Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Chapter 5 - Process costing
MULTIPLE CHOICE
1. The sum of direct labour and factory overhead is referred to as
a.
period costs.
b.
conversion costs.
c.
prime costs.
d.
direct product costs.
2. Conversion costs do NOT include
a.
direct materials.
b.
direct labour.
c.
factory overhead.
d.
all of these costs
3. Dedo Company purchased £4,000 of raw materials and used £3,750. The entry to record the
requisition of direct materials for the Mixing Department would be
a.
Raw Materials 3,750
Work in Progress--Mixing Department 3,750
b.
Materials Expense 4,000
Raw Materials 4,000
c.
Work in Progress--Mixing Department 3,750
Raw Materials 3,750
d.
Work in Progress--Mixing Department 4,000
Raw Materials 4,000
4. Process costing is complicated by
a.
the presence of significant beginning and ending inventories.
b.
the treatment of beginning inventory cost.
c.
nonuniform application of manufacturing costs.
d.
all of the above.
5. Equivalent units of production are
a.
complete units that could have been produced given the total amount of manufacturing
effort expended for the period under consideration.
b.
the average number of units produced in a given period.
c.
continuously measured in a total quality environment.
d.
computed in both job-order and process cost systems.
6. Equivalent production expresses all activity of the period in terms of
a.
direct labour hours.
b.
partially completed units.
c.
fully completed units.
d.
units of input.
7. The two methods used to determine equivalent units of production are
a.
weighted average and FIFO.
b.
weighted average and LIFO.
c.
FIFO and LIFO.
d.
FIFO and specific identification.
8. When computing equivalent units of production, the method that combines partially completed units in
beginning inventory with current period production is the
a.
FIFO method.
b.
LIFO method.
c.
weighted average method.
d.
specific identification method.
9. Simplicity is the main advantage of which of the following process costing methods?
a.
weighted average
b.
LIFO
c.
FIFO
d.
specific identification
10. The cost per equivalent unit using the weighted average method is calculated as
a.
Total costs to account for/Equivalent units.
b.
Costs added during the period/Equivalent units.
c.
Total costs to account for/Number of partially completed units.
d.
Costs added during the period/Number of partially completed units.
11. Conversion costs consist of
a.
direct materials and direct labour.
b.
direct materials and manufacturing overhead.
c.
direct labour and manufacturing overhead.
d.
direct labour and transferred-in costs.
12. In a process used by Kane Company, conversion cost is incurred uniformly throughout the process.
Material is added at the end of the process. Which of the following statements is true?
a.
Kane Company cannot use process costing and must use job-order costing.
b.
Kane Company must calculate the unit cost of materials and the unit conversion cost
separately.
c.
Kane Company will report the cost of materials with the cost of the ending inventory.
d.
Kane Company uses parallel processing.
13. The Packing Department receives goods produced in previous departments. The costs transferred into
the Packing Department are treated as
a.
conversion cost incurred uniformly throughout the process.
b.
materials cost added at the end of the process.
c.
materials cost added at the beginning of the process.
d.
either materials cost or conversion cost, depending on whether the firm uses FIFO or
weighted average.
14. If costs of manufacturing inputs fluctuate from period to period, which of the following methods is
more useful for cost control?
a.
FIFO
b.
LIFO
c.
weighted average
d.
equivalent units
15. If the cost of materials increased from January to February and there is beginning inventory for each
month, which of the following statements would be true? (Assume all other factors are held constant.)
a.
Only the weighted average method would result in an increase in the unit cost for
February.
b.
Only the FIFO method would result in an increase in the unit cost for February.
c.
Both the weighted average method and the FIFO method would result in an increase in the
unit cost for February; however, the weighted average method would result in a greater
unit cost for units in February than the FIFO method.
d.
Both the weighted average method and the FIFO method would result in an increase in the
unit cost for February; however, the FIFO method would result in a greater unit cost for
units in February than the weighted average method.
16. If the cost of materials decreased from June to July, which of the following statements would be true?
(Assume all other factors are held constant.)
a.
