Chapter 5 Class Problem
James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida
Chapter 5 | MAAW's Textbook Table of Contents
This problem is very similar to Example 5-2 in Chapter 5, but it shows how a process cost problem might appear on a multiple choice exam.
The Bath Company uses normal historical full absorption process costing. The following information represents one month's activity in process #1. Material is added at the beginning of the process and the inspection point is at the end of the process. Assume all spoilage comes from the units started during the period.
| Stage | WIP Process # 1 | |||
| BWIP | 1,000 | 80% | Beginning Material | $3,100 |
| Started |
9,000 |
Beginning Conversion |
2,320 |
|
| Completed (good) | 6,200 | Material added | 27,000 | |
| EWIP | 2,500 | 40% | Conversion added | 23,100 |
| Normal Spoilage | 1,240 | Total | $55,520 | |
| Abnormal Spoilage | 60 | |||
1. The unit material cost using FIFO is
a. 3.0000 b. 3.0100 c. 3.5065 d. 2.7000 e. none of these.
2. The unit conversion cost using FIFO is
a. 2.9906 b. 3.6094 c. 2.7177
d. 3.0000 e. none of these.
3. Now ignore the
unit costs you calculated above and assume that the unit costs using
FIFO are material = $2 and conversion = $4. The completed costs of the
1,000 units in the beginning inventory (using the FIFO assumption) is
a. 6,000 b. 6,220 c. 6,620
d. 5,420 e. none of these.
4. Using the same
unit costs given in question 3, what would be the completed costs of the
good units started and finished during the period (i.e., excluding spoilage)
using the FIFO assumption?
a. 31,200 b. 37,200 c. 38,640
d. 44,860 e. none of the above.
5. Using the same
unit costs given in question 3, what amount of costs would be
transferred to the loss account based on the FIFO assumption.
a. 7,800 b. 7,440 c. 360
d. 216 e. none of these.
6. Using the same
unit costs given in question 3, what amount of costs would be assigned
to the ending inventory of work in process?
a. 6,000 b. 6,500 c. 9,000
d. 15,000 e. none of the above.
7. Now assume the
company uses weighted average. The unit material cost using the weighted
average assumption is
a. 3.0000 b. 3.0100 c. 3.4598
d. 2.7000 e. none of these.
8. The unit
conversion cost using the weighted average assumption is
a. 3.3893 b. 3.5306 c. 3.0000
d. 2.9906 e. none of the above.
9. Now ignore the
unit costs you calculated above and assume that the unit costs using
weighted average are: material = $3 and conversion = $3.
The cost
transferred to the next department is
a. 37,200 b. 44,640 c. 44,660
d. 45,000 e. none of these.
10. Using the unit
costs given in question 9, what amount of costs would be assigned to the
ending inventory of work in process?
a. 6,000 b. 10,500 c. 12,000
d. 15,000 e. none of the above.