Choose the correct answer: Kramer, Inc., manufactures a product that passes thro

Question

Choose the correct answer:

Kramer, Inc., manufactures a product that passes through two processes: mixing and molding. All manufacturing costs are added uniformly in the mixing department.

Information for the mixing department for April follows:
Work in process, April 1:
Units (35% complete) 5,000
Direct materials $24,000
Direct labor $30,000
Overhead $10,000



During April, 25,000 units were completed and transferred to the molding department. The following costs were incurred by the mixing department during April:
Direct materials $ 90,000
Direct labor 120,000
Overhead 30,000


By April 30, 2,500 units that were 80 percent complete remained in Mixing. Kramer uses the weighted average method.

1. Kramer’s equivalent units of production using the weighted average method would be?
a. 28,750
b. 20,000
c. 27,000
d. 23,000

2. Kramer's total costs to account for would be?
a. 304,000
b. 264,000
c. 240,000
d. 176,000

3. Kramer's total cost per equivalent unit of production would be?
a. 12.16
b. 11.26
c. 9.76
d. 6.52

4. Kramer's cost of goods transferred to the molding department during April would be?
a. 210,000
b. 261,050
c. 281,500
d. 294,000

5. Which of the following best describes sequential processing?
a. Units must pass sequentially through a process.
b. Units must pass through one process before they can be worked on in later processes
c. Units which are not processed in the correct sequence will be discarded
d. Subcomponents can be worked on simultaneously in different processes and then brought to a final process for completion.

6. When should process costing techniques be used in assigning costs to products?
a. Any time production is only partially completed during the accounting period.
b. If the product is composed of mass-produced homogeneous products and production is not always completed as to all elements of production during the accounting period
c. If the product is manufactured according to customer specifications.
d. All of them.

7. The cost of this transferred-in goods is the cost of:
a. materials, labor, and overhead
b. the goods transferred out as computed in the prior department
c. materials and conversion costs
d. materials added and conversion costs

8. Setups, material handling, and inspection are all possible examples of:
a. non-unit level overhead activities
b. unit level overhead activities
c. product diversity
d. sustainable development
e. none of these

9. ____ are assigned using direct tracing and resource drivers.
a. Resources
b. Costs
c. Profits
d. Materials
e. Products

10. Complying with the filing requirements of the IRS is an example of a:
a. Recreational activity
b. Discretionary activity
c. Recommended activity
d. Required activity

Explanation / Answer

1.Option a 28,750 units is the correct answer. Beginning WIP(35%Complete)      1,750 units Completed units during the period 25,000 Ending (80% complete)                  2,000                                                 _____________ Total equivalent units                   28,750                                                ______________ 2. Option a. 304,000 is the correct answer. Cost                         Material                    Labor                        Overhead       Beginning WIP          $24,000                 $30,000                      $10,000 Cost incurred during the period        90,000                  1,20,000                       30,000                             ___________       ______________       _______________ Total                         $114,000               1,50,000                       40,000                            ____________      ______________       _______________ Total cost : $114,000 + 150,000+40,000 = $304,000 3. Total cost per equivalent unit = $304,000/28,750                                                 = $10.57 4. Option d . 294,000 is the correct answer. (24,000+30,000+90,000+120,000+30,000) 5. Option a . is the correct answer. Units must pass sequentially through a process. 6.Option d is the correct answer. 7.Option a is the correct answer. Transferred-in-cost: Materials, labor, and overhead costs 8. Option d is the corrrect answer. 9.Option a is the correct answer, Resources are assigned using direct traciing and resources drivers. 10. Option d is the correct answer. Beginning WIP          $24,000                 $30,000                      $10,000 Cost incurred during the period        90,000                  1,20,000                       30,000                             ___________       ______________       _______________ Total                         $114,000               1,50,000                       40,000                            ____________      ______________       _______________ Total cost : $114,000 + 150,000+40,000 = $304,000 3. Total cost per equivalent unit = $304,000/28,750                                                 = $10.57 4. Option d . 294,000 is the correct answer. (24,000+30,000+90,000+120,000+30,000) 5. Option a . is the correct answer. Units must pass sequentially through a process. 6.Option d is the correct answer. 7.Option a is the correct answer. Transferred-in-cost: Materials, labor, and overhead costs 8. Option d is the corrrect answer. 9.Option a is the correct answer, Resources are assigned using direct traciing and resources drivers. 10. Option d is the correct answer.

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