Process Costing Reviewer

Chapter 66Chapter 6Process Costing

MULTIPLE CHOICE

1.Which cost accumulation procedure is most applicable in continuous mass-production manufacturing environments?a.standard

b.actual

c.process

d.job order

ANS:CPTS:1DIF:EasyOBJ:6-1NAT:AACSB: Reflective ThinkingLOC:AICPA Functional Competencies: Measurement, Reporting

2.Process costing is used in companies thata.engage in road and bridge construction.

b.produce sailboats made to customer specifications.

c.produce bricks for sale to the public.

d.construct houses according to customer plans.


3.A producer of ____ would not use a process costing system.a.gasoline

b.potato chips

c.blank videotapes

d.stained glass windows

ANS:DPTS:1DIF:EasyOBJ:6-1NAT:AACSB: Reflective ThinkingLOC:AICPA Functional Competencies: Measurement, Reporting

4.A process costing system is used by a company thata.produces heterogeneous products.

b.produces items by special request of customers.

c.produces homogeneous products.

d.accumulates costs by job.


5.Which is the best cost accumulation procedure to use for continuous mass production of like units?a.actual

b.standard

c.job order

d.process


6.Equivalent units of production are equal to thea.units completed by a production department in the period.

b.number of units worked on during the period by a production department.

c.number of whole units that could have been completed if all work of the period had been used to produce whole units.

d.identifiable units existing at the end of the period in a production department.

ANS:CPTS:1DIF:ModerateOBJ:6-2NAT:AACSB: Reflective ThinkingLOC:AICPA Functional Competencies: Measurement, Reporting

7.In a process costing system using the weighted average method, cost per equivalent unit for a given cost component is found by dividing which of the following by EUP?a.only current period cost

b.current period cost plus the cost of beginning inventory

c.current period cost less the cost of beginning inventory

d.current period cost plus the cost of ending inventory

ANS:BPTS:1DIF:EasyOBJ:6-2NAT:AACSB: Reflective ThinkingLOC:AICPA Functional Competencies: Measurement, Reporting

8.The weighted average method is thought by some accountants to be inferior to the FIFO method because ita.is more difficult to apply.

b.only considers the last units worked on.

c.ignores work performed in subsequent periods.

d.commingles costs of two periods.

ANS:DPTS:1DIF:ModerateOBJ:6-3NAT:AACSB: Reflective ThinkingLOC:AICPA Functional Competencies: Measurement, Reporting

9.The first step in determining the cost per EUP per cost component under the weighted average method is toa.add the beginning Work in Process Inventory cost to the current period's production cost.

b.divide the current period's production cost by the equivalent units.

c.subtract the beginning Work in Process Inventory cost from the current period's production cost.

d.divide the current period's production cost into the EUP.

ANS:APTS:1DIF:ModerateOBJ:6-3NAT:AACSB: Reflective ThinkingLOC:AICPA Functional Competencies: Measurement, Reporting

10.The difference between EUP calculated using FIFO and EUP calculated using weighted average is the equivalent unitsa.started and completed during the period.

b.residing in beginning Work in Process Inventory.

c.residing in ending Work in Process Inventory.

d.uncompleted in Work in Process Inventory.

ANS:BPTS:1DIF:ModerateOBJ:6-3NAT:AACSB: Reflective ThinkingLOC:AICPA Functional Competencies: Measurement, Reporting

11.EUP calculations for standard process costing are the same asa.the EUP calculations for weighted average process costing.

b.the EUP calculations for FIFO process costing.

c.LIFO inventory costing for merchandise.

d.the EUP calculations for LIFO process costing.


12.In a FIFO process costing system, which of the following are assumed to be completed first in the current period?a.units started this period

b.units started last period

c.units transferred out

d.units still in process


13.To compute equivalent units of production using the FIFO method of process costing, work for the current period must be stated in unitsa.completed during the period and units in ending inventory.

b.completed from beginning inventory, units started and completed during the period, and units partially completed in ending inventory.

c.started during the period and units transferred out during the period.

d.processed during the period and units completed during the period.


14.The FIFO method of process costing will produce the same cost of goods transferred out amount as the weighted average method whena.the goods produced are homogeneous.

b.there is no beginning Work in Process Inventory.

c.there is no ending Work in Process Inventory.

d.beginning and ending Work in Process Inventories are each 50 percent complete.


15.The primary difference between the FIFO and weighted average methods of process costing isa.in the treatment of beginning Work in Process Inventory.

b.in the treatment of current period production costs.

c.in the treatment of spoiled units.

d.none of the above.

ANS:APTS:1DIF:EasyOBJ:6-4NAT:AACSB: Reflective ThinkingLOC:AICPA Functional Competencies: Measurement, Reporting

16.Material is added at the beginning of a process in a process costing system. The beginning Work in Process Inventory for the process was 30 percent complete as to conversion costs. Using the FIFO method of costing, the number of equivalent units of material for the process during this period is equal to thea.beginning inventory this period for the process.

b.units started and completed this period in the process.

c.units started this period in the process plus the beginning Work in Process Inventory.

d.units started and completed this period plus the units in ending Work in Process Inventory.


17.In a cost of production report using process costing, transferred-in costs are similar to thea.cost of material added at the beginning of production.

b.conversion cost added during the period.

c.cost transferred out to the next department.

d.cost included in beginning inventory.


18.In a process costing system, the journal entry to record the transfer of goods from Department #2 to Finished Goods Inventory is aa.debit Work in Process Inventory #2, credit Finished Goods Inventory.

b.debit Finished Goods Inventory, credit Work in Process Inventory #1.

c.debit Finished Goods Inventory, credit Work in Process Inventory #2.

d.debit Cost of Goods Sold, credit Work in Process Inventory #2.


19.Transferred-in cost represents the cost froma.the last department only.

b.the last production cycle.

c.all prior departments.

d.the current period only.


20.Which of the following is(are) the same between the weighted average and FIFO methods of calculating EUPs?

Units toEUPTotal cost to

account forcalculationsaccount for

a.no yes no

b.yes yes yes

c.yes no no

d.yes no yes


21.Process costing techniques should be used in assigning costs to productsa.if a product is manufactured on the basis of each order received.

b.when production is only partially completed during the accounting period.

c.if a product is composed of mass-produced homogeneous units.

d.whenever standard-costing techniques should not be used.


