# Lesson 2 Process Cost Accounting Pages 67 – 74

1. A plant that uses process costing has 8,000 units in beginning work in process, 15,000

more started, and 5,000 units in the ending work in process. Using this information, answer

the following questions on a separate sheet of paper. Label each answer carefully and

show all of your work. (Each answer is worth 3 points.)

a. How many units are there to account for?

b. How many units are transferred using the average cost method?

c. How many units are transferred using the first-in, first-out method?

d. How many units were both started and completed during the period?

2. The Spangle Company uses the process cost system and average costing. The following

prediction data are for the month of July:

Use the form at the end of this examination to prepare a cost of production summary for

the month. (This problem is worth 15 points.)

**Production Costs**

Work in process, beginning of month

Materials $2,500

Labor 1,200

Factory overhead 1,100 $4,800

Costs incurred during the month

Materials $13,500

Labor 9,200

Factory overhead 8,500 31,200

$36,000

**Production Report Units**

In process, beginning of month 500

Finished and transferred during month 3,800

Work in process, end of month 400

Stage of completion 50%

Use the form at the end of this examination to prepare a cost of production summary for

the month. (This problem is worth 15 points.)

3. The following data is for a production company:

Beginning inventory 1,000 units, three-fourths completed

Finished and transferred 16,000 units

Work in process, end of month 2,000 units, one-half completed

Assume that materials, labor, and factory overhead are added evenly throughout the process.

On a separate sheet of paper, complete the following problems. Label each answer carefully

and show all your work.

a. Using the average cost method, compute the equivalent production.

b. Using the first-in, first-out method, compute the equivalent production.

c. During the month, Department B received 10,000 units from Department A with a unit

cost of $10; 2,000 of these units were lost during production in Department B.

Determine the adjusted cost of these units.

d. During the month, Department 2 received 8,000 from Department 1 with a unit cost of

$15. Department 2 added materials that increased the number of units by 50%.

Determine the adjusted cost of these units.

(Each answer is worth 5 points.)

4. Complete Problem P5-9 on pages 246–247 in your textbook. Use the forms provided in the

*Study Guide/Working Papers*booklet on pages WP-161 to WP-170.

(This problem is worth 20 points.)

5. Complete Problem P6-9 on page 290 in your textbook. Use the forms provided in the

*Study Guide/Working Papers*booklet on pages WP-201 to WP-204.

(This problem is worth 15 points.)

6. Complete the Chapter 6 Mini-Case, Parts 1 and 2, on pages 291–292 in your textbook.

Use a separate sheet of paper. Label each answer and show all of your work.

(This problem is worth 18 points.)