Managerial Accounting Management Test
This test is about managerial accounting management of finance and accounting.
In order to be useful to managers, management accounting reports should possess all of the following characteristics EXCEPT:
provide objective measures of past operations and subjective estimates about future decisions
be prepared in accordance with generally accepted accounting principles – correct
be provided at any time management needs information
be prepared to report information for any unit of the business to support decision making
What is the primary criterion for the preparation of managerial accounting reports?
Relevance of the reports
Meet the manager needs – correct
Timing of the reports
Cost of the reports
Which of the following is most associated with managerial accounting?
Must follow GAAP
May rely on estimates and forecasts – correct
Is prepared for users outside the organization
Always reports on the entire entity
Which of the following is most associated with financial accounting?
Can have both objective and subjective information
Can be prepared periodically, or as needed
Prepared in accordance with GAAP – correct
Can be prepared for the entity or segment
Which of the following statements is false?
There is no overlap between financial and managerial accounting – correct
Managerial accounting sometimes relies on past information.
Managerial accounting does not need to conform to GAAP
Financial accounting must conform to GAAP.
In most business organizations, the chief management accountant is called the:
chief accounting officer
controller – correct
chairman of the board
chief executive officer
All of the following employees hold line positions in Anthea Electric EXCEPT:
vice president of production
vice president of finance – correct
manager of the Valhalla Plant
vice president of sales
The controller’s staff often consists of several management accountants. All of the following would most likely be on the controller’s staff EXCEPT:
general accountants
budgets and budget analysts
investments and shareholder relations managers – correct
cost accountants
Managerial accounting
is prepared according to GAAP.
is prepared according to management needs – correct
is prepared periodically only.
is related to the entire business entity only.
Who are the individuals charged with the responsibility for directing the day-to-day operations of a business?
Investors
Managers – correct
Shareholders
Customers
Which of the following are basic phases of the management process?
Supervising and directing
Decision making and supervising
Organizing and directing
Planning and controlling – correct
What term is used to describe the process of developing the organization’s objectives and translating those into courses of action?
Supervising
Planning – correct
Improving
Decision making
Which of the following is the principle reason for preparing managerial accounting reports?
Usefulness to management – correct
Cost of preparation
Clarity
GAAP
Which of the following is not a characteristic of useful managerial accounting reports?
Accuracy
GAAP – correct
historical and estimated data
reports prepared as needed
Compute conversion costs given the following data: Direct Materials, $347,500; Direct Labor, $186,300; Factory Overhead, $187,900; and Selling Expenses, $45,290.
$533,800
$187,900
$721,700
$374,200 – correct
The cost of a manufactured product generally consists of which of the following costs?
Direct materials cost and factory overhead cost
Direct labor cost and factory overhead cost
Direct labor cost, direct materials cost, and factory overhead cost – correct
Direct materials cost and direct labor cost
Materials must have which two qualities in order to be classified as direct materials?
They must be classified as both prime costs and conversion costs.
They must be introduced into the process in both work-in-process inventories and finished goods inventories.
They must be an integral part of the finished product, but can be an insignificant portion of the total product cost.
They must be an integral part of the finished product and be a significant portion of the total product cost. – correct
If the cost of direct materials is a small portion of total production cost, it may be classified as part of:
direct labor cost
selling and administrative costs
miscellaneous costs
factory overhead cost – correct
The cost of wages paid to employees directly involved in the manufacturing process in converting materials into finished product is classified as:
factory overhead cost
direct labor cost – correct
miscellaneous costs
direct materials cost
Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as:
factory overhead cost – correct
miscellaneous expense
product costs
period cost
Another term often used to refer to factory overhead is:
period cost
supervisory cost
factory burden – correct
Which of the following costs are referred to as conversion costs?
Direct labor cost and factory overhead cost – correct
Direct materials cost and direct labor cost
Factory overhead cost
Direct materials cost and factory overhead cost
What term is used to refer to the cost of changing direct materials into a finished manufactured product?
Factory overhead cost
Period cost
Conversion cost – correct
Direct labor cost
Prime costs are
direct materials and factory overhead
direct materials and direct labor – correct
direct labor and factory overhead
period costs and factory overhead
Conversion costs are
direct materials and direct labor
direct materials and factory overhead
factory overhead and direct labor – correct
direct materials and indirect labor
Which of the following are the two main types of cost accounting systems for manufacturing operations?