22.Averaging the total cost of completed beginning work-in-process inventory and units started and completed over all units transferred out is known asa.strict FIFO.

b.modified FIFO.

c.weighted average costing.

d.normal costing.


23.A process costing systema.cannot use standard costs.

b.restates Work in Process Inventory in terms of completed units.

c.accumulates costs by job rather than by department.

d.assigns direct labor and manufacturing overhead costs separately to units of production.


24.A process costing system does which of the following?

Calculates EUPsAssigns costs to inventories

a.no no

b.no yes

c.yes yes

d.yes no


25.A process costing system

Calculates average costDetermines total units to

per whole unitaccount for

a.yes yes

b.no no

c.yes no

d.no yes


26.A hybrid costing system combines characteristics ofa.job order and standard costing systems.

b.job order and process costing systems.

c.process and standard costing systems.

d.job order and normal costing systems.


27.When standard costs are used in process costing,a.variances can be measured during the production period.

b.total costs rather than current production and current costs are used.

c.process costing calculations are made simpler.

d.the weighted average method of calculating EUPs makes computing transferred-out costs easier.


28.Which of the following is subtracted from weighted average EUP to derive FIFO EUP?a.beginning WIP EUP completed in current period

b.beginning WIP EUP produced in prior period

c.ending WIP EUP not completed

d.ending WIP EUP completed


29.The cost of abnormal continuous losses isa.considered a product cost.

b.absorbed by all units in ending inventory and transferred out on an equivalent unit basis.

c.written off as a loss on an equivalent unit basis.

d.absorbed by all units past the inspection point.


30.Abnormal spoilage can be

continuousdiscrete

a.yes no

b.no no

c.yes yes

d.no yes


31.When the cost of lost units must be assigned, and those same units must be included in an equivalent unit schedule, these units are considereda.normal and discrete.

b.normal and continuous.

c.abnormal and discrete.

d.abnormal and continuous.


32.A continuous lossa.occurs unevenly throughout a process.

b.never occurs during the production process.

c.always occurs at the same place in a production process.

d.occurs evenly throughout the production process.


33.Which of the following would be considered a discrete loss in a production process?a.adding the correct ingredients to make a bottle of ketchup

b.putting the appropriate components together for a stereo

c.adding the wrong components when assembling a stereo

d.putting the appropriate pieces for a bike in the box


34.The method of neglect handles spoilage that isa.discrete and abnormal.

b.discrete and normal.

c.continuous and abnormal.

d.continuous and normal.


35.The cost of normal discrete losses isa.absorbed by all units past the inspection point on an equivalent unit basis.

b.absorbed by all units in ending inventory.

c.considered a period cost.

d.written off as a loss on an equivalent unit basis.


36.The cost of abnormal continuous losses isa.considered a product cost.

b.absorbed by all units in ending inventory and transferred out on an equivalent unit basis.

c.written off as a loss on an equivalent unit basis.

d.absorbed by all units past the inspection point.


37.Normal spoilage units resulting from a continuous processa.are extended to the EUP schedule.

b.result in a higher unit cost for the good units produced.

c.result in a loss being incurred.

d.cause estimated overhead to increase.


38.When the cost of lost units must be assigned, and those same units must be included in an equivalent unit schedule, these units are considereda.normal and discrete.

b.normal and continuous.

c.abnormal and discrete.

d.abnormal and continuous.


39.Which of the following accounts is credited when abnormal spoilage is written off in an actual cost system?a.Miscellaneous Revenue

b.Loss from Spoilage

c.Finished Goods

d.Work in Process


40.The cost of abnormal discrete units must be assigned to

good unitslost units

a.yes yes

b.no no

c.yes no

d.no yes


41.Which of the following statements is false? The cost of rework on defective units, ifa.abnormal, should be assigned to a loss account.

b.normal and if actual costs are used, should be assigned to material, labor and overhead costs of the good production.

c.normal and if standard costs are used, should be considered when developing the overhead application rate.

d.abnormal, should be prorated among Work In Process, Finished Goods, and Cost of Goods Sold.


42.If normal spoilage is detected at an inspection point within the process (rather than at the end), the cost of that spoilage should bea.included with the cost of the units sold during the period.

b.included with the cost of the units completed in that department during the period.

c.allocated to ending work in process units and units transferred out based on their relative values.

d.allocated to the good units that have passed the inspection point.


43.Dallas Co. has a production process in which the inspection point is at 65 percent of conversion. The beginning inventory for July was 35 percent complete and ending inventory was 80 percent complete. Normal spoilage costs would be assigned to which of the following groups of units, using FIFO costing?

BeginningEndingUnits Started

InventoryInventory& Completed

a.no yes yes

b.yes yes yes

c.no no yes

d.yes no no


44.Which of the following is not a question that needs to be answered with regard to quality control?a.What happens to the spoiled units?

b.What is the actual cost of spoilage?

c.How can spoilage be controlled?

d.Why does spoilage happen?

ANS:APTS:1DIF:ModerateOBJ:6-8NAT:AACSB: Reflective ThinkingLOC:AICPA Functional Competencies: Measurement, Reporting

45.Normal spoilage units resulting from a continuous processa.are extended to the EUP schedule.

b.result in a higher unit cost for the good units produced.

c.result in a loss being incurred.

d.cause estimated overhead to increase.


46.The addition of material in a successor department that causes an increase in volume is calleda.accretion.

b.reworked units.

c.complex procedure.

d.undetected spoilage.


47.Wood Company transferred 5,500 units to Finished Goods Inventory during October. On October 1, the company had 300 units on hand (40 percent complete as to both material and conversion costs). On October 31, the company had 800 units (10 percent complete as to material and 20 percent complete as to conversion costs). The number of units started and completed during October was:a.5,200.

b.5,380.

c.5,500.

d.6,300.

