A product requires processing in two departments, the Baking Department and then the Packaging Department, before it is completed. Costs transferred out of the Baking Department will be transferred to: – Cost of Goods Sold. – Finished Goods Inventory. – Manufacturing Overhead. – Work in Process-Packaging Department. Question 16 4.5pts If there are 20,000 units in a process that are 70% complete, this equals: – 6,000 equivalent units of production. – 20,000 equivalent units of production. – 8,000 equivalent units of production. – 14,000 equivalent units of production. Question 17 4.5pts A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of January, there were no units in the beginning work in process inventory. 90,000 units were started into production in January and there were 20,000 units that were 40% complete in the ending work in process inventory at the end of January. What were the equivalent units of production for materials for the month of January? – 98,000 equivalent units. – 82,000 equivalent units. – 70,000 equivalent units. – 90,000 equivalent units.
The Correct Answer and Explanation is:
Let’s break down the questions:
Question 15: Costs transferred out of the Baking Department will be transferred to:
The costs transferred out of the Baking Department would be transferred to Work in Process-Packaging Department. This is because the product is still in process and is moving from one department (Baking) to another (Packaging) before it is completed. The Baking Department has incurred costs related to the production of the units, which will be passed on to the Packaging Department for further processing.
Answer: Work in Process-Packaging Department.
Question 16: If there are 20,000 units in a process that are 70% complete, this equals:
To calculate the equivalent units of production, we multiply the number of units by the percentage of completion.
- 20,000 units × 70% complete = 14,000 equivalent units of production.
This means that 14,000 units of work have been completed in terms of processing, even though the actual number of physical units is 20,000.
Answer: 14,000 equivalent units of production.
Question 17: What were the equivalent units of production for materials for the month of January?
In this scenario, we are told that raw materials are added at the beginning of the process. This means that all materials are fully assigned to units when they enter the process. The key to solving this problem is to focus on the number of units started and the units in the ending inventory.
Since materials are added at the start of the process, all 90,000 units that were started in January would have received materials. Additionally, because the ending work in process inventory is still 40% complete, these units (20,000 units) are considered to have received full materials as well (since materials are added at the beginning of the process).
Thus, the total equivalent units for materials is:
- 90,000 units started + 20,000 units in ending inventory = 110,000 equivalent units for materials.
However, the key here is the focus on materials for the month of January, and the ending inventory is considered fully assigned for materials. Therefore, the correct answer is 90,000 equivalent units.
Answer: 90,000 equivalent units.
Explanation: In process costing, equivalent units of production are used to measure the amount of work done during a period, considering both completed and partially completed units. For materials, when they are added at the beginning, all units started will have received materials. For conversion costs (labor and overhead), the completion percentage is considered for the partially completed units.
