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Quiz – Chapter 4 - Solutions
- Salter Company uses the FIFO method in its process costing system. The company reported 25,000 equivalent units for materials last month. The company's beginning work in process inventory consisted of 6,000 units, 40% complete with respect to materials. The ending work in process inventory consisted of 4,000 units, 70% complete with respect to materials. The number of units started during the month was: A) 25,400 units. B) 23,400 units. C) 22,600 units. D) 24,600 units.
% Direct Materials Beginning Inv. 6,000 60% 3, Started & Comp.? 100%? Ending Inv. 4,000 70% 2, 25,
C is correct. You can calculate the equivalent units for Started & Completed 18,600 (25000 – 3600 – 2800) The equivalent units are the same as the actual units.
The units started are the Ending Inventory (4,000) plus the Started & Completed units (18,600) This is 22,600 units.
- The following data were taken from the accounting records of Abacus Company, which uses the FIFO method in its process costing system:
Beginning work in process inventory: 20,000 units (materials 100% complete, labor and overhead 60% complete) Started in process during the period: 80,000 units Ending work in process inventory: 30,000 units (materials 100% complete, labor and overhead 70% complete)
The equivalent units are: A) Material, 90,000 units; labor and overhead, 89,000 units. B) Material, 100,000 units; labor and overhead, 91,000 units. C) Material, 60,000 units; labor and overhead, 53,000 units. D) Material, 80,000 units; labor and overhead, 79,000 units.
D is correct. You need to figure out that there are 50,000 Started & Completed units (80,000 – 30,000).
% Direct Materials Conversion Beginning Inv. 20,000 0%/40% 0 8, Started & Comp. 50,000 100% 50,000 50, Ending Inv. 30,000 100%/70% 30,000 21, 80,000 79,
- Tabet Corporation uses the FIFO method in its process costing system. Operating data for the Curing Department for the month of March appear below:
Percent Units Complete Beginning work in process inventory ...... 5,700 70% Transferred in from the prior department during March ........................................ 57, Completed and transferred to the next department during March ..................... 58, Ending work in process inventory ........... 4,000 90%
According to the company's records, the conversion cost in beginning work in process inventory was $20,349 at the beginning of March. The cost per equivalent unit for conversion costs for March was $5.00.
- What are the equivalent units for materials for the month in the first processing department? A) 750 B) 5, C) 4, D) 5,
D is correct. You need to calculate that the Started & Completed units are 3,700 (4,400 – 700).
% Direct Materials Conversion Beginning Inv. 700 100% 700 700 Started & Comp. 3,700 100% 3,700 3, Ending Inv. 1,500 50%/30% 750 450 5,150 4,
- What are the equivalent units for conversion costs for the month in the first processing department? A) 5, B) 4, C) 4, D) 450
C is correct. See above table.
- The cost per equivalent unit for materials for the month in the first processing department is closest to: A) $16. B) $15. C) $17. D) $19.
D is correct. The numerator for Direct Materials is this month’s Direct Material costs ($90,300)
- the Direct Material cost in the Beginning Inventory from last month. ($8,000).
Divide the numerator by the equivalent units:
$98,300/5150 = 19.
- The cost per equivalent unit for conversion costs for the first department for the month is closest to: A) $28. B) $22. C) $27. D) $25.
C is correct. The numerator for Conversion Costs is this month’s Conversion costs ($125,600)
- the Conversion cost in the Beginning Inventory from last month. ($7,800).
Divide the numerator by the equivalent units:
$133,400/4850 = 27.
- The cost per equivalent whole unit for the month in the first processing department is closest to: A) $39. B) $46. C) $49. D) $52.
B is correct. The cost of one equivalent unit is the cost per equivalent unit for Direct Material plus the cost per equivalent unit for Conversion Costs
19.08738 + 27.50515 = 46.
- The total cost transferred from the first processing department to the next processing department during the month is closest to: A) $231, B) $274, C) $205, D) $215,
C is correct.
Calculation Cost Beginning Inv. 700 (19.08738 + 27.50515) $ 32,614. Started & Comp. 3,700 x (19.08738 + 27.50515) 172,392. $205,007.
Answer Key -- Quiz Chapter 6
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