Cost Accounting Chapter 8

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Multiple Choice Questions

21. Which of the following statements is (are) true regarding product costing?
(A) Twenty cans of paint that are 25% full are equivalent to four cans of paint that are completely full.
(B) The equivalent unit concept refers to the actual amount of work during the period stated in terms of whole units.
A. Only A is true.
B. Only B is true.
C. Both A and B are true.
D. Neither A nor B is true.

B. Only B is true.

22. Which of the following organizations would most likely use a process costing system?
A. Gasoline refinery
B. Automobile retailer
C. Airplane manufacturer
D. Public accounting firm

A. Gasoline refinery

23. The following examples briefly describe the manufacture of two different products. Which costing method (job-order or process) would be the best method to use for each project?
I. Fred Puetz manufactures Fred's Wine Cooler. Fred once made the statement, "People can have any flavor of Fred's Wine Cooler they want as long it's boysenberry."
II. Ahmad Aerondonetics is manufacturing three space shuttles for the country of Kricherra. Each shuttle is slightly different and production will last approximately two years.

a. Process Process
b. Job-order Job-order
c. Process Job-order
d. Job-order Process

A. a
B. b
C. c
D. d

C. c

24. An equivalent unit of conversion costs is equal to the amount of conversion costs required to
A. start a unit.
B. start and complete a unit.
C. transfer a unit in.
D. transfer a unit out.

B. start and complete a unit.

25. Of the following process costing steps, which must be done last?
A. Compute the equivalent units of production.
B. Compute the costs per equivalent unit of production.
C. Measure the physical flow of resources.
D. Identify the product costs to account for.

B. Compute the costs per equivalent unit of production.

26. If the units in the beginning Work-in-Process Inventory are greater than the units in the ending Work-in-Process Inventory, then the units transferred out are
A. more than the units started during the period.
B. equal to the equivalent units of production.
C. less than the units started during the period.
D. equal to the actual work done during the period.

A. more than the units started during the period.

27. Which of the following statements concerning a process cost accounting system is false?
A. The units in beginning inventory plus the units transferred out during the month should equal the units in the ending inventory plus the units transferred in during the month.
B. If material is used evenly throughout a process, the number of equivalent material units will equal the number of equivalent units for the conversion (processing) costs.
C. Actual costing may be used in a process costing system to assign indirect overhead costs to departments.
D. The units in beginning inventory plus the units transferred in during the month should equal the units in the ending inventory plus the units transferred out during the month.

A. The units in beginning inventory plus the units transferred out during the month should equal the units in the ending inventory plus the units transferred in during the month.

28. In the computation of the manufacturing cost per equivalent unit, the weighted average method of process costing considers
A. current costs only.
B. current costs plus cost of beginning Work-in-Process Inventory.
C. current costs plus cost of ending Work-in-Process Inventory.
D. current costs less cost of beginning Work-in-Process Inventory.

B. current costs plus cost of beginning Work-in-Process Inventory.

29. In order to compute equivalent units of production using the FIFO method of process costing, work for the period must be broken down to units
A. completed during the period and units in ending inventory.
B. started during the period and units transferred out during the period.
C. completed from beginning inventory, started and completed during the month, and units in ending inventory.
D. processed during the period and units completed during the period.

C. completed from beginning inventory, started and completed during the month, and units in ending inventory.

30. Blue Company has beginning and ending Work-in-Process Inventories that are 45% and 10% complete, respectively. Materials are added at the beginning of the process. If first-in, first-out (FIFO) process costing is used, the total equivalent units for materials will equal the number of units
A. transferred out during the period.
B. started and completed during the period.
C. started into the process during the period.
D. started into the process plus the units in the ending inventory.

C. started into the process during the period.

31. Red Company had Work-in-Process Inventories that were 45% complete at the start of the month. Work-in-Process at the end of the month was 10% complete. Materials were added at the beginning of the process. If weighted-average process costing is used, the total equivalent units for materials will equal the number of units
A. transferred out during the period.
B. started and completed during the period.
C. started into the process during the period.
D. transferred out during the process plus the units in the ending inventory.

