test bank chapter 4 process costing

Chapter Systems Design: Process Costing True/False T Easy The following journal entry would be made in a processing costing system when units that have been completed with respect to the work done in Processing Department Z are transferred from Processing Department Z to Processing Department Y: Work in Process, Department Y XXX Work in Process, Department Z F Easy XXX The following journal entry would be made in a processing costing system when units that have been completed with respect to the work done in the final processing department are transferred to the finished goods warehouse: Finished Goods XXX Materials XXX T Hard Appendix) The "Quantity schedule" and the "Costs to be accounted for" sections of the production report are the same for the weightedaverage method and the FIFO method of process costing F Easy In process costing, the same equivalent units figure is used for both materials and conversion costs F Hard (Appendix) The cost per equivalent unit for conversion costs will always be the same under both the FIFO and the weighted-average methods if there is no ending work in process inventory T Medium (Appendix) The cost per equivalent unit for conversion costs will always be the same under both the FIFO and the weighted-average methods if there is no beginning work in process inventory F Medium When assigning costs to partially completed units in the ending work in process inventory, it is not necessary to consider the percentage completion of the units under the weighted-average method Managerial Accounting, 9/e 89 T Medium When computing the cost per equivalent unit, it is not necessary to consider the percentage completion of the units in beginning inventory under the weighted-average method T Easy (Appendix) Under the FIFO process costing method, the equivalent units of production in the production report relate only to work done during the current period 10 F Medium (Appendix) The cost per equivalent unit under the FIFO method of process costing is equal to the cost of beginning work in process inventory plus the costs added during the period, all divided by the equivalent units of production for the period 11 F Medium The weighted-average method of process costing can only be used if materials are added at the beginning of the production process 12 T Medium A manufacturer of blank CDs would ordinarily use process costing rather than job-order costing 13 T Easy In order to use process costing, the output of a processing department must be homogeneous 14 T Easy In process costing, costs are accumulated in processing departments, rather than by job 15 F Easy If all units go through all processing departments then the processing departments are arranged in a parallel, rather than sequential, fashion Multiple Choice 16 C Hard (Appendix) All of the following are correct in referring to a production report except: a The quantity schedule deals with whole units b The total "Costs to be accounted for" must equal the total cost of the units completed and transferred out plus the cost of the ending work in process inventory c The equivalent units in the ending work in process inventory will be different if the weighted-average method is used than it is if the FIFO method is used d The total of the "Units to be accounted for" will equal the total of the "Units accounted for" Managerial Accounting, 9/e 90 17 D Hard CPA adapted Assuming that there was no beginning work in process inventory, and the ending work in process inventory is 50% complete with respect to conversion costs, the number of equivalent units of production with respect to conversion costs under the weighted-average method would be: a the same as the units completed b the same as the units started during the period c less than the units completed d less than the units started during the period 18 B Hard (Appendix) All production costs have been steadily rising in the Donner Company for several periods The company maintains large work in process inventories Donner Company's cost per equivalent unit computed using the FIFO method would be: a the same as that computed under the weighted-average method b higher than that computed under the weighted-average method c lower than that computed under the weighted-average method d could be the lower than, the same as, or higher than that computed under the weighted-average method 19 C Medium (Appendix) If a company uses two different unit cost figures to cost transfers from one department to another under a process costing system, then it is reasonable to assume that: a there was no beginning work in process inventory b processing centers are arranged in a sequential pattern c the FIFO cost method is being used d the weighted-average cost method is being used 20 A Easy Process costing would be appropriate for each of