AC 512 Comprehensive Exam

7/30/2019 AC 512 Comprehensive Exam

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PROCESS COSTING

1. If spoilage occur due as a result of an internal failure (discrete) in a process cost system,

using fifo costing , the number of equivalent units that production costs should be charged

to would be based upon:

a. Spoiled units c. Units transferred out, beginning and ending units

b. Units transferred out and spoiled units d. Units transferred out, spoilage, endingand beginning units

2. Spoilage occurs as a result of normal production shrinkage in a process cost system, using

average costing, the number of equivalent units that production costs should be charged

to would be based upon:

a. Spoiled units c. units transferred out, spoiled units and ending

inventory

b. Units transferred out and spoiled units d. units transferred out and units in ending

inventory

3. In a process costing, the cost of spoilage due to an internal failure should be recorded as:

a. DR: WIP; CR: FG b. DR:WIP; CR: FOHc. DR: FOH, CR: WIP d. DR: FG;

CR: WIP

4. In a process costing, the cost of rework is usually debited to:

a. FOH Control b. Applied FOH c. Spoiled Goods Inventory d. WIP

5. Spoilage occurs as a result of normal production shrinkage in a process cost system, using

FIFO costing, the number of equivalent units that production costs should be charged to

would be based upon:

a. Spoiled Units c. units transferred out, beginning and

ending units

b. Units transferred out and spoiled units d. units transferred out, spoiled, beginning

and ending units

6. The FIFO will produce the same cost of goods manufactured amount in Weighted Averagewhen:

a. Beginning inventory is 100% complete c. there is no ending inventory

b. Beginning and ending are 50% complete d. there is no beginning

inventory

7. The method that allows the addition of beginning inventory costs with cost incurred in the

period is:

a. FIFO b. Accretion c. LIFO d. Average e. Last in, First Out

8. In a process cost system, using the Weighted Average method, Cost per EUP for a given

unit cost component is found by dividing which of the following by EUP?

a. Only current period cost c. Current period Cost of beginning

b. Current period + Cost ofbeginning d. Current Period + Cost of Ending

9. The weighted average method is thought by some as inferior to the FIFO method because

it:

a. Commingles cost of two periods c. Only considers the last units

worked in

b. Ignores work performed in subsequent periods d. is more difficult to

apply

10.EUP calculation for standard process costing are the same as

a. Weighted Average b. FIFO c. LIFO d. none of these

11.Ozzie had 4,500 units of WIP at April 1 which were 60% complete as to conversion cost.

During April, 15,000 units were completed. At April 30, 6,000 units remained in WIP whichwere 40% complete as to conversion cost. Direct materials are added at the beginning of

the process. How many units were started during April?

a. 16,500 b. 15,000 c. 14,700 d. 13,500 e. none of these

12.With the following data for a company using FIFO, compute the EUP for materials and

conversion cost: Beginning WIP 15 units (DM-100%, CC 30%); Transferred in 150

units; Transferred out 120 units; Ending WIP 45 units (DM-100%, CC 40%).

a. DM 195; CC -179 units c. DM 150, CC - 134 units e .

none of these


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b. DM 165; CC 149 units d. DM 134, CC 150 units

13.The Romeo Company manufactures the famous DingDong watch on an assembly line

basis. January WIP consisted of 5,000 units partially completed. During the month an

additional 110,000 units were started and 105,000 units were completed. The ending WIP

was 3/5 complete as to conversion costs. Conversion costs are added evenly throughout

the process. The following conversion costs were incurred: Beginning Cost P1,500; Total

Current Conversion cost P273,920. The conversion costs assigned to Ending WIP totaled

to P15,360 using the FIFO method of process costing. What was the percentage of

completion as to conversion cost on the 5,000 units in Beginning Work in process?

a. 80% b. 60% c. 40% d. 20% e. none of

these

14.Sed Incorporated had 8,000 units of WIP in Department A on October 1, 2012. These units

were 60% complete as to conversion costs. Materials are added at the beginning of the

process. During the month of October, 34,000 units were started and 36,000 units

completed. Sed had 6,000 units of WIP on October 31. These units were 80% complete as

to conversion costs. By how much did the EUP for the month of October using Weighted

Average exceed the EUP for the month October using the FIFO?

a. DM 8,000; CC 4,800 c. DM 0; CC 4,800 e. none of

theseb. DM 8,000; CC 3,200 d. DM 0; CC 3,200

15.Marlon Corporations production cycle starts in the Mixing Department. The following

information is available for the month of April 2012: WIP, April 1 (50% complete) 40,000

units; Started in April 240,000 units; WIP, April 30 (60% complete) 25,000 units.