D. transferred out during the process plus the units in the ending inventory.

32. A form prepared periodically for each processing department summarizing (1) the units for which the department is accountable and the disposition of these units and (2) the costs charged to the department and the allocation of these costs is called a
A. schedule of Cost of Goods Manufactured.
B. production cost report.
C. job order cost sheet.
D. schedule for Cost of Goods Sold.

B. production cost report.

33. Materials are added at the beginning of a process in a process costing system. The beginning Work-in-Process Inventory was 30% complete as to conversion costs. Using first-in, first-out (FIFO) process costing, the total equivalent units for material are
A. beginning inventory this period for this process.
B. units started this period in this process.
C. units started this period in this process plus the beginning inventory.
D. units started this period in this process plus 70% of the beginning inventory this period.

B. units started this period in this process.

34. An error was made by ROC Company in computing the percentage-of-completion of the current year's ending Work-in-Process Inventory. The error resulted in the assignment of a lower percentage of completion to each component of the inventory than actually was the case. There was no beginning Work-in-Process Inventory. What is the effect of this error on (1) cost assigned to cost of goods completed for the period and (2) the computation of costs per equivalent unit?
1 2
A. Understated Understated
B. Understated Overstated
C. Overstated Understated
D. Overstated Overstated

D. Overstated Overstated

35. Which of the following statements regarding first-in, first-out (FIFO) process costing is/are true?
(A) First-in, first-out (FIFO) process costing transfers out the costs in beginning inventory before transferring out the costs associated with units started and completed.
(B) First-in, first-out process costing requires one additional step in assigning costs to the units transferred out and the ending Work-in-Process Inventory.
A. A only.
B. B only.
C. Both A and B.
D. Neither A nor B.

A. A only.

36. In a production-cost report using process costing, transferred-in costs are most similar to
A. material added at the beginning of the process.
B. conversion costs added during the process.
C. costs transferred-out to the next process.
D. costs included in beginning inventory.

A. material added at the beginning of the process.

37. Additional materials are added in the second department of a four-department production process. However, this addition does not increase the number of units being produced in the second department, but will
A. increase the equivalent units of production.
B. increase the total cost per unit.
C. decrease the value of the transferred-in costs.
D. decrease the total costs to account for.

B. increase the total cost per unit.

38. Under which of the following conditions will the FIFO method produce the same cost of goods manufactured as the weighted-average method?
A. There is no ending inventory.
B. There is no beginning inventory.
C. The beginning and ending inventories are equal.
D. The beginning and ending inventories are both 50% complete.

B. There is no beginning inventory.

39. Which of the following statements is (are) true?
I. For cost control, the FIFO method of process costing is better than the weighted-average method.
II. The weighted-average method of process costing assigns more cost to units completed (transferred out) than the FIFO method.
A. I only.
B. II only.
C. Both I and II.
D. Neither I nor II.

A. I only.

40. Which of the following statements is (are) false?
(A) Operations costing accounts for material costs like job costing and conversion costs like process costing.
(B) An automobile manufacturer is more likely to use an operations costing system than a process costing system.
A. A only.
B. B only.
C. Both A and B.
D. Neither A nor B.

D. Neither A nor B.

41. Operations costing systems are used when the products have
A. used a standardized method that is repeatedly performed.
B. common characteristics and no individual characteristics.
C. individual characteristics and no common characteristics.
D. been mass produced in a continuous production process.
E. some common characteristics and some individual characteristics.

E. some common characteristics and some individual characteristics.

42. An operations costing system is
A. identical to a process costing system except that actual cost is used for manufacturing overhead.
B. the same as a process costing system except that materials are allocated on the basis of batches of production.
C. the same as a job order costing system except that materials are accounted for in the same way as they are in a process costing system.
D. the same as a job order costing system except that no overhead allocations are made since actual costs are used throughout.
E. a system in which manufacturing activities are finely divided into individual, discrete steps or operations.