the following except: a custom furniture b oil refining c grain milling d newsprint production 21 B Hard An operation costing system is: a identical to a process costing system except that actual manufacturing overhead costs are traced to units of product b the same as a process costing system except that direct materials costs are accounted for in the same way as in job order costing c the same as a job order system except that direct materials costs are accounted for in the same way as in process costing d identical to a job order costing system except that actual manufacturing overhead costs are traced to units of product Managerial Accounting, 9/e 91 22 D Medium CMA adapted Lucas Company uses the weighted-average method in its process costing system The company adds materials at the beginning of the process in the Forming Department, which is the first of two stages in its production process Information concerning operations in the Forming Department in October follows: Units Work in process on October 6,000 Units started during October 50,000 Units completed and transferred to the next Department during October 44,000 Materials Cost P 3,000 P25,560 What was the materials cost of work in process at October 31? a P3,060 b P5,520 c P6,000 d P6,120 23 A Medium David Company uses the weighted-average method in its process costing system The first processing department, the Welding Department, started the month with 20,000 units that were 80% complete with respect to conversion costs The conversion cost in this beginning work in process inventory was P123,200 An additional 65,000 units were started into production during the month There were 19,000 units in the ending work in process inventory of the Welding Department that were 10% complete with respect to conversion costs A total of P389,250 in conversion costs were incurred in the department during the month What would be the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.) a P7.547 b P7.700 c P4.634 d P5.988 Managerial Accounting, 9/e 92 24 A Medium Larner Company uses the weighted-average method in its process costing system Operating data for the first processing department for the month of June appear below: Beginning work in process inventory Started into production during June Ending work in process inventory Units 24,000 86,000 19,000 Percentage complete 40% 20% According to the company's records, the conversion cost in beginning work in process inventory was P68,064 at the beginning of June Additional conversion costs of P585,324 were incurred in the department during the month What was the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.) a P6.892 b P6.806 c P5.575 d P7.090 25 C Hard CPA adapted Glo Co., a manufacturer of combs, uses the weighted-average method in its process costing system The company sold 125,000 units during the month of April There is only one processing department The following additional information is provided: Inventory at April 1: Work in process None Finished goods 37,500 units Inventory at April 30: Work in process (75% complete as to conversion costs) 8,000 units Finished goods 30,000 units What were the equivalent units of production for conversion costs for April? a 126,500 b 125,500 c 123,500 d 117,500 Managerial Accounting, 9/e 93 26 D Hard The Morgan Company uses the weighted-average method in its process costing system For a particular department, the company had 54,000 equivalent units of production with respect to conversion costs in March There were 7,500 units in the department's beginning work in process inventory, two thirds complete with respect to conversion costs During March, 52,500 units were started and 50,000 were completed and transferred out of the department The ending work in process inventory in the department: a consisted of 5,000 units b consisted of 2,500 units c was 65% complete with respect to conversion costs d was 40% complete with respect to conversion costs 27 B Medium The following data were taken from the accounting records of the Hazel Corporation which uses the weighted-average method in its process costing system: Beginning work in process inventory (100% complete as to materials; 70% complete as to conversion) 30,000 units Started in process during the period 90,000 units Ending work in process inventory (100% complete as to materials; 60% complete as to conversion) 20,000 units The equivalent units of production for conversion costs was: a 102,000 units b 112,000 units c 111,000 units d 100,000 units 28 B Medium Baker Company uses the weighted-average method in its process costing system The Assembly Department started the month with 8,000 units in its beginning work in process inventory that were 90% complete with respect to conversion costs An additional 95,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department There were 