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So I’m here in Seattle on a sunny 80 degree day….in the library. I’m going over some of the Cost Accounting stuff which should be relatively straight forward. I want to practice some of the equivalent units questions but I’m running into these monstrous questions. As much as I love Becker for over preparing users for the actual exam, I think they get carried away in the difficulty of the actual questions. Sometimes they are so complex that the concepts become convoluted.
I would love it if Becker would throw me out some softballs for me to crush concerning FIFO/Weighted Avg equivalent units. Instead, I get this (below: I did not format this thing to look pretty). My point is, I need to practice the basics because, in all likelihood, I would get a medium difficulty question on average. Becker seems to get straight to the most difficult questions because, as Peter Olinto says, “If you can do this then you’re in great shape.” Well, I would like to get this but because you have layered about 4 or 5 different problems on top of each other, I can’t even manage to learn from the problems. I can’t spend an hour on every question trying to untangle it; I simply don’t have that much time!!
Again, I like Becker, but does anybody know where I could find some questions that might be more reasonable. Becker even states that “this question is overly complex and has been released because it won’t be on the exam.”
Question CPA-03642
Units Beginning work-in-process inventory, May 116,000 Started in production during May100,000 Completed production during May92,000 Ending work-in-process inventory, May 3124,000
a.$153,168 b.$154,800 c.$155,328 d.$156,960
Explanation
Registered to: Blake Smith
Kimbeth Manufacturing uses a process cost system to manufacture Dust Density Sensors for the mining industry. The following information pertains to operations for the month of May:
The beginning inventory was 60 percent complete for materials and 20 percent complete for conversion costs. The ending inventory was 90 percent complete for materials and 40 percent complete for conversion costs. Costs pertaining to the month of May are as follows: •Beginning inventory costs are: materials, $54,560; direct labor $20,320; and factory overhead, $15,240. •Costs incurred during May are: materials used, $468,000; direct labor, $182,880; and factory overhead, $391,160. Using the FIFO method, the total cost of units in the ending work-in-process inventory at May 31 is:
Choice “a” is correct. $153,168 total cost of units in ending work-in-process inventory using the FIFO method. Ending Work-In-Process Inventory – FIFO Actual%EquivUnitTotal Units x Compl = Units x Cost =Cost Materials24,00090%21,6004.50$97,200 Conversion Costs24,00040%9,6005.83$55,968 Ending Inventory24,000 $153,168 Note that the unit costs for materials ($4.50) and conversion costs ($5.83) are calculated below in Notes A and B.
Note A: Cost of materials used $468,000 Equivalent units÷ 104,000 [Note 1] Equivalent unit cost of materials$4.50
Note 1: Under the FIFO method, the equivalent units of production is comprised of three parts: the completion of units on hand at the beginning of the period, the units started and completed during the period, and the units partially completed at the end of the period. Applying these principles to the given fact pattern, the total equivalent units of production for materials is determined as follows: Equivalent units for the first quarter: Work in process, beginning (16,000 units 40% to complete)6,400
Units started and completed: Units completed and transferred out92,000 Units in beginning inventory(16,000)76,000
Work in process, ending (24,000 units 90% complete)21,600
Equivalent units of production104,000
Becker Professional Education
Registered to: Blake Smith
Note B: Direct labor costs incurred$182,880 Factory overhead incureed391,160 Conversion costs incurred $574,040 Equivalent units ÷ 98,400 [Note 2] Equivalent unit cost of materials$5.83
Note 2: Under the FIFO method, the equivalent units of production is comprised of three parts: the completion of units on hand at the beginning of the period, the units started and completed during the period, and the units partially completed at the end of the period. Applying these principles to the given fact pattern, the total equivalent units of production for conversion costs is determined as follows: Equivalent units for the first quarter: Work in process, beginning (16,000 units 80% to complete)12,800
Units started and completed: Units completed and transferred out92,000 Units in beginning inventory(16,000)76,000
Work in process, ending (24,000 units 40% complete)9,600
Equivalent units of production98,400
Choices “b”, “c”, and “d” are incorrect, per the above explanation.
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