Key Answers (last page)

Items 1 and 2 are based on the following data:

Sol Companys Job 501 for the manufacturing of 2,200 coats was completed during
August 2003 at the following unit costs:
Direct materials
Direct labor
Factory overhead
spoiled work)

P 20
18
(includes

an

allowance

of

P1

for
18
P 56

Final inspection of Job 501 disclosed 200 spoiled coats which were sold to a jobber for
P6,000.
1. Assume that spoiled loss is charged attributable to exacting specification of Job 501
during August 2003. What would be the unit cost of the good coats produced on Job
501?
a. P 55.00
c. P 57.50
b. 58.00
d. 56.00
2. Assume that the spoilage loss is charged to all production (or due to internal failure)
during August. What would be the unit cost of the good coats produced on Job 501?
a. P 53.00
c. P 56.00
b. 55.00
d. 58.60

Items 3 and 4 are based on the following information:

During March, Sofia Company incurred the following costs on Job 109 for the
manufacture of 200 motors:
Original cost accumulation:
Direct Materials
Direct labor
Factory overhead (150% of DL)
Direct costs of reworking 10 units:
Direct materials
Direct labor

P 660
800
1,200
P2,660
P
P

100
160
260

3. The rework coats were attributable to the exacting specifications of Job 109, and the full
rework costs were charged to this specific job.
a. P 15.80
c. P 14.00
b. 14.60
d.
13.30
4. If the rework coat was the result of an internal failure due to the employee error, what is
the cost per unit of Job 1097?
a. P 15.80
c. P 14.00
b. 14.60
d.
13.30
5. Under Hermie Companys job order cost system; estimated costs of defective work
(considered normal in the manufacturing process) are included in the predetermined
factory overhead rate. During March, Job No. 210 for 2,000 handsaws was completed at
the following costs per unit.
Direct materials
Direct labor
Factory overhead (applied at 150% of direct labor cost)

P5
4
6
P15

Final inspection disclosed 100 defective saws, which were reworked at a cost of P2 per
unit for direct labor, plus overhead at the predetermined rate. The defective units fall with
in the normal range. What is the total rework cost and to what account should it be
charged?
a. P200 to work-in-process
c. P500 to work-in process
b. P200 to factory overhead control
d. P500 to factory overhead control

Process Costing
6. Kew had 3,000 units of work-in-process at April 1 which were 60% complete as to
conversion cost. During April, 10,000 units were completed. At April 30, 4,000 units
remained in work-in-process which were 40% complete as to conversion cost. Direct
materials are added at the beginning of the process. How many units were started during
April?
a. 9,000
c. 10,000
b. 9,800
d. 11,000

7. With the following data for a company using the FIFO process cost
system, calculate the equivalent units for materials and conversion costs:
Beginning inventory
Transferred-in
Transferred-out
Ending inventory
a. 89 materials, 100 conversion costs.
b. 100 materials, 89 conversion costs.
c. 110 materials, 99 conversion costs.
d. 130 materials, 119 conversion costs.

Whole
Units
10
100
80
30

Materials
100%

Conversion
Costs
30%

100%

40%

8. The Wilson Company manufactures the famous Ticktock watch on an assembly-line

basis. January 1 work-in process consisted of 5,000 units partially completed. During the
month an additional 110,000 units were started and 105,000 units were completed. The
ending work-in-process was 3/5 complete as to conversion costs. Conversion costs are
added evenly throughout the process. The following conversion costs were incurred:
Beginning costs for work-in processP 1,500
Total current conversion costs. 273,920
The conversion costs assigned to ending work-in process totaled P15,360 using the FIFO
method of process costing. What was the percentage of completion as to conversion
costs on the 5,000 units in BWIP?
a. 20%
c. 60%
b. 40%
d. 80%
9. Winnie Incorporated had 8,000 units of work in process in Department A on October 1,
2003. These units were 60% complete as to conversion costs. Materials are added in the
beginning of the process. During the month of October, 34,000 units were started and
36,000 units completed. Winnie had 6,000 units of work in process on October 31, 2003.
These units were 80% complete as to conversion costs. By how much did the equivalent
units for the month of October using the weighted-average method exceed the equivalent
units for the month of October using the first-in, first-out method?
Materials
Conversion Costs
a. P
0
P 3,200
b..
0
4,800
c.
8,000
3,200
d.
8,000
4,800

10. RIVERA CORPORATIONS PRODUCTION CYCLE STARTS IN THE MIXING DEPARTMENT.

THE FOLLOWING INFORMATION IS AVAILABLE FOR THE MONTH OF APRIL 2003:
Work in process, April 30 (50% complete)
Started in April
Work in process, April 30 (60% complete)

Units
40,000
240,000
25,000

Materials are added in the beginning of the process in the Mixing Department. Using the
weighted-average method, what are the equivalent units of production for the month of
April 2003?
Materials
Conversion
a.
240,000
250,000
b.
255,000
255,000

c.
d.

