Chapter 03 ACC

luyện tập trắc nghiệm ACC kết hợp lý thuyết môn acc luyên tập các kiến thức liên quan đến kế toán tính toán về income statement balance sheet

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CHAPTER 3

PROCESS COSTING

SUMMARY OF QUESTIONS BY LEARNING OBJECTIVES AND BLOOM’S TAXONOMYItemLOBTItemLOBTItemLOBTItemLOBTItemLOBT

sg This question also appears in the Study Guide.

st This question also appears in a self-test at the student companion website.

a This topic is dealt with in an Appendix to the chapter.

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SUMMARY OF QUESTIONS BY LEARNING OBJECTIVES AND BLOOM’S TAXONOMY

SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE

ItemTypeItemTypeItemTypeItemTypeItemTypeItemTypeItemType

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SA = Short-Answer Essay

The chapter also contains one set of ten Matching questions and five Short-Answer Essay questions.

CHAPTER LEARNING OBJECTIVES

1 Understand who uses process cost systems Companies that mass-produce similar

products in a continuous fashion use process cost systems Once production begins, it continues until the finished product emerges Each unit of finished product is indistinguishable from every other unit.

2 Explain the similarities and differences between job order cost and process costsystems Job order cost systems are similar to process cost systems in three ways: (1)

Both systems track the same cost elements—direct materials, direct labor, and manufacturing overhead (2) Both accumulate cost in the same accounts—Raw Materials Inventory, Factory Labor, and Manufacturing Overhead (3) Both assign accumulated costs to the same accounts—Work in Process, Finished Goods Inventory, and Cost of Goods Sold However, the method of assigning costs differs significantly.

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There are four main differences between the two cost systems: (1) A process cost system uses separate accounts for each department or manufacturing process, rather than only one work in process account used in a job order cost system (2) A process cost system summarizes costs in a production cost report for each department A job order cost system charges costs to individual jobs and summarizes them in a job cost sheet (3) Costs are totaled at the end of a time period in a process cost system, but at the completion of a job in a job cost system (4) A process cost system calculates unit cost as: Total manufacturing costs for the period ÷ Units produced during the period A job order cost system calculates unit cost as: Total cost per job ÷ Units produced.

3 Explain the flow of costs in a process cost system A process cost system assigns

manufacturing costs for raw materials, labor, and overhead to work in process accounts for various departments or manufacturing processes It transfers the costs of units completed from one department to another as those units move through the manufacturing process The system transfers the costs of completed work to Finished Goods Inventory Finally, when inventory is sold, the system transfers costs to Cost of Goods Sold

4 Make the journal entries to assign manufacturing costs in a process cost system.

Entries to assign the costs of raw materials, labor, and overhead consist of a credit to Raw Materials Inventory, Factory Labor, and Manufacturing Overhead, and a debit to Work in Process for each department Entries to record the cost of good transferred to another department are a credit to Work in Process for the department whose work is finished and a debit to the department to which the goods are transferred The entry to record units completed and transferred to the warehouse is a credit for the department whose work is finished and a debit to Finished Goods Inventory The entry to record the sale of goods is a credit to Finished Goods Inventory and a debit to Cost of Goods Sold.

5 Compute equivalent units Equivalent units of production measure work done during a

period, expressed in fully completed units Companies use this measure to determine the cost per unit of completed product Equivalent units are the sum of units completed and transferred out plus equivalent units of ending work in process.

6 Explain the four steps necessary to prepare a production cost report The four steps to

complete a production cost report are: (1) Compute the physical unit flow—that is, the total units to be accounted for (2) Compute the equivalent units of production (3) Compute the unit production costs, expressed in terms of equivalent units of production (4) Prepare a cost reconciliation schedule, which shows that the total costs accounted for equal the total costs to be accounted for.

