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# Process Costing – Weighted Average

Process Costing – Weighted Average

Beginning goods in process inventory (March 31)

Units of product                                                                     30,000 units

Percentage of completion – Direct materials                            100%

Percentage of completion – Direct labor                                    65%

Direct materials costs                                                              \$4,300

Direct labor costs                                                                    \$  700

Factory overhead costs applied                                              \$  920

Activities during the current period (April)

Units started this period                                                           90,000 units

Units transferred out (completed)                                          100,000 units

Direct materials costs                                                              \$ 12,900

Direct labor costs                                                                    \$   6,700

Factory overhead costs applied                                              \$   7,680

Ending goods in process inventory (April 30)

Units of product                                                                     20,000

Percentage of completion – Direct materials                             100%

Percentage of completion – Direct labor                                     25%

# Process Cost Summary

Weighted Average

Cost Charged to Production

Costs of beginning goods in process

Direct Materials

Direct Labor

Costs incurred this period

Direct materials

Direct Labor

Total costs to account for

Unit Cost Information

Units to accounts for:                                                                                         Units accounted for:

Beginning goods in process                                                                                Completed and transferred out

Units started this period                                                                                      Ending goods in process

Total units to account for                                                                                  Total units accounted for

Direct                    Direct                    Factory

Equivalents Units of Production (EUP)        Materials              Labor                    Overhead

Units completed and transferred out

Units of ending goods in process

Direct materials

Direct labor

Equivalent units of production

Direct                    Direct                    Factory

Cost per EUP                                                       Materials              Labor                    Overhead

Costs of beginning goods in process

Costs incurred this period

Total costs

/EUP

Cost per EUP

## Cost Assignment and Reconciliation

Costs transferred out (COGM)

Direct materials

Direct labor

Costs of ending goods in process

Direct materials

Direct labor

Total costs accounted for

1. What is the equivalent units of production for direct materials?
2. 105,000
3. 110,000
4. 115,000
5. 120,000
6. What is the equivalent units of production for direct labor?
7. 90,000
8. 95,000
9. 100,000
10. 105,000
11. What is the equivalent units of production for factory overhead?
12. 95,000
13. 100,000
14. 105,000
15. 110,000
16. What is the cost per equivalent unit of production (4 decimals) for direct materials?
17. .1267
18. .1433
19. .1742
20. .1944
21. What is the cost per equivalent unit of production (4 decimals) for direct labor?
22. .0705

B   .1145

1. .1398
2. .1484
3. What is the cost per equivalent unit of production for factory overhead?
4. .0645
5. .0995
6. .0524
7. .0819
8. What is the cost of goods manufactured?
9. 26,890
10. 27,640
11. 29,571
12. 32,580
13. What is the cost of ending goods in process?

A.3,115

1. 3,345
2. 3,629
3. 3,985

### Measuring Cost Behavior

Month                         Setup Hours (X)                    Setup Costs (Y)

January                                100                                        \$1,000

February                              200                                          1,250

March                                  300                                          2,250

April                                    400                                          2,500

May                                     500                                          3,750

1. What is the variable cost per unit (3 decimals) using the high-low method?
2. \$6.875
3. \$5.934
4. \$7.875
5. \$8.545
6. What is the fixed cost using the high-low method?
7. \$215.55
8. \$245.95
9. \$275.25
10. \$312.50
11. What is the total cost at a level of 750 setup hours using the high-low method?
12. \$5,115.45
13. \$5,468.75
14. \$6,215.55
15. \$6,935.85
16. What is the variable cost per unit using least-squares regression?
17. \$4.50
18. \$6.75
19. \$7.25
20. \$8.95
21. What is the fixed cost using least-squares regression?
22. \$100
23. \$105
24. \$125
25. \$135
26. What is the total cost at a level of 800 setup hours using least-squares regression?
27. \$4,235
28. \$4,765
29. \$4,985
30. \$5,525

#### Cost-Volume-Profit Analysis

Sport Caps Co. manufactures and sells caps for different sporting events.  The fixed costs of operating the company are \$160,000 per month, and the variable costs for caps are \$7.50 per unit.  The caps are sold for \$10 per unit.  The fixed costs provide a production capacity of up to 100,000 caps per month.

1. What is the contribution margin per cap?
2. \$1.15
3. \$1.50
4. \$2.35
5. \$2.50
6. What is the break-even point in terms of the number of caps produced and sold?
7. 75,000
8. 51,000
9. 55,000
10. 64,000
11. What is the amount of net income at 90,000 caps sold per month?
12. \$65,000
13. \$54,000
14. \$72,000
15. \$68,500
16. What is the contribution margin ratio?
17. .25
18. .17
19. .32
20. .45
21. What is the break-even point in terms of sales dollars?
22. \$615,000
23. \$640,000
24. \$655,000
25. \$675,000
26. What is the dollars of sales needed to provide \$45,000 of after-tax income, assuming an income tax rate of 20%.

A.\$825,000

1. \$850,000
2. \$865,000
3. \$872,000

Last Updated on March 23, 2018

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