ANS:AUnits Transferred Out5,500

Less: Units in Beginning Inventory (300)

Units Started and Completed5,200

PTS:1DIF:EasyOBJ:6-2NAT:AACSB: Analytical SkillsLOC:AICPA Functional Competencies: Measurement, Reporting

48.Cole Company transferred 6,000 units to Finished Goods Inventory during August. On August 1, the company had 400 units on hand (35 percent complete as to both material and conversion costs). On August 31, the company had 750 units (20 percent complete as to material and 30 percent complete as to conversion costs). The number of units started and completed during August was:a.5,600

b.5,860

c.6,000

d.6,750

ANS:AUnits Transferred Out6,000

Less: Units in Beginning Inventory (400)



49.Boggs Company started 9,000 units in March. The company transferred out 7,000 finished units and ended the period with 3,500 units that were 40 percent complete as to both material and conversion costs. Beginning Work in Process Inventory units werea. 500.

b. 600.

c.1,500.

d.2,000.

ANS:CBeginning Work in Process1,500

Add: Units Started 9,000

Deduct: Units Transferred Out(7,000)

Ending Work in Process3,500


50.Williams Company started 8,600 units in April. The company transferred out 6,400 finished units and ended the period with 3,200 units that were 40 percent complete as to both material and conversion costs. Beginning Work in Process Inventory units werea. 400.

b.1,000.

c.1,280.

d.2,200.

ANS:BBeginning Work in Process1,000





51.Lincoln Company had beginning Work in Process Inventory of 5,000 units that were 40 percent complete as to conversion costs. Lincoln Company started and completed 42,000 units this period and had ending Work in Process Inventory of 12,000 units. How many units were started this period?a.42,000

b.47,000

c.54,000

d.59,000


Add: Units Started54,000

Deduct: Units Transferred Out( 47,000)


PTS:1DIF:ModerateOBJ:6-2NAT:AACSB: Analytical SkillsLOC:AICPA Functional Competencies: Measurement, Reporting

52.Douglas Company had beginning Work in Process Inventory of 6,000 units that were 45 percent complete as to conversion costs. Douglas Company started and completed 46,000 units this period and had ending Work in Process Inventory of 11,000 units. How many units were started this period?a.46,000

b.52,000

c.57,000

d.63,000


Add: Units Started57,000




53.Streete Company uses a weighted average process costing system. Material is added at the start of production. Streete Company started 13,000 units into production and had 4,500 units in process at the start of the period that were 60 percent complete as to conversion costs. If Streete Company transferred out 11,750 units, how many units were in ending Work in Process Inventory?a.1,250

b.3,000

c.3,500

d.5,750

ANS:DBeginning Work in Process4,500





54.Roache Company uses a weighted average process costing system. Material is added at the start of production. Roache Company started 14,000 units into production and had 5,000 units in process at the start of the period that were 75 percent complete as to conversion costs. If Roache Company transferred out 12,250 units, how many units were in ending Work in Process Inventory?a.1,750

b.3,000

c.5,500

d.6,750

ANS:DBeginning Work in Process5,000





55.Jones Company uses a weighted average process costing system and started 30,000 units this month. Jones had 12,000 units that were 20 percent complete as to conversion costs in beginning Work in Process Inventory and 3,000 units that were 40 percent complete as to conversion costs in ending Work in Process Inventory. What are equivalent units for conversion costs?a.37,800

b.40,200

c.40,800

d.42,000

ANS:BBeginning Work in Process12,000 20%2,400

+ Completion of Units in Process12,000 80%9,600

+ Units Started and Completed27,000 100%27,000

+ Ending Work in Process3,000 40%1,200

Equivalent Units of Production40,200


56.Summers Company uses a weighted average process costing system and started 36,000 units this month. Jones had 15,000 units that were 25 percent complete as to conversion costs in beginning Work in Process Inventory and 6,000 units that were 35 percent complete as to conversion costs in ending Work in Process Inventory. What are equivalent units for conversion costs?a.43,350

b.47,100

c.48,900

d.51,000

ANS:BBeginning Work in Process15,000 25% 3,750

+ Completion of Units in Process15,000 75%11,250

+ Units Started and Completed30,000 100% 30,000




57.Weston Company makes small metal containers. The company began April with 250 containers in process that were 30 percent complete as to material and 40 percent complete as to conversion costs. During the month, 5,000 containers were started. At month end, 1,700 containers were still in process (45 percent complete as to material and 80 percent complete as to conversion costs). Using the weighted average method, what are the equivalent units for conversion costs?a.3,450

b.4,560

c.4,610

d.4,910

ANS:DBeginning Work in Process250 40%100

+ Completion of Units in Process250 60%150





58.Meade Company makes small metal containers. The company began October with 300 containers in process that were 35 percent complete as to material and 45 percent complete as to conversion costs. During the month, 6,000 containers were started. At month end, 1,900 containers were still in process (40 percent complete as to material and 75 percent complete as to conversion costs). Using the weighted average method, what are the equivalent units for conversion costs?a.4,265

b.5,590

c.5,825

d.6,300

ANS:CBeginning Work in Process300 45%135






59.Ormandy Company uses a FIFO process costing system. The company had 5,000 units that were 60 percent complete as to conversion costs at the beginning of the month. The company started 22,000 units this period and had 7,000 units in ending Work in Process Inventory that were 35 percent complete as to conversion costs. What are equivalent units for material, if material is added at the beginning of the process?a.18,000

b.22,000

c.25,000

d.27,000

ANS:BThe material is added at the beginning of the process; therefore there are 22,000 equivalent units of material.


60.Bernstein Company uses a FIFO process costing system. The company had 6,000 units that were 75 percent complete as to conversion costs at the beginning of the month. The company started 25,000 units this period and had 8,000 units in ending Work in Process Inventory that were 40 percent complete as to conversion costs. What are equivalent units for material, if material is added at the beginning of the process?a.18,500

b.25,000

c.26,500

d.31,000

ANS:BThe material is added at the beginning of the process; therefore there are 25,000 equivalent units of material.