7 Prepare a production cost report The production cost report contains both quantity and

cost data for a production department There are four sections in the report: (1) number of physical units, (2) equivalent units determination, (3) unit costs, and (4) cost reconciliation schedule.

a8 Compute equivalent units using the FIFO method Equivalent units under the FIFO

method are the sum of the work performed to: (1) Finish the units of beginning work in process inventory, if any; (2) complete the units started into production during the period; and (3) start, but only partially complete, the units in ending work in process inventory.

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TRUE-FALSE STATEMENTS

1 Process cost accounting focuses on the process involved in mass-producing products that are very similar in nature.

Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: Cost Management

2 Process cost systems are used to apply costs to a specific job, such as the manufacturing of a specialized machine.

Ans: F, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: Cost Management

3 A company that produces motion pictures would likely use a process cost system.

Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: Cost Management

4 In a process cost system, costs are tracked through a series of connected manufacturing processes or departments, rather than by individual jobs.

Ans: T, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: Cost Management

5 In a process cost system, total costs are determined at the end of a month or year.

6 Separate work in process accounts are maintained for each production department or manufacturing process in a process cost system.

Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: FSA

7 In a process cost system, materials, labor and overhead are only added in the first production department.

8 The assignment of the three manufacturing cost elements to Work in Process in a process cost system is the same as in a job order cost system.

9 Fewer materials requisitions are generally required in a process cost system than in a job order cost system.

10 In a process cost system, labor costs incurred may be captured on time tickets.

11 A primary driver of overhead costs in continuous manufacturing operations is machine time used.

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12 Equivalent units of production are used to determine the cost per unit of completed products.

13 Equivalent units of production measure the work done during a period, expressed in fully completed units.

14 Equivalent units of production is the sum of units completed and transferred out plus equivalent units of beginning work in process.

15 The weighted-average method of computing equivalent units is the most widely used method in practice.

16 There are no units in process at the beginning of the period, 1,500 units in process at the end of the period that are 40% complete, and 15,000 units transferred out during the period Based on this information, there were 14,400 equivalent units of production during the period.

Ans: F, LO: 5, Bloom: AP, Difficulty: Easy, Min: 2, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: Cost Management

17 The first step performed in preparing a production cost report is computing the equivalent

19 The physical units in a department are another name for the equivalent units of production.

Ans: F, LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:Reporting

20 Unit material cost is computed by taking total material costs charged to the department for the period and dividing by the physical units in the process during the period.

21 When equivalent units of production are different for materials and conversion costs, unit costs are computed for materials, conversion, and total manufacturing.

Ans: T, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:Reporting

22 The total manufacturing cost per unit is used in costing the units completed and transferred during the period.

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23 A production cost report is an internal document for management that shows production quantity and cost data for a particular job.

24 Production cost reports provide a basis for evaluating the productivity of a department Ans: T, LO: 7, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:

25 Companies often use a combination of a process cost and a job order cost system, called operations costing.

a26 The FIFO method is easier to understand and use than the weighted-average method Ans: F, LO: 8, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Leverage Technology, AICPA PC:

None, IMA: Cost Management

a27 The FIFO method is conceptually superior to the weighted-average method.

Ans: T, LO: 8, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Leverage Technology, AICPA PC:None, IMA: Cost Management

a28 When comparing the FIFO with the weighted-average method, the FIFO method provides current cost information.

a29 There are no units in ending work in process at the end of the period under the FIFO method.

Ans: F, LO: 8, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Leverage Technology, AICPA PC:None, IMA: Cost Management

a30 Companies using the weighted-average method do not complete units left over from the previous accounting periods, they start new units.

31 In continuous process manufacturing, generally once the production begins, it continues until the finished product emerges.

32 One similarity of process cost accounting with job order cost accounting is that both determine total manufacturing costs after each job.

33 The flow of costs in a process costing system requires that materials be added in one department, labor added in another department and manufacturing overhead in a third department.

34 When finished goods are sold, the entry to record the cost of goods sold is a debit to Finished Goods Inventory and a credit to Cost of Goods Sold.

