ACCT 130 – Principles of Management Accounting

Spring 2024, S1
Practice Sheet 3 – Chapter 4 & 4A Process Costing

MCQs:
1. Vital Industries manufactured 1,200 units of its product Huge in the month of April. It
incurred a total cost of $120,000 during the month. Out of this $120,000, $45,000 comprised of
direct materials used in the product and the rest was incurred because of the conversion cost
involved in the process. Ryan had no opening or closing inventory.

What will be the total cost per unit of the product, assuming conversion costs contained $10,000
of indirect labor?
A) $100
B) $90
C) $70
D) $30

2. Williams Company uses the FIFO method in its process costing system. The beginning work
in process inventory in a particular department consisted of 10,000 units, 100% complete with
respect to materials and 60% with respect to conversion costs. The total cost in the beginning
work in process inventory was $48,200. During the month, 25,000 units were transferred out of
the department. The costs per equivalent unit were computed to be $3.10 for materials and $4.50
for conversion costs.

The total cost of the units completed and transferred out of the department was:
A) $190,000
B) $189,200
C) $180,200
D) $132,000

3. Darvin 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 in its
beginning work in process inventory that were 10% complete with respect to conversion costs.
The conversion cost in this beginning work in process inventory was $7,000. An additional
63,000 units were started into production during the month. There were 10,000 units in the
ending work in process inventory of the Welding Department that were 10% complete with
respect to conversion costs. A total of $237,600 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?
A) $3.255
B) $3.771
C) $3.500
D) $3.305

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4. Richard Corporation uses the FIFO method in its process costing system. Operating data
for the Cutting Department for the month of March appear below:

Units Percentage complete

Beginning work in process inventory .......................... 9,600 70%

Transferred in from the prior department during

March ....................................................................... 47,000
Completed and transferred to the next department
during March ........................................................... 49,600

Ending work in process inventory ............................... 7,000 90%

According to the company's records, the conversion cost in beginning work in process inventory
was $26,880 at the beginning of March. Additional conversion costs of $190,130 were incurred
in the department during the month.

What would be the cost per equivalent unit for conversion costs for March on the Cutting
Department's production report? (Round off to three decimal places.)
A) $3.866
B) $3.834
C) $4.045
D) $4.000

Short Computational:

1. U.N.C.L.E Company uses the weighted average method in its process costing system.
Department A is the first stage of the company’s production process. The following information
is available for conversion costs for the month of April in Department A:
Units
Work in process, beginning (60% complete) 20,000
Started in April 340,000
Work in process, ending (40% complete) 40,000

Required:
a. What are the equivalent units of production for conversion costs?
b. What would be the difference in equivalent units for conversion costs if the company had used
the FIFO method instead of weighted average method?

2. Stay Corporation uses the weighted-average method in its process costing system. The
company's ending work in process inventory consists of 8,000 units, 60% complete with respect
to materials and 80% complete with respect to conversion costs. If the total cost in this inventory
is $200,000 and if the cost for materials is $16 per equivalent unit for the period, what is the
conversion cost per equivalent unit of the production for the period?

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Long form Problems:

Question 1:

Shiffon Electronics manufactures music player. Its costing system uses two cost categories,
direct materials and conversion costs. Each product must pass through the Assembly
Department, the Programming department, and the Testing Department. Direct materials are
added at the beginning of the production process. Conversion costs are allocated evenly
throughout production. Shiffon Electronics uses weighted-average costing.

The following information is available for the month of August 2022 for the Assembly
department.

Work in process, beginning inventory 300 units

Conversion costs (30% complete)
Units started during August 800 units
Work in process, ending inventory: 100 units
Conversion costs (50% complete)

The cost details for the month of August are as follows:

Work in process, beginning inventory:
Direct materials $345,000
Conversion costs $360,000
Direct materials costs added during August $700,000
Conversion costs added during August $1,120,000

Required:
a. What are the equivalent units of production for direct materials and conversion costs,
respectively, for August?
b. What is the total amount debited to the Work-in-Process account during the month of August?
c. What is the total cost per equivalent unit during August?
d. Prepare the journal entry required to transfer the music players from Assembly department to
the Programming department at the end of August.

Question 2:
Selzik Company makes super-premium cake mixes that go through two processing departments,
Blending and Packaging. The following activity was recorded in the Blending Department
during July:

Production data:
Units in process, July 1 10,000
(materials 100% complete; conversion 30% complete)
Units started into production 170,000
Units in process, July 31 20,000
(materials 100% complete; conversion 40% complete)

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Cost data:
Work in process inventory, July 1:
Materials cost $8,500
Conversion cost $4,900
Cost added during the month:
Materials cost $139,400
Conversion cost $244,200

All materials are added at the beginning of work in the Blending Department. The company uses
the FIFO method in its process costing system.

Required:
a. Determine the equivalent units of production for July for the Blending Department.
b. Compute the costs per equivalent unit for July for the Blending Department.
c. Determine the total cost of ending work in process inventory and the total cost of units
transferred to the next process for the Blending Department in July.
d. Compute the cost per equivalent unit of materials and conversion carried forward from June
and assigned to the Blending Department’s beginning inventory on July 1.

Question 3:
Dessa Cabinetry, Inc., manufactures standard sized modular cabinet units for kitchens and other
applications within the home. It’s costing system utilizes two cost categories, direct materials
and conversion costs. Each product must pass through the rough-cut department and the finish
department. Direct materials are added at the beginning of production. Conversion costs are
allocated evenly throughout production. Dessa used the weighted average method.
Data for Finishing Department for March 2023 are:
Work in process, beginning inventory, 25% converted 1,000 units
Units started during March 1,200 units
Work in process, ending inventory, 30% converted 500 units

Costs for Finishing department for March 2023 are:

Work in process, beginning inventory:
Direct materials $200,000
Conversion costs $200,000
Direct materials costs added during March $420,000
Conversion costs added during March $1,440,000
Required:
a. What is the unit cost per equivalent unit of the beginning inventory in the Finishing
Department?
b. What is the cost assigned to the ending WIP and units transferred out?