61.Montgomery Company makes fabric-covered hatboxes. The company began July with 500 boxes in process that were 100 percent complete as to cardboard, 80 percent complete as to cloth, and 60 percent complete as to conversion costs. During the month, 3,300 boxes were started. On April 30, 350 boxes were in process (100 percent complete as to cardboard, 70 percent complete as to cloth, and 55 percent complete as to conversion costs). Using the FIFO method, what are equivalent units for cloth?a.3,295

b.3,395

c.3,450

d.3,595

ANS:ABeginning Work in Process (Ignored for FIFO)500 0%-



+ Ending Work in Process350 70%245



62.Hahn Company makes fabric-covered storage totes. The company began July with 600 totes in process that were 100 percent complete as to cardboard, 75 percent complete as to cloth, and 65 percent complete as to conversion costs. During the month, 3,600 totes were started. On April 30, 450 totes were in process (100 percent complete as to cardboard, 60 percent complete as to cloth, and 50 percent complete as to conversion costs). Using the FIFO method, what are equivalent units for cloth?a.3,570

b.3,750

c.3,870

d.4,020

ANS:ABeginning Work in Process (Ignored for FIFO)600 0%-


+ Units Started and Completed3,150100%3,150




Brewer Corporation

Brewer Corporation. has the following information for August:

Beginning Work in Process Inventory

(70% complete as to conversion)6,000 units

Started24,000 units

Ending Work in Process Inventory


Beginning WIP Inventory Costs:

Material$23,400

Conversion50,607

Current Period Costs:

Material$31,500

Conversion76,956

All material is added at the start of the process and all finished products are transferred out.

63.Refer to Brewer Corporation. How many units were transferred out in August?a.15,500

b.18,000

c.21,500

d.24,000






64.Refer to Brewer Corporation. Assume that weighted average process costing is used. What is the cost per equivalent unit for material?a.$0.55

b.$1.05

c.$1.31

d.$1.83

ANS:DMaterial Costs:

Beginning $23,400

Current Period 31,500

54,900 30,000 units =$ 1.83


65.Refer to Brewer Corporation. Assume that FIFO process costing is used. What is the cost per equivalent unit for conversion?a.$3.44

b.$4.24

c.$5.71

d.$7.03

ANS:BConversion Costs:

Beginning (Ignored for FIFO)$ -


$ 76,956

Equivalent Units

Beginning Inventory (6,000 * 30%)1,800

Started and Completed (15,500)15,500

Ending Inventory (8,500 * 10%) 850

18,150 eq units

Cost per equivalent unit$ 4.24


Collins Corporation

Collins Corporation. has the following information for May:



Started27,000 units



Beginning WIP Inventory Costs:

Material$25,500

Conversion52,725


Material$34,300

Conversion80,845

All material is added at the start of the process and all finished products are transferred out.

66.Refer to Collins Corporation. How many units were transferred out in May?a.17,600

b.19,500

c.25,100

d.27,000

ANS:CBeginning Work in Process 7,500


Deduct: Units Transferred Out (25,100)



67.Refer to Collins Corporation. Assume that weighted average process costing is used. What is the cost per equivalent unit for material?a.$0.99

b.$1.18

c.$1.64

d.$1.73

ANS:DMaterial Costs:

Beginning$25,500

Current Period_34,300

$59,800 34,500 units = $ 1.73


68.Refer to Collins Corporation. Assume that FIFO process costing is used. What is the cost per equivalent unit for conversion?a.$3.05

b.$3.87

c.$4.25

d.$6.40

ANS:BConversion Costs:

Beginning (Ignored for FIFO)$ -


$ 80,845

Equivalent Units


Started and Completed (17,600)17,600

Ending Inventory (9,400 * 15%) 1,410

20,885 equivalent units

Cost per equivalent unit ($80,845/20885)$ 3.87


Fantastic Decorations Corporation

The Fantastic Decorations Corporation makes wreaths in two departments: Forming and Decorating. Forming began the month with 500 wreaths in process that were 100 percent complete as to material and 40 percent complete as to conversion. During the month, 6,500 wreaths were started. At month end, Forming had 2,100 wreaths that were still in process that were 100 percent complete as to material and 50 percent complete as to conversion. Assume Forming uses the weighted average method of process costing. Costs in the Forming Department are as follows:

Beginning Work in Process Costs:

Material$1,000

Conversion1,500

Current Costs:

Material$3,200

Conversion5,045

The Decorating Department had 600 wreaths in process at the beginning of the month that were 80 percent complete as to material and 90 percent complete as to conversion. The department had 300 units in ending Work in Process that were 50 percent complete as to material and 75 percent complete as to conversion. Decorating uses the FIFO method of process costing, and costs associated with Decorating are:

Beginning WIP Inventory:

Transferred In$1,170

Material4,320

Conversion6,210

Current Period:

Transferred In?

Material$67,745

Conversion95,820

69.Refer to Fantastic Decorations Corporation. How many units were transferred to Decorating during the month?a. 600

b.4,900

c.5,950

d.7,000

ANS:BWreaths completed from BWIP500

Wreaths started and completed4,400

4,900


70.Refer to Fantastic Decorations Corporation. What was the cost transferred out of Forming during the month?a.$5,341

b.$6,419

c.$8,245

d.$8,330

ANS:DUnits Transferred OutCost per Eq. UnitTotal

4,9001.70$8,330


71.Refer to Fantastic Decorations Corporation. Assume 8,000 units were transferred to Decorating. Compute the number of equivalent units as to costs in Decorating for the transferred-in cost component.a.7,400

b.7,700

c.8,000

d.8,600

ANS:CThe transferred-in cost component is the 8,000 units that were transferred in.


72.Refer to Fantastic Decorations Corporation. Assume 8,000 units were transferred to Decorating. Compute the number of equivalent units in Decorating for material.a.7,970

b.8,000

c.8,330

d.8,450

ANS:AMaterials: Decorating: FIFOUnits% CompleteEqiv. Units

Beginning Work in Process600 20%120





73.Refer to Fantastic Decorations Corporation. Assume 8,000 units were transferred to Decorating. Compute the number of equivalent units in Decorating for conversion.a.7,925

b.7,985

c.8,360

d.8,465

ANS:BConversion: Decorating: FIFOUnits% CompleteEquiv.Units

Beginning Work in Process600 10%60





74.Refer to Fantastic Decorations Corporation. Assume that 8,000 units were transferred to Decorating at a total cost of $16,000. What is the material cost per equivalent unit in Decorating?a.$8.50

b.$8.65

c.$8.80

d.$9.04

ANS:AWhen FIFO is used, consider only current costs.

