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# Managerial Accounting - equivalent units for conversion costs

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Question 16: Marginal Maintenance Company makes screwdrivers in a single process and uses weighted average process costing. All material is added at the start of the process. The following information is available for May production:

What are the equivalent units for conversion costs?

A 19,000

B 20,000

C 21,000

D 19,800

Question 17: Dreamland Company produces pillows. Each pillow has a variable cost of \$8 and fixed costs are \$78,000 per month. Each pillow sells for \$17. If the company produces and sells 65,000 pillows in February, at this level of activity, total costs per unit are:

A \$8.00.

B \$9.20.

C \$9.00.

D \$7.80.

Question 18: PotteryWorks Company sold 60,000 units of product for \$22 per unit. Their unit product cost using process costing is \$11 per unit and the company has fixed costs of \$240,000 per month. The company predicts that a \$2 decrease in the selling price will generate a 20% increase in sales during the next period. If the company lowers the price which of the following will occur in the next period?

A Net income will increase by \$36,000.

B Net income will decrease by \$12,000.

C Total fixed costs will increase by \$48,000.

D The variable costs per unit will decline by \$2 per unit.

Question 19: Sam's Chop has budgeted the following costs for a month in which 1,500 steak dinners will be produced and sold: Materials, \$3,750; labor (variable), \$3,000; rent(fixed),\$2,400; straight-line depreciation, \$600; and other costs that don't change when the number of dinner sold changes, \$1,800. Sam sells the steak dinners for \$10.00 each.

What is the budgeted total fixed cost?

A \$11,550

B \$7,800

C \$4,800

D \$3,750

Question 20: Paul's Pizza produced and sold 2,000 pizzas last month and had fixed costs of \$6,000. If production and sales are expected to increase by 10% next month, which of the following statements is true?

A Total fixed costs will increase.

B Total fixed costs will decrease.

C Fixed cost per unit will increase.

D Fixed cost per unit will decrease.

#### Solution Summary

The solution explains some multiple choice questions relating to managerial accounting

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## Managerial Accounting: Straightforward Weighted-Average Process Costing

Problem 4-26
Straightforward Weighted-Average Process Costing, Step-by-Step Approach

Piscataway Plastics Company manufactures a highly specialized plastic that is used extensively in the automobile industry. The following data have been compiled for the month of June. Conversion activity occurs uniformly throughout the production process.

Work in process, June 1—50,000 units: 50,000
Direct material: 100% complete cost of 120,00
Conversion: 40% complete, cost of 34,400
Balance in work in process, June 1 154400

Units started during June 200,000
Units completed during June and transferred out to finished-goods inventory 190000
Work in process, June 30:
Direct material: 100% complete
Conversion: 60% complete

Costs incurred during June:
Direct material 492500

Conversion costs:
Direct labor 87450
Total conversion costs 349800

Required: Prepare schedules to accomplish each of the following process-costing steps for the month
1. Analysis of physical flow of units.
2. Calculation of equivalent units.
3. Computation of unit costs.
4. Analysis of total costs.

Problem 4-27
Missing Data; Production Report; Weighted-Average
The following data pertain to the Vesuvius Tile Company for July. See the attached file for proper formatting.

Work in process, July 1 (in units) 20000
Units started during July 45000 45000
Total units to account for 65000
Units completed and transferred out during July ? 50000
Work in process, July 31 (in units) 15000
Total equivalent units: direct material 65000
Total equivalent units: conversion ? 56000
Work in process, July 1: direct material 164400
Work in process, July 1: conversion ? 79800
Costs incurred during July: direct material ? 371850
Costs incurred during July: conversion 65940
Work in process, July 1: total cost 244200
Total costs incurred during July 1031250
Total costs to account for 1275450
Cost per equivalent unit: direct material 8.25
Cost per equivalent unit: conversion ? 13.2
Total cost per equivalent unit 21.45
Cost of goods completed and transfered out during July 1072500 1072500
Cost remaining in ending work-in-process inventory: direct material 123750 123750
Cost remaining in ending work-in-process inventory: conversion 79200
Total cost of July 31 work in process 202950