CH 06

CHAPTER 6
PROCESS COSTING
MULTIPLE CHOICE
1.
Which cost accumulation procedure is most applicable in continuous mass-production

manufacturing environments?
a.
b.
c.
d.
standard
actual
process
job order
ANSWER:
2.
engage in road and bridge construction.

produce sailboats made to customer specifications.
produce bricks for sale to the public.
construct houses according to customer plans.
ANSWER:
EASY
A producer of ________ would not use a process costing system.

a.
b.
c.
d.
gasoline
potato chips
blank videotapes
stained glass windows
ANSWER:
4.
EASY
Process costing is used in companies that

a.
b.
c.
d.
3.
EASY
A process costing system is used by a company that

a.
b.
c.
d.
produces heterogeneous products.

produces items by special request of customers.
produces homogeneous products.
accumulates costs by job.
ANSWER:
EASY
61
62
5.
Chapter 6
Which is the best cost accumulation procedure to use for continuous mass production of
like units?
a.
b.
c.
d.
actual
standard
job order
process
ANSWER:
6.
d.
EASY
units completed by a production department in the period.

number of units worked on during the period by a production department.
number of whole units that could have been completed if all work of the period
had been used to produce whole units.
identifiable units existing at the end of the period in a production department.
ANSWER:
MEDIUM
In a process costing system using the weighted average method, cost per equivalent unit
for a given cost component is found by dividing which of the following by EUP?
a.
b.
c.
d.
only current period cost

current period cost plus the cost of beginning inventory
current period cost less the cost of beginning inventory
current period cost plus the cost of ending inventory
ANSWER:
8.
Equivalent units of production are equal to the

a.
b.
c.
7.
Process Costing
EASY
The weighted average method is thought by some accountants to be inferior to the FIFO
method because it
a.
b.
c.
d.
is more difficult to apply.

only considers the last units worked on.
ignores work performed in subsequent periods.
commingles costs of two periods.
ANSWER:
MEDIUM
Chapter 6
9.
Process Costing
The first step in determining the cost per EUP per cost component under the weighted
average method is to
a.
b.
c.
d.
add the beginning Work in Process Inventory cost to the current periods
production cost.
divide the current periods production cost by the equivalent units.
subtract the beginning Work in Process Inventory cost from the current periods
production cost.
divide the current periods production cost into the EUP.
ANSWER:
10.
MEDIUM
started and completed during the period.

residing in beginning Work in Process Inventory.
residing in ending Work in Process Inventory.
uncompleted in Work in Process Inventory.
ANSWER:
MEDIUM
EUP calculations for standard process costing are the same as

a.
b.
c.
d.
the EUP calculations for weighted average process costing.

the EUP calculations for FIFO process costing.
LIFO inventory costing for merchandise.
the EUP calculations for LIFO process costing.
ANSWER:
12.
The difference between EUP calculated using FIFO and EUP calculated using weighted
average is the equivalent units
a.
b.
c.
d.
11.
63
MEDIUM
In a FIFO process costing system, which of the following are assumed to be completed
first in the current period?
a.
b.
c.
d.
units started this period

units started last period
units transferred out
units still in process
ANSWER:
EASY
64
13.
Chapter 6
To compute equivalent units of production using the FIFO method of process costing,
work for the current period must be stated in units
a.
b.
c.
d.
completed during the period and units in ending inventory.

completed from beginning inventory, units started and completed during the
period, and units partially completed in ending inventory.
started during the period and units transferred out during the period.
processed during the period and units completed during the period.
ANSWER:
14.
MEDIUM
the goods produced are homogeneous.

there is no beginning Work in Process Inventory.
there is no ending Work in Process Inventory.
beginning and ending Work in Process Inventories are each 50 percent complete.
ANSWER:
EASY
The primary difference between the FIFO and weighted average methods of process
costing is
a.
b.
c.
d.
in the treatment of beginning Work in Process Inventory.

