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Mang 1025 Test 2 Questions With Solutions
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1. Conversion costs do NOT includea. direct materials.
b. direct labour.
c. factory overhead.
d. all of these costs
2. Units
Work in progress, May 1 (10% complete) 2,000
Started in May 17,000
Work in progress, May 31 (20% complete) 3,000
Materials and conversion are incurred uniformly throughout the progress.
Equivalent units of production for conversion using the weighted average method would be
a. 14,800.
b. 16,400.
c. 17,800.
d. 16,600.
Units completed = 2,000 + 17,000 – 3,000 = 16,000 units
Closing WIP = 3,000 units (20% completed)
Equivalent units = 16,000 + (3,000 * 0.20) = 16,600 units
Figure 1: Corn Ltd. produces a product that passes through two processes. During April, the
first department transferred 40,000 units to the second department. The cost of the units
transferred was £60,000. Materials are added uniformly in the second process. The following
information was provided about the second department's operations during April:
Units, beginning work in progress 8,000
Units, ending work in progress 11,000
3. Refer to figure 1, units started in the second department during April for Corn Ltd. would
be
a. 40,000.
b. 29,000.
c. 32,000.
d. 48,000.
The units transferred from the first department are the units started in the second
department during April.
4. Refer to figure 1, units started and completed in Corn Ltd.'s second department during
June would be
a. 48,000.
b. 37,000.
c. 29,000.
d. 55,000.
, Units started during June = 40,000 of which 11,000 units still ending WIP, so units started
and completed = 40,000 – 11,000 = 29,000 units
5. Beginning inventory for the month contained 2,000 units that were 70 per cent complete
with respect to materials. During the month, 60,000 units were completed and transferred
out. Ending inventory contained 3,000 units, 20 per cent complete with respect to
materials. The weighted average equivalent units of production for materials for the
month would be
a. 62,400.
b. 63,000.
c. 60,600.
d. 60,000.
Units completed = 60,000
Closing WIP = 3,000 units (20% completed)
Equivalent units = 60,000 + (3,000 * 0.20) = 60,600 units
6. 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 progress, April 1:
Units (35% complete) 5,000
Direct materials £24,000
Direct labour £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 labour 120,000
Overhead 30,000
Two thousand five hundred (2,500) units that were 80 per cent complete remained in mixing at April
30.
Kramer's total cost per equivalent unit of production would be
a. £12.16.
b. £11.26.
c. £9.76.
d. £6.52.
Total cost incurred = 24,000 + 30,000 + 10,000 + 90,000 + 120,000 + 30,000 = 304,000
Equivalent units = 25,000 completed units + 2000 equivalent WIP units (2,500 * 0.8) =
27,000
Total cost per unit = 304,,000 = £11.259 = £11.26
7. Conversion costs consist of
a. direct materials and direct labour.
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