Question

PZC Company had the following activities, traceable costs, and physical flow of driver units:
                                                                               Physical Flow of
         Activities                                Costs               Driver Units
   Account inquiry (hours)             $400,000                    10,000 hours
   Account billing (lines)             280,000                    4,000,000 lines
   Account verification (accounts) 150,000                  40,000 accounts
   Correspondence (letters)               50,000        4,000 letters

The above activities are used by departments A and B as follows:

                                                                      A                       B
   Account inquiry (hours)              2,000 hours          4,000 hours
   Account billing (lines)               400,000 lines     200,000 lines
   Account verification (accounts) 10,000 accounts     8,000 accounts
   Correspondence (letters)              1,000 letters               1,600 letters


1. How much of the account billing cost will be assigned to Department B?

Group of answer choices:

$280,000

none of the choices

$14,000

$28,000

2) How much of the account inquiry cost will be assigned to Department B?

Group of answer choices

$160,000

none of the choices

$400,000

$80,000

The Caterpillar Company manufactures small garden tractors on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each tractor must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Caterpillar uses weighted-average costing.

Data for the Assembly Department for April 2008 are:
       Work in process, beginning inventory:                                              400 units
              Direct materials (100% complete)
              Conversion costs (40% complete)
       Units started during April                                                               1,200 units
       Work in process, ending inventory:                                                   250 units
              Direct materials (100% complete)
              Conversion costs (80% complete)

Costs for April 2008:
       Work in process, beginning inventory:
              Direct materials                                                                          $100,000
              Conversion costs                                                                         $300,000
       Direct materials costs added during April                                         $700,000
       Conversion costs added during April                                             $1,250,000
What amount of direct materials costs are assigned to the ending Work-in-Process account for April?

Group of answer choices

$248,387

$143,750

$250,000

$125,000

Answer 1

1.

Account billing cost to Department B = $280,000/4,000,000*200,000 = $14,000

2.

Account inquiry cost to Department B = $400,000/10,000*4,000 = $160,000

3.

Equivalent units for Material:

Units completed and transferred (400+1,200-250)	1,350
Ending work in process	250
Total equivalent units	1,600

Cost per equivalent unit for Material:

Beginning work in process	$100,000
Direct cost added during April	700,000
Total cost	800,000
Total equivalent unit	1,600
Cost per equivalent unit for Material	$500

Directv material cost for ending work in process = 250*$500 = $125,000