11,000 units in the ending work in process inventory of the Assembly Department that were 90% complete with respect to conversion costs What were the equivalent units of production for conversion costs in the Assembly Department for the month? a 94,700 b 101,900 c 98,000 d 92,000 Managerial Accounting, 9/e 94 29 C Medium Jawson Company uses the weighted-average method in its process costing system Operating data for the Painting Department for the month of April appear below: Beginning work in process inventory Transferred in from the prior department during April Ending work in process inventory Units 6,300 65,600 4,600 Percentage complete 10% 70% What were the equivalent units of production for conversion costs in the Painting Department for April? a 67,300 b 68,820 c 70,520 d 63,900 30 C Medium Sarver Company uses the weighted-average method in its process costing system The Fitting Department is the second department in its production process The data below summarize the department's operations in March Beginning work in process inventory Transferred in from the prior department during March Ending work in process inventory Units 7,100 61,000 4,600 Percentage complete 70% 30% The Fitting Department's production report indicates that the cost per equivalent unit for conversion cost for March was P8.24 How much conversion cost was assigned to the units transferred out of the Fitting Department during March? a P482,287.20 b P502,640.00 c P523,240.00 d P561,144.00 Managerial Accounting, 9/e 95 31 B Medium The Nichols Company uses the weighted-average method in its process costing system The company recorded 29,500 equivalent units of production for conversion costs for November in a particular department There were 6,000 units in the ending work in process inventory on November 30, 75% complete with respect to conversion costs The November work in process inventory consisted of 8,000 units, 50% complete with respect to conversion costs A total of 25,000 units were completed and transferred out of the department during the month The number of units started during November in the department was: a 24,500 units b 23,000 units c 27,000 units d 21,000 units 32 B Easy The Assembly Department started the month with 35,000 units in its beginning work in process inventory An additional units 472,000 were transferred in from the prior department during the month to begin processing in the Assembly Department There were 34,000 units in the ending work in process inventory of the Assembly Department How many units were transferred to the next processing department during the month? a 507,000 b 473,000 c 471,000 d 541,000 33 A Medium CPA adapted Huffer Company uses the weighted-average method in its process costing system The following information pertains to Processing Department D for the month of May: Beginning work in process Started in May Units completed Ending work in process Number of units 30,000 80,000 85,000 25,000 Cost of materials P11,000 P36,000 All materials are added at the beginning of the process The cost per equivalent unit for materials is closest to: a P0.43 b P0.45 c P0.55 d P0.59 Managerial Accounting, 9/e 96 34 D Medium Harker Company uses the weighted-average method in its process costing system The first processing department, the Welding Department, started the month with 16,000 units in its beginning work in process inventory that were 40% complete with respect to conversion costs The conversion cost in this beginning work in process inventory was P29,440 An additional 59,000 units were started into production during the month and 61,000 units were completed in the Welding Department and transferred to the next processing department There were 14,000 units in the ending work in process inventory of the Welding Department that were 10% complete with respect to conversion costs A total of P246,400 in conversion costs were incurred in the department during the month What would be the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.) a P4.176 b P4.600 c P3.375 d P4.421 35 A Medium Paxton Company uses the weighted-average method in its process costing system The Molding Department is the second department in its production process The data below summarize the department's operations in January Beginning work in process inventory Transferred in from the prior department during January Completed and transferred to the next department during January Ending work in process inventory Units 2,700 Percentage complete 80% 57,000 50,300 9,400 20% The accounting records indicate that the conversion cost that had been assigned to beginning work in process inventory was P10,973 and a total of P268,107 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 P5.348 b P4.038 c P5.080 d P4.704 Managerial Accounting, 9/e 97 36 D Easy The Richmond Company uses the