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Exam 3: Process Cost Systems

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Question 51

Multiple Choice

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Carmelita Inc., has the following information available: At the beginning of the period, there were 500 units in process that were 60% complete as to conversion costs and 100% complete as to direct materials costs. During the period, 4,500 units were started and completed. Ending inventory contained 340 units that were 30% complete as to conversion costs and 100% complete as to materials costs. The company uses the FIFO process cost method. The equivalent units of production for direct materials and conversion costs, respectively, were

A) 5,340 for direct materials and 4,902 for conversion costs
B) 4,840 for direct materials and 4,802 for conversion costs
C) 4,602 for direct materials and 4,802 for conversion costs
D) 4,902 for direct materials and 4,802 for conversion costs

E) A) and D)
F) C) and D)

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Question 52

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The closer a company moves towards just-in-time processing, the differences in unit costs between average costing and FIFO will be reduced.

A) True
B) False

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Question 53

Multiple Choice

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Equivalent production units are generally determined for

Everett Company's inventory at December 31 , and the costs charged to Work in Process-Department B during December are as follows: During December , all direct materials are transferred from Department A, the units in process at December  1 were completed. Of the 10,000 units entering the department, all were completed except 1,200 units which were 25% completed as to conversion costs. Inventories are costed by the first-in, first-out method. Prepare a cost of production report for December .

Carmelita Inc., has the following information available: At the beginning of the period, there were 500 units in process that were 60% complete as to conversion costs and 100% complete as to direct materials costs. During the period, 4,500 units were started and completed. Ending inventory contained 340 units that were 30% complete as to conversion costs and 100% complete as to materials costs. The company uses the FIFO process cost method. The cost of completing a unit during the current period was:

On March 1, Upton Company's Packaging Department had work in process inventory of 8,820 units, which had been transferred in from the Finishing Department.  These units had accumulated costs of $315,000 in previous departments and $16,000 for conversion costs in the Packaging Department. During March, 30,000 units were transferred into the department.  These units had accumulated costs of $770,000 in the previous departments.  The Packaging Department incurred $54,000 in conversion costs during the month. On March 31, 700 units remained in ending inventory.  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 using the average cost method.

Austin Co. manufactures a product called Aster in a three-process series. All materials are introduced at the beginning of the first process. Austin uses the first-in, first-out method of inventory costing. Unit and cost data for the first process (Department A) for the month of December follow: Prepare Austin's Department A cost of production report for December .

The Mountain Springs Water Company has two departments, Purifying and Bottling. The Bottling Department had 3,000 liters in beginning work in process inventory (30% complete). During the period 71,000 liters were completed. The ending work in process was 5,000 liters (70% completed). What is the total equivalent units for direct materials (using the FIFO method)  if materials were added at the beginning of the process?

The debits to Work in Process-Assembly Department for April, together with data concerning production, are as follows: All direct materials are placed in process at the beginning of the process and the average cost method is used to cost inventories. The materials cost per equivalent unit (to the nearest cent) for April is:

Department G had 3,600 units, 40% completed at the beginning of the period, 12,000 units were completed during the period, 2,000 units were 20% completed at the end of the period, and the following manufacturing costs were debited to the departmental work in process account during the period: Assuming that all direct materials are placed in process at the beginning of production and that the first-in, first-out method of inventory costing is used, what is the material and conversion cost per unit (to the nearest penny) , respectively.

The Bottling Department of Mountain Springs Water Company had 5,000 liters in beginning work in process inventory (20% complete). During the period, 58,000 liters were completed. The ending work in process inventory was 3,000 liters (90% complete). What are the equivalent units for conversion costs under the FIFO method?

The cost of direct materials transferred into the Bottling Department of the Mountain Springs Water Company is $28,072. The conversion cost for the period in the Bottling Department is $10,275. The total equivalent units for direct materials and conversion are 63,800 and 68,500, respectively. Determine the direct materials and conversion cost per equivalent unit.  Round answers to nearest cent.

Which of the following is not included in conversion costs?

The last step in the preparation of a cost of production report is the calculation of equivalent units of production.

Conversion costs include materials, direct labor, and factory overhead.

If a department that applies FIFO process costing starts the reporting period with 50,000 physical units that were 25% complete with respect to direct materials and 40% complete with respect to conversion, it must add 12,500 equivalent units of direct materials and 20,000 equivalent units to direct labor to complete them.

Penny, Inc. employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities: Using the FIFO method, the cost per equivalent unit for materials used during July was:

Process manufacturing usually reflects a manufacturer that produces small quantities of unique items.

The Mountain Springs Water Company has two departments, Purifying and Bottling. The Bottling Department received 67,000 liters from the Purifying Department. During the period, the Bottling Department completed 65,000 liters, including 3,000 liters of work in process at the beginning of the period. The ending work in process was 5,000 liters. How many liters were started and completed during the period?

Process cost systems use job order cost cards to accumulate cost data.