in the treatment of current period production costs.
in the treatment of spoiled units.
none of the above.
ANSWER:
16.
The FIFO method of process costing will produce the same cost of goods transferred out
amount as the weighted average method when
a.
b.
c.
d.
15.
Process Costing
EASY
Material is added at the beginning of a process in a process costing system. The beginning
Work in Process Inventory for the process was 30 percent complete as to conversion
costs. Using the FIFO method of costing, the number of equivalent units of material for
the process during this period is equal to the
a.
b.
c.
d.
beginning inventory this period for the process.

units started this period in the process.
units started this period in the process plus the beginning Work in Process
Inventory.
units started and completed this period plus the units in ending Work in Process
Inventory.
ANSWER:
MEDIUM
Chapter 6
17.
Process Costing
In a cost of production report using process costing, transferred-in costs are similar to the
a.
b.
c.
d.
cost of material added at the beginning of production.

conversion cost added during the period.
cost transferred out to the next department.
cost included in beginning inventory.
ANSWER:
18.
EASY
debit Work in Process Inventory #2, credit Finished Goods Inventory.

debit Finished Goods Inventory, credit Work in Process Inventory #1.
debit Finished Goods Inventory, credit Work in Process Inventory #2.
debit Cost of Goods Sold, credit Work in Process Inventory #2.
ANSWER:
EASY
Transferred-in cost represents the cost from

a.
b.
c.
d.
the last department only.

the last production cycle.
all prior departments.
the current period only.
ANSWER:
20.
In a process costing system, the journal entry to record the transfer of goods from
Department #2 to Finished Goods Inventory is a
a.
b.
c.
d.
19.
65
EASY
Which of the following is(are) the same between the weighted average and FIFO methods
of calculating EUPs?
a.
b.
c.
d.
Units to
account for
no
yes
yes
yes
ANSWER:
EUP
calculations
yes
yes
no
no
EASY
Total cost to
account for
no
yes
no
yes
66
Chapter 6
21.
Process costing techniques should be used in assigning costs to products

a.
b.
c.
d.
if a product is manufactured on the basis of each order received.

when production is only partially completed during the accounting period.
if a product is composed of mass-produced homogeneous units.
whenever standard-costing techniques should not be used.
ANSWER:
22.
EASY
strict FIFO.
modified FIFO.
weighted average costing.
normal costing.
ANSWER:
MEDIUM
A process costing system

a.
b.
c.
d.
cannot use standard costs.

restates Work in Process Inventory in terms of completed units.
accumulates costs by job rather than by department.
assigns direct labor and manufacturing overhead costs separately to units of
production.
ANSWER:
24.
Averaging the total cost of completed beginning inventory and units started and completed
over all units transferred out is known as
a.
b.
c.
d.
23.
Process Costing
EASY
A process costing system does which of the following?

a.
b.
c.
d.
Calculates EUPs
no
no
yes
yes
ANSWER:
EASY
Assigns costs to inventories

no
yes
yes
no
Chapter 6
25.
Process Costing
A process costing system
a.
b.
c.
d.
Calculates average cost

per whole unit
yes
no
yes
no
ANSWER:
26.
EASY
job order and standard costing systems.

job order and process costing systems.
process and standard costing systems.
job order and normal costing systems.
ANSWER:
EASY
When standard costs are used in process costing,

a.
b.
c.
d.
variances can be measured during the production period.

total costs rather than current production and current costs are used.
process costing calculations are made simpler.
the weighted average method of calculating EUPs makes computing transferredout costs easier.
ANSWER:
28.
Determines total units to