Process cost and general accounting systems
Job order cost and process cost systems – correct
Job order and general accounting systems
d. Process cost and replacement cost systems
Which of the following would most likely use a job order costing system?
A paper mill
A swimming pool installer – correct
A company that manufactures chlorine for swimming pools
An oil refinery
An oil refinery
Which of the following systems provides for a separate record of the cost of each particular quantity of product that passes through the factory?
Job order cost system – correct
General cost system
Replacement cost system
Process cost system
For which of the following businesses would the job order cost system be appropriate?
Meat processor
Automobile manufacturer
Oil refinery
Construction contractor – correct
Job order costing and process costing are
pricing systems
cost accounting systems – correct
cost flow systems
inventory tracking systems
Which of the following costs are NOT included in finished goods inventory?
Direct labor
Factory overhead
Company president’s salary – correct
Direct materials
Which of the following is the correct flow of manufacturing costs?
Raw materials, work in process, finished goods, cost of goods sold – correct
Raw materials, finished goods, cost of goods sold, work in process
Work in process, finished goods, raw materials, cost of goods sold
Cost of goods sold, raw materials, work in process, finished goods.
The document authorizing the issuance of materials from the storeroom is the:
materials requisition – correct
purchase requisition
receiving report
purchase order
In a job order cost accounting system, when goods that have been ordered are received, the receiving department personnel count, inspect the goods, and complete a:
purchase order
sales invoice
receiving report – correct
purchase requisition
The amount of time spent by each employee and the labor cost incurred for each individual job or for factory overhead are recorded on:
pay stubs.
in-and-out cards.
time tickets. – correct
employees’ earnings records
At the end of the fiscal year, the balance in Factory Overhead is small. This balance would normally be:
transferred to Work in Process
transferred to Cost of Goods Sold – correct
transferred to Finished Goods
allocated between Work in Process and Finished Goods
The controlling account for the cost ledger is:
Finished Goods
Materials
Work in Process – correct
Cost of Goods Sold
A widely used activity base for developing factory overhead rates in highly automated settings is:
direct labor hours
direct labor dollars
direct materials
machine hours – correct
The entries to record cost and sale of a finished good on account is:
debit Cost of Goods Sold, credit Finished Goods
debit Cost of Goods Sold, credit Finished Goods, debit Accounts Receivable, credit Sales – correct
debit Sales Expense, credit Finished Goods, credit Cash, credit Accounts Receivable
debit Work in Process, credit Finished Goods, debit Accounts Receivable, credit Sales
All of the following are examples of activity bases except:
salaries of supervisors – correct
quality inspections of products
number of machine setups
raw materials storage
Costs that are used in generating revenues during the current period, but are not involved in the manufacturing process are often referred to as:
period costs – correct
conversion costs
factory overhead costs
product costs
Costs that are treated as assets until the product is sold are called:
product costs – correct
period costs
conversion costs
selling expenses
The period costs of a textbook publisher would include:
wages of a press operator
factory utility costs
advertising expenses – correct
paper costs
Which types of inventories does a manufacturing business report on the balance sheet?
Finished goods inventory and work in process inventory
Direct materials inventory and work in process inventory
Direct materials inventory, work in process inventory, and finished goods inventory – correct
Direct materials inventory and finished goods inventory
For the manufacturing business, inventory which is in the process of being manufactured is referred to as:
supplies inventory
work in process inventory – correct
finished goods inventory
direct materials inventory
The proper journal entry to record the purchase of $30,000 of raw materials on account would be:
Raw Material Inventory 30,000 Accounts Receivable 30,000
Raw Material Inventory 30,000 Accounts Payable 30,000 – correct
Inventory 30,000 Accounts Receivable 30,000
Inventory 30,000 Cash 30,000
A separate account for each material is found in a
general ledger
materials ledger – correct
receiving report
job cost sheet
Period costs are
found on the balance sheet.
not involved in the production process – correct
classified as direct labor, direct material, or factory overhead
found on the job order cost sheets.
The direct labor and overhead costs of providing services to clients are accumulated in:
finished services expense
work in process – correct
administrative salaries expense
overhead
In a job order cost accounting system used by a service business, which of the following items would normally not be included as part of overhead?
