ANSWERS-MID TERM QUIZ (PROCESS COSTING)

THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 1 AND 2.

Injection Molding, Inc., manufactures plastic moldings for car seats. Its costing system
utilizes two cost categories, direct materials and conversion costs. Each product must pass
through Department A and Department B. Direct materials are added at the beginning of
production. Conversion costs are allocated evenly throughout production.

Data for Department A for February 20x3 are:

Work in process, beginning inventory, 40% converted 200 units
Units started during February 600 units
Work in process, ending inventory 100 units

Costs for Department A for February 20x3 are:

Work in process, beginning inventory:
Direct materials $100,000
Conversion costs $100,000
Direct materials costs added during February $1,000,000
Conversion costs added during February $1,250,000

1 What is the unit cost per equivalent unit in Department A?

a. $1,000
b. $1,750
c. $3,500
d. $3,750
Answer: b
Direct materials per unit ($100,000/200 units) $ 500
Conversion costs per unit ($100,000/(200 x 0.40) units) 1,250
Total costs per unit $1,750

2. How many units were completed and transferred out of Department A during February?
a. 100 units
b. 600 units
c. 700 units
d. 800 units
Answer: c
200 units + 600 units - 100 units = 700 units

3. Injection Molding, Inc., manufactures plastic moldings for car seats. Its costing system
utilizes two cost categories, direct materials and conversion costs. Each product must
pass through Department A and Department B. Direct materials are added at the
beginning of production. Conversion costs are allocated evenly throughout production.

Data for Department A for February 20x3 are:

Work in process, beginning inventory, 40% converted 200 units
Units started during February 600 units
Work in process, ending inventory: 100 units
30% complete as to conversion costs
100% complete as to materials

Costs for the Department A for February 20x3 are:

Work in process, beginning inventory:
Direct materials $100,000
Conversion costs $100,000
Direct materials costs added during February $1,000,000
Conversion costs added during February $1,250,000

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 What were the equivalent units of direct materials and conversion costs, respectively, at
the end of February? Assume Injection Molding, Inc., uses the weighted-average
process costing method.
a. 800, 730
b. 800, 800
c. 800, 700
d. 600, 500
Answer: a

Equivalent units of direct materials under weighted average = units completed +

equivalent units in ending inventory = 700 + 100
Conversion costs = 700 + (100 x 30%) = 730

THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 4 THROUGH 9.

The Swiss Clock Shop manufactures clocks on a highly automated assembly line. Its costing
system utilizes two cost categories, direct materials and conversion costs. Each product must
pass through the Assembly Department and the Testing Department. Direct materials are
added at the beginning of the production process. Conversion costs are allocated evenly
throughout production. Swiss Clock Shop uses weighted-average costing.

Data for the Assembly Department for June 20x3 are:

Work in process, beginning inventory 250 units
Direct materials (100% complete)
Conversion costs (50% complete)

Units started during June 800 units

Work in process, ending inventory: 150 units
Direct materials (100% complete)
Conversion costs (75% complete)

Costs for June 20x3:

Work in process, beginning inventory:
Direct materials $180,000
Conversion costs $270,000
Direct materials costs added during June $1,000,000
Conversion costs added during June $1,000,000

4. What are the equivalent units for direct materials and conversion costs, respectively, for
June?
a. 1,200.5 units; 1,160.64 units
b. 1,050 units; 1,012.5 units
c. 1,050 units; 1,050 units
d. 962 units; 990 units

Answer: b
Direct materials Conversion costs
Completed and transferred out 900 900.0
Work in process, ending 150 112.5
Total equivalent units 1,050 1,012.5

5. What is the total amount debited to the Work-in-Process account during the month of
June?
a. $450,000
b. $2,000,000
c. $2,270,000
d. $2,450,000

Answer: b
$1,000,000 + $1,000,000 = $2,000,000

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6. What is the direct materials cost per equivalent unit during June?
a. $1,123.81
b. $1,730.20
c. $1,579,00
d. $1,890.35