Ans: F, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: FSA

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35 When there is no beginning work in process and materials are entered at the beginning of the process, equivalent units of materials are the same as the units started into production.

36 In order to compute the physical unit flow, a company must first compute unit production costs.

37 Under the FIFO method, it is assumed that the beginning work in process is completed before new work is started.

Ans: T, LO: 8, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:Reporting

Answers to True-False Statements

MULTIPLE CHOICE QUESTIONS

38 A process cost accounting system is most appropriate when

a a variety of different products are produced, each one requiring different types of materials, labor, and overhead.

b the focus of attention is on a particular job or order c similar products are mass-produced.

d individual products are custom made to the specification of customers.

Ans: C, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: Business Applications

39 A characteristic of products that are mass-produced in a continuous fashion is that a the products are identical or very similar in nature.

b they are grouped in batches.

c they are produced at the time an order is received d their costs are accumulated on job cost sheets.

Ans: A, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: Cost Management

40 A process cost system would be used for all of the following products except

a chemicals b computer chips c motion pictures d soft drinks.

Ans: C, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: Business Applications

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41 In a process cost system,

a a Work in Process account is maintained for each product.

b a materials requisition must identify the job on which the materials will be used c a Work in Process account is maintained for each process.

d one Work in Process account is maintained for all the processes, similar to a job order cost system.

Ans: C, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:Reporting

42 Differences between a job order cost system and a process cost system include all of the

following except the

a documents used to track costs b point at which costs are totaled c unit cost computations.

d flow of costs.

Ans: D, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:Business Applications

43 Which of these best reflects a distinguishing factor between a job order cost system and a process cost system?

a The detail at which costs are calculated b The time period each covers.

c The number of work in process accounts d The manufacturing cost elements included.

Ans: C, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:Business Applications

44 Which of the following is a true statement about process cost systems? a In process cost systems, costs are accumulated but not assigned.

b A process cost system has one work in process account for each process c In process cost systems, costs are summarized on job cost sheets.

d Unit costs are not computed in process cost systems.

Ans: B, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: Business Applications

45 Which of the following is correct regarding cost systems?

Job Order Process a Work in process account several one for each process

c Work in process account one one for each process d Work in process account several one

Ans: C, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: Business Applications

46 In a process cost system, unit costs are determined using a a numerator of costs of each job.

b denominator of units produced during the period c denominator of units produced for the job.

d denominator of units produced for the day.

Ans: B, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: Business Economics

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47 In process cost accounting, manufacturing costs are summarized on a a job order cost sheet.

b process order cost sheet c production cost report d manufacturing cost sheet.

Ans: C, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:

Ans: D, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: Business Economics

49 In a process cost system, product costs are summarized: a on job cost sheets.

b on production cost reports c after each unit is produced d when the products are sold.

Ans: B, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:Reporting

50 When manufacturing overhead costs are assigned to production in a process cost system, they are debited to

a the Finished Goods Inventory account b Cost of Goods Sold.

c a Manufacturing Overhead account d a Work in Process account.

Ans: D, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: FSA

51 A product requires processing in two departments, the Baking Department and then the Packaging Department, before it is completed Costs transferred out of the Baking Department will be transferred to:

a Finished Goods Inventory b Cost of Goods Sold.

c Work in Process—Packaging Department d Manufacturing Overhead.

Ans: C, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: FSA

52 Which of the following would not appear as a debit in the Work in Process account of a

second department in a two stage production process? a Materials used.

b Overhead applied c Labor assigned.

d Cost of products transferred out.

Ans: D, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: FSA

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53 Materials requisitions are: a not used in process costing.

b generally used more frequently in process costing than job order costing c generally used less frequently in process costing than job order costing d used more frequently by latter stage production departments.

Ans: C, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: Cost Management

54 A primary driver of overhead costs in continuous manufacturing operations is: a direct labor dollars.

b direct labor hours c machine hours.

d machine maintenance dollars.