Materials are added at the end of the process in the Mixing Department. Using the

weighted average method, what are the EUP of production for the month of April?

a. DM 280,000; CC 270,000 c. DM 255,000; CC 255,000 e.

none ofthese

b. DM 270,000; CC 280,000 d. DM 240,000; CC 250,000

16.Stanley Inc., had 8,000 units or WIP in its Department A on March 1, which were 50%complete as to conversion costs. Materials are introduced at the beginning of the process.

During March 17,000 units were started, 18,000 units were completed and there were

2,000 units of normal spoilage. Stanley had 5,000 units of WIP at March 31, which was

60% complete as to conversion costs. Under Stanleys cost system, spoilage units reduce

the number of units over which total costs can be spread. Using the Weighted average

method, the EUP for March for conversion costs were


17.Kiray CO. had the following production for the month of June: WIP June 1 10,000 units;

Started during June 40,000 units; Completed and transferred 33,000 units; Abnormal

spoilage 2,000 units; WIP- June 30 15,000 units. Materials are added at the end of the

process. As to conversion cost, the beginning work in process was 70% completed and the

ending WIP was 60% completed. Spoilage is detected at the end of the process. Using the

weighted average method, the equivalent units for June, with respect to the conversion

costs, were


18.A company manufactures a product that passes through two production departments,

molding and assembly. Direct materials are added in the assembly department when

conversion is 50% complete. Conversion costs are incurred uniformly. The activity in units

for the assembly department during April is as follows: WIP, April 1 (CC- 60% complete)

5,000 units; Transferred in 32,000 units; Defective units at final inspection (within

normal limits) 2,500 units; Transferred out 28,500 units; WIP, April30 (CC- 40%complete) 6,000 units. The number of EUP for direct materials in the assembly

department for April calculated on the weighted average basis is:

a. 37,000 units b. 34,000 units c. 31,000 units d. 26,000 unit

e. none of these

19.Lea Company adds materials in the beginning of the process in the Forming Department,

which is the first of two stages of its production. Information concerning the materials

used in the Forming Department is as follows: WIP beg 6,000 units and P3,000 cost;

Units started during the period 50,000 units and P25,000 cost; Units completed and


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transferred 44,000 units. Using the weighted average method, what was the material

cost of work in process at the end of the month?

a. P6,120 b. P6,000 c. P5,520 d. P3,060 e. none of

these

20.The Forming Department is the first of a two-stage production process. Spoilage is

identified when the units have completed the Forming process. Costs of spoiled units are

assigned to units completed and transferred to the second department in the period

spoilage is identified. The following information concerns Formings conversion costs in

May 2012:

Units Conversion

CostsBeginning WIP (50%

complete)

2,00

0

P10,000

Units started during May 8,00

0

P75,500

Spoilage normal 500Units completed and

Transferred

7,00

0

Ending WIP (80% complete) 2,500Using the weighted average, what was Formings conversion cost transferred to the

second department?

a. P71,250 b. P67,500 c. P64,125 d. P59,850 e. none of these

JOINT AND BY PRODUCT

21.The allocation of Joint Cost to individual products used primarily to:

a. Deciding whether to sell at the SOP c. inventory costing

b. Determining the best market price d. determining whether to produce one of

the joint products

22.In a joint production process, a by- product is also described as:a. A simultaneously produced product of relatively low value

b. A form of main product with controllable production proportions

c. Waste

d. Products of low value recovered at the end of a production process

23.All of the following are methods of costing by-products except the:

a. Average unit cost method c. Recognition of net revenue method

b. Recognition of gross revenue method d. market value method

24.All of the following are methods of allocating joint products costs except the:

a. Recognition ofnet revenue method c. quantitative unit method

b. Average cost method d. market value method25.If a company obtains two salable products from the refining of one ore, the refining

process should be accounted as:

a. Extractive process b.Joint Process c. Mixed cost process d. Depletion

process

26.The characteristic that is most often used to distinguish a product as either joint or by-

product is the:

a. Amount of labor b. Separate Cost c. sales value d. none of these

27.Which of the following methods of allocating costs use market based data?