weighted-average method in its process costing system The company has only a single processing department The company's ending work in process inventory on August 31 consisted of 18,000 units The units in the ending work in process inventory were 100% complete with respect to materials and 60% complete with respect to labor and overhead If the cost per equivalent unit for August was P2.75 for materials and P4.25 for labor and overhead, the total cost assigned to the ending work in process inventory was: a P126,000 b P 75,600 c P 80,100 d P 95,400 37 D Hard CPA adapted (Appendix) On November 1, Yankee Company had 20,000 units of work in process in Department No that were 100% complete with respect to material costs and 20% complete with respect to conversion costs During November, 160,000 units were started in Department No and 170,000 units were completed and transferred to Department No The work in process on November 30, was 100% complete with respect to material costs and 40% complete with respect to conversion costs By what amount would the equivalent units of production for conversion costs for the month of November differ if the FIFO method were used instead of the weighted-average method? a 20,000 decrease b 16,000 decrease c 8,000 decrease d 4,000 decrease 38 D Easy Fabian Company uses the weighted-average method in its process costing system The Assembly Department started the month with 9,000 units in its beginning work in process inventory that were 70% complete with respect to conversion costs An additional 90,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department During the month 87,000 units were completed in the Assembly Department and transferred to the next processing department There were 12,000 units in the ending work in process inventory of the Assembly Department that were 20% complete with respect to conversion costs What were the equivalent units of production for conversion costs in the Assembly Department for the month? a 93,000 b 83,100 c 87,000 d 89,400 Managerial Accounting, 9/e 98 107 Hard (Appendix) The Smith Company manufactures a product that goes through two departments prior to completion The following information is available on work in one of these departments, the Forming Department, during March: Work in process, March Started into production Completed and transferred out Work in process, March 31 Percentage Completed Units Materials Conversion 70,000 5/7 3/7 460,000 450,000 80,000 7/8 5/8 Cost in the beginning work in process inventory and cost added during the month were as follows: Work in process, March Cost added during March Materials P 42,190 P440,810 Conversion P 38,000 P 394,000 The Forming Department is the first department in the production process; after forming has been completed, the units are transferred to the Finishing Department Required: Calculate the equivalent units and unit cost for materials and conversion costs assuming the company uses the weightedaverage method (round to the nearest tenth of a cent) Calculate the equivalent units and unit cost for materials and conversion costs assuming the company uses the FIFO method (round to the nearest tenth of a cent) Answer: Equivalent units: Weighted-average: Units completed and transferred out Work in process, March 31: Materials: 80,000 x 7/8 = Conversion: 80,000 x 5/8 = Equivalent units Materials 450,000 Conversion 450,000 70,000 520,000 50,000 500,000 Unit costs: Materials: (P42,190 + P440,810)/520,000 = P0.929 Conversion: (P38,000 + P394,000)/500,000 = P0.864 Managerial Accounting, 9/e 125 Equivalent units: FIFO: Materials Work in process, March 1: Materials: 70,000 x 2/7 = 20,000 Conversion:70,000 x 4/7 = Started and completed during March 380,000 Work in process, March 31: Materials: 80,000 x 7/8 = 70,000 Conversion: 80,000 x 5/8 = Equivalent units 470,000 Conversion 40,000 380,000 50,000 470,000 Unit costs: Materials: P440,810/470,000 = P0.938 Conversion: P394,000/470,000 = P0.838 108 Medium Dita Company uses a process costing system The following information relates to one month's activity in the company's Curing Department Conversion Percentage Units Complete Beginning work in process inventory 10,000 20% Units started 21,000 Units completed and transferred out 26,000 Ending work in process inventory 5,000 80% The conversion cost of the beginning inventory was P6,500 During the month, P112,000 in additional conversion cost was incurred Required: a (Appendix) Assume that the company uses the FIFO method Compute: The equivalent units of production for conversion for the month The cost per equivalent unit for conversion for the month The total cost transferred out during the month The cost assigned to the ending work in process inventory b Assume that the company uses the weighted-average cost method Compute: The equivalent units of production for conversion