account for
yes
no
no
yes
A hybrid costing system combines characteristics of

a.
b.
c.
d.
27.
67
MEDIUM
Short Company transferred 5,500 units to Finished Goods Inventory during June. On June
1, the company had 300 units on hand (40 percent complete as to both material and
conversion costs). On June 30, the company had 800 units (10 percent complete as to
material and 20 percent complete as to conversion costs). The number of units started and
completed during June was
a.
b.
c.
d.
5,200.
5,380.
5,500.
6,300.
ANSWER:
EASY
68
29.
Chapter 6
Brown Co. started 9,000 units in October. The company transferred out 7,000 finished
units and ended the period with 3,500 units that were 40 percent complete as to both
material and conversion costs. Beginning Work in Process Inventory units were
a.
b.
c.
d.
500.
600.
1,500.
2,000.
ANSWER:
30.
EASY
X Co. had beginning Work in Process Inventory of 5,000 units that were 40 percent
complete as to conversion costs. X started and completed 42,000 units this period and had
ending Work in Process Inventory of 12,000 units. How many units were started this
period?
a.
b.
c.
d.
54,000
59,000
42,000
47,000
ANSWER:
31.
Process Costing
MEDIUM
Winn Co. uses a weighted average process costing system. Material is added at the start of
production. Winn Co. started 13,000 units into production and had 4,500 units in process
at the start of the period that were 60 percent complete as to conversion costs. If Winn
transferred out 11,750 units, how many units were in ending Work in Process Inventory?
a.
b.
c.
d.
1,250
3,500
5,750
3,000
ANSWER:
EASY
Chapter 6
32.
Process Costing
Murphy Co. uses a weighted average process costing system and started 30,000 units this
month. Murphy had 12,000 units that were 20 percent complete as to conversion costs in
beginning Work in Process Inventory and 3,000 units that were 40 percent complete as to
conversion costs in ending Work in Process Inventory. What are equivalent units for
conversion costs?
a.
b.
c.
d.
37,800
42,000
40,200
40,800
ANSWER:
33.
EASY
Kim Co. makes small metal containers. The company began December with 250
containers in process that were 30 percent complete as to material and 40 percent
complete as to conversion costs. During the month, 5,000 containers were started. At
month end, 1,700 containers were still in process (45 percent complete as to material and
80 percent complete as to conversion costs). Using the weighted average method, what
are the equivalent units for conversion costs?
a.
b.
c.
d.
4,610
4,910
3,450
4,560
ANSWER:
34.
69
MEDIUM
Zammillo Co. uses a FIFO process costing system. The company had 5,000 units that
were 60 percent complete as to conversion costs at the beginning of the month. The
company started 22,000 units this period and had 7,000 units in ending Work in Process
Inventory that were 35 percent complete as to conversion costs. What are equivalent units
for material, if material is added at the beginning of the process?
a.
b.
c.
d.
18,000
22,000
25,000
27,000
ANSWER:
EASY
610
35.
Chapter 6
Process Costing
Lisa Co. makes fabric-covered hatboxes. The company began August with 500 boxes in
process that were 100 percent complete as to cardboard, 80 percent complete as to cloth,
and 60 percent complete as to conversion costs. During the month, 3,300 boxes were
started. On August 31, 350 boxes were in process (100 percent complete as to cardboard,
70 percent complete as to cloth, and 55 percent complete as to conversion costs). Using
the FIFO method, what are equivalent units for cloth?
a.
b.
c.
d.
3,450
3,295
3,395
3,595
ANSWER:
MEDIUM
Use the following information for questions 3638.

Forte Co. has the following information for May:
Beginning Work in Process Inventory
(70% complete as to conversion)
Started
Ending Work in Process Inventory
6,000 units
24,000 units
8,500 units
Beginning WIP Inventory Costs:

Material
$23,400
Conversion
50,607
Current Period Costs:
Material
Conversion
$31,500
76,956
All material is added at the start of the process and all finished products are transferred out.
36.
How many units were transferred out in May?

a.
b.
c.
d.
15,500
18,000
21,500
24,000
ANSWER:
EASY
Chapter 6
37.
Process Costing
Assume that weighted average process costing is used. What is the cost per equivalent unit
for material?
a.
b.
c.
d.
$1.83
$1.05
$0.55
$1.31
ANSWER:
38.
611
MEDIUM
Assume that FIFO process costing is used. What is the cost per equivalent unit for
conversion?
a.
b.
c.
d.
$7.03
$3.44
$4.24
$5.71
ANSWER:
MEDIUM
612
Chapter 6
Process Costing

