Question : Answer the following questions using the information below: Lehman Pottery Company : 1217023

Answer the following questions using the information below:

Lehman Pottery Company manufactures clay molded pottery on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production.

Data for the Assembly Department for August 2008 are:

Work in process, beginning inventory:800 units

Direct materials (100% complete)

Conversion costs (40% complete)

Units started during August450 units

Work in process, ending inventory:300 units

Direct materials (100% complete)

Conversion costs (60% complete)

Costs for August:

Standard costs for Assembly:

Direct materials$30 per unit

Conversion costs$55 per unit

Work in process, beginning inventory:

Direct materials$22,000

Conversion costs$16,500

5) What is the balance in ending work-in-process inventory?

A) $25,500

B) $ 38,500

C) $15,600

D) $18,900

6) Which of the following journal entries records the Assembly Department’s conversion costs for the month, assuming conversion costs are 10% higher than expected?

A) Assembly Department Conversion Cost Control39,325

Various accounts39,325

B) Materials Inventory39,325

Assembly Department Conversion Cost Control39,325

C) Assembly Department Conversion Cost Control49,005

Various accounts49,005

D) Materials Inventory49,005

Work in Process ? Assembly49,005

7) Standard costing is extremely useful when unique, high cost products are produced, as compared to the production of multiple products.

8) Under standard costing the cost per equivalent-unit calculation is more difficult than in either weighted average or FIFO.

9) Standard costing is NOT possible in a firm that uses process costing.

10) Companies that use process-costing systems will incur variances if they do NOT incorporate the use of the standard-costing method.

11) In companies that produce masses of identical or similar units of output and consequently use process-costing systems, it is relatively easy to set standards and use a standard cost as the cost per equivalent unit.

12) BIG Manufacturing Products has been using FIFO process costing for tracking the costs of its manufacturing activities. However, in recent months, the system has become somewhat bogged down with details. It seems that, when the company purchased Brown Electronics last year, its product lines increased six-fold. This has caused both the accountants and the suppliers of the information, the line managers, great difficulty in keeping the costs of each product line separate. Likewise, the estimation of the completion of ending work-in-process inventories and the associated costs has become very cumbersome. The chief financial officer of the company is looking for ways to improve the reporting system of product costs.

Required:

What can you recommend to improve the situation?