LSUS MBA 714 Exam 2 QUESTIONS, ANSWERS AND
EXPLANATIONS
1. Qu Corporation uses the FIFO method in its process costing system. Data
concerning the first processing department for the most recent month
are listed below:
Beginning work in process inventory:
Units in beginning work in process inventory 900
Materials costs $9,800
Conversion costs $9,200
Percent complete with respect to materials 55%
Percent complete with respect to conversion 30%
Units started into production during the month 8,400
Materials costs added during the month $130,400
Conversion costs added during the month $220,600
Ending work in process inventory:
Units in ending work in process inventory 2,200
Percent complete with respect to materials 65%
Percent complete with respect to conversion 25%
How many units were started AND completed during the month in the first
processing department?
a.7,100
b.9,300
c.8,400
d.6,200: 6,200
Explanation: FIFO method
Units started and completed during the period = Units started into production during the period - Units in ending work
in process inventory = 8,400 - 2,200 = 6,200
2. The Assembly Department started the month with 24,000 units in its begin-
ning work in process inventory. An additional 309,000 units were transferred
, LSUS MBA 714 Exam 2 QUESTIONS, ANSWERS AND
EXPLANATIONS
in from the prior department during the month to begin processing in the
Assembly Department. There were 29,000 units in the ending work in process
inventory of the Assembly Department. How many units were transferred to
the next processing department during the month?
a. 3,000
b.304,000
c.362,000
d.314,000:
304,000
Explanation: Units completed and transferred out = Units in beginning work in process inventory + Units started into
production or transferred in - Units in ending work in process inventory
Units completed and transferred out = 24,000 + 309,000 - 29,000 = 304,000
3. Arrojo Corporation manufactures two products: Product X71B and
Prod- uct C91I. The company uses a plantwide overhead rate based on
direct la- bor-hours. It is considering implementing an activity-based costing
system that allocates its manufacturing overhead to four cost pools. The
following
additional information is available for the company as a whole and for Products
X71B and C91I
Activity Cost Pool: Activity Measure:Total Cost:Total Activity
Machining: Machine-hours $275000:11000MHs
Machine setups: Number of setups $210000:350 setups
Product design: Number of products $48000:2 products
Order size: Direct labor-hours $300000:10000 DLHs
Activity Measure: Product X71B:Product C91I
Machine-hours: 5000:6000
Number of setups: 220:130
Number of products: 1:1
Direct labor-hours: 6000:4000
Using the plantwide overhead rate, how much manufacturing overhead cost
would be allocated to Product X71B?
, LSUS MBA 714 Exam 2 QUESTIONS, ANSWERS AND
EXPLANATIONS
499800
416500
333200
372000: a. $499,800
Explanation: The company's plantwide overhead rate is computed as follows:
Machining $275,000
Machine setups 210,000
Product design 48,000
Order size 300,000
Total estimated overhead cost (a) $833,000
Total expected direct labor-hours (b) 10,000 DLHs
Predetermined overhead rate (a) ÷ (b) $83.30 per DLH
Using the plantwide overhead rate, the manufacturing overhead cost that would be allocated to Product X71B is comput
as follows:
Product X71B
Total direct labor hours (a) 6,000
Plantwide overhead rate per DLH (b) $83.30
Manufacturing overhead assigned (a) × (b) $499,800
4. Fabert Corporation uses the weighted-average method in its process costing
system. The Assembly Department started the month with 16,000 units in its
beginning work in process inventory that were 40% complete with respect to
conversion costs. An additional 60,000 units were transferred in from the prior
department during the month to begin processing in the Assembly Depart-
ment. During the month 65,000 units were completed in the Assembly Depart-
ment and transferred to the next processing department. There were 11,00
units in the ending work in process inventory of the Assembly Department that
were 50% complete with respect to conversion costs. What were the equivalent
units for conversion costs in the Assembly Department for the month?
EXPLANATIONS
1. Qu Corporation uses the FIFO method in its process costing system. Data
concerning the first processing department for the most recent month
are listed below:
Beginning work in process inventory:
Units in beginning work in process inventory 900
Materials costs $9,800
Conversion costs $9,200
Percent complete with respect to materials 55%
Percent complete with respect to conversion 30%
Units started into production during the month 8,400
Materials costs added during the month $130,400
Conversion costs added during the month $220,600
Ending work in process inventory:
Units in ending work in process inventory 2,200
Percent complete with respect to materials 65%
Percent complete with respect to conversion 25%
How many units were started AND completed during the month in the first
processing department?
a.7,100
b.9,300
c.8,400
d.6,200: 6,200
Explanation: FIFO method
Units started and completed during the period = Units started into production during the period - Units in ending work
in process inventory = 8,400 - 2,200 = 6,200
2. The Assembly Department started the month with 24,000 units in its begin-
ning work in process inventory. An additional 309,000 units were transferred
, LSUS MBA 714 Exam 2 QUESTIONS, ANSWERS AND
EXPLANATIONS
in from the prior department during the month to begin processing in the
Assembly Department. There were 29,000 units in the ending work in process
inventory of the Assembly Department. How many units were transferred to
the next processing department during the month?
a. 3,000
b.304,000
c.362,000
d.314,000:
304,000
Explanation: Units completed and transferred out = Units in beginning work in process inventory + Units started into
production or transferred in - Units in ending work in process inventory
Units completed and transferred out = 24,000 + 309,000 - 29,000 = 304,000
3. Arrojo Corporation manufactures two products: Product X71B and
Prod- uct C91I. The company uses a plantwide overhead rate based on
direct la- bor-hours. It is considering implementing an activity-based costing
system that allocates its manufacturing overhead to four cost pools. The
following
additional information is available for the company as a whole and for Products
X71B and C91I
Activity Cost Pool: Activity Measure:Total Cost:Total Activity
Machining: Machine-hours $275000:11000MHs
Machine setups: Number of setups $210000:350 setups
Product design: Number of products $48000:2 products
Order size: Direct labor-hours $300000:10000 DLHs
Activity Measure: Product X71B:Product C91I
Machine-hours: 5000:6000
Number of setups: 220:130
Number of products: 1:1
Direct labor-hours: 6000:4000
Using the plantwide overhead rate, how much manufacturing overhead cost
would be allocated to Product X71B?
, LSUS MBA 714 Exam 2 QUESTIONS, ANSWERS AND
EXPLANATIONS
499800
416500
333200
372000: a. $499,800
Explanation: The company's plantwide overhead rate is computed as follows:
Machining $275,000
Machine setups 210,000
Product design 48,000
Order size 300,000
Total estimated overhead cost (a) $833,000
Total expected direct labor-hours (b) 10,000 DLHs
Predetermined overhead rate (a) ÷ (b) $83.30 per DLH
Using the plantwide overhead rate, the manufacturing overhead cost that would be allocated to Product X71B is comput
as follows:
Product X71B
Total direct labor hours (a) 6,000
Plantwide overhead rate per DLH (b) $83.30
Manufacturing overhead assigned (a) × (b) $499,800
4. Fabert Corporation uses the weighted-average method in its process costing
system. The Assembly Department started the month with 16,000 units in its
beginning work in process inventory that were 40% complete with respect to
conversion costs. An additional 60,000 units were transferred in from the prior
department during the month to begin processing in the Assembly Depart-
ment. During the month 65,000 units were completed in the Assembly Depart-
ment and transferred to the next processing department. There were 11,00
units in the ending work in process inventory of the Assembly Department that
were 50% complete with respect to conversion costs. What were the equivalent
units for conversion costs in the Assembly Department for the month?