The December 25th Co. makes wreaths in two departments: Forming and Decorating. Forming
began the month with 500 wreaths in process that were 100 percent complete as to material and
40 percent complete as to conversion. During the month, 6,500 wreaths were started. At month
end, Forming had 2,100 wreaths that were still in process that were 100 percent complete as to
material and 50 percent complete as to conversion. Assume Forming uses the weighted average
method of process costing. Costs in the Forming Department are as follows:
Beginning Work in Process Costs:
Material
$1,000
Conversion
1,500
Current Costs:
Material
$3,200
Conversion
5,045
The Decorating Department had 600 wreaths in process at the beginning of the month that were
80 percent complete as to material and 90 percent complete as to conversion. The department had
300 units in ending Work in Process that were 50 percent complete as to material and 75 percent
complete as to conversion. Decorating uses the FIFO method of process costing, and costs
associated with Decorating are:
Beginning WIP Inventory:
Transferred In
$1,170
Material
4,320
Conversion
6,210
Current Period:
Transferred In
?
Material
$67,745
Conversion
95,820
39.
How many units were transferred to Decorating during the month?

a.
b.
c.
d.
7,000
600
4,900
5,950
ANSWER:
EASY
Chapter 6
40.
Process Costing
What was the cost transferred out of Forming during the month?
a.
b.
c.
d.
$6,419
$5,341
$8,330
$8,245
ANSWER:
41.
MEDIUM
7,700
8,000
8,600
7,400
ANSWER:
DIFFICULT
Disregard your answer to question 39. Assume 8,000 units were transferred to
Decorating. Compute the number of equivalent units in Decorating for material.
a.
b.
c.
d.
8,000
8,450
8,330
7,970
ANSWER:
43.
Decorating. Compute the number of equivalent units as to costs in Decorating for the
transferred-in cost component.
a.
b.
c.
d.
42.
613
MEDIUM
Decorating. Compute the number of equivalent units in Decorating for conversion.
a.
b.
c.
d.
7,985
8,465
8,360
7,925
ANSWER:
MEDIUM
614
44.
Chapter 6
Disregard your answer to question 40. Assume that 8,000 units were transferred to
Decorating at a total cost of $16,000. What is the material cost per equivalent unit in
Decorating?
a.
b.
c.
d.
$8.80
$8.65
$8.50
$9.04
ANSWER:
45.
MEDIUM
Disregard your answer to question 40. Assume that 8,000 units were transferred to
Decorating at a total cost of $16,000. What is the conversion cost per equivalent unit in
Decorating?
a.
b.
c.
d.
$12.00
$12.78
$11.32
$11.46
ANSWER:
46.
Process Costing
MEDIUM
Assume the material cost per EUP is $8.00 and the conversion cost per EUP is $15 in
Decorating. What is the cost of completing the units in beginning inventory?
a.
b.
c.
d.
$11,940
$960
$1,380
$1,860
ANSWER:
MEDIUM
Chapter 6
Process Costing
615

BCW Co. adds material at the start to its production process and has the following information
available for November:
Started this period
Transferred out
47.
29,500
39,000
36,500
34,500
ANSWER:
MEDIUM
Calculate equivalent units of production for material using FIFO.

a.
b.
c.
d.
36,800
32,000
39,000
37,125
ANSWER:
49.
2,500 units
?
Compute the number of units started and completed in November.

a.
b.
c.
d.
48.
7,000 units
32,000 units
EASY
Calculate equivalent units of production for conversion using FIFO.

a.
b.
c.
d.
34,325
30,125
37,125
39,000
ANSWER:
MEDIUM
616
50.
Chapter 6
Calculate equivalent units of production for material using weighted average.

a.
b.
c.
d.
34,325
32,000
37,125
39,000
ANSWER:
51.
Process Costing
EASY
Calculate equivalent units of production for conversion using weighted average.