Current CostsEquivUnitsCost/Equiv Unit

$67,7457,970$8.50


75.Refer to Fantastic Decorations Corporation. Assume that 8,000 units were transferred to Decorating at a total cost of $16,000. What is the conversion cost per equivalent unit in Decorating?a.$11.32

b.$11.46

c.$12.00

d.$12.78

ANS:CWhen FIFO is used, consider only current costs.

Current CostsEquivUnitsCost/Equiv Unit

$95,8207,985$12.00


76.Refer to Fantastic Decorations Corporation. Assume the material cost per EUP is $8.00 and the conversion cost per EUP is $15 in Decorating. What is the cost of completing the units in beginning inventory?a.$ 960

b.$ 1,380

c.$ 1,860

d.$11,940

ANS:CCosts to Complete Beg InvUnitsPercent toCompleteCost per UnitTotal

Materials60020%$8 $960

Conversion60010%$15 $900

Total Costs to Complete$1,860


Four Seasons Company

Four Seasons Company adds material at the start to its production process and has the following information available for August:


(40% complete as to conversion)7,000units

Started this period32,000units



Transferred out?

77.Refer to Four Seasons Company. Compute the number of units started and completed in August.a.29,500

b.34,500

c.36,500

d.39,000

ANS:AUnits started this period32,000

Less: Ending Work in Process2,500

Units started and completed this period29,500


78.Refer to Four Seasons Company. Calculate equivalent units of production for material using FIFO.a.32,000

b.36,800

c.37,125

d.39,000

ANS:AMaterials are added at the beginning of the process. 32,000 units were started in the current period; therefore there are 32,000 equivalent units for materials.


79.Refer to Four Seasons Company. Calculate equivalent units of production for conversion using FIFO.a.30,125

b.34,325

c.37,125

d.39,000

ANS:BEquivalent Units for Conversion

Beginning Inventory (7,000 * 60%) 4,200

Started and Completed (29,500) 29,500


34,325 eq. units


80.Refer to Four Seasons Company. Calculate equivalent units of production for material using weighted average.a.32,000

b.34,325

c.37,125

d.39,000

ANS:DEquivalent Units--Materials

Beginning Inventory (7,000 units) 7,000

Started this Period (32,000) 32,000

39,000 eq. units


81.Refer to Four Seasons Company. Calculate equivalent units of production for conversion using weighted average.a.34,325

b.37,125

c.38,375

d.39,925

ANS:BEquivalent Units--Conversion




37,125 eq. units


Simpson Company

Simpson Company adds material at the start of production. The following production information is available for September:



Started this period120,000units



Beginning Work in Process Inventory Costs:

Material$24,500

Conversion68,905


Material$ 75,600

Conversion130,053

82.Refer to Simpson Company. How many units must be accounted for?a.118,200

b.128,200

c.130,000

d.138,200

ANS:CBeginning Work in Process 10,000

Units Started120,000

Total Units130,000


83.Refer to Simpson Company. What is the total cost to account for?a.$ 93,405

b.$205,653

c.$274,558

d.$299,058

ANS:DBWIP: Materials$ 24,500

BWIP: Conversion 68,905

Current Period: Materials 75,600

Current Period: Conversion 130,053

Total Costs$299,058


84.Refer to Simpson Company. How many units were started and completed in the period?a.111,800

b.120,000

c.121,800

d.130,000

ANS:AUnits started this period 120,000

Less: Ending Work in Process 8,200

Units started and completed this period 111,800


85.Refer to Simpson Company. What are the equivalent units for material using the weighted average method?a.120,000

b.123,860

c.128,360

d.130,000

ANS:DEquivalent Units

Beginning Inventory (10,000 * 100%) 10,000



130,000 eq. units


86.Refer to Simpson Company. What are the equivalent units for material using the FIFO method?a.111,800

b.120,000

c.125,500

d.130,000

ANS:BEquivalent Units

Beginning Inventory (Ignored for FIFO)0



120,000 eq. units


87.Refer to Simpson Company. What are the equivalent units for conversion using the weighted average method?a.120,000

b.123,440

c.128,360

d.130,000

ANS:CBeginning Work in Process 10,000 45% 4,500

+ Completion of Units in Process 10,000 55% 5,500

+ Units Started and Completed 111,800 100% 111,800

+ Ending Work in Process 8,200 80% 6,560

Equivalent Units of Production 128,360


88.Refer to Simpson Company. What are the equivalent units for conversion using the FIFO method?a.118,360

b.122,860

c.123,860

d.128,360

ANS:CBeginning Work in Process (ignored) 10,000 0% -

+ Completion of Units in Process 10,000 55% 5,500





89.Refer to Simpson Company. What is the material cost per equivalent unit using the weighted average method?a.$.58

b.$.62

c.$.77

d.$.82

ANS:CMaterial Costs:

Beginning $ 24,500


100,100 130,000 units= $ 0.77 per unit


90.Refer to Simpson Company. What is the conversion cost per equivalent unit using the weighted average method?a.$1.01

b.$1.05

c.$1.55

d.$1.61

ANS:CConversion Costs:

Beginning $ 68,905


198,958 128,360 units= $ 1.55 per unit


91.Refer to Simpson Company. What is the cost of units completed using the weighted average method?a.$237,510

b.$266,742

c.$278,400

d.$282,576

ANS:DUnits CompletedCosts per Equivalent UnitTotal

121,800(1.55 + .77) = $2.32$282,576

PTS:1DIF:DifficultOBJ:6-3NAT:AACSB: Analytical SkillsLOC:AICPA Functional Competencies: Measurement, Reporting

92.Refer to Simpson Company. What is the conversion cost per equivalent unit using the FIFO method?a.$1.05

b.$.95

c.$1.61

d.$1.55

ANS:AConversion Costs:

Beginning (Ignored)

Current Period $130,053

$130,053 123,860 units= $1.05 per unit


93.Refer to Simpson Company. What is the cost of all units transferred out using the FIFO method?a.$204,624

b.$191,289

c.$287,004

d.$298,029

ANS:CBeginning Inventory10,000 units:

Raw Materials (prior period)$24,500

Direct Labor (prior period68,905

FOH (10,000 * .55 * $1.05)5,775

$99,180

Units Started and Completed111,800 units * $ (.63+1.05):$187,824

Total$287,004


Mercury Corporation

Beginning inventory (30% complete as to Material B and 60% complete for conversion)700units

Started this cycle2,000units

Ending inventory (50% complete as to Material B and 80% complete for conversion) 500units

Beginning inventory costs:

Material A$14,270

Material B5,950

Conversion5,640

Current Period costs:

Material A$40,000

Material B70,000

Conversion98,100

Material A is added at the start of production, while Material B is added uniformly throughout the process.