Materials
Direct labor – correct
Rent
Supplies
Which of the following is not a factory overhead allocation method?
single plantwide rate
multiple departmental rates
factory costing – correct
activity-based costing
Pinacle Corp. budgeted $350,000 of overhead cost for 2012. Actual overhead costs for the year were $325,000. Pinacle’s plantwide allocation base, machine hours, was budgeted at 50,000 hours. Actual machine hours were 40,000. A total of 100,000 units was budgeted to be produced and 98,000 units were actually produced. Pinacle’s plantwide factory overhead rate for 2012 is:
$8.13 per machine hour
$7.00 per machine hour – correct
$6.50 per machine hour
$8.75 per machine hour
The Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below.
| Product | Number of units | Labor hrs per unit | Machine hours per unit |
| Blinks | 1,000 | 4 | 5 |
| Dinks | 2,000 | 2 | 8 |
All of the machine hours take place in the Fabrication department, which has an estimated overhead of $84,000. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $72,000.
The Ramapo Company uses a single overhead rate to apply all overhead costs based on labor hours. What is the overhead cost per unit for Blinks?
$78.00 – correct
$19.50
$37.45
$56.00
| Product | Number of units | Labor hrs per unit | Machine hours per unit |
| Blinks | 1,000 | 4 | 5 |
| Dinks | 2,000 | 2 | 8 |
The Ramapo Company uses a single overhead rate to apply all overhead costs based on labor hours. What is the overhead cost per unit for Dinks?
$77.00
$39.00
$19.50
$59.92
The Ramapo Company uses a single overhead rate to apply all overhead costs. What would the single plantwide rate be if it was based on machine hours instead of labor hours?
| Product | Number of units | Labor hrs per unit | Machine hours per unit |
| Blinks | 1,000 | 4 | 5 |
| Dinks | 2,000 | 2 | 8 |
$9.00 per MH
$19.50 per MH
$7.43 per MH – correct
$4.00 per MH
Common allocation bases are
direct labor dollars, direct labor hours, direct material dollars
direct labor dollars, direct labor hours, machine hours – correct
direct labor dollars, direct labor hours, machine dollars
machine dollars, direct labor dollars, machine hours
The Baffin Factory has determined that its budgeted factory overhead budget for the year is $7,750,000. They plan to produce 1,000,000 units. Budgeted direct labor hours are 525,000 and budgeted machine hours are 375,000. Using the single plantwide factory overhead rate based on direct labor hours, calculate the factory overhead rate for the year.
$14.76 – correct
$20.67
$7.75
$77.50
The Cunningham Factory has determined that its budgeted factory overhead budget for the year is $6,750,000 and budgeted direct labor hours are 5,000,000. If the actual direct labors for the period are 175,000 how much overhead would be allocated to the period?
$675,000
$129,630
$236,250 – correct
$175,000
Blackwelder Factory produces two similar products – small lamps and desk lamps. The total plant overhead budget is $640,000 with 400,000 estimated direct labor hours. It is further estimated that small lamp production will require 275,000 direct labor hours and desk lamp production will need 125,000 direct labor hours.
Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will be allocated to the small lamp production if the actual direct hours for the period is 285,000?
$275,000
$285,000
$440,000
$456,000 – correct
Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will be allocated to the desk lamp production if the actual direct hours for the period is 118,000?
$118,000
$200,000
$188,800 – correct
$125,000
Using multiple department factory overhead rates instead of a single plantwide factory overhead rate:
results in more accurate product costs – correct
results in distorted product costs
is simpler and less expensive than a plantwide rate
applies overhead costs to all departments equally
Scoresby Co. uses 3 machine hours and 1 direct labor hour to produce Product X. It uses 4 machine hours and 8 direct labor hours to produce Product Y. Scoresby’s Assembly and Finishing Departments have factory overhead rates of $240 per machine hour and $160 per direct labor hour, respectively. How much overhead cost will be charged to the two products?
Product X = $1,600; Product Y = $4,800
Product X = $400; Product Y = $400
Product X = $880; Product Y = $2,240 – correct
Product X = $720; Product Y = $1,280
The Aleutian Company produces two products, Rings and Dings. They are manufactured in two departments—fabrication and assembly. Data for the products and departments are listed below.
| Product | Number of units | Labor hrs per unit | Machine hours per unit |
| Rings | 1,000 | 4 | 6 |
| Dings | 2,000 | 3 | 9 |
The Aleutian Company uses a departmental overhead rates. The fabrication department uses machine hours for an allocation base, and the assembly department uses labor hours.