Ans: C, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: Cost Management

55 Price Company assigns overhead based on machine hours The Milling Department logs 1,800 machine hours and Cutting Department shows 3,000 machine hours for the period If the overhead rate is $5 per machine hour, the entry to assign overhead will show a

a debit to Manufacturing Overhead for $24,000.

b credit to Work in Process—Cutting Department for $15,000 c debit to Work in Process for $15,000.

d credit to Manufacturing Overhead for $24,000.

Ans: D, LO: 4, Bloom: C, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC:Problem Solving, IMA: FSA

56 Barnes and Miller Manufacturing is trying to determine the equivalent units for conversion costs with 10,000 units of ending work in process at 80% completion and 28,000 physical units There are no beginning units in the department Conversion costs occur evenly throughout the entire production period What are the equivalent units for conversion costs for the current period?

a 38,000 b 36,000 c 8,000 d 26,000.

Ans: D, LO: 5, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC:Problem Solving, IMA: FSA

57 15,000 units in a process that are 70% complete are referred to as: a 15,000 equivalent units of production.

b 4,500 equivalent units of production c 10,500 equivalent units of production d 4,500 equivalent units of production.

Ans: C, LO: 5, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC:Problem Solving, IMA: Reporting

58 A process with no beginning work in process, completed and transferred out 95,000 units during a period and had 50,000 units in the ending work in process inventory that were 30% complete The equivalent units of production for the period were:

a 95,000 equivalent units b 145,000 equivalent units c 110,000 equivalent units d 47,500 equivalent units.

Ans: C, LO: 5, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC:Problem Solving, IMA: Business Economics

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59 A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process For the month of January, there were no units in the beginning work in process inventory; 80,000 units were started into production in January; and there were 20,000 units that were 40% complete in the ending work in process inventory at the end of January What were the equivalent units of production for materials for the month of January?

Total unit = 80,000 = begin WIP + started into production Units completed = 80,000 – ending WIP = 60,000

equivalent units of production for materials = 60,000 + 20,000 x 100% = 80,000

Ans: D, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC:Problem Solving, IMA: Reporting

60 A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process For the month of January, there were no units in the beginning work in process inventory; 80,000 units were started into production in January; and there were 20,000 units that were 40% complete in the ending work in process inventory at the end of January What were the equivalent units of production for conversion costs for the month of January?

61 Equivalent units are calculated by

a multiplying the percentage of work done by the equivalent units of output b dividing physical units by the percentage of work done.

c multiplying the percentage of work done by the physical units d dividing equivalent units by the percentage of work done.

62 Minor Company had the following department data:

Physical Units

Completed and transferred out 135,000

Materials are added at the beginning of the process What is the total number of equivalent units for materials in July?

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63 Corsi Company had the following department data:

Physical Units

Materials are added at the beginning of the process What is the total number of equivalent units for materials during the period?

a 70,000 b 7,000 c 77,000 d 63,000.

64 Gantner Company had the following department information about physical units and percentage of completion:

Physical Units

If materials are added at the beginning of the production process, what is the total number of equivalent units for materials during May?

equivalent units for materials = 150,000 + 50,000 x 100% equivalent units for conversion costs = 150,000 + 50,000 x 40% a 210,000.

b 200,000 c 194,000 d 170,000.

Ans: B, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC:Problem Solving, IMA: Reporting

65 It is necessary to calculate equivalent units of production in a department because a a physical count of units is impossible.

b some units worked on in the department are not fully complete c the physical units in the department are always 100% complete.

d at times a department may use a job order cost system and then switch to a process cost system.

Ans: B, LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: Cost Management

66 In the month of June, a department had 20,000 units in beginning work in process that were 70% complete During June, 80,000 units were transferred into production from another department At the end of June there were 10,000 units in ending work in process that were 40% complete Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process How many units were transferred out of the process in June?

a 80,000 units b 70,000 units c 90,000 units d 100,000 units.