94.Refer to Mercury Corporation. Assuming a weighted average method of process costing, compute EUP units for Materials A and B.a.2,700 and 2,280, respectively

b.2,700 and 2,450, respectively

c.2,000 and 2,240, respectively

d.2,240 and 2,700, respectively

ANS:BWeighted AverageMaterial AMaterial B

Beginning Work in Process700700

Units Started and Completed1,5001,500

Ending Work in Process500250

EUP Materials2,7002,450


95.Refer to Mercury Corporation Assuming a FIFO method of process costing, compute EUP units for Materials A and B.a.2,700 and 2,280, respectively

b.2,700 and 2,450, respectively

c.2,000 and 2,240, respectively

d.2,450 and 2,880, respectively

ANS:CFIFOMaterial AMaterial B


Units Started and Completed1,5001,500


EUP Materials2,0002,240


96.Refer to Mercury Corporation Assuming a weighted average method of process costing, compute EUP for conversion.a.2,600

b.2,180

c.2,000

d.2,700

ANS:AWeighted Average




2,600


97.Refer to Mercury Corporation Assuming a FIFO method of process costing, compute EUP for conversion.a.2,240

b.2,180

c.2,280

d.2,700

ANS:BFIFO

Beginning Work in Process (700 * 40%)280


Ending Work in Process (500 * 80%)400

2,180


98.Refer to Mercury Corporation Assuming a weighted average method of process costing, compute the average cost per unit for Material A.a.$20.10

b.$20.00

c.$31.25

d.$31.00

ANS:AWeighted Average: Material A

Beginning $ 14,270


54,270 2,700 units= $ 20.10 per unit


99.Refer to Mercury Corporation Assuming a FIFO method of process costing, compute the average cost per EUP for Material A.a.$31.25

b.$20.10

c.$20.00

d.$31.00

ANS:CMaterial A Costs(Current Period)Equivalent UnitsAverage Cost per EUP

$40,0002,000$20.00


100.Refer to Mercury Corporation Assuming a FIFO method of process costing, compute the average cost per EUP for Material B.a.$20.10

b.$31.25

c.$20.00

d.$31.00

ANS:BMaterial B Costs(Current Period)Equivalent UnitsAverage Cost per EUP

$70,0002,240$31.25


101.Refer to Mercury Corporation Assuming a weighted average method of process costing, compute the average cost per EUP for Material B.a.$20.00

b.$31.25

c.$20.10

d.$31.00

ANS:DMaterial B Costs(Beginning Inventory and Current Period)Equivalent UnitsAverage Cost per EUP

$75,9502,450$31.00


102.Refer to Mercury Corporation Assuming a FIFO method of process costing, compute the average cost per EUP for conversion.a.$45.50

b.$45.00

c.$43.03

d.$47.59

ANS:BConversion Costs(Current Period)Equivalent UnitsAverage Cost per EUP

$98,1002,180$45.00


103.Refer to Mercury Corporation Assuming a weighted average method of process costing, compute the average cost per EUP for conversion.a.$39.90

b.$45.00

c.$43.03

d.$47.59

ANS:AConversion Costs(Beginning WIP and Current Period)Equivalent UnitsAverage Cost per EUP

$(98,100 + $5,640)=$103,6402,600$39.90


Guthrie Corporation

The following information is available for Guthrie Corporation for the current year:

Beginning Work in ProcessCosts of Beginning Work in Process:

(75% complete)14,500 units Material$25,100

Started75,000 units Conversion50,000

Ending Work in ProcessCurrent Costs:

(60% complete)16,000 units Material$120,000

Abnormal spoilage2,500 units Conversion300,000

Normal spoilage (continuous)5,000 units

Transferred out66,000 units

All materials are added at the start of production.

104.Refer to Guthrie Corporation. Using weighted average, what are equivalent units for material?a.82,000

b.89,500

c.84,500

d.70,000

ANS:CMaterials: Weighted AverageUnits% CompleteEq. Units

Beginning Work in Process14,500 100%14,500



+ Abnormal Spoilage2,500 100% 2,500



105.Refer to Guthrie Corporation. Using weighted average, what are equivalent units for conversion costs?a.80,600

b.78,100

c.83,100

d.75,600

ANS:BConversion: Weighted AverageUnits% CompleteEq Units







106.Refer to Guthrie Corporation. What is the cost per equivalent unit for material using weighted average?a.$1.72

b.$1.62

c.$1.77

d.$2.07

ANS:AWeighted Average: Materials

Beginning $ 25,100


145,100 84,500 units=$1.72 per unit


107.Refer to Guthrie Corporation. What is the cost per equivalent unit for conversion costs using weighted average?a.$4.62

b.$4.21

c.$4.48

d.$4.34

ANS:CWeighted Average: Conversion

Beginning$ 50,000


$ 350,000 78,100 units =$ 4.48 per unit


108.Refer to Guthrie Corporation. What is the cost assigned to normal spoilage using weighted average?a.$31,000

b.$15,500

c.$30,850

d.None of the responses are correct

ANS:DNo costs are assigned to normal, continuous spoilage. Higher costs are assigned to good units produced.


