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Managerial Accounting, 16e (Garrison)
Appendix 4A FIFO Method
1) Any difference in the equivalent units calculated under the weighted-average and the FIFO
methods is due to the units in the ending work in process inventory.
2) When comparing the two process costing methods for the same company, equivalent units
computed under the FIFO method will always be less than or equal to equivalent units computed
under the weighted-average method.
3) The equivalent units in the ending work in process inventory will be different under the FIFO
and the weighted-average methods of process costing.
4) The cost per equivalent unit for conversion costs will always be the same under both the FIFO
and the weighted-average methods if there is no beginning work in process inventory.
5) Under the FIFO method of product costing, equivalent units of production consider units in the
beginning inventory as if they were started and completed during the current period.
6) The equivalent units of production for a department using the FIFO process costing method is
equal to the number of units completed plus the equivalent units in the ending inventory.
7) The cost per equivalent unit under the FIFO method of process costing is equal to the cost added
during the period divided by the equivalent units of production for the period.
8) From the standpoint of cost control, the FIFO method of process costing is superior to the
weighted-average method.
9) In the cost reconciliation report under the FIFO method, the costs to be accounted for equals the
cost of ending work in process inventory plus the costs added during the period.
10) In the cost reconciliation report under the FIFO method, the costs accounted for equals the cost
of units transferred out plus the costs added during the period.
11) In the cost reconciliation report under the FIFO method, the costs accounted for equals the cost
of beginning work in process inventory plus the costs added during the period.
12) The weighted-average method of process costing differs from the FIFO method of process
costing in that the weighted-average method:
A) does not consider the degree of completion of beginning work in process inventory when
computing equivalent units of production.
B) considers ending work in process inventory to be fully complete.
C) will always yield a higher cost per equivalent unit.
D) All of the choices are correct.
13) All production costs have been steadily rising in the Donner Company for several periods. The
company maintains large work in process inventories. Donner Company's cost per equivalent unit
computed using the FIFO method would be:
A) the same as that computed under the weighted-average method.
B) higher than that computed under the weighted-average method.
C) lower than that computed under the weighted-average method.
D) could be lower than, the same as, or higher than that computed under the weighted-average
method.
14) Equivalent units of production for a process costing system using the FIFO method are equal
to:
A) Units completed during the period + Equivalent units in the ending work in process inventory.
B) Units transferred out + Equivalent units in ending work in process inventory + Equivalent units
in beginning work in process inventory.
C) Units started and completed during the period + Equivalent units in the ending work in process
inventory.
D) Units completed during the period and transferred out.
15) Under the FIFO method, in addition to the cost of units started and completed during the
period, the cost of the units transferred out of the department includes:
The cost in beginning
work in process
inventory
The cost to complete
the units in beginning
work in process
inventory
A)
Yes
Yes
B)
No
Yes
C)
Yes
No
D)
No
No
A) Choice A
B) Choice B
C) Choice C
D) Choice D
16) Under the FIFO method, the cost per equivalent unit equals:
A) Cost of beginning work in process inventory ÷ Equivalent units of production.
B) (Cost of beginning work in process inventory + Cost added during the period) ÷ Equivalent
units of production.
C) Cost added during the period ÷ Equivalent units of production.
D) (Cost added during the period − Cost of beginning work in process inventory) ÷ Equivalent
units of production.
17) Intask Corporation uses the FIFO method in its process costing system. Beginning inventory in
the mixing department consisted of 6,000 units that were 75% complete with respect to conversion
costs. Ending work in process inventory consisted of 5,000 units that were 60% complete with
respect to conversion costs. If 12,000 units were transferred to the next processing department
during the period, the equivalent units of production for conversion cost would be:
A) 12,500 units
B) 10,500 units
C) 13,500 units
D) 13,000 units
18) Gaba Corporation uses the FIFO method in its process costing system. The Grinding
Department started the month with 17,000 units in its beginning work in process inventory that
were 60% complete with respect to conversion costs. An additional 60,000 units were transferred
in from the prior department during the month to begin processing in the Grinding Department.
During the month 70,000 units were completed in the Grinding Department and transferred to the
next processing department. There were 7,000 units in the ending work in process inventory of the
Grinding Department that were 10% complete with respect to conversion costs. What were the
equivalent units of production for conversion costs in the Grinding Department for the month?
A) 70,700
B) 60,500
C) 50,000
D) 70,000
19) Onyemah Corporation uses the FIFO method in its process costing system. Operating data for
the Brazing Department for the month of November appear below:
Units
Percent
Complete with
Respect to
Conversion
Beginning work in process inventory
7,300
40
%
Transferred in from the prior department during November
37,500
Completed and transferred to the next department during
November
35,600
Ending work in process inventory
9,200
70
%
What were the equivalent units of production for conversion costs in the Brazing Department for
November?
A) 42,040
B) 39,120
C) 35,600
D) 39,400
20) Salmont Corporation uses the FIFO method in its process costing system. The company
reported 30,800 equivalent units of production for materials last month. The company's beginning
work in process inventory consisted of 8,000 units, 75% complete with respect to materials. The
ending work in process inventory consisted of 6,000 units, 80% complete with respect to materials.
