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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

  1. 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?

  1. 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

  1. Work-in-Process Testing Department 1,400,000 Assembly Department Conversion Cost Control 1,400,000
  2. Work-in-Process - Assembly Department 1,680,000 Conversion-Cost Variances 280,000 Assembly Department Conversion Cost Control 1,400,000
  3. Work-in-Process Assembly Department 1,680,000 Direct Materials Variances 280,000 Testing Department Conversion Cost Control 1,400,000
  4. None of the above

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