Question
Hudson Dock Company manufactures boat docks on an assembly line. Its standard costing system uses two costs categories, direct materials and conversion costs. Each tractor
- Hudson Dock Company manufactures boat docks on an assembly line. Its standard costing system uses two costs categories, direct materials and conversion costs. Each tractor 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 20X5 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?
- Work in Process Assembly Department 1,400,000 Assembly Department Conversion Costs Allocated 1,400,000
Assembly Department Conversion Costs Allocated 1,400,000 Conversion Cost Variances 280,000 Assembly Department Conversion Costs Control 1,680,000
- Work-in-Process Testing Department 1,400,000 Assembly Department Conversion Cost Control 1,400,000
- Work-in-Process - Assembly Department 1,680,000 Conversion-Cost Variances 280,000 Assembly Department Conversion Cost Control 1,400,000
- Work-in-Process Assembly Department 1,680,000 Direct Materials Variances 280,000 Testing Department Conversion Cost Control 1,400,000
- None of the above
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