for the month The cost per equivalent unit for conversion for the month The total cost transferred out during the month The cost assigned to the ending work in process inventory Managerial Accounting, 9/e 126 Answer: a Units transferred out Deduct: equivalent units in the beginning inventory Add: equivalent units in the ending inventory Equivalent units 26,000 2,000 24,000 4,000 28,000 P112,000 ÷ 28,000 EUs = P4 per EU Beginning inventory: Cost in the beginning inventory P 6,500 Completion of the units in the beginning inventory: P4 x 1,000 x 80% 32,000 Units started and completed during the period: P4 x 16,000 units 64,000 Total cost transferred out P102,500 P4 per EU x 5,000 x 80% = P16,000 b Units transferred out Add: equivalent units in the ending inventory Equivalent units 26,000 4,000 30,000 Cost in the opening inventory P 6,500 Cost incurred during the period 112,000 Total cost P118,500 P118,500 ÷ 30,000 Eus = P3.95 per EU 26,000 units x P3.95 per EU = P102,700 P3.95 per EU x 5,000 x 80% = P15,800 Managerial Accounting, 9/e 127 109 Hard Production and cost data for the month of February for Process A of the Packer manufacturing Company follow: Production record: Units in process, February (100% complete with respect to materials; 25% complete with respect to conversion cost) New units started in process Units completed Units in process, February 28 (100% complete with respect to materials; 1/3 complete with respect to conversion cost) Cost record: Work in process inventory, February 1: Materials Conversion Costs for February: Materials issued Conversion Total cost to be accounted for P600 100 2,000 8,000 7,000 3,000 P 700 2,560 1,500 P4,760 The company uses the weighted-average cost method in its process costing system Required: Calculate the equivalent units and unit costs for February materials and for conversion costs for Determine the cost transferred to finished goods Determine the amount of cost that should be assigned to the ending work in process and finished goods inventories Answer: Equivalent units: Materials: Completed 7,000 Work in process, Feb 28 3,000 Equivalent units 10,000 Conversion: Completed 7,000 Work in process, Feb 28 (3,000 x 1/3) 1,000 Equivalent units 8,000 Material Unit costs: Cost from work in process, Feb Cost recorded in February Total cost Equivalent units Unit cost Managerial Accounting, 9/e P 600 2,560 P 3,160 10,000 P 0.316 Conversion P 100 1,500 P1,600 8,000 P 0.20 128 and Units completed and transferred—7,000 x P.516 P3,612 Work in process inventory, February 28: Material cost: 3,000 units x 100% x P0.316 = 948 Conversion cost: 3,000 units x 1/3 x P0.20 = 200 Total cost accounted for P4,760 110 Hard Miller Company manufactures a product for which materials are added at the beginning of the manufacturing process A review of the company’s inventory and cost records for the most recently completed year revealed the following information: Units Work in process, Jan 80% complete with respect to conversion costs Units started into production Costs added during the year: Materials Conversion Units completed during the year Costs _ Materials Conversion 100,000 P100,000 500,000 P157,500 P650,000 P997,500 450,000 The company uses the weighted-average cost method in its process costing system The ending inventory is 50% complete with respect to conversion costs Required: Compute the equivalent units of production and the cost per equivalent units for materials and for conversion costs Determine the cost transferred to finished goods Determine the amount of cost that should be assigned to the ending work in process inventory Managerial Accounting, 9/e 129 Answer: Equivalent units: Units completed and transferred out Work in process, December 31: Materials: 150,000 x 1.00 = Conversion: 150,000 x 0.50 = Equivalent units Materials 450,000 Conversion 450,000 150,000 _ 600,000 75,000 525,000 Unit costs: Materials Costs in beginning work in process P100,000 Costs added during the year 650,000 Total P750,000 Equivalent units 600,000 Unit cost P 1.25 Costs to be accounted for: Work in process, beginning Cost added by department Total cost to be accounted for Conversion P 157,500 997,500 P1,155,000 525,000 P 2.20 P 257,500 1,697,500 P1,905,000 Cost accounted for as follows: Transferred to finished goods: 450,000 x (P1.25 + P2.20) = Work in process, ending: Materials—150,000 x P1.25 = Conversion—75,000 x P2.20 = Total costs accounted for P1,552,500 187,500 165,000 P1,905,000 Ending work in process: Materials: Conversion Total Managerial Accounting, 9/e P187,500 165,000 P352,500 130 111 Medium The Hardy Company manufactures a product that goes through two departments prior to completion The following information is available on work in one of these departments, the Molding Department, during the month of July: Work in process, July Started into