All of the machine hours take place in the Fabrication department, which has an estimated overhead of $90,000. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $105,000.
What is the assembly department overhead rate per labor hour?
$10.50 – correct
$19.50
$3.75
$4.38
What is the overhead cost per unit for Rings?
$65.25
$23.25
$44.10
$64.50 – correct
What is the overhead cost per unit for Dings?
$65.25 – correct
$56.75
$23.25
$64.50
What is the fabrication department overhead rate per machine hour?
$10.50
$9.00
$8.12
$3.75 – correct
All of the following can be used as an allocation base for calculating factory overhead rates except:
direct labor dollars
direct labor hours
machine hours
total overhead costs – correct
Which of the following are the two most common allocation bases for factory overhead?
Total overhead dollars and machine hours
Direct labor hours and machine hours – correct
Direct labor hours and factory expenses
d. Machine hours and factory expenses
Activity rates are determined by
dividing the actual cost for each activity pool by the actual activity base for that pool.
dividing the cost budgeted for each activity pool by the estimated activity base for that pool. – correct
dividing the actual cost for each activity pool by the estimated activity base for that pool.
dividing the cost budgeted for each activity pool by the actual activity base in that pool.
Shubelik Company is changing to an activity-based costing method. They have determined that they will use three cost pools. They are setups, inspections, and assembly. Which of the following would be used as the activity base for assembly?
number of direct labor hours – correct
number of setups
number of inspections
number of units to be produced
Given the following information, determine the activity rate for setups.
| Activity Pool | Activity Base | Budgeted Amount |
| Setups | 10,000 | $60,000 |
| Inspections | 24,000 | $120,000 |
| Assembly (DLH) | 80,000 | $400,000 |
$58.00
$6.00 – correct
$.75
$5.09
If selling and administrative expenses are allocated to different products, they should be reported as a
product cost
factory overhead cost
period cost – correct
cost of goods sold
Activity-based costing for selling and administrative expenses can also be beneficial in allocating expenses to various products. Which of the following is the best allocation base for help desk costs?
Number of calls – correct
Square footage of the help desk office
Number of products sold
Number of employees
The Beauty Beyond Words Salon uses an activity-based costing system in its beauty salon to determine the cost of services. The salon has determined the costs of services by activity as follows:
| Activity | Activity Rate |
| Hair Washing | $3.00 |
| Conditioning | $3.50 |
| Chemical Treatment | $25.00 |
| Styling | $10.00 |
| Hair Washing | Conditioning | Chemical Treatment | Styling | |
| Hair Cut | 1 | 1 | 0 | 0 |
| Complete Style | 1 | 1 | 0 | 1 |
| Perms | 2 | 3 | 1 | 1 |
| Hi-Lights | 3 | 4 | 2 | 1 |
Calculate the cost of services for a hair cut.
$3.00
$6.50 – correct
$3.50
$16.50
The Beauty Beyond Words Salon uses an activity-based costing system in its beauty salon to determine the cost of services. The salon has determined the costs of services by activity as follows:
| Activity | Activity Rate |
| Hair Washing | $3.00 |
| Conditioning | $3.50 |
| Chemical Treatment | $25.00 |
| Styling | $10.00 |
| Hair Washing | Conditioning | Chemical Treatment | Styling | |
| Hair Cut | 1 | 1 | 0 | 0 |
| Complete Style | 1 | 1 | 0 | 1 |
| Perms | 2 | 3 | 1 | 1 |
| Hi-Lights | 3 | 4 | 2 | 1 |
Calculate the cost of services for a perm.
$51.50 – correct
$41.50
$44.50
$25.00
In process cost accounting, the costs of direct materials and direct labor are charged directly to:
service departments
processing departments – correct
customer accounts receivable
job orders
In a process cost system, the cost of completed production in Department A is transferred to Department B by which of the following entries?
Debit Work in Process–Dept. B; credit Work in Process–Dept. A. – correct
Debit Work in Process–Dept. B; credit Finished Goods–Dept. A.
Debit Work in Process–Dept. B; credit Cost of Goods Sold–Dept. A.
Debit Finished Goods; credit Work in Process–Dept. B.