a.
b.
c.
d.
39,925
37,125
34,325
38,375
ANSWER:
MEDIUM

Storey Co. adds material at the start of production. February information for the company
follows:
Started this period
10,000 units
120,000 units
8,200 units
Beginning Work in Process Inventory Costs:

Material
$24,500
Conversion
68,905
Material
Conversion
52.
$ 75,600
130,053
How many units must be accounted for?

a.
b.
c.
d.
128,200
138,200
130,000
118,200
ANSWER:
EASY
Chapter 6
53.
Process Costing
What is the total cost to account for?

a.
b.
c.
d.
$205,653
$299,058
$ 93,405
$274,558
ANSWER:
54.
EASY
What are the equivalent units for material using the weighted average method?
a.
b.
c.
d.
120,000
128,360
130,000
123,860
ANSWER:
EASY
What are the equivalent units for material using the FIFO method?
a.
b.
c.
d.
130,000
125,500
111,800
120,000
ANSWER:
57.
EASY
120,000
111,800
121,800
130,000
ANSWER:
56.
How many units were started and completed in the period?

a.
b.
c.
d.
55.
617
EASY
What are the equivalent units for conversion using the weighted average method?
a.
b.
c.
d.
128,360
123,440
130,000
120,000
ANSWER:
MEDIUM
618
58.
Chapter 6
What are the equivalent units for conversion using the FIFO method?
a.
b.
c.
d.
128,360
123,860
118,360
122,860
ANSWER:
59.
MEDIUM
What is the conversion cost per equivalent unit using the weighted average method?
a.
b.
c.
d.
$1.61
$1.55
$1.05
$1.01
ANSWER:
MEDIUM
What is the cost of units completed using the weighted average?

a.
b.
c.
d.
$266,742
$282,576
$278,400
$237,510
ANSWER:
62.
MEDIUM
$.58
$.62
$.77
$.82
ANSWER:
61.
What is the material cost per equivalent unit using the weighted average method?
a.
b.
c.
d.
60.
Process Costing
DIFFICULT
What is the conversion cost per equivalent unit using the FIFO method?
a.
b.
c.
d.
$1.05
$.95
$1.61
$1.55
ANSWER:
MEDIUM
Chapter 6
63.
Process Costing
619
What is the cost of all units transferred out using the FIFO method?
a.
b.
c.
d.
$204,624
$191,289
$287,004
$298,029
ANSWER:
DIFFICULT
Use the following information relating to I M Cute Co. for questions 6473.
Beginning inventory (30% complete as to Material B
and 60% complete for conversion)
Started this cycle
Ending inventory (50% complete as to Material B
and 80% complete for conversion)
700 units
2,000 units
500 units
Beginning inventory costs:

Material A
$14,270
Material B
5,950
Conversion
5,640
Current Period costs:
Material A
Material B
Conversion
$40,000
70,000
98,100
Material A is added at the start of production, while Material B is added uniformly throughout the
process.
64.
Assuming a weighted average method of process costing, compute EUP units for
Materials A and B.
a.
b.
c.
d.
2,700 and 2,280, respectively

ANSWER:
EASY
620
65.
Chapter 6
Assuming a FIFO method of process costing, compute EUP units for Materials A and B.
a.
b.
c.
d.

ANSWER:
66.
MEDIUM
2,600
2,180
2,000
2,700
ANSWER:
MEDIUM
Assuming a FIFO method of process costing, compute EUP for conversion.