270,000
280,000

280,000
270,000

11. The Alice Company had computed the physical flow (of physical units) for Department A,
for the month of April 2003 as follows:
Units completed:
From work in process on April 1, 2003
10,000
From April production
30,000
40,000
Materials are added at the beginning of the process. Units of work in process at April 30,
2003, were 8,000. The work in process of April 1, 2003, was 80% complete as to
conversion costs and the work in process at April 30, 2003, was 60% complete as to
conversion costs. What are the equivalent units of production for the month of April 2003
using the FIFO methods?
Materials
Conversion Costs
a.
38,000
36,800
b.
38,000
38,000
c.
48,000
44,800
d.
48,000
48,000
12. A company uses the first-in, first-out method of costing in a process costing system.
Material is added at the beginning of the process in Department A, and conversion costs
are incurred uniformly throughout the process. Beginning work in process inventory on
April 1 in Department A consisted of 50,000 units estimated to be 30% complete. During
April 150,000 units were started in Department A, and 160,000 units were completed and
transferred to Department B. Ending work in process inventory on April 30 in Department
A was estimated to be 20% complete. What were the total equivalent units in
Department A for April for materials and conversion costs, respectively?
a. 150,000 and 133,000
c. 200,000 and 133,000
b. 150,000 and 153,000
d. 200,000 and 153,000
13. Rina Inc. had 8,000 units of work in process in its Department A on March 1, 2003, which
were 50% complete as to conversion costs. Materials are introduced at the beginning of
the process. During March 17,000 units were started, 18,000 units were completed and
there were 2,000 units of normal spoilage. Rina had 5,000 units of work in process at
March 31, 2003, which was 60% complete as to conversion costs. Under Rinas cost
accounting system, spoilage units reduce the number of units over which total cost can
be spread. Using the weighted-average method, the equivalent units for March for
conversion cost were
a. 17,000
c. 21,000
b. 19,000
d. 23,000
14. Dorie Co. had the following production for the month of June:

Work in process at June 1

Started during June
Completed and transferred to finished goods during June
Abnormal spoilage incurred
Work in process at June 30

Units
10,000
40,000
33,000
2,000
15,000

Materials are added at the beginning of the process. As to conversion cost, the
beginning work in process was 70% completed, and the ending work in process was 60%
completed. Spoilage is detected at the end of the process. Using the weighted-average
method, the equivalent units for June, with respect to conversion costs, were
a. 42,000
c. 45,000
b. 44,000
d. 50,000

15. A COMPANY MANUFACTURES A PRODUCT THAT PASSES THROUGH TWO PRODUCTION

DEPARTMENTS, MOLDING AND ASSEMBLY. DIRECT MATERIALS ARE ADDED IN THE
ASSEMBLY DEPARTMENT WHEN CONVERSION IS 50% COMPLETE. CONVERSION COSTS
ARE INCURRED UNIFORMLY. THE ACTIVITY IN UNITS FOR THE ASSEMBLY DEPARTMENT
DURING APRIL IS AS FOLLOWS:
Units
Work in process inventory, April 1 (60% complete as to
conversion costs)
Transferred in from molding department

5,000
32,000

Defective at final inspection (within normal limits)

Transferred out to finished goods inventory
Work in process inventory, April 30 (40% complete as
conversion costs)

2,500
28,500
6,000

The number of equivalent units for direct materials in the assembly department for April
calculated on the weighted-average basis is
a. 26,000 units
c. 34,000 units
b. 31,000 units
d. 37,000 units

16. LEA COMPANY ADDS MATERIALS IN THE BEGINNING OF THE PROCESS IN THE FORMING
DEPARTMENT, WHICH IS THE FIRST OF TWO STAGES OF ITS PRODUCTION CYCLE.
INFORMATION CONCERNING THE MATERIALS USED IN THE FORMING DEPARTMENT IN
OCTOBER 2003 IS AS FOLLOWS:
Units
6,000
50,000

Work in process at October 1, 2003

Units started during October
Units completed and transferred to next
Department during October

Materials
Cost
P 3,000
25,000

44,000

Using the weighted-average method, what was the materials cost of work in process at
October 31, 2003?
a. P 3,060
c. P 6,000
b.
5,520
d.
6,120
17. Information concerning Department B of the Loren Company is as follows:
Units
Costs
Beginning work in process
5,000
P 6,300
Units transferred
35,000
58,000
40,000
64,300
Units completed
37,000
Ending work in process
3,000
Costs
Transferred in
Beginning work in
process
Units transferred in