a. Sales value at split off method c. the constant gross margin percentage

method

b. Estimated NRV method d. all of the above

28.When a product is the result of a joint process, the decision to process the product past

the split off point further should be influenced by

a. The extra operating income earned past the split off point

b. The extra revenue earned past the split off point

c. The portion of the joint cost allocated to individual products

d. The total amount of joint cost

29.All costs incurred beyond the split off point are called


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a. By product cost b. joint cost c. main cost d. separable costd. selling

cost

30.What type of cost is the result of an event that results in more than one product or service

simultaneously?

a. By product cost b. joint cost c. main cost d. separable cost d.

selling cost

31.Jojo Corporation manufactures products S and T from a joint process. The sales value at

split off was P50,000 for 6,000 units of Product S and P25,000 for 2,000 units of Product T.

Assuming that the portion of the total joint costs properly allocated to Product S using the

relative-sales value at split off approach was P30,000, what were the total joint costs?

a. P60,000 b. P45,000 c. P42,000 d. P40,000 e. none of these

32.Laika Inc manufactures product P, Q and R from a joint process. Additional Information is

as follows.

P Q R TotalUnits Produced 4,000 2,000 1,000 7,000

Joint Cost P36,000 ? ? P60,000Sales Value at

SOP

? ? P15,000 P100,000

Separate Cost P7,000 P5,000 P3,000 P15,000Final Selling

Price

P70,000 P30,000 P20,000 P120,000

Assuming the joint cost is allocated using the relative sales value at split off

approach, what were the joint costs allocated to Product Q and R?

a. Q P16,000 ; R P8,000 c. Q P14,400; R P9,600 e. none of the

above

b. Q P15,000; R P9,000 d. Q P 12,00; R P12,000

33.Based on Laika Inc, Assuming the company uses Approximated NRV, how much total

production cost incurred under joint process to Product P? P36,000

34.Wong Manufacturing purchases trees from Cascara Lumber and process them up to the

split off point where two products (paper and pencil casings) are obtained. The productsare then sold to an independent company and distribute them to retail outlets. The

following information was collected for the month.

Trees Processed: 75 trees (yield is 45,000 sheets of paper and 45,000 pencil

casings and scrap)

Production: Paper 45,000 sheets; Pencil Casings 45,000

Sales: Paper 43,500 sheets @ P0.04 per page; Pencil casing 45,000 @

P0.10 per casing

Cost of purchasing 75 trees to process the joint products is P2,250. Wong reported

no beginning inventory and ending inventory of 1,500 sheets of paper. What is the sales

value at the SOP for paper?a. P2,925 b. P1,800 c. P1,740 d. P180 e. none of the

above

35.Based on Wong Manufacturing, what is the sales value at SOP of the pencil casings?

a. P5,625 b. P4,500 c. P2,220 d. P450 e. none of these

36.Based on Wong Manufacturing, If the sales value at Split off point is used, what is the

approximate cost of ending inventory for paper?

a. P1,125 b. P652.50 c. P75 d. P21.435 e. none of these

37.Based on Wong Manufacturing, If the sales Value at Split off point is used, what is the

approximate production cost for each pencil casing?

a. P0.0357 b. P0.0335 c. P0.0255 d. 0.0250 e. none of these

38. Kobe Co. manufactures a major product that gives rise to by-product called May. Mays

only separable cost is a P1 selling cost when a unit is sold for P4. Kobe accounts for Mays

sales by deducting the P3 net amount from the cost of good sold of the major product.

There are no inventories. If Kobe were to change its method of accounting for May from a

by-product to a joint cost product, what would be the effect on Kobes overall gross

margin?

a. No effect

b. Gross margin increases by P1 for each unit of May sold

c. Gross margin increases by P3 for each unit of May sold


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d. Gross Margin increases by P4 for each unit of May sold

39.Kite Co. manufactures X an Y from a joint process that also yields a by-product Z. Revenue

from sales of Z is treated as a reduction of joint cost. Additional Information is as follows:

X Y Z TotalUnits Produced 20,000 20,000 10,000 50,000

Joint Costs ? ? ? P262,000Sales Value @

SOP

P300,000 P150,000 P10,000 P460,000

Joint cost were allocated using the sales value at split off approach. The joint costsallocated to product X were:

a. P168,000 b. P150,000 c. P100,000 d. P75,000 e. none of the above

40.Based on Kite Co., if no amount of joint cost allocated to by-product, how much joint cost

will be allocated to product Y using the sales value at split off point? P87,333

AC 512 Comprehensive Exam

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