assume that direct material and direct labor are variable costs and that manufacturing overhead costs are primarily fixed. Should Harry’s Sandwich Shop lower the price?

 

 

 

CHALLENGE EXERCISES

 

153. Tiny Trains produces wooden toy trains and uses process costing. Each train passes through three processes—cutting, assembly, and finishing. In the Assembly Department, materials are added when the trains are 60% complete, and conversion costs are added evenly throughout the process. Production information for the Assembly Department for July follows:

 

Ending Work in Process, conversion costs40% complete

Beginning Work in Process, conversion costs70% complete

Units started during July41,000

Units in Work in Process, July 15,200

Units in Work in Process, July 317,000

Conversion costs in beginning Work in Process$31,000

Transferred-in costs in beginning Work in Process$16,820

Cost of direct materials in beginning Work in Process$11,280

Conversion costs added during July$21,500

Direct material cost added during July$24,000

Transferred-in costs added during July$34,000

 

a. Calculate the equivalent units for the Assembly Department for July.

b.Identify the nature of ‘transferred-in’ costs and how these costs differ from costs in the beginning Work in Process inventory as it relates to the Assembly Department.

 

154.Wiseman Toys produces paint guns and uses process costing. The paint guns pass through three processes—molding, assembly, and testing. In the Assembly Department, materials are added when the guns are 10% complete, and conversion costs are added evenly throughout the process. Production information for July in the Assembly Department follows:

 

Ending Work in Process, conversion costs30% complete

Beginning Work in Process, conversion costs60% complete

Units started during July6,200

Units in Work in Process, July 11,100

Units in Work in Process, July 311,800

Conversion costs in beginning Work in Process$31,048

Transferred-in costs in beginning Work in Process$11,820

Cost of direct materials in beginning Work in Process$11,280

Conversion costs added during July$21,500

Direct material cost added during July$23,760

Transferred-in costs added during July$34,170

 

a.Calculate the following for Weisman Toys for the Assembly Department for July:

1.Equivalent units

2.Total cost to account for

3.Cost per unit assigned to units transferred out to the Testing Department

 

b.Identify which of Wiseman Toys’ three departments would not have any transferred-in costs. Explain why.

 

Short-answer essays

 

155.What is meant by the statement, “Process costing is essentially a system of averaging?”

 

 

 

156.What are transferred-in costs? Which departments will never have transferred-in costs?

 

 

157.Why is it necessary to use equivalent units in a process costing system?

 

 

158.List the four basic steps in preparing the production cost report.

 

159.What are conversion costs? What are the characteristics of the costs that make up conversion costs?

 

 

 

 

160.The production cost report may contain as many as four cost per equivalent unit calculations. What are the components of total cost for which the cost per equivalent unit may be calculated?

 

 

 

161.What caution must be considered when using process costing information in incremental analysis, and why?