B. the same as a process costing system except that materials are allocated on the basis of batches of production.

43. Predetermined manufacturing overhead rates can be used in all of the following costing systems except
A. job costing.
B. process costing.
C. operations costing.
D. actual costing.

D. actual costing.

44. The Blue Corporation started and completed 4,800 units during February. Blue started the month with 700 units in process (40% complete) and ended the month with 400 units in process (40% complete). How many units were transferred to the Finished Goods Inventory during February?
A. 5,500.
B. 5,380.
C. 5,100.
D. 4,400.
E. 4,100.

C. 5,100.

45. The ALG Manufacturing Company has gathered the following information for the month of September:
• 6,000 units in the beginning Work-in-Process Inventory (75% complete as to materials, 1/3 complete with respect to the conversion costs)
• 60,000 units were started into production
• 50,000 units were completed and transferred to the next department
• The ending Work-in-Process Inventory is complete as to materials but only 3/8 complete with respect to conversion costs.
What are the equivalent units of production (EUP) for materials in the month of September assuming ALG uses weighted-average process costing?
A. 52,000
B. 64,500
C. 66,000
D. 61,500

C. 66,000

46. The ALG Manufacturing Company has gathered the following information for the month of September:
• 6,000 units in the beginning Work-in-Process Inventory (75% complete as to materials, 1/3 complete with respect to the conversion costs)
• 60,000 units were started into production
• 50,000 units were completed and transferred to the next department
• The ending Work-in-Process Inventory is complete as to materials but only 3/8 complete with respect to conversion costs.
What are the equivalent units of production (EUP) for the conversion costs in the month of September assuming ALG uses weighted-average process costing?
A. 64,500
B. 56,000
C. 61,500
D. 54,000

B. 56,000

47. ABC Company has a beginning Work-in-Process Inventory of 25,000 units (40% complete). During the period, 110,000 units were started and the ending Work-in-Process Inventory consisted of 20,000 units (80%). What are the equivalent units for conversion costs using weighted-average process costing?
A. 110,000
B. 115,000
C. 121,000
D. 131,000

D. 131,000

48. The Wisco Company has a process cost system. All materials are placed in process when the process is first begun. At the beginning of September, there were no units of product in process. During September 50,000 units were started; 5,000 of these were still in process at the end of September and were 3/5 finished. The equivalent units of material in September were
A. 40,000
B. 45,000
C. 48,000
D. 50,000

D. 50,000

49. The Wisco Company has a process cost system. All materials are placed in process when the process is first begun. At the beginning of September, there were no units of product in process. During September 50,000 units were started; 5,000 of these were still in process at the end of September and were 3/5 finished. The equivalent units for the conversion costs in September were
A. 40,000
B. 45,000
C. 48,000
D. 50,000

C. 48,000

50. Department B had a beginning inventory of 400 units, 1/4 completed; an ending inventory of 300 units, 2/3 completed, and received 900 units during the period from Department A. What was the equivalent unit production of Department B, assuming weighted-average process costing?
A. 800 units.
B. 900 units.
C. 1,100 units.
D. 1,200 units.
E. 1,400 units.

D. 1,200 units.

51. Sussex Corporation's production cycle starts in the Mixing Department. The following information is available for April:
Work-in-process, April 30 (60% complete) 25,000 units
Total units in process during April 280,000 units
Work-in-process, April 1 (25% complete) 40,000 units

Materials are added at the beginning of the process in the Mixing Department. What are the equivalent units of production for the month of April, assuming Sussex uses the weighted average method?

a. 240,000 260,000
b. 255,000 235,000
c. 280,000 270,000
d. 315,000 285,000
e. 320,000 295,000

A. a
B. b
C. c
D. d
E. e

C. c

52. Department A had no Work-in-Process at the beginning of the period, 1,000 units were completed during the period, 200 units were 50% completed at the end of the period, and the following manufacturing costs were debited to the departmental Work-in-Process account during the period

DM (1,200@$10) $12,000
DL 5,000
Factory Overhead 4,400


Assuming that all direct materials are placed in process at the beginning of production and Department A uses weighted-average process costing, what is the total cost of the departmental Work-in-Process Inventory at the end of the period?
A. $3,650
B. $2,900
C. $2,000
D. $1,825