109.Refer to Guthrie Corporation. Assume that the cost per EUP for material and conversion are $1.75 and $4.55, respectively. What is the cost assigned to ending Work in Process?a.$100,800

b.$87,430

c.$103,180

d.$71,680

ANS:DEquivalent UnitsCost per Equivalent UnitTotal

16,000$1.75$28,000

9,600$4.55$43,680

$71,680


110.Refer to Guthrie Corporation. Using FIFO, what are equivalent units for material?a.75,000

b.72,500

c.84,500

d.70,000

ANS:DMaterials: FIFO

Beginning Work in Process- 0% -


+ Ending Work in Process16,000 100% 16,000




111.Refer to Guthrie Corporation. Using FIFO, what are equivalent units for conversion costs?a.72,225

b.67,225

c.69,725

d.78,100

ANS:BConversion: FIFO







112.Refer to Guthrie Corporation. Using FIFO, what is the cost per equivalent unit for material?a.$1.42

b.$1.66

c.$1.71

d.$1.60

ANS:CFIFO: Materials

Current Period $ 120,000

120,000 70,000 units = $1.71 per unit


113.Refer to Guthrie Corporation. Using FIFO, what is the cost per equivalent unit for conversion costs?a.$4.46

b.$4.15

c.$4.30

d.$3.84

ANS:AFIFO: Conversion


300,000 67,225 units = $ 4.46 per unit


114.Refer to Guthrie Corporation. Assume that the FIFO EUP cost for material and conversion are $1.50 and $4.75, respectively. Using FIFO what is the total cost assigned to the units transferred out?a.$414,194

b.$339,094

c.$445,444

d.$396,975

ANS:ATransferred Out Units: FIFOEquiv UnitsCost per Equiv UnitTotal

Beginning Work in Process75,100

+ Completion of Beginning Inventory(14,500 * 25%) 3,625 4.7517,219

+Units Started and Completed51,500 6.25 321,875



Crafton Corporation

Crafton Corporation has the following information for the current month:

Units started100,000units

Beginning Work in Process: (35% complete)20,000units

Normal spoilage (discrete)3,500units

Abnormal spoilage5,000units

Ending Work in Process: (70% complete)14,500units

Transferred out97,000units


Material$15,000

Conversion10,000

All materials are added at the start of the production process. Crafton Corporation inspects goods at 75 percent completion as to conversion.

115.Refer to Crafton Corporation. What are equivalent units of production for material, assuming FIFO?a.100,000

b.96,500

c.95,000

d.120,000

ANS:AMaterials: FIFO

Beginning Work in Process - 0% -


+ Normal Spoilage--Discrete 3,500 100% 3,500

+ Abnormal Spoilage 5,000 100% 5,000




116.Refer to Crafton Corporation. What are equivalent units of production for conversion costs, assuming FIFO?a.108,900

b.103,900

c.108,650

d.106,525

ANS:DConversion: FIFO

Beginning Work in Process 20,000 65% 13,000


+Normal Spoilage--Discrete 3,500 75% 2,625





117.Refer to Crafton Corporation. Assume that the costs per EUP for material and conversion are $1.00 and $1.50, respectively. What is the amount of the period cost for July using FIFO?a.$0

b.$9,375

c.$10,625

d.$12,500

ANS:CAbnormal spoilage is a period cost.

Materials5,000 * $1.00/unit$5,000

Conversion Costs3,750 * $1.50/unit5,625

Total Abnormal Spoilage$10,625


118.Refer to Crafton Corporation. Assume that the costs per EUP for material and conversion are $1.00 and $1.50, respectively. Using FIFO, what is the total cost assigned to the transferred-out units (rounded to the nearest dollar)?a.$245,750

b.$244,438

c.$237,000

d.$224,938

ANS:BTransferred Out Units: FIFO

Beginning Work in Process$ 25,000

+ Completion of Beginning Inventory(20,000 * 65%)13,000 1.5019,500

+ Units Started and Completed77,000 2.50192,500

+Normal Spoilage--Discrete-Materials3,500 1.003,500

+Normal Spoilage--Discrete-Conversion2,625 1.50 3,938

Equivalent Units of Production$244,438


119.Refer to Crafton Corporation. What are equivalent units of production for material assuming weighted average is used?a.107,000

b.116,500

c.120,000

d.115,000

ANS:CMaterials: Weighted Average








120.Refer to Crafton Corporation. What are equivalent units of production for conversion costs assuming weighted average is used?a.113,525

b.114,400

c.114,775

d.115,650

ANS:AConversion: Weighted Average








121.Refer to Crafton Corporation. Assume that the costs per EUP for material and conversion are $1.00 and $1.50, respectively. What is the cost assigned to normal spoilage, using weighted average, and where is it assigned?

ValueAssigned To

a.$7,438 Units transferred out and Ending Inventory

b.$7,438 Units transferred out

c.$8,750 Units transferred out and Ending Inventory

d.$8,750 Units transferred out

ANS:B

Equivalent UnitsCost per Equivalent UnitTotal

3,500$1.00$3,500

2,625$1.503,938

$7,438

This amount is transferred out.


122.Refer to Crafton Corporation. Assume that the costs per EUP for material and conversion are $1.00 and $1.50, respectively. Assuming that weighted average is used, what is the cost assigned to ending inventory?a.$29,725.00

b.$37,162.50

c.$38,475.00

d.$36,250.00

ANS:AEnding Inventory: Weighted Average

Materials14,500 $1.00 $ 14,500.00

Conversion (14,500 * 70%)10,150 1.50 15,225.00

Total $ 29,725.00


Knight Corporation

Knight Corporation has the following information for the current month:

Units started95,000units

Beginning Work in Process: (30% complete)15,000units


Abnormal spoilage4,000units

Ending Work in Process: (75% complete)15,000units



Material$18,000

Conversion14,000

All materials are added at the start of the production process. Knight Corporation inspects goods at 75 percent completion as to conversion.

123.Refer to Knight Corporation. What are equivalent units of production for material, assuming FIFO?a. 91,000

b. 92,000

c. 95,000

d.110,000

ANS:CMaterials: FIFO

Beginning Work in Process - 0% -


+ Normal Spoilage--Discrete 3,000100% 3,000





124.Refer to Knight Corporation. What are equivalent units of production for conversion costs, assuming FIFO?a. 97,750

b.100,000

c.101,750

d.104,500

ANS:BConversion: FIFO








125.Refer to Knight Corporation. Assume that the costs per EUP for material and conversion are $2.00 and $2.25, respectively. What is the amount of the period cost for July using FIFO?a.$0

b.$12,750

c.$14,750

d.$17,000

ANS:CAbnormal spoilage is a period cost.

