1
Chapter Assignments
Exercises: Set B
LO 1
Process Costing Versus Job Order Costing
E1B. Indicate whether the manufacturer of each of the following products should use a
job order costing system or a process costing system to accumulate product costs:
1. paint
5. coffee cups printed with your school insignia
2. fruit juices
6. paper
3. tailor-made suits
7. roller coaster for a theme park
4. milk
8. posters for a fund-raising event
LO 2
Use of Process Costing Information
E2B. Accounting Connection ▶ Tom’s Bakery makes a variety of cakes, cookies, and
pies for distribution to five major chains of grocery stores in the area. The company uses
a standard manufacturing process for all items except special-order cakes. It currently
uses a process costing system. Tom, the owner, has the following questions:
1. How much does it cost to make one chocolate cheesecake?
2. Did the cost of making special-order cakes exceed the cost budgeted for this month?
3. What is the value of the pie inventory at the end of June?
4. What were the costs of the cookies sold during June?
5. At what price should Tom’s Bakery sell its famous brownies to the grocery store
chains?
6. Were the planned production costs of $3,000 for making pies in June exceeded?
Which of these questions can be answered using information from a process costing
system? Which can be best answered using information from a job order costing system?
Explain your answers.
LO 2
Work in Process Inventory Accounts in Process Costing Systems
E3B. Gilbert, Inc., which uses a process costing system, makes a chemical used as a food
preservative. The manufacturing process involves Departments A and B. The company
had the following total costs and unit costs for completed production last month, when
it manufactured 10,000 pounds of the chemical. Neither Department A nor Department B had any beginning or ending work in process inventories:
Department A:
Direct materials
Direct labor
Overhead
Total costs
Department B:
Direct materials
Direct labor
Overhead
Total costs
Totals
Total Cost
Unit Cost
$10,000
2,600
1.300
$13,900
$1.00
0.26
0.13
$1.39
$ 3,000
700
1,000
$ 4,700
$18,600
$0.30
0.07
0.10
$0.47
$1.86
1. How many Work in Process Inventory accounts would Gilbert use?
2. What dollar amount of the chemical’s production cost was transferred from Department A to Department B last month?
3.What dollar amount was transferred from Department B to the Finished Goods
Inventory account?
4.What dollar amount is useful in determining a selling price for 1 pound of the
chemical?
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Chapter 19: Costing Systems: Process Costing
LO 3
Equivalent Production: FIFO Costing Method
E4B. McQuary Stone Company produces bricks. Although the company has been in
operation for only 12 months, it already enjoys a good reputation. During its first 12
months, it put 600,000 bricks into production and completed and transferred 586,000
bricks to finished goods inventory. The remaining bricks were still in process at the end
of the year and were 60 percent complete.
The company’s process costing system adds all direct materials costs at the beginning of the production process; conversion costs are incurred uniformly throughout
the process. Using the FIFO costing method, compute the equivalent units of production for direct materials and conversion costs for the company’s first year, which ended
December 31.
LO 3
Equivalent Production: FIFO Costing Method
E5B. O’Leon Enterprises makes Perfect Shampoo for professional hair stylists. On July
31, it had 5,200 liters of shampoo in process that were 80 percent complete in regard to
conversion costs and 100 percent complete in regard to direct materials costs. During
August, it put 212,500 liters of direct materials into production. Data for Work in Process Inventory on August 31 were as follows: shampoo, 4,500 liters; stage of completion, 60 percent for conversion costs and 100 percent for direct materials. Using the
FIFO costing method, compute the equivalent units of production for direct materials
and conversion costs for the month.
LO 3
Equivalent Production: FIFO Costing Method
E6B. Paper Savers Corporation produces wood pulp that is used in making paper. The
data that follow pertain to the company’s production of pulp during September.
Percentage Complete
Work in process, Aug. 31
Placed into production
Work in process, Sept. 30
Tons
40,000
250,000
80,000
Direct
Materials
100%
—
100%
Conversion
Costs
60%
—
40%
Compute the equivalent units of production for direct materials and conversion costs for
September using the FIFO costing method.
LO 4
Work in Process Inventory Accounts: Total Unit Cost
E7B. Scientists at Anschultz Laboratories, Inc., have just perfected Dentalite, a liquid
substance that dissolves tooth decay. The substance, which is generated by a complex
process involving five departments, is very expensive. Cost and equivalent unit data for
the latest week follow (units are in ounces).