B. $2,900

53. Read, Inc. instituted a new process in October 2008. During October, 10,000 units were started in Department A. Of the units started, 8,000 were transferred to Department B, and 2,000 remained in Work-in-Process at October 31, 2008. The Work-in-Process at October 31, 2008, was 100% complete as to material costs and 50% complete as to conversion costs. Material costs of $27,000 and conversion costs of $36,000 were charged to Department A in October. What were the total costs transferred to Department B assuming Department A uses weighted-average process costing?
A. $46,900
B. $53,600
C. $56,000
D. $57,120

B. $53,600

54. The Viva Company had 20,000 units in process on December 31, 2008 which was 80% complete as to materials but only 40% complete as to conversion costs. The company's records show 40,000 units were transferred to the Finished Goods Inventory during January 2009. On January 31, 2009, 15,000 units were on hand which were 30% complete as to conversion costs and 60% complete as to materials. What are the equivalent units of production for the conversion costs in January, assuming Viva uses first-in, first-out (FIFO)?
A. 34,000
B. 35,000
C. 36,500
D. 41,500

C. 36,500

55. RST Company incurred $126,000 in material costs during July. Additionally, the 12,000 units in the Work-in-Process Inventory on July 1 had materials assigned to them of $32,000, even though they were only 5% complete as to materials. No additional units were started during July, and there were no unfinished units on hand on July 31. What is the material cost per unit for July, assuming RST uses weighted-average process costing?
A. $10.50
B. $11.59
C. $13.17
D. $15.49

C. $13.17

56. Beattie Company completed and transferred out 2,300 units in May 2008. There were 200 units in the Work-in-Process Inventory on May 31, 2008, 30% complete as to conversion costs and 100% complete as to materials. The month's charges for conversion costs and material costs were $9,440 and $6,250, respectively. There was no beginning inventory on May 1, 2008. What is the cost of the work transferred-out during May?
A. $8,510
B. $14,950
C. $15,690
D. $16,250

B. $14,950

57. Sussex Corporation's production cycle starts in the Mixing Department. The following information is available for April:

Work in process, April 30 (60% complete) 25,000 units
Total units in process during April 280,000 units
Work in process, April 1 (25% complete) 40,000 units


Materials are added at the beginning of the process in the Mixing Department. What are the equivalent units of production for the month of April, assuming Sussex uses first-in, first-out (FIFO), process costing.

a. 240,000 235,000
b. 240,000 260,000
c. 280,000 270,000
d. 315,000 285,000
e. 320,000 295,000


A. a
B. b
C. c
D. d
E. e

B. b

58. Equivalent units of production for material are
A. 16,000.
B. 17,000.
C. 19,000.
D. 20,000.

D. 20,000.

59. Equivalent units of production for labor and overhead are
A. 16,000.
B. 17,000.
C. 19,000.
D. 20,000.

B. 17,000.

60. Unit cost of material is
A. $2.20.
B. $2.07.
C. $1.85.
D. $1.76.

D. $1.76.

61. Unit cost of labor and overhead is
A. $2.34.
B. $2.20.
C. $1.97.
D. $1.87.

B. $2.20

62. Total cost of the 16,000 units finished is
A. $63,360.
B. $67,320.
C. $72,640.
D. $65,120.

A. $63,360.

63. Total cost of the 4,000 units of the ending inventory
A. $15,840.
B. $14,520.
C. $9,240.
D. $8,910.

C. $9,240.

64. How many units were transferred-out during the period?
A. 12,000
B. 13,000
C. 18,000
D. 20,000

C. 18,000

65. The How many units were started and completed during the period?
A. 12,000
B. 13,000
C. 18,000
D. 20,000

B. 13,000

66. What are the equivalent units of production for materials during the period?
A. 12,000
B. 13,000
C. 14,000
D. 15,000

C. 14,000

67. What are the equivalent units of production for the conversion costs during the period?
A. 14,500
B. 15,100
C. 16,500
D. 17,100