Materials4,000 * $2.00/unit$ 8,000

Conversion Costs3,000 * $2.25/unit6,750

Total Abnormal Spoilage$14,750


126.Refer to Knight Corporation. Assume that the costs per EUP for material and conversion are $2.00 and $2.25, respectively. Using FIFO, what is the total cost assigned to the transferred-out units (rounded to the nearest dollar)?a.$344,938

b.$365,875

c.$376,938

d.$378,625

ANS:CTransferred Out Units: FIFO

Beginning Work in Process$ 32,000

+ Completion of Beginning Inventory(15,000 * 70%)10,500 $2.2523,625

+ Units Started and Completed73,000 4.25310,250

+Normal Spoilage--Discrete-Materials3,000 2.006,000

+Normal Spoilage--Discrete-Conversion(3,000 * 75%) 2,250 2.25 5,063

Total Costs Assigned to Transferred Units$376,938


127.Refer to Knight Corporation. What are equivalent units of production for material assuming weighted average is used?a.105,500

b.106,000

c.107,000

d.110,000

ANS:DMaterials: Weighted Average








128.Refer to Knight Corporation. What are equivalent units of production for conversion costs assuming weighted average is used?a.103,750

b.104,500

c.104,750

d.105,500

ANS:BConversion: Weighted Average








129.Refer to Knight Corporation. Assume that the costs per EUP for material and conversion are $2.00 and $2.25, respectively. What is the cost assigned to normal spoilage, using weighted average, and where is it assigned?

ValueAssigned To

a.$11,063 Units transferred out and Ending Inventory

b.$11,063 Units transferred out

c.$12,750 Units transferred out and Ending Inventory

d.$12,750 Units transferred out

ANS:BEquivalent UnitsCost per Equivalent UnitTotal

3,000$2.00$6,000

2,250$2.255,063

$11,063

This amount is transferred out.


130.Refer to Knight Corporation. Assume that the costs per EUP for material and conversion are $2.00 and $2.25, respectively. Assuming that weighted average is used, what is the cost assigned to ending inventory?a.$55,312.50

b.$63,750.00

c.$66,375.00

d.$72,312.50

ANS:AEnding Inventory: Weighted Average

Materials15,000 $2.00 $ 30,000.00

Conversion (15,000 * 75%)11,250 2.25 25,312.50

Total $ 55,312.50


Chapman Corporation

The following information is available for Chapman Corporation for the current month:

Started this month80,000units

Beginning WIP

(40% complete)7,500units


Abnormal spoilage900units

Ending WIP

(70% complete)13,000units



Material$10,400

Conversion13,800

Current Costs:

Material$120,000

Conversion350,000

All materials are added at the start of production and the inspection point is at the end of the process.

131.Refer to Chapman Corporation. What are equivalent units of production for material using FIFO?a.80,000

b.79,100

c.78,900

d.87,500

ANS:AMaterials: FIFO

Beginning Work in Process- 0%-



+ Normal Spoilage (discrete)1,100 100%1,100

+ Abnormal Spoilage900 100% 900



132.Refer to Chapman Corporation. What are equivalent units of production for conversion costs using FIFO?a.79,700

b.79,500

c.81,100

d.80,600

ANS:DConversion: FIFOUnits% CompleteEUP








133.Refer to Chapman Corporation. What are equivalent units of production for material using weighted average?a.86,600

b.87,500

c.86,400

d.85,500

ANS:BMaterials: Weighted AverageUnits% CompleteEUP

Beginning Work in Process7,500100%7,500







134.Refer to Chapman Corporation. What are equivalent units of production for conversion costs using weighted average?a.83,600

b.82,700

c.82,500

d.81,600

ANS:AConversion: FIFOUnits% CompleteEUP








135.Refer to Chapman Corporation. What is cost per equivalent unit for material using FIFO?a.$1.63

b.$1.37

c.$1.50

d.$1.56

ANS:CFIFO: Materials


$ 120,000 80,000 units= $ 1.50 per unit


136.Refer to Chapman Corporation. What is cost per equivalent unit for conversion costs using FIFO?a.$4.00

b.$4.19

c.$4.34

d.$4.38

ANS:CFIFO: Conversion


$ 350,000 80,600 units = $ 4.34 per unit


137.Refer to Chapman Corporation. What is cost per equivalent unit for material using weighted average?a.$1.49

b.$1.63

c.$1.56

d.$1.44

ANS:AWeighted Average: Materials

Beginning $ 10,400


130,400 87,500 units = $ 1.49 /unit


138.Refer to Chapman Corporation. What is cost per equivalent unit for conversion costs using weighted average?a.$4.19

b.$4.41

c.$4.55

d.$4.35

ANS:DWeighted Average: Conversion

Beginning $ 13,800


363,800 83,600 units = $4.35 per unit


139.Refer to Chapman Corporation. What is the cost assigned to ending inventory using FIFO?a.$75,920

b.$58,994

c.$56,420

d.$53,144

ANS:BEnding Inventory: FIFO

Materials 13,000 $ 1.50 $ 19,500

Conversion (13,000 * 70%)9,100 4.34 39,494

Total $ 58,994


140.Refer to Chapman Corporation. What is the cost assigned to abnormal spoilage using FIFO?a.$1,350

b.$3,906

c.$5,256

d.$6,424

ANS:CAbnormalSpoiled UnitsPrice per Equivalent UnitTotal

900$5.84$5,256


141.Refer to Chapman Corporation. What is the cost assigned to normal spoilage and how is it classified using weighted average?a.$6,193 allocated between WIP and Transferred Out

b.$6,424 allocated between WIP and Transferred Out

c.$6,193 assigned to loss account

d.$6,424 assigned to units Transferred Out

ANS:DNormalSpoiled UnitsPrice per Equivalent UnitTotal

1,100$5.84$6,424 Transferred Out


142.Refer to Chapman Corporation. What is the total cost assigned to goods transferred out using weighted average?a.$435,080

b.$429,824

c.$428,656

d.$423,400

ANS:BGoods Transferred Out/Price per Eq UnitTotal

73,600$5.84$429,824


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