The number of units started during the month was:
A) 32,000 units
B) 24,000 units
C) 6,800 units
D) 30,000 units
21) Kalyan Corporation uses the FIFO method in its process costing system. Operating data for the
Enameling Department for the month of May appear below:
Units
Percent Complete
with Respect to
Conversion
Beginning work in process inventory
1,200
20
%
Transferred in from the prior department during May
58,000
Ending work in process inventory
6,600
70
%
What were the equivalent units of production for conversion costs in the Enameling Department
for May?
A) 63,400
B) 52,600
C) 56,980
D) 57,220
22) Marston Corporation uses the FIFO method in its process costing system. The equivalent units
of production for March for conversion costs totaled 37,500 units. The beginning work in process
inventory in March consisted of 15,000 units, 60% complete with respect to conversion costs. The
ending work in process inventory in March consisted of 10,000 units, 75% complete with respect
to conversion costs. The number of units started during the month was:
A) 41,500 units
B) 34,000 units
C) 25,000 units
D) 72,500 units
23) Carver Corporation uses the FIFO method in its process costing system. The Assembly
Department started the month with 2,000 units in its beginning work in process inventory that were
60% complete with respect to conversion costs. An additional 66,000 units were transferred in
from the prior department during the month to begin processing in the Assembly Department.
There were 9,000 units in the ending work in process inventory of the Assembly Department that
were 50% complete with respect to conversion costs. What were the equivalent units of production
for conversion costs in the Assembly Department for the month?
A) 59,000
B) 62,300
C) 63,500
D) 73,000
24) Billings Corporation uses the FIFO method in its process costing system. On July 1,
Department A had 10,000 units in process that were 80% complete with respect to conversion. On
July 31 the department had 8,000 units in process that were 60% complete with respect to
conversion. The department transferred 40,000 units out during the month, of which 10,000 units
came from the beginning work in process inventory, and 30,000 units were started and completed
during the month. All materials are added at the beginning of the process in Department A. What
are the equivalent units of production for the month for materials and conversion, respectively?
A) 38,000 units and 36,800 units
B) 38,000 units and 38,000 units
C) 48,000 units and 44,800 units
D) 48,000 units and 48,000 units
25) Ricardo Corporation uses the FIFO method in its process costing system. During June, 36,000
units were completed in Department M. Of this total, 6,000 were in the beginning work in process
and the remainder were started and completed during the month. The work in process at June 1 was
40% complete with respect to conversion costs. Materials are added at the beginning of the
process. A total of 8,000 units were in work in process at June 30; these units were 80% complete
with respect to conversion costs. The equivalent units of production for conversion costs for June
is closest to:
A) 32,800 units
B) 33,600 units
C) 40,000 units
D) 36,400 units
26) Laurant Corporation uses the FIFO method in its process costing system. Department A is the
first stage of the company's production process. The following information is available for
conversion costs for the month of May for Department A:
Units
Work in process, beginning (40% complete with respect to conversion costs)
5,000
Started in May
42,000
Completed in May and transferred to Department B
37,000
Work in process, ending (30% complete with respect to conversion costs)
8,000
The equivalent units of production for conversion costs for the month is closest to:
A) 34,000 units
B) 34,400 units
C) 35,000 units
D) 37,400 units
27) Ibarra Corporation uses the FIFO method in its process costing system. The first processing
department, the Forming Department, started the month with 16,000 units in its beginning work in
process inventory that were 20% complete with respect to conversion costs. The conversion cost in
this beginning work in process inventory was $19,250. An additional 97,000 units were started
into production during the month and 100,000 units were completed and transferred to the next
processing department. There were 13,000 units in the ending work in process inventory of the
Forming Department that were 30% complete with respect to conversion costs. A total of
$593,123 in conversion costs were incurred in the department during the month. The cost per
equivalent unit for conversion costs for the month is closest to:
A) $6.100
B) $5.890
C) $5.422
D) $6.115
18
28) Krumbly Corporation uses the FIFO method in its process costing system. At the beginning of
the month, Department D's work in process inventory contained 2,000 units. These units were
100% complete with respect to materials and 40% complete with respect to conversion costs, with
a total cost at that point of $13,600. During the month, conversion costs amounted to $8 per
equivalent unit. If all 2,000 units are fully complete by the end of the month and transferred out of
the department, the total cost of the 2,000 units transferred out will be closest to:
A) $9,600
B) $19,600
C) $23,200
D) $16,000
29) Maccari Corporation uses the FIFO method in its process costing system. Operating data for
the Casting Department for the month of September appear below:
Units
Percent Complete
with Respect to
Conversion
Beginning work in process inventory
24,000
80
%
Transferred in from the prior department during
September
61,000
Ending work in process inventory
10,000
60
%
According to the company's records, the conversion cost in beginning work in process inventory
was $61,824 at the beginning of September. Additional conversion costs of $206,412 were
incurred in the department during the month.
The cost per equivalent unit for conversion costs for September is closest to: (Round off to three
decimal places.)
A) $3.340
B) $3.220
C) $3.156
D) $3.384
