Chapter 3 Review
1.Which of the following manufacturing cost elements occurs in a process cost system?
a. Direct materials.
b. Direct labor.
c. Manufacturing overhead.
d. All of these.
2.
Price Company assigns overhead based on machine hours. The Milling Department logs 2,400 machine
hours and Cutting Department shows 4,000 machine hours for the period. If the overhead rate is $5 per
machine hour, the entry to assign overhead will show a
a. debit to Manufacturing Overhead for $32,000.
b. credit to Work in Process—Cutting Department for $20,000.
c. debit to Work in Process for $20,000.
d. credit to Manufacturing Overhead for $32,000.
3.Minor Company had the following department data:
Work in process, July 1
Completed and transferred out
Work in process, July 31
Physical Units
30,000
165,000
45,000
Materials are added at the beginning of the process. What is the total number of equivalent units for
materials in July?
a. 165,000.
b. 180,000.
c. 240,000.
d. 210,000.
4.Gantner Company had the following department information about physical units and percentage of
completion:
Physical Units
Work in process, May 1 (60%)
60,000
Completed and transferred out
180,000
Work in process, May 31 (40%)
50,000
If materials are added at the beginning of the production process, what is the total number of equivalent
units for materials during May?
a. 240,000.
b. 230,000.
c. 224,000.
d. 200,000.
5.Barnes and Miller Manufacturing is trying to determine the equivalent units for conversion costs with 10,000
units of ending work in process at 80% completion and 32,000 physical units. There are no beginning
units in the department. Conversion costs occur evenly throughout the entire production period. What
are the equivalent units for conversion costs for the current period?
a. 42,000.
b. 40,000.
c. 8,000.
d. 30,000.
6.The Molding Department of Kennett Company has the following production data: beginning work in process
25,000 units (60% complete), started into production 475,000 units, completed and transferred out
450,000 units, and ending work in process 50,000 units (40% complete). Assuming conversion costs
are incurred uniformly during the process, the equivalent units for conversion costs are:
a. 500,000.
b. 455,000.
c. 470,000.
d. 450,000.
7.A process cost system would be used for all of the following products except
a. chemicals.
b. computer chips.
c. motion pictures.
d. soft drinks.
8.Crawford Company has the following equivalent units for July: materials 20,000 and conversion costs
18,000. Production cost data are:
Work in process, July 1
Costs added in July
Materials
$ 6,400
50,400
Conversion
$ 3,000
42,000
The unit production costs for July are:
Materials
Conversion Costs
a.
$2.52
$2.50
b.
2.84
2.33
c.
2.52
2.33
d.
2.84
2.50
9.Materials costs of $600,000 and conversion costs of $642,600 were charged to a processing department in
the month of September. Materials are added at the beginning of the process, while conversion costs
are incurred uniformly throughout the process. There were no units in beginning work in process,
100,000 units were started into production in September, and there were 8,000 units in ending work in
process that were 40% complete at the end of September.
What was the total amount of manufacturing costs assigned to those units that were completed and
transferred out of the process in September?
a. $552,000.
b. $1,173,000.
c. $1,242,600.
d. $1,275,600.
10.The Assembly Department shows the following information:
Beginning Work in Process
Ending Work in Process
Units Transferred Out
Units
20,000
65,000
31,000
How many total units are to be accounted for by the Assembly Department?
a. 96,000.
b. 65,000.
c. 85,000.
d. 76,000.
11.Conversion cost per unit equals $6. Total materials cost equal $90,000. Equivalent units for materials are
10,000. How much is the total manufacturing cost per unit?
a. $15.
b. $6.
c. $12.
d. $9.
BE 1 (step 2)
Lowman Painting Company has the following production data for March:



Beginning work in process, 2,000 units
Units transferred out, 42,000
Units in ending work in process, 15,000, which are 80% complete for conversion costs
Materials are added only at the beginning of the process.
Instructions
Compute equivalent units of production for both materials and conversion costs.
Equivalent Units
QUANTITIES
Physical Units
Materials
Conversion Costs
Units to be accounted for
Work in process, March 1
Started into production
Total units
2,000
55,000
57,000
Units accounted for
Transferred out
Work in process, March 31
Total units
42,000
15,000
57,000
42,000
15,000
57,000
42,000
12,000 (15,000 × 80%)
54,000
BE 2 (step 1)
Sandusky Widget Company has the following production data for March.
Ending Work in Process
Month
Beginning
Work in Process
Units
Transferred Out
Units
% Complete as to
Conversion Cost
March
1,200
8,100
1,000
20%
Instructions
Compute the physical units for March.
Beginning work in process
Started into production
Total units to be accounted for
1,200
7,900
9,100
Transferred out
Ending work in process
Total units accounted for
8,100
1,000
9,100
BE 3 (step 4)
Sequal Company has the following production data for June: units transferred out 50,000, and ending work in
process 6,000 units that are 100% complete for materials and 30% complete for conversion costs. Unit
materials cost is $5 and unit conversion cost is $7.
Instructions
Determine the costs to be assigned to the units transferred out and the units in ending work in process.
Units transferred out (50,000 × $12)
$600,000
Work in process, June 30
Materials (6,000 × $5)
Conversion costs (6,000 × 30% × $7)
Total cost of work in process
$30,000
12,600
$42,600
BE 4 (step 3)
Production costs chargeable to the Sanding Department in July for Joyful Art are $30,000 for materials,
$26,000 for labor, and $10,000 for manufacturing overhead. Equivalent units of production are 25,000 for
materials and 20,000 for conversion costs.
Instructions
Compute the unit costs for materials and conversion costs.
Cost Reconciliation Schedule
Costs accounted for
Transferred out (50,000 × $15)
Work in process, June 30
Materials (6,000 × $4)
Conversion costs (3,600* × $11)
Total costs
*(6,000 x 60%)
$750,000
$ 24,000
39,600
63,600
$813,600
Ex. 1
Sanders Company has two production departments: Fabricating and Finishing. Beginning inventories are:
Work in Process—Fabricating, $6,030; Work in Process—Finishing, $4,100; and Finished Goods, $5,600.
During the month the following transactions occurred:
1. Purchased $40,000 of raw materials on account.
2. Incurred $75,000 of factory labor. Wages are unpaid.
3. Incurred $50,000 of manufacturing overhead; $40,000 was paid and the remainder is unpaid.
4. Requisitioned materials for Fabricating, $10,000 and Finishing, $8,000.
5. Used factory labor for Finishing, $60,000 and Fabricating, $15,000.
6. Applied $45,000 of overhead based on machine hours used in each department. The Finishing Department
used twice as many machine hours as did Fabricating.
Instructions
Journalize the transactions for the month.
1. Raw Materials Inventory .................................................................
Accounts Payable ..................................................................
40,000
40,000
2. Factory Labor .................................................................................
Factory Wages Payable .........................................................
75,000
3. Manufacturing Overhead ................................................................
50,000
75,000
Accounts Payable ..................................................................
Cash ......................................................................................
10,000
40,000
4. Work in Process—Fabricating.........................................................
Work in Process—Finishing ............................................................
Raw Materials Inventory .........................................................
10,000
8,000
5. Work in Process—Fabricating.........................................................
Work in Process—Finishing ............................................................
Factory Labor .........................................................................
15,000
60,000
6. Work in Process—Fabricating.........................................................
Work in Process—Finishing ............................................................
Manufacturing Overhead ........................................................
15,000
30,000
18,000
75,000
45,000