Chapter 4 Practice Exam
1. (LO2) Santini Company uses the weighted-average method in its process
costing system. The following data were taken from the companys accounting
records:
Beginning work in process inventory
(100% as to materials; 70% as to conversion) 120,000 units
Started in process during the period 360,000 units
Ending work in process inventory
(100% as to materials;60% as to conversion) 80,000 units
What were the equivalent units of production for conversion costs?
Solution:
First, account for all units in the processing department in order to determine the
units in ending inventory (which is required in order to compute the equivalent
units).
Beginning inventory 120,000 (given)
Started (transferred in) 360,000 (given)
Completed (transferred out) 400,000 (C)
Ending inventory 80,000 (given)
Total units to be accounted for 480,000(A)
Total units accounted for 480,000(B)
Calculations:
(A) Units in beginning inventory + Units started = Total units to be accounted for
120,000 + 360,000 = 480,000
(B) Units to be accounted for = Total units accounted for
480,000 (from A) = 480,000 (B)
(C) Units completed + Units in ending inventory = Total units accounted for
Units completed + 80,000 =480,000
then solve for
Units completed = 400,000 (C)
Then, compute the equivalent units (EU):
Units completed and transferred out 400,000
Units in ending inventory(80,000 x .6) 48,000
Equivalent units for conversion costs 448,000
2. (LO2) Drafke Company, a manufacturer of bicycle tires, uses the weighted-
average method in its process costing system. The company sold 500,000 units
during the month of June. There is only one processing department. The
following data were taken from the companys accounting records:
Inventory at June 1:
Work in process none
Finished goods 150,000 units
Inventory at June 30:
Work in process (75% as to conversion costs) 32,000 units
Finished goods 120,000 units
What were the equivalent units of production for conversion costs for June?
Solution:
First, account for all units in the finished goods department in order to compute
the number of units that were transferred to finished goods from the processing
department during June (which is required in order to compute the equivalent
units in the processing department).
Beginning inventory 150,000 (given)
Sold (transferred out) 500,000 (given)
Transferred in (from Processing Dept.) 470,000 (C)
Ending inventory 120,000 (given)
Total units to be accounted for 620,000(B)
Total units accounted for 620,000(A)
Calculations:
(A) Units sold + Units in ending inventory = Total units accounted for
500,000 + 120,000 = 620,000(A)
(B) Total units to be accounted for = Total units accounted for
620,000 = 620,000(from A)
(C) Units in beginning inventory + Units transferred in = Units to be accounted for
150,000 + Units transferred in =620,000
then solve for
Units transferred in =470,000 (C)
Then, calculate the equivalent units in the processing department:
Units completed and transferred out (to finished goods) 470,000(C)
Units in ending inventory (32,000x .75) 24,000
Equivalent units for conversion costs 494,000
3. (LO3,4) Murdock Company uses the weighted-average method in its process
costing system. The following information pertains to Processing Department #1
for the month of August:
Number Cost of
of units materials
Beginning work in process 120,000 $ 40,000
Started in August 320,000 $108,000
Units completed 340,000
Ending work in process 100,000
All materials are added at the beginning of the process. What is the cost per
equivalent unit for materials?
Solution:
Equivalent unit calculation:
Units completed 340,000
Units in ending inventory(100,000 x 100%) 100,000
Equivalent units 440,000
Cost per equivalent unit:
Beginning inventory $ 40,000
Started (materials transferred in) 108,000
Total costs $148,000
Divided by equivalent units 440,000
Cost perequivalent unit (rounded) $ 0.34
4. (LO5) The Aurora 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 May 31 consisted of 72,000
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 May was $11.00 for materials and$17.00 for labor and
overhead, what was the total cost assigned to the ending work in process
inventory?
Solution:
Work in Process, May 31:
Materials (72,000 units x 100% x $11.00 per unit) $ 792,000
Labor and overhead (72,000 units x 60% x $17.00 per unit) 734,400
Total cost of work in process, May 31 $1,526,400
5. (LO6,7,8,9)(Appendix 4A) The Fox Company produces digital cameras. For
the month of May, it has the following cost information, and uses the FIFO
method of process cost accounting:
Assembly Department:
Work in Process, May 1
400 units (55% complete as to materials)
400 units (30% complete as to conversion)
Units started and completed during May: 4000 units
Work in Process, May 31:
600 units (40% complete as to materials)
600 units (25% complete as to conversion)
Costs in the beginning inventory totaled $18000. The materials cost incurred
during May were $252,120, and conversion costs in May totaled $340,870.
Compute and prepare a quantity schedule, the equivalent units, costs per
equivalent unit, and cost reconciliation using the FIFO method of process
costing.
Solution:
The Fox Company
Production Report Assembly Department
For the Month of May
Quantity Schedule and Equivalent Units
Quantity Schedule
Work in Process, May 1 (Materials 55%,Conversion 30%) 400 units
Started in production 4000 units
Total units to be accounted for 4400 units
Units accounted for as follows: Equivalent Units (EU) For
Quantity Materials Conversion
Transferred to the next department
From beginning inventory 400 180 (400x45%) 280 (400x70%)
Started and completed-May 3400 3400 3400
Ending inventory, May 31
(40% as to materials,
25% as to conversion) 600 240 150
Total units accounted for: 4400 3820 3830
Cost per Equivalent Unit:
Costs to be accounted for: Total Whole
Cost Materials Conversion Unit
Work in Process, May 1 $ 18,000
Cost added in May(a) 592,990 $252,120 $340,870
Total Cost to be Accounted For: $ 610,990
Equivalent Units for May Production(above)(b) 3820 3830
Cost per EU (a divided by b) $66 $89 $155
Cost Reconciliation: Total Equivalent Units
Cost Materials Conversion
Transferred to the next department:
From beginning inventory $ 18,000
Costs to complete these units:
Materials at $66 per EU 11,880 180
Conversion at $89 per EU 24,920 280
Total costs from beginning inv. 54,800
Units started & completed in May:
At $155 per unit 527,000 3400 3400
Total cost transferred out (c) $581,800
Work in process, May 31:
Materials at $66 per EU 15,840 240
Conversion at $89 per EU 13,350 150
Total Work in Process,May 31(d) $29,190
Total Costs accounted for $610,990