D. 17,100

68. What are the total costs to be accounted for on the production cost report for Department #2 for the period?
A. $16,400
B. $17,600
C. $11,600
D. $12,660

B. $17,600

69. Determine the equivalent units of production for conversion costs.
A. 500
B. 5,500
C. 5,900
D. 6,400
E. 6,900

D. 6,400

70. The conversion costs per equivalent units is
A. $1.00
B. $1.50
C. $2.00
D. $2.55

C. $2.00

71. The unit cost of Product X started in the prior period and completed in the current period is
A. $2.00
B. $2.50
C. $2.55
D. $3.45

B. $2.50

72. The unit cost of Product X started and completed in the current period is
A. $2.00
B. $2.50
C. $2.55
D. $2.60

D. $2.60

73. The cost of goods transferred to finished goods is
A. $17,660
B. $16,000
C. $13,000
D. $12,800

B. $16,000

74. The cost of the ending Work-in-Process Inventory is
A. $2,600
B. $1,600
C. $600
D. $1,000

B. $1,600

75. In process 2, material G is added when a batch is 60% complete. Ending work-in-process units, which are 50% complete, would be included in the computation of equivalent units for: (CPA adapted)


A. a
B. b
C. c
D. d

A. a

76. A process costing system was used for a department that began operations in January 2008. Approximately the same number of physical units, at the same degree of completion, were in work-in-process at the end of both January and February. Monthly conversion costs are allocated between ending work-in-process and units completed. Compared to the FIFO method, would the weighted average method use the same or a greater number of equivalent units to calculate the monthly allocations? (CPA adapted, 5/91)


A. a
B. b
C. c
D. d

D. d

77. In a process costing system, the application of factory overhead usually would be recorded as an increase in: (CPA adapted)
A. Finished goods inventory control
B. Factory overhead control
C. Cost of goods sold
D. Work-in-process inventory control

D. Work-in-process inventory control

78. Yarn Co.'s inventories in process were at the following stages of completion at April 30:



Equivalent units of production in ending inventory amounted to: (CPA adapted)
A. 150
B. 180
C. 330
D. 350

A. 150

79. The following information pertains to Lap Co.'s Palo Division for the month of April:



All materials are added at the beginning of the process. Using the weighted-average method, the cost per equivalent unit of materials is: (CPA adapted)
A. $0.59
B. $0.55
C. $0.45
D. $0.43
E. $0.48

D. $0.43

80. In computing the current period's manufacturing cost per equivalent unit, the FIFO method of process costing considers: (CPA adapted)
A. only current period costs.
B. current period costs plus cost of beginning work-in-process inventory
C. current period costs less cost of beginning work-in-process inventory
D. current period costs plus the cost of ending work-in-process inventory

A. only current period costs.

81. What is the equivalent unit cost for materials assuming Kimbeth uses first-in, first-out (FIFO) process costing?
A. $4.12
B. $4.50
C. $4.60
D. $4.80
E. $5.46

B. $4.50

82. What is the equivalent unit cost for the conversion costs assuming Kimbeth uses first-in, first-out (FIFO) process costing?
A. $5.65
B. $5.83
C. $6.00
D. $6.20
E. $6.62

B. $5.83

83. What are the total costs in the ending Work-in-Process Inventory assuming Kimbeth uses first-in, first-out (FIFO) process costing?
A. $153,168
B. $154,800
C. $155,328
D. $156,960
E. $159,648

A. $153,168

84. What is the equivalent unit cost for materials assuming Kimbeth uses weighted-average process costing?
A. $4.12
B. $4.50
C. $4.60
D. $4.80
E. $5.46

C. $4.60

85. What is the equivalent unit cost for the conversion costs assuming Kimbeth uses weighted-average process costing?
A. $5.65
B. $5.83
C. $6.00
D. $6.20
E. $6.62

C. $6.00

86. What are the total costs in the ending Work-in-Process Inventory assuming Kimbeth uses weighted-average process costing?
A. $86,400
B. $153,960
C. $154,800
D. $155,328
E. $156,960

E. $156,960

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