The three categories of manufacturing costs comprising the cost of work in process are direct labor, direct materials, and
office expenses
direct expenses
sales salaries expense
factory overhead – correct
Which of the following is not characteristic of a process cost system?
The system may use several work in process inventory accounts
Manufacturing costs are grouped by department rather than by jobs.
The system accumulates costs per job. – correct
The system emphasizes time periods rather than the time it takes to complete a job
Which of the following is not a characteristic of a process cost system?
Manufacturing costs are grouped by departments.
The system may use several Work-in-Process accounts
The system measures costs for each completed job. – correct
The system allocates costs between completed and partially completed units within a department.
If a company uses a process costing system to account for the costs in its four production departments, how many Work-in-Process will it use?
3
4 – correct
1
2
The four steps necessary to determine the cost of goods completed and the ending inventory valuation in a process cost system are:
| 1. | allocate costs to transferred and partially completed units |
| 2. | determine the units to be assigned costs |
| 3. | determine the cost per equivalent unit |
| 4. | calculate equivalent units of production |
The correct ordering of the steps is:
2, 4, 3, 1 – correct
4, 2, 3, 1
2, 3, 4, 1
2, 3, 1, 4
Which of the following costs incurred by a paper manufacturer would be included in the group of costs referred to as conversion costs?
Advertising costs
Raw lumber (direct materials)
Machine operator’s wages (direct labor) – correct
Sales salaries
In the manufacture of 15,000 units of a product, direct materials cost incurred was $165,000, direct labor cost incurred was $105,000, and applied factory overhead was $53,500. What is the total conversion cost?
$270,000
$158,500 – correct
$323,500
$53,500
If Department H had 600 units, 60% completed, in process at the beginning of the period, 6,000 units were completed during the period, and 700 units were 30% completed at the end of the period, what was the number of equivalent units of production for conversion costs for the period, if the first-in, first-out method is used to cost inventories?
7,300
5,640
6,700
5,850 – correct
If Department K had 2,000 units, 40% completed, in process at the beginning of the period, 12,000 units were completed during the period, and 1,200 units were 25% completed at the end of the period, what was the number of equivalent units of production for conversion costs for the period if the first-in, first-out method is used to cost inventories?
11,500 – correct
11,200
15,200
10,000
Department X had 5,000 units in work in process that were 75% completed as to labor and overhead at the beginning of the period, 30,000 units of direct materials were added during the period, 32,000 units were completed during the period, and 3,000 units were 40% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The first-in, first-out method is used to cost inventories. The number of equivalent units of production for conversion costs for the period was:
32,450
29,450 – correct
31,950
26,000
Department Z had no work in process at the beginning of the period. 12,000 units of direct materials were added during the period at a cost of $84,000, 9,000 units were completed during the period, and 3,000 units were 30% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. Direct labor was $49,500 and factory overhead was $9,900.
The total conversion costs for the period were:
$59,400 – correct
$49,500
$143,400
$9,900
Department Z had no work in process at the beginning of the period. 12,000 units of direct materials were added during the period at a cost of $84,000, 9,000 units were completed during the period, and 3,000 units were 30% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. Direct labor was $49,500 and factory overhead was $9,900.
The total cost of units completed during the period were:
$117,000 – correct
$143,400
$121,000
$127,450
The following production data were taken from the records of the Finishing Department for June:
| Inventory in process, 6-1, | |
| 25% completed | 1,500 units |
| Transferred to finished goods | |
| during June | 5,000 units |
| Equivalent units of production | |
| during June | 5,200 units |
Determine the number of equivalent units of production in the June 30 Finishing Department inventory, assuming that the first-in, first-out method is used to cost inventories. Assume the completion percentage of 25% applies to both direct materials and conversion costs.