Answer: a
$180,000 + $1,000,000 = $1,180,000
$1,180,000/1,050 units = $1,123.81

7. What is the conversion cost per equivalent unit in June?

a. $1,254.32
b. $1,579.14
c. $1,730.20
d. $1,890.35

Answer: a
$270,000 + $1,000,000 = $1,270,000
$1,270,000/1,012.5 = $1,254.32

8. What amount of direct materials costs is assigned to the ending Work-in-Process

account for June?

a. $168,571.50
b. $283,552.50
c. $259,530
d. $236,850

Answer: a
$1,180,000/1,050= $1,124 cost per equivalent unit
$1,124 x 150= $168,571.50

9. What amount of conversion costs are assigned to ending Work-in-Process account for
June?
a. $101,956.64
b. $141,111.00
c. $126,450.50
d. $188,148.00

Answer: b
(150 units x 75%) x $1,254.32 = $141,111

THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 10 THROUGH 13.

The Rest-a-Lot Chair Company manufacturers a standard recliner. During February, the
firm's Assembly Department started production of 75,000 chairs. During the month, the firm
completed 85,000 chairs and transferred them to the Finishing Department. The firm ended
the month with 10,000 chairs in ending inventory. All direct materials costs are added at the
beginning of the production cycle. Weighted-average costing is used by Rest-a-Lot.

10. How many chairs were in inventory at the beginning of the month? Conversion costs
are incurred uniformly over the production cycle.
a. 10,000 chairs
b. 20,000 chairs
c. 15,000 chairs
d. 25,000 chairs

Answer: b
Beginning inventory + 75,000 - 85,000 = 10,000
Beginning inventory = 20,000

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11. What were the equivalent units for materials for February?
a. 95,000 chairs
b. 85,000 chairs
c. 80,000 chairs
d. 75,000 chairs

Answer: a
10,000 + 85,000 = 95,000

12. What were the equivalent units for conversion costs for February if beginning inventory
was 70% complete as to conversion costs and ending inventory was 40% complete as to
conversion costs?
a. 89,000
b. 75,000
c. 85,000
d. 95,000

Answer: a
85,000 + (0.4) (10,000) = 89,000

13. Of the 75,000 units Rest-a-Lot started during February, how many were finished during
the month?
a. 75,000
b. 85,000
c. 65,000
d. 95,000

Answer: c
75,000 - 10,000 = 65,000

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THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 14 THROUGH 16.
The Rest-a-Lot chair company manufacturers a standard recliner. During February, the firm's
Assembly Department started production of 75,000 chairs. During the month, the firm
completed 80,000 chairs, and transferred them to the Finishing Department. The firm ended
the month with 10,000 chairs in ending inventory. There were 15,000 chairs in beginning
inventory. All direct materials costs are added at the beginning of the production cycle and
conversion costs are added uniformly throughout the production process. The FIFO method
of process costing is used by Rest-a-Lot. Beginning work in process was 30% complete as to
conversion costs, while ending work in process was 80% complete as to conversion costs.

Beginning inventory:
Direct materials $24,000
Conversion costs $35,000

Manufacturing costs added during the accounting period:

Direct materials $168,000
Conversion costs $278,000

14. How many of the units that were started during February were completed during
February?
a. 85,000
b. 80,000
c. 75,000
d. 65,000

Answer: d
75,000 - 10,000 = 65,000

15. What were the equivalent units for conversion costs during February?
a. 83,500
b. 85,000
c. 75,000
d. 79,500

Answer: a
(15,000 x 0.7) + 65,000 + 10,000 (0.8) = 83,500

16. What is the amount of direct materials cost assigned to ending work-in-process
inventory at the end of February?
a. $19,200
b. $22,400
c. $25,600
d. $22,500

Answer: b
$168,000/75,000 = $2.24 x 10,000 = $22,400

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