1. Salter Company uses the FIFO method in its process costing system. The company reported 25,000 equivalent units for materials last month. The company's beginning work in process inventory consisted of 6,000 units, 40% complete with respect to materials. The ending work in process inventory consisted of 4,000 units, 70% complete with respect to materials. The number of units started during the month was:
A) 25,400 units. B) 23,400 units. C) 22,600 units. D) 24,600 units. % Direct Materials Beginning Inv. 6,000 60% 3,600
Started & Comp. ? 100% ?
Ending Inv. 4,000 70% 2,800
25,000
C is correct. You can calculate the equivalent units for Started & Completed 18,600 (25000 – 3600 – 2800)
The equivalent units are the same as the actual units.
The units started are the Ending Inventory (4,000) plus the Started & Completed units (18,600) This is 22,600 units.
2. The following data were taken from the accounting records of Abacus Company, which uses the FIFO method in its process costing system:
Beginning work in process inventory: 20,000 units (materials 100% complete, labor and overhead 60% complete)
Started in process during the period: 80,000 units
Ending work in process inventory: 30,000 units (materials 100% complete, labor and overhead 70% complete)
The equivalent units are:
A) Material, 90,000 units; labor and overhead, 89,000 units. B) Material, 100,000 units; labor and overhead, 91,000 units. C) Material, 60,000 units; labor and overhead, 53,000 units.
% Direct Materials Conversion
Beginning Inv. 20,000 0%/40% 0 8,000
Started & Comp. 50,000 100% 50,000 50,000
Ending Inv. 30,000 100%/70% 30,000 21,000
80,000 79,000
3. Tabet Corporation uses the FIFO method in its process costing system. Operating data for the Curing Department for the month of March appear below:
Percent Units Complete
Beginning work in process inventory ... 5,700 70% Transferred in from the prior department
during March ... 57,000 Completed and transferred to the next
department during March ... 58,700
Ending work in process inventory ... 4,000 90%
According to the company's records, the conversion cost in beginning work in process inventory was $20,349 at the beginning of March. The cost per equivalent unit for conversion costs for March was $5.00.
of the department during March? A) $273,550 B) $293,899 C) $285,000 D) $293,500 B is correct. % Conversion Beginning Inv. 5,700 30% 1,710
Started & Comp. 53,000 100% 53,000
Ending Inv. 4,000 90% 3,600
You know that Started & Completed is 53,000 units (57,000 – 4,000). You are told the cost per equivalent unit of Conversion Cost is $5.00. Units completed consist of Beginning Inventory and Started & Completed units. The cost of these units is:
Calculation Cost
Beginning Inv. $20,349 + (1,710 x $5) $28,899
Started & Comp. 53,000 x 5 265,000
$293,899 Use the following to answer questions 4-10:
Hache Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below:
Beginning work in process inventory:
Units in beginning work in process inventory ... 700 Materials costs ... $8,000 Conversion costs ... $7,800 Percentage complete with respect to materials ... 50% Percentage complete with respect to conversion ... 35% Units started into production during the month ... 5,200 Units transferred to the next department during the month 4,400 Materials costs added during the month ... $90,300 Conversion costs added during the month ... $125,600 Ending work in process inventory:
4. What are the equivalent units for materials for the month in the first processing department? A) 750 B) 5,900 C) 4,400 D) 5,150
D is correct. You need to calculate that the Started & Completed units are 3,700 (4,400 – 700). % Direct Materials Conversion
Beginning Inv. 700 100% 700 700
Started & Comp. 3,700 100% 3,700 3,700
Ending Inv. 1,500 50%/30% 750 450
5,150 4,850
5. What are the equivalent units for conversion costs for the month in the first processing department?
A) 5,900 B) 4,400 C) 4,850 D) 450
C is correct. See above table.
6. The cost per equivalent unit for materials for the month in the first processing department is closest to:
A) $16.66 B) $15.31 C) $17.53 D) $19.09
D is correct. The numerator for Direct Materials is this month’s Direct Material costs ($90,300) + the Direct Material cost in the Beginning Inventory from last month. ($8,000).
Divide the numerator by the equivalent units: $98,300/5150 = 19.08738
7. The cost per equivalent unit for conversion costs for the first department for the month is closest to: A) $28.89 B) $22.61 C) $27.51 D) $25.90
C is correct. The numerator for Conversion Costs is this month’s Conversion costs ($125,600) + the Conversion cost in the Beginning Inventory from last month. ($7,800).
Divide the numerator by the equivalent units: $133,400/4850 = 27.50515
8. The cost per equivalent whole unit for the month in the first processing department is closest to:
A) $39.27 B) $46.59 C) $49.39 D) $52.66
B is correct. The cost of one equivalent unit is the cost per equivalent unit for Direct Material plus the cost per equivalent unit for Conversion Costs
19.08738 + 27.50515 = 46.59253
9. The total cost transferred from the first processing department to the next processing department during the month is closest to:
A) $231,700 B) $274,893 C) $205,005 D) $215,900 C is correct. Calculation Cost Beginning Inv. 700 (19.08738 + 27.50515) $ 32,614.77
10. The cost of ending work in process inventory in the first processing department according to the company's cost system is closest to:
A) $26,692 B) $69,888 C) $34,944 D) $20,966 A is correct. Calculation Cost Ending Inv. (750 x 19.08738) + (450 x 27.50515) $26,692.85
1. C 2. D 3. B 4. D 5. C 6. D 7. C 8. B 9. C 10. A