production Completed Work in process, July 31 Percentage Completed Materials Conversion 3/5 2/5 Units 50,000 440,000 430,000 60,000 5/6 2/3 The Molding Department is the first department in the production process; after molding has been completed, the units are transferred to the Finishing Department Required: Calculate the equivalent units for materials and conversion costs assuming the company uses the weighted-average method Round to the nearest tenth of a cent Answer: Equivalent units: Weighted-average: Units completed and transferred out Work in process, July 31: Materials: 60,000 x 5/6 = Conversion: 60,000 x 2/3 = Equivalent units Managerial Accounting, 9/e Materials 430,000 Conversion 430,000 50,000 480,000 40,000 470,000 131 112 Medium Sharp Company has a process costing system The following data relate to the company's Mixing Department for a recent month: Beginning work in process inventory Units started into production Units completed and transferred out Ending work in process inventory Conversion Percentage of Completion 60% Units 5,000 40,000 37,000 8,000 25% All materials are added at the beginning of the Mixing process Required: a (Appendix) Compute the equivalent units of materials using the FIFO method b (Appendix) Compute the equivalent units of conversion using the FIFO method c Compute the equivalent units of production using the weighted-average method d Compute the equivalent units of production using the weighted-average method production for production for for materials for conversion Answer: a & b Materials Units transferred out 37,000 Deduct: equivalent units in beginning inventory 5,000 32,000 Add: equivalent units in ending inventory 8,000 Equivalent units of production 40,000 c & d Units transferred out Add: equivalent units in the ending inventory Equivalent units of production Managerial Accounting, 9/e Conversion 37,000 3,000 34,000 2,000 36,000 37,000 37,000 8,000 45,000 2,000 39,000 132 113 Hard (Appendix) Darver Inc uses the FIFO method in its process costing system The following data concern the operations of the company's first processing department for a recent month Work in process, beginning: Units in process Stage of completion with respect to materials Stage of completion with respect to conversion Costs in the beginning inventory: Material cost Conversion cost P376 P2,376 Units started into production during the month Units completed and transferred out 21,000 20,400 100 80% 60% Costs added to production during the month: Material cost P93,645 Conversion cost P825,531 Work in Units Stage Stage process, ending: in process of completion with respect to materials of completion with respect to conversion 700 70% 50% Required: Prepare a production report for the department using the FIFO method Answer: Quantity Schedule and Equivalent Units Quantity Schedule Units to be accounted for: Work in process, beginning Started into production Total units 100 21,000 21,100 Equivalent units Materials Conversion d Units accounted for as follows: Transferred out: From the beginning inventory 100 Started and completed 20,300 Work in process, ending 700 Total units 21,100 Managerial Accounting, 9/e 20 20,300 490 20,810 40 20,300 350 20,690 133 Costs per equivalent unit Total Cost Materials Conversion P93,645 P825,531 20,810 P4.500 20,690 P39.900 Cost to be accounted for: Work in process, beginning P2,752 Cost added during the month P919,176 Total cost (a) P921,928 Equivalent units (above) (b) Cost per EU, (a) ÷(b) Combined cost per EU P44.400 Cost Reconciliation Total Cost Cost accounted for as follows: Transferred out: From the beginning inventory: Cost in the beginning inventory P2,752 Cost to complete these units: Materials P90 Conversion P1,596 Total cost P4,438 Units started and completed P901,320 Total cost transferred P905,758 Work in process, ending: Materials P2,205 Conversion P13,965 Total work in process, ending P16,170 Total cost P921,928 Managerial Accounting, 9/e Equivalent Units (above) Materials Conversion 20 40 20,300 20,300 490 350 134 114 Hard (Appendix) Easy Inc uses the FIFO method in its process costing system The following data concern the operations of the company's first processing department for a recent month Work in process, beginning: Units in process Stage of completion with respect to materials Stage of completion with respect to conversion Costs in the beginning inventory: Materials cost Conversion cost P594 P8,256 Units started into production during the month Units completed and transferred out 26,000 25,500 Costs added to production during the month: Materials cost Conversion cost P79,732 P887,626 Work in Units Stage Stage process, ending: in process of completion with respect to materials of completion with respect to conversion 300 60% 80% 800 50% 40% Required: Using the FIFO method: a Determine the equivalent