Multiple Choice
Hudson Dock Company manufactures boat docks on an assembly line. Its standard costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production.
Data for the Assembly Department for May 20x3 are:
Work in process, beginning inventory: 70 units
Direct materials (100% complete)
Conversion costs (25% complete)
Units started during May 40 units
Work in process, ending inventory: 10 units
Direct materials (100% complete)
Conversion costs (50% complete)
Costs for May:
Standard costs for Assembly:
Direct materials $4,000 per unit
Conversion costs $16,000 per unit
Work in process, beginning inventory:
Direct materials $140,000
Conversion costs $260,000
Which of the following journal entries properly records the assignment of conversion costs to work-in-process inventory and the conversion-cost variances of the Assembly Department, assuming that conversion costs are 20% higher than expected?
a. Work in Process - Assembly $1,680,000
Conversion-Cost Variances $ 280,000
Assembly Department Conversion Cost Control $1,400,000
b. Work in Process - Assembly $1,680,000
Direct Materials Variances $ 280,000
Testing Department Conversion Cost Control $1,400,000
c. Work in Process - Assembly $1,400,000
Conversion-Cost Variances $ 280,000
Assembly Department Conversion Cost Control $1,680,000
d. Work in Process - Testing $1,400,000
Assembly Department Conversion Cost Control $1,400,000
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