Only the FIFO method would result in a decrease in the unit cost for July.
b.
Only the weighted average method would result in a decrease in the unit cost for July.
c.
Both the weighted average method and the FIFO method would result in a decrease in the
unit cost for July; however, the FIFO method would result in a lower unit cost for units in
July than the weighted average method.
d.
Both the weighted average method and the FIFO method would result in a decrease in the
unit cost for July; however, the weighted average method would result in a lower unit cost
for units in July than the FIFO method.
17. Beginning inventory for the month contained 2,000 units that were 70 per cent complete with respect
to materials. During the month, 60,000 units were completed and transferred out. Ending inventory
contained 3,000 units, 20 per cent complete with respect to materials. The weighted average equivalent
units of production for materials for the month would be
a.
62,400
b.
63,000
c.
60,600
d.
60,000
18. Beginning inventory for the month contained 2,000 units that were 45 per cent complete with respect
to materials. During the month, 18,000 units were completed and transferred out. Ending inventory
contained 2,500 units, 20 per cent complete with respect to materials. The weighted average equivalent
units of production for materials for the month would be
a.
18,000.
b.
19,600.
c.
19,400.
d.
18,500.
Figure 5-1
The Flanders Ltd. produces a product that passes through two processes. During June, the first
department transferred 15,000 units to the second department. Materials are added uniformly in the
second process. The following information was provided about the second department's operations
during June:
Units, beginning work in progress
5,000
Units, ending work in progress
7,000
19. Refer to Figure 5-1. The Flanders Corporation's units started in the second department during April
would be
a.
20,000.
b.
15,000.
c.
10,000.
d.
8,000.
e.
22,000.
Figure 5-2
Units
Work in progress, September 1 (40% complete)
5,000
Started in September
20,000
Work in progress, September 30 (60% complete)
8,000
Materials are added at the beginning of the process.
20. Refer to Figure 5-2. Equivalent units of production for materials using the weighted average method
would be
a.
29,800.
b.
28,000.
c.
33,000.
d.
25,000.
21. Refer to Figure 5-2. Equivalent units of production for conversion costs using the weighted average
method would be
a.
25,000.
b.
27,800.
c.
26,800.
d.
21,800.
22. Nortfont Industries had 25,000 units in production during the period just ended. Equivalent units of
production were calculated at 24,000; 22,000 units were completed and transferred to finished goods.
Cost associated with the beginning inventory was £125,000. Manufacturing costs totaling £850,000
were added during the period. Nortfont uses the weighted average cost method. Nortfont's cost per unit
was
a.
£34.00.
b.
£39.00.
c.
£40.63.
d.
£38.64.
Figure 5-3
Units
Work in progress, May 1 (10% complete)
2,000
Started in May
17,000
Work in progress, May 31 (20% complete)
3,000
Materials and conversion are incurred uniformly throughout the progress.
23. Refer to Figure 5-3. Units started and completed using the weighted average method would be
a.
18,000.
b.
16,000.
c.
12,000.
d.
14,000.
24. Refer to Figure 5-3. The total units of production to be accounted for would be
a.
14,000.
b.
17,000.
c.
19,000.
d.
22,000.
25. Refer to Figure 5-3. Equivalent units of production for conversion using the weighted average method
would be
a.
14,800.
b.
16,400.
c.
17,800.
d.
16,600.
26. Refer to Figure 5-3. Equivalent units of production for materials using the weighted average method
would be
a.
16,600.
b.
14,800.
c.
17,800.
d.
18,860.
27. The following information is provided:
Units
Work in progress, June 1 (20% complete)
4,000
Started in June
32,000
Work in process, June 30 (30% complete)
12,000
Materials are added at the beginning of the process.
Equivalent units of production for conversion costs using the weighted average method would be
a.
35,600.
b.
34,800.
c.
36,000.
d.
27,600.
28. Burgundy Manufacturing uses a process cost system and computes cost using the weighted average
method. During the current period, the beginning work-in-progress inventory cost was £13,525.