Ans: C, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC:Problem Solving, IMA: Cost Management

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67 In the month of June, a department had 20,000 units in beginning work in process that were 70% complete During June, 80,000 units were transferred into production from another department At the end of June there were 10,000 units in ending work in process that were 40% complete Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process The equivalent units of production for materials for June were

20,000 units in beginning work in process + 80,000 units were transferred into production = 100,000 units

90,000 units completed + 10,000 ending WIP x 100% equivalent units of production for conversion costs =

68 In the month of June, a department had 20,000 units in beginning work in process that were 70% complete During June, 80,000 units were transferred into production from another department At the end of June there were 10,000 units in ending work in process that were 40% complete Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process The equivalent units of production for conversion costs for June were

Ans: B, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC:Problem Solving, IMA: Cost Management

69 A process with no beginning work in process, completed and transferred out 28,000 units during a period and had 14,000 units in the ending work in process that were 50% complete How much is equivalent units of production for the period for conversion costs? a 35,000 equivalent units.

b 42,000 equivalent units c 49,000 equivalent units d 21,000 equivalent units.

Ans: A, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC:Problem Solving, IMA: Cost Management

70 A process with 1,600 units of beginning work in process, completed and transferred out 20,000 units during a period There were 10,000 units in the ending work in process that were 50% complete as to conversion costs Materials are added 80% at the beginning of the process and 20% when the units are 90% complete How much is equivalent units of production for the period for material costs?

Ans: D, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC:Problem Solving, IMA: Cost Management

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71 Hanker Company had the following department data on physical units:

Materials are added at the beginning of the process What is the total number of equivalent units for materials during the period?

a 12,600 b 2,400 c 14,400 d 9,000.

72.Super-Tech Industries had the following department information about physical units and percentage of completion:

Physical Units

Work in process, June 30 (50%) 12,000

If materials are added at the beginning of the production process, what is the total number of equivalent units for materials during June?

a 15,000 b 30,000 c 32,000 d 24,000.

73 Gloria Company had no beginning work in process During the period, 12,000 units were completed, and there were 1,200 units of ending work in process How many units were started into production?

a 13,200 b 12,000 c 10,800 d 1,200

74 Cohen Company is trying to determine the equivalent units for conversion costs with 5,000 units of ending work in process at 80% completion and 35,000 units that are 100% complete as to materials There are no beginning units in the department Materials are added at the beginning of the process, and conversion costs occur evenly throughout the entire production period What is the equivalent units of production for conversion costs for the current period?

a 40,000 b 39,000 c 4,000 d 34,000.

Ans: B, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC:Problem Solving, IMA: FSA

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75 If beginning work in process is 4,000 units, ending work in process is 2,000 units, and the units accounted for equals 12,000 units, what must units started into production be? a 16,000.

b 14,000 c 8,000 d 10,000.

76 The Molding Department of Kennett Company has the following production data: beginning work in process 25,000 units (60% complete), started into production 425,000 units, completed and transferred out 400,000 units, and ending work in process 50,000 units (40% complete) Assuming materials are entered at the beginning of the process, equivalent units for materials are:

a 450,000 b 375,000 c 400,000 d 475,000.

77 The Molding Department of Kennett Company has the following production data: beginning work in process 25,000 units (60% complete), started into production 425,000 units, completed and transferred out 400,000 units, and ending work in process 50,000 units (40% complete) Assuming conversion costs are incurred uniformly during the process, the equivalent units for conversion costs are:

a 450,000 b 405,000 c 420,000 d 400,000.

78 The Molding Department of Boswell Company has the following production data: beginning work process 40,000 units (60% complete), started into production 680,000 units, completed and transferred out 640,000 units, and ending work in process 80,000 units (40% complete) Assuming materials are entered at the beginning of the process, equivalent units for materials are:

a 720,000 b 600,000 c 640,000 d 760,000.