a.
b.
c.
d.
2,240
2,180
2,280
2,700
ANSWER:
68.
Assuming a weighted average method of process costing, compute EUP for conversion.
a.
b.
c.
d.
67.
Process Costing
MEDIUM
Assuming a weighted average method of process costing, compute the average cost per
unit for Material A.
a.
b.
c.
d.
$20.10
$20.00
$31.25
$31.00
ANSWER:
MEDIUM
Chapter 6
69.
Process Costing
Assuming a FIFO method of process costing, compute the average cost per EUP for
Material A.
a.
b.
c.
d.
$31.25
$20.10
$20.00
$31.00
ANSWER:
70.
MEDIUM
$20.10
$31.25
$20.00
$31.00
ANSWER:
MEDIUM
EUP for Material B.
a.
b.
c.
d.
$20.00
$31.25
$20.10
$31.00
ANSWER:
72.
Material B.
a.
b.
c.
d.
71.
621
MEDIUM
conversion.
a.
b.
c.
d.
$45.50
$45.00
$43.03
$47.59
ANSWER:
MEDIUM
622
73.
Chapter 6
Process Costing
EUP for conversion.
a.
b.
c.
d.
$39.90
$45.00
$43.03
$47.59
ANSWER:
DIFFICULT
THE FOLLOWING MULTIPLE CHOICE RELATES TO MATERIAL COVERED IN

THE APPENDIX OF THE CHAPTER.
74.
Which of the following is subtracted from weighted average EUP to derive FIFO EUP?
a.
b.
c.
d.
beginning WIP EUP completed in current period

beginning WIP EUP produced in prior period
ending WIP EUP not completed
ending WIP EUP completed
ANSWER:
EASY
SHORT ANSWER/PROBLEMS
1.
Discuss the assignment of costs to transferred-out inventories in both process costing

methods.
ANSWER:
The assignment of costs in a process costing system first involves
determining total production costs. These costs are then assigned to units completed and
transferred out during the period and to the units in Work in Process Inventory at the end
of the period. To assign costs, the cost per equivalent unit must be established using either
the FIFO or weighted average method. The cost per EUP is then multiplied by the number
of equivalent units in the component being costed. Transferred-out costs using the
weighted average method are computed as the number of units transferred times the total
price per equivalent unit. When using FIFO, transferred-out units are computed as
follows: the costs in beginning WIP are added to the current period costs to complete the
units which sums to the total cost of beginning WIP; the units started and completed are
priced at current period costs; the total of the costs of beginning inventory and units
started and completed are then transferred out.
MEDIUM
Chapter 6
2.
Process Costing
623
Discuss process costing in a multidepartment atmosphere.

ANSWER:
When a business has more than one department in its production process,
products are transferred from Department A to Department B and so on. As the products
are transferred from department to department so, too, must the costs be transferred.
When products are transferred, the units and costs are treated as input material in the next
department. The new department may add additional material or may simply add
conversion costs and finish the products. The total cost of the products is a cumulative
total from all departments within the process.
MEDIUM
3.
Discuss standard costing as used in conjunction with process costing.

ANSWER:
When standard costing is used in conjunction with process costing, the
costing procedure is simplified. Standard costing eliminates the calculation in each new
period of a new production cost because the standards are established as on going norms
for (at least) a one-year period of time. Standard costing in a process costing system is
essentially a FIFO system that permits variances to be recognized during the period.
MEDIUM
4.
What are two alternative calculations that can be used to either check an equivalent units
answer or to obtain the answer initially?
ANSWER:
One alternative method of calculating equivalent units for weighted average
is to determine units transferred out and add to that the equivalent units of ending work in
process. Another alternative method of calculating equivalent units for FIFO is to
determine equivalent units of production under weighted average and subtract the
beginning work in process equivalent units that were completed in the last period. Both of
these methods may be used to check original answers.
MEDIUM
624
Chapter 6
Process Costing

VanBuren Co. has the following information available for November:
Started
10,000 units
120,000 units
30,000 units
Beginning Work in Process Inventory Costs:

Material
$2,100
Conversion
2,030
Material
Conversion
$ 33,000
109,695
All material is added at the start of production and all products completed are transferred out.
Chapter 6
5.
Process Costing
625
Prepare an equivalent units schedule using the (a) FIFO and (b) weighted average method.
ANSWER:
VanBuren Company
Schedule of Equivalent Units for
Fifo and Weighted Average
November 30, 20XX
Beg. WIP
Started
To Acct. For
FIFO
10,000
120,000
130,000
Beg. WIP
S&C
End. WIP
Acct. For
10,000
90,000
30,000
130,000
(a)
BWIP
S&C
EWIP
EUP
FIFO
Mat.
0
90,000
30,000
120,000
CC
7,500
90,000
9,000
106,500
Beg. WIP
Started
To Acct. For
Weighted Average
10,000
120,000
130,000
TO
EI
Acct. for
100,000
30,000
130,000
(b) Weighted Average