575 units – correct
200 units
1,000 units
300 units
The debits to Work in Process–Assembly Department for April, together with data concerning production, are as follows:
| April 1, work in process: | |
| Materials cost, 3,000 units | $ 8,000 |
| Conversion costs, 3,000 units, | |
| 66.7% completed | 6,000 |
| Materials added during April, 10,000 units | 30,000 |
| Conversion costs during April | 31,000 |
| Goods finished during April, 11,500 units | — |
| April 30 work in process, 1,500 units, | |
| 50% completed | — |
All direct materials are placed in process at the beginning of the process and the first-in, first-out method is used to cost inventories. The materials cost per equivalent unit for April is:
$3.00 – correct
$3.80
$2.92
$2.31
Department E had 4,000 units in Work in Process that were 40% completed at the beginning of the period at a cost of $12,500. 14,000 units of direct materials were added during the period at a cost of $28,700. 15,000 units were completed during the period, and 3,000 units were 75% completed at the end of the period. All materials are added at the beginning of the process. Direct labor was $32,450 and factory overhead was $18,710. The number of equivalent units of production for the period for conversion if the first-in, first-out method is used to cost inventories was:
15,650 – correct
14,850
14,150
14,650
Department A had 1,000 units in Work in Process that were 60% completed at the beginning of the period at a cost of $7,000. 4,000 units of direct materials were added during the period at a cost of $8,200. 4,500 units were completed during the period, and 500 units were 40% completed at the end of the period. All materials are added at the beginning of the process. Direct labor was $28,700 and factory overhead was $4,510. The cost of the 500 units in process at the end of the period if the first-in, first-out method is used to cost inventories was:
$3,240
$5,175
$2,569
$2,645 – correct
In the manufacture of 10,000 units of a product, direct materials cost incurred was $145,800, direct labor cost incurred was $82,000, and applied factory overhead was $45,500. What is the total conversion cost?
$127,500 – correct
$145,800
$272,200
$273,300
If Department H had 600 units, 60% completed, in process at the beginning of the period, 8,000 units were completed during the period, and 500 units were 30% completed at the end of the period, what was the number of equivalent units of production for the period for conversion if the first-in, first-out method is used to cost inventories? Assume the completion percentage applies to both direct materials and conversion cost.
7,790 – correct
8,390
8,600
8,000
If Department K had 2,500 units, 45% completed, in process at the beginning of the period, 15,000 units were completed during the period, and 1,200 units were 40% completed at the end of the period, what was the number of equivalent units of production for the period for conversion if the first-in, first-out method is used to cost inventories? Assume the completion percentage applies to both direct materials and conversion cost.
16,855
16,605
13,460
14,355 – correct
Department A had 4,000 units in work in process that were 60% completed as to labor and overhead at the beginning of the period, 29,000 units of direct materials were added during the period, 31,000 units were completed during the period, and 2,000 units were 80% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The first-in, first-out method is used to cost inventories.
The number of equivalent units of production for conversion costs for the period was:
30,200 – correct
29,800
33,800
33,000
The debits to Work in Process–Assembly Department for April, together with data concerning production, are as follows:
| April 1, work in process: | |
| Materials cost, 3,000 units | $ 7,200 |
| Conversion costs, 3,000 units, | |
| 60% completed | 6,000 |
| Materials added during April, 10,000 units | 25,000 |
| Conversion costs during April | 35,750 |
| Goods finished during April, 12,000 units | — |
| April 30 work in process, 1,000 units, | |
| 40% completed | — |
All direct materials are placed in process at the beginning of the process and the first-in, first-out method is used to cost inventories. The materials cost per equivalent unit for April is:
$2.48
$2.08
$2.50 – correct
$5.25
The debits to Work in Process–Assembly Department for April, together with data concerning production, are as follows:
| April 1, work in process: | |
| Materials cost, 3,000 units | $ 7,200 |
| Conversion costs, 3,000 units, | |
| 40% completed | 6,000 |
| Materials added during April, 10,000 units | 25,000 |
| Conversion costs during April | 30,800 |
| Goods finished during April, 12,000 units | — |
| April 30 work in process, 1,000 units, | |
| 40% completed | — |
All direct materials are placed in process at the beginning of the process and the first-in, first-out method is used to cost inventories. The conversion cost per equivalent unit for April is:
$2.48
$2.75 – correct
$2.50
$5.25
Department B had 3,000 units in Work in Process that were 25% completed at the beginning of the period at a cost of $12,500. 13,700 units of direct materials were added during the period at a cost of $28,700. 15,000 units were completed during the period, and 1,700 units were 95% completed at the end of the period. All materials are added at the beginning of the process. Direct labor was $32,450 and factory overhead was $18,710.
The number of equivalent units of production for the period for conversion if the first-in, first-out method is used to cost inventories was:
14,365
13,615
12,000
15,865 – correct