79 The Molding Department of Boswell Company has the following production data: beginning work process 40,000 units (60% complete), started into production 680,000 units, completed and transferred out 640,000 units, and ending work in process 80,000 units (40% complete) Assuming conversion costs are incurred uniformly during the process, the equivalent units for conversion costs are:

a 720,000 b 760,000 c 672,000 d 600,000.

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80 Crawford Company has the following equivalent units for July: materials 20,000 and conversion costs 18,000 Production cost data are:

Work in process, July 1 $ 3,200 $ 1,500

The unit production costs for July are: Materials Conversion Costs

81 In Moyer Company, the Cutting Department had beginning work in process of 6,000 units, transferred out 16,000 units, and had an ending work in process of 3,000 units How many units were started by Moyer during the month?

a 10,000 b 13,000 c 16,000 d 19,000.

82 In the Shaping Department of Rollins Company the unit materials cost is $5.00 and the unit conversions cost is $3.00 The department transferred out 20,000 units and had 2,500 units in ending work in process 20% complete If all materials are added at the beginning of the process, the total cost to be assigned to the ending work in process is

a 4,000 b 12,500 c 14,000 d 20,000.

83 Holton Company has the following equivalent units for July: materials 20,000 and conversion 18,000 Production cost data are:

Work in process, July 1 $ 4,800 $ 2,250

The unit production costs for July are: Materials Conversion Costs

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84 In Kapler Company, the Cutting Department had beginning work in process of 8,000 units, transferred out 20,000 units, and had an ending work in process of 4,000 units How many units were started by Kapler during the month?

a 12,000 b 16,000 c 20,000 d 24,000.

85 In the Shaping Department of Jenkins Company the unit materials cost is $2.50 and the unit conversion cost is $1.50 The department transferred out 8,000 units and had 2,000 units in ending work in process 20% complete If all materials are added at the beginning of the process, the total cost to be assigned to the ending work in process is

a $1,600 b $5,000 c $5,600 d $8,000.

86 Cinder Company had the following department information for the month:

Equivalent units of conversion costs 20,000 How much is the total manufacturing cost per unit?

a $14.00 b $6.66 c $6.00 d $8.00.

87 Materials costs of $500,000 and conversion costs of $535,500 were charged to a processing department in the month of September Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process There were no units in beginning work in process, 100,000 units were started into production in September, and there were 8,000 units in ending work in process that were 40% complete at the end of September.

What was the total amount of manufacturing costs assigned to those units that were completed and transferred out of the process in September?

a $460,000 b $977,500 c $1,035,500 d $1,063,000.

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88 Materials costs of $500,000 and conversion costs of $535,500 were charged to a processing department in the month of September Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process There were no units in beginning work in process, 100,000 units were started into production in September, and there were 8,000 units in ending work in process that were 40% complete at the end of September.

What was the total amount of manufacturing costs assigned to the 8,000 units in the ending work in process?

a $40,000 b $18,000 c $34,000 d $58,000.

89 Charley Company’s Assembly Department has materials cost at $3 per unit and conversion cost at $6 per unit There are 20,000 units in ending work in process, all of which are 70% complete as to conversion costs and 100% complete as to materials How much are total costs to be assigned to inventory?

a $84,000 b $144,000 c $126,000 d $180,000.

90 Byrd Company decided to analyze certain costs for June of the current year Units started into production equaled 14,000 and ending work in process equaled 2,000 units With no beginning work in process inventory, how much is the conversion cost per unit if ending work in process was 25% complete and total conversion costs equaled $35,000?

started into production equaled 14,000 + no beginning work in process = 14,000 12,000 units completed + 2,000 ending WIP = 14,000

equivalent units as conversion costs = 12,000 + 2,000 x 25% = 12,500 equivalent units

a $2.19 b $8.75 c $2.80 d $1.40.