units of production for materials and conversion costs b Determine the cost per equivalent unit for materials and conversion costs c Determine the cost of units transferred out of the department during the month d Determine the cost of ending work in process inventory in the department Answer: a through d can be answered by completing a production report follows: as Quantity Schedule and Equivalent Units Quantity Schedule Units to be accounted for: Work in process, beginning 300 Started into production 26,000 Total units 26,300 Managerial Accounting, 9/e 135 Equivalent units Materials Conversion d Units accounted for as follows: Transferred out: From the beginning inventory Started and completed Work in process, ending Total units 300 25,200 800 26,300 120 25,200 400 25,720 60 25,200 320 25,580 Costs Per Equivalent Unit Total Cost Cost to be accounted for: Work in process, beginning P8,850 Cost added during the month P967,358 Total cost (a) P976,208 Equivalent units (above) (b) Cost per EU, (a) ÷ (b) Combined cost per EU Materials Conversion P79,732 P887,626 25,720 P3.100 25,580 P34.700 P37.800 Cost Reconciliation Total Cost Cost accounted for as follows: Transferred out: From the beginning inventory: Cost in the beginning inventory Cost to complete these units: Materials P8,850 P372 Conversion P2,082 Total cost P11,304 Units started and completed P952,560 Total cost transferred P963,864 Work in process, ending: Materials P1,240 Conversion P11,104 Total work in process, ending P12,344 Total cost P976,208 Managerial Accounting, 9/e Equivalent Units (above) Materials Conversion 120 60 25,200 25,200 400 320 136 115 Medium (Appendix) Farwest Inc uses the FIFO method in its process costing system The following data concern the operations of the company's first processing department for a recent month Work in Units Stage Stage process, beginning: in process of completion with respect to materials of completion with respect to conversion Units started into production during the month Work in Units Stage Stage process, ending: in process of completion with respect to materials of completion with respect to conversion 800 70% 50% 22,000 300 80% 70% Required: Using the FIFO method, determine the equivalent units of production for materials and conversion costs by compiling the "Quantity Schedule and Equivalent Units" portion of the production report Answer: Quantity Schedule and Equivalent Units Quantity Schedule Units to be accounted for: Work in process, beginning 800 Started into production 22,000 Total units 22,800 Equivalent units Materials Conversion d Units accounted for as follows: Transferred out: From the beginning inventory Started and completed Work in process, ending Total units Managerial Accounting, 9/e 800 21,700 300 22,800 240 21,700 240 22,180 400 21,700 210 22,310 137 116 Hard (Appendix) Production and cost data for the month of February for Process A of the Packer Manufacturing Company were as follows: Production record: Units in process, February (100% complete with respect to materials; 25% complete with respect to conversion cost) New units started in process Units completed Units in process, February 28 (100% complete with respect to materials; 1/3 complete with respect to conversion cost) Cost record: Work in process inventory, February 1: Materials Conversion Costs for February: Materials issued Conversion Total cost to be accounted for P600 100 2,000 8,000 7,000 3,000 P 700 2,560 1,500 P4,760 The company uses the FIFO cost method in its process costing system Required: Calculate the equivalent units and unit costs for February materials and conversion costs for Determine the cost transferred to finished goods Determine the amount of cost that should be assigned to the ending work in process and finished goods inventories Managerial Accounting, 9/e 138 Answer: Equivalent units: Materials: Completion of work in process at February Units started and completed during the period Units in process at February 28 Equivalent units 5,000 3,000 8,000 Conversion: Completion of work in process at February (2,000 x 0.75) Units started and completed during the period Units in process at February 28 (3,000 x 1/3) Equivalent units 1,500 5,000 1,000 7,500 Unit costs: Materials: P2,560/8,000 = Conversion: P1,500/7,500 = Total unit cost P0.32 0.20 P0.52 and From beginning work in process inventory (2,000 units): Cost from preceding period P 700 Materials added -0Conversion: 2,000 units x 0.75 x P0.20 300 Completed cost of opening inventory P1,000 From new production started in current month (5,000 units): 5,000 units x P0.52 2,600 Total cost of completed production P3,600 Work in process inventory, February 28: Material cost: 3,000 units x 100% x P0.32 960 Conversion cost: 3,000 units x 1/3 x P0.20 200 1,160 Total cost accounted for P4,760 Managerial Accounting, 9/e 139