Dept.
A
B
C
D
E
Direct Materials
Equivalent
Cost
Units
$12,000
1,000
21,835
1,985
23,896
1,030
—
—
—
—
Conversion Costs
Equivalent
Cost
Units
$33,825
2,050
13,065
1,005
20,972
2,140
22,086
2,045
15,171
1,945
Compute the unit cost for each department and the total unit cost of producing 1 ounce
of Dentalite.
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Chapter Assignments
LO 4
Determining Unit Cost: FIFO Costing Method
E8B. Reuse Cookware, Inc., manufactures sets of heavy-duty pots. It has just completed
production for August. At the beginning of August, its Work in Process Inventory
account showed direct materials costs of $31,700 and conversion costs of $29,400. The
cost of direct materials used in August was $275,373; conversion costs were $175,068.
During the month, the company started and completed 15,190 sets. For August, a total
of 16,450 equivalent sets for direct materials and 16,210 equivalent sets for conversion
costs have been computed. Using the FIFO costing method, determine the cost per
equivalent set for August.
LO 4
Assigning Costs: FIFO Costing Method
E9B. The Bakery produces tea cakes. It uses a process costing system. In March, its
beginning inventory was 450 units, which were 100 percent complete for direct materials costs and 10 percent complete for conversion costs. The cost of beginning inventory was $655. Units started and completed during the month totaled 14,200. Ending
inventory was 410 units, which were 100 percent complete for direct materials costs
and 70 percent complete for conversion costs. Costs per equivalent unit for March were
$1.40 for direct materials costs and $0.80 for conversion costs. Using the FIFO costing method, compute the cost of goods transferred to the Finished Goods Inventory
account, the cost remaining in the Work in Process Inventory account, and the total
costs to be accounted for. (Round ending inventory to the nearest whole dollar.)
LO 4
Process Cost Report: FIFO Costing Method
E10B. Toy Country Corporation produces children’s toys using a liquid plastic formula
and a continuous production process. In the company’s toy truck work cell, the plastic is
heated and fed into a molding machine. The molded toys are then cooled and trimmed
and sent to the packaging work cell. All direct materials are added at the beginning
of the process. In November, the beginning work in process inventory was 420 units,
which were 40 percent complete; the ending balance was 400 units, which were 70 percent complete.
During November, 15,000 units were started into production. The Work in Process
Inventory account had a beginning balance of $937 for direct materials costs and $370
for conversion costs. In the course of the month, $35,300 of direct materials were added
to the process, and $31,760 of conversion costs were assigned to the work cell. Using
the FIFO costing method, prepare a process cost report that computes the equivalent
units for November, the product unit cost for the toys, and the ending balance in the
Work in Process Inventory account. (Round cost per equivalent unit to the nearest cent.
Round units started and completed this period to the nearest whole dollar.)
LO 5
Equivalent Production: Average Costing Method
E11B. Using the data given for McQuary Stone Company in E4B and assuming that the
company uses the average costing method, compute the equivalent units of production
for direct materials and conversion costs for the company’s first year ended December 31.
LO 5
Equivalent Production: Average Costing Method
E12B. Using the data given for O’Leon Enterprises in E5B and assuming that the company uses the average costing method, compute the equivalent units of production for
direct materials and conversion costs for August.
LO 5
Equivalent Production: Average Costing Method
E13B. Using the data given for Paper Savers Corporation in E6B and assuming that the
company uses the average costing method, compute the equivalent units of production
for direct materials and conversion costs for September.
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Chapter 19: Costing Systems: Process Costing
LO 5
Determining Unit Cost: Average Costing Method
E14B. Using the data given for Reuse Cookware, Inc., in E8B and assuming that the
company uses the average costing method, determine the cost per equivalent set for
August. Assume equivalent sets are 16,900 for direct materials costs and 17,039 for
conversion costs.
LO 5
Process Cost Report: Average Costing Method
E15B. Using the data given for Toy Country Corporation in E10B and assuming that
the company uses the average costing method, prepare a process cost report that computes the equivalent units for November, the product unit cost for the toys, and the
ending balance in the Work in Process Inventory account.
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