Manufacturing cost added was £57,000. If Burgundy's ending work-in-progress inventory was valued
at £15,100, then cost of goods transferred must have been
a.
£70,525.
b.
£55,425.
c.
£84,625.
d.
£58,575.
29. The following amounts were selected from the production report of Chandon Corporation:
Actual units in production
42,000
Equivalent units (materials)
42,000
Equivalent units (conversion)
39,000
Cost per equivalent unit (materials)
£1.10
Cost per equivalent unit (conversion)
£0.90
Chandon uses the weighted average method in preparing its production reports. Chandon's total
production cost to be accounted for must have been
a.
£81,300.
b.
£84,000.
c.
£89,100.
d.
£72,900.
Figure 5-4
The following information is available for Department X for August:
Work in progress, August 1:
Materials
£8,000
Conversion costs
£15,000
Costs added during August:
Materials
£28,000
Conversion costs
£25,000
Equivalent units of production (weighted average):
Materials
4,000
Conversion
5,000
30. Refer to Figure 5-4. Department X's cost per equivalent unit for materials using the weighted average
method would be
a.
£2.00.
b.
£7.00.
c.
£8.00.
d.
£9.00.
31. Refer to Figure 5-4. Department X's cost per equivalent unit for conversion using the weighted average
method would be
a.
£8.00.
b.
£5.00.
c.
£3.00.
d.
£9.00.
Figure 5-5
The following information is available for Department A for the month of July:
Units
Cost
Work in progress, July 1 (60% complete)
5,000
Direct materials
£12,000
Conversion
18,000
Total work in progress, July 1
£30,000
Started in production during July
20,000
Costs added:
Direct materials
£36,000
Conversion
_52,000
Total costs added during July
£88,000
Work in progress, July 31, (40% complete) 2,000
Materials are added at the beginning of the process. (Round to two decimal places.)
32. Refer to Figure 5-5. Department A's cost per equivalent unit of production for conversion using the
weighted average method would be
a.
£2.60.
b.
£2.94.
c.
£3.04.
d.
£3.50.
Figure 5-6
Kramer, Inc., manufactures a product that passes through two processes: mixing and molding. All
manufacturing costs are added uniformly in the mixing department.
Information for the mixing department for April follows:
Work in progress, April 1:
Units (35% complete)
5,000
Direct materials
£24,000
Direct labour
£30,000
Overhead
£10,000
During April, 25,000 units were completed and transferred to the molding department. The following
costs were incurred by the mixing department during April:
Direct materials
£ 90,000
Direct labour
120,000
Overhead
30,000
Two thousand five hundred (2,500) units that were 80 per cent complete remained in mixing at April
30.
33. Refer to Figure 5-6. Kramer's equivalent units of production using the weighted average method would
be
a.
28,750.
b.
20,000.
c.
27,000.
d.
23,000.
34. Refer to Figure 5-6. Kramer's total costs to account for would be
a.
£304,000.
b.
£264,000.
c.
£240,000.
d.
£176,000.
35. Refer to Figure 5-6. Kramer's total cost per equivalent unit of production would be
a.
£12.16.
b.
£11.26.
c.
£9.76.
d.
£6.52.
36. Refer to Figure 5-6. Kramer's cost of goods transferred to the molding department during April would
be
a.
£210,000.
b.
£261,050.
c.
£281,500.
d.
£294,000.
Figure 5-7
The Corn Ltd. produces a product that passes through two processes. During April, the first
department transferred 40,000 units to the second department. The cost of the units transferred was
£60,000. Materials are added uniformly in the second process. The following information was
provided about the second department's operations during April:
Units, beginning work in progress
8,000
Units, ending work in progress
11,000
37. Refer to Figure 5-7. Units started in the second department during April for Corn Ltd. would be
a.
40,000.
b.
29,000.
c.
32,000.
d.
48,000.
38. Refer to Figure 5-7. Units completed in the second department during April for Corn Ltd. would be
a.
48,000.
b.
37,000.
c.
19,000.
d.
55,000.