Mat.
CC
TO
EI
EUP
100,000
30,000
130,000
100,000
9,000
109,000
MEDIUM
6.
Prepare a schedule showing the computation for cost per equivalent unit assuming the
(a) FIFO and (b) weighted average method.
ANSWER:
VanBuren Company
Schedule of Average Cost Per Unit
FIFO and Weighted Average
November 30, 20XX
(a) FIFO
Mat.
CC
$ 33,000
$ 109,695
120,000
106,500
$
.275
$
1.03
$1.305
MEDIUM

Mat.
CC
$ 35,100
$111,725
130,000
109,000
$
.27
$ 1.025
$1.295
626
7.
Chapter 6
Process Costing
Prepare a schedule showing the assignment of costs assuming the (a) FIFO and (b)
weighted average method.
ANSWER:
VanBuren Company
Schedule of Assigned Costs
FIFO and Weighted Average
November 30, 20XX
(a) FIFO
Beginning Work in Process
To complete (7,500 $1.03) =
Started and Completed
90,000 $1.305 =
Total costs transferred out
Ending Work in Process
30,000 $ .275 =
9,000 $1.03 =
$ 4,130
7,725
$11,855
117,450
$129,305
Total costs accounted for
8,250
9,270
$ 17,520
$146,825

Completed
100,000 $1.295 =
$129,500
Ending Work in Process

30,000 $ .27 =
9,000 $1.025 =
Total costs accounted for
DIFFICULT
8,100
9,225
$ 17,325
$146,825
Chapter 6
8.
Process Costing
627
The Valentines Day Company has two processing departments, Cooking and Packaging.
Ingredients are placed into production at the beginning of the process in Cooking, where
they are formed into various shapes. When finished, they are transferred into Packaging,
where the candy is placed into heart and tuxedo boxes and covered with foil. All material
added in Packaging is considered as one material for convenience. Since the boxes contain
a variety of candies, they are considered partially complete until filled with the appropriate
assortment. The following information relates to the two departments for February 2001:
Cooking Department:
Beginning WIP (30% complete as to conversion)
Units started this period
Ending WIP (60% complete as to conversion)
Packaging Department:
Beginning WIP (90% complete as to material,
80% complete as to conversion)
Units started during period
Ending WIP (80% complete as to material
and 80% complete as to conversion)
a.
b.
4,500 units
15,000 units
2,400 units
1,000 units
?
500 units
Determine equivalent units of production for both departments using the weighted
average method.
Determine equivalent units of production for both departments using the FIFO
method.
628
Chapter 6
ANSWER:
a.
Cooking Department
Mat.
17,100
2,400
19,500
CC
17,100
1,440
18,540
Packaging Department
T. In
Trans. Out
17,600
EWIP
500
TOTAL EUP
18,100
Mat.
17,600
400
18,000
Trans. Out
EWIP
TOTAL EUP
b.
CC
17,600
400
18,000
Cooking Department
Mat.
0
12,600
2,400
15,000
CC
3,150
12,600
1,440
17,190
Packaging Department
T. In
BWIP
0
S&C
16,600
EWIP
500
TOTAL EUP
17,100
Mat.
100
16,600
400
17,100
BWIP
S&C
EWIP
TOTAL EUP
DIFFICULT
CC
200
16,600
400
17,200
Process Costing
Chapter 6
9.
Process Costing
629
The following costs were accumulated by Department 2 of H Company during July:

Cost Transferred
from Dept. 1
Beginning Inventory
$ 17,050
Material
CC
$
Total
5,450 $
$ 34,000
$ 34,000
104,000
$ 109,450
22,500
Current Period Cost
184,000
$ 201,050
322,000
$
344,500
Production for July in Department 2 (in units):
WIPJuly 1
Complete period transferred
WIPJuly 31
2,000 60% complete

20,000
5,000 40% complete
Materials are not added in Department 2 until the very end of processing Department 2.
Required: Compute the cost of units completed and the value of ending WIP for:
a.
Average inventory assumption
b.
FIFO inventory assumption
630
Chapter 6
Process Costing
ANSWER:
a.
Average inventory assumption

Complete
EqEnd WIP
EPWA
Dept 1
20,000
5,000
25,000
MAT
20,000
0
20,000
Unit
Cost
$201,050 = $8.042 $34,000 = $1.70

25,000
20,000
End WIP
Dept 1 = 5,000 $8.042

CC = 2,000 units $4.975
CC
20,000
2,000
22,000
$109,450 = $4.975
22,000
= $14.717
= $40,210
= 9,950
$50,160
COGM = $344,500 $50,160 = $294,340

b.
FIFO inventory assumption

Complete
Eq-End WIP
Eq-Begin
EP-WA
Unit
Cost
End WIP
Dept 1
20,000
5,000
(2,000)
23,000
$184,000 = $8.00
23,000
MAT
20,000
0
0
20,000
$34,000 = $1.70
20,000
Dept 1 = 5,000 units $8.00

CC = 2,000 units $5.00
COGM = $344,500 $50,000 = $294,500

MEDIUM
CC
20,000
2,000
(1,200 )
20,800
$104,000 = $5.00
20,800
= $40,000
= 10,000
$50,000
= $14.70

CH 06

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CH 06

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CHAPTER 6

Which cost accumulation procedure is most applicable in continuous mass-production

engage in road and bridge construction.

A producer of ________ would not use a process costing system.

Process costing is used in companies that

A process costing system is used by a company that

produces heterogeneous products.

units completed by a production department in the period.

only current period cost

Equivalent units of production are equal to the

is more difficult to apply.

started and completed during the period.

EUP calculations for standard process costing are the same as

the EUP calculations for weighted average process costing.

units started this period

completed during the period and units in ending inventory.

the goods produced are homogeneous.

in the treatment of beginning Work in Process Inventory.

beginning inventory this period for the process.

cost of material added at the beginning of production.

debit Work in Process Inventory #2, credit Finished Goods Inventory.

Transferred-in cost represents the cost from

the last department only.

Process costing techniques should be used in assigning costs to products

if a product is manufactured on the basis of each order received.

A process costing system

cannot use standard costs.

A process costing system does which of the following?

Assigns costs to inventories

A process costing system

Calculates average cost

job order and standard costing systems.

When standard costs are used in process costing,

variances can be measured during the production period.

Determines total units to

A hybrid costing system combines characteristics of

Use the following information for questions 3638.

Beginning WIP Inventory Costs:

How many units were transferred out in May?

Use the following information for questions 3946.

How many units were transferred to Decorating during the month?

Use the following information for questions 4751.

Calculate equivalent units of production for material using FIFO.

Compute the number of units started and completed in November.

Calculate equivalent units of production for conversion using FIFO.

Calculate equivalent units of production for material using weighted average.

Calculate equivalent units of production for conversion using weighted average.

Use the following information for questions 5263.

Beginning Work in Process Inventory Costs:

How many units must be accounted for?

What is the total cost to account for?

How many units were started and completed in the period?

What is the cost of units completed using the weighted average?

Beginning inventory costs:

2,700 and 2,280, respectively

2,700 and 2,280, respectively

Assuming a FIFO method of process costing, compute EUP for conversion.

THE FOLLOWING MULTIPLE CHOICE RELATES TO MATERIAL COVERED IN

beginning WIP EUP completed in current period

Discuss the assignment of costs to transferred-out inventories in both process costing

Discuss process costing in a multidepartment atmosphere.

Discuss standard costing as used in conjunction with process costing.

Use the following information for questions 57.