91 Long Company has recently tried to improve its analysis for its manufacturing process Units started into production equaled 6,000 and ending work in process equaled 400 units Long had no beginning work in process inventory Conversion costs are applied equally throughout production, and materials are applied at the beginning of the process How much is the materials cost per unit if ending work in process was 25% complete and total materials costs equaled $24,000?

unit completed = 5,600

ending WIP = 400 => equivalent unit as material = 400 total equivalent unit as material = 6,000

a $4.00 b $4.21 c $15.00 d $3.75.

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92 Conversion cost per unit equals $7.00 Total materials costs are $60,000 Equivalent units are 20,000 How much is the total manufacturing cost per unit?

a $10.00 b $7.00 c $4.00 d $3.00.

93 Physical units are 40,000 Total conversion costs are $237,000 There are 1,000 units in ending inventory which are 50% complete as to conversion costs How much are conversion costs per unit?

a $6.00 b $5.92 c $11.86 d $5.78.

94 Madison Industries has equivalent units of 4,000 for materials and for conversion costs Total manufacturing costs are $160,000 Total materials costs are $120,000 How much is the conversion cost per unit?

a $4.00 b $10.00 c $40.00 d $8.00.

95 Equivalent units for materials total 30,000 There were 24,000 units completed and transferred out Equivalent units for conversion costs equal 27,000 How much are the physical units for conversion costs if ending work in process is 50% complete?

a 27,000 b 30,000 c 6,000 d 24,000.

96 If equivalent units are 12,000 for conversion costs and units transferred out equals 8,000, what stage of completion should the ending work in process be for the 16,000 units

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97 In the month of April, a department had 500 units in the beginning work in process inventory that were 60% complete These units had $40,000 of materials costs and $30,000 of conversion costs Materials are added at the beginning of the process and conversion costs are added uniformly throughout the process During April, 10,000 units were completed and transferred to the finished goods inventory and there were 2,000 units that were 25% complete in the ending work in process inventory on April 30 During April, manufacturing costs charged to the department were: Materials $920,000;

98 In the month of April, a department had 500 units in the beginning work in process inventory that were 60% complete These units had $40,000 of materials costs and $30,000 of conversion costs Materials are added at the beginning of the process and conversion costs are added uniformly throughout the process During April, 10,000 units were completed and transferred to the finished goods inventory and there were 2,000 units that were 25% complete in the ending work in process inventory on April 30 During April, manufacturing costs charged to the department were: Materials $920,000;

99 Zibba Company enters materials at the beginning of the process In January, there was no beginning work in process, but there were 200 units in the ending work in process inventory The number of units completed equals the number of

a units started.

b units started less 200 c units started plus 200 d equivalent units.

100 If there are no units in process at the beginning of the period, then a the company must be using a job order cost system.

b only one computation of equivalent units of production will be necessary c the units started into production will equal the number of units transferred out.

d the units to be accounted for will equal the units transferred out and the units in process at the end of the period.

Ans: D, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: Cost Management

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101 Which of the following is not a necessary step in preparing a production cost report? a Compute the equivalent units of production.

b Compute the physical unit flow c Prepare the job order cost sheet d Prepare a cost reconciliation schedule.

Ans: C, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:Reporting

102 Honrad Company's Assembly Department has materials cost at $4 per unit and conversion cost at $8 per unit There are 20,000 units in ending work in process, all of which are 70% complete as to conversion costs How much are total costs to be assigned

103 In a process cost system, units to be accounted for in a department are equal to the a number of units started or transferred into the department.

b number of units transferred out of the department.

c units in the beginning inventory plus the units started or transferred into the department d ending inventory plus the units started or transferred into the department.

104 The total units accounted for equals units in

a beginning work in process – units transferred out b beginning work in process + ending work in process c ending work in process + units transferred out.

d ending work in process – units started into production.

Ans: C, LO: 6, Bloom: AP, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:Reporting

105 The Slicing Department production process shows:

Units

Total units to be accounted