P 2,900
17,500
P 20,400

Materials
P

25,500
P 25,500

Conversion
P 3,400
15,000
P18,400

Total
costs
P 6,300
58,000
P 64,300

Conversion costs were 20% complete as to the beginning work in process and 40%
complete as to the ending work in process. All materials are added at the end of the
process. Loren uses the weighted-average method. The portion of the total cost of
ending work in process attributable to transferred in cost is
a. P 0
c. P 1,530
b. 1,500
d. 1,650
18. Roy Company manufactures product X in a two-stage production cycle in Department A
and B. Materials are added at the beginning of the process in Department B. Roy used
the weighted-average method. Conversion costs for Department B were 50% complete
as to the 6,000 units in the beginning work in process and 75% complete as to the 8,000
units in the ending work in process. 12,000 units were completed and transferred out of
Department B during February 2003. An analysis of the costs relating to work in process
(WIP) and production activity in Department B for February 2003 is as follows:

WIP, February 1: Costs attached

February activity: Costs added

Transferred in
P 12,000
29,000

Cost
Materials
P 2,500
5,500

Conversion
P 1,000
5,000

The total cost per equivalent unit transferred out for February 2003 of product X, rounded
to the nearest centavo, was
a. P 2.75
c. P 2.82
b. 2.78
d. 2.85

19. INFORMATION FOR THE MONTH OF MAY CONCERNING DEPARTMENT A, THE FIRST
STAGE OF LEO CORPORATIONS PRODUCTION CYCLE, IS AS FOLLOWS:

Work in process, beginning

Current costs
Total Costs
Equivalent units based on weighted- average
method
Average unit costs
Goods completed
Work in process, end

Materials
P 4,000
20,000
P24,000

Conversion
Costs
P 3,000
16,000
P 19,000

100,000
95,000
P 0.24
P 0.20
90,000 units
10,000 units

Materials costs are added at the beginning of the process. The ending work in process is
50% complete as to conversion costs. How would the total cost accounted for be
distributed, using the weighted-average method?

a.
b.
c.
d.

Goods
Completed
P 39,600
39,600
13,000
44,000

Work-inprocess, end
P 3,400
4,400
0
3,400

20. The Cutting Department in the first stage of Marlene Companys production cycle.
Conversion costs for this department were 80% complete to the beginning work in
process and 50% complete as to the ending work in process. Information as to
conversion costs in the Cutting Department for January 2003 is as follows:

Work in process at January 1, 2003

Units started and costs incurred during January
Units completed and transferred to next department
during January

Units
25,000
135,000

Conversion
Costs
P 22,000
143,000

100,000

Using the FIFO method, what was the conversion cost of the work in process in the
Cutting Department at January 31, 2003?
a. P 33,000
c. P 39,000
b.
38,100
d.
45,000
21. The Forming Department is the first of a two-stage production process. Spoilage is
identified when the units have completed the Forming process. Costs of spoiled units are
assigned to units completed and transferred to the second department in the period
spoilage is identified. The following information concerns Formings conversion costs in
May 2003.

Beginning work in process (50%) complete

Units started during May
Spoilage-normal
Units completed and transferred
Ending work in process (80% complete)

Units
2,000
8,000
500
7,000
2,500

Conversion
Costs
P 10,000
75,500

Using the weighted-average method, what was Formings conversion cost transferred to
the second production department?
a. P 59,850
c. P 67,500
b.
64,125
d. 71,250
Key Answers:
1. C
2. C
3. A
4. D
5. D
6. D
7. B
8. D
9. D
10. D

11. A
12. B
13. C
14. B
15. B
16. C
17. C: IP, end: 3,000xP.51=P1,530 (P20,400/40,000=P.51)
18. B: UCPD: P12,000+29,000 = P 2.05
20,000
UCTD
M:P2,500+P5,500 =
.40
20,000 EP
CC:P1,000+P5,000 =
.33
18,000EP
P 2.78
19. A: 9,000x(P.24+P.20)=P 39,600
IP, end:
CPD
P 0
CTD (EP)
M: 10,000x P.24
2,400
CC: 5,000x P.20
_1,000
P 3,400
20. C: IP,end: CC: 3,000x P1.30 = P39,000
(P143,000/110,000=P1.30)
21. C: UCTD:
(P10,000+P75,500)
(7,000+(2,500x.8)+(5,000x1)= P 9,000
NL/u: (P9x500)
7,000 completed
= 0.642
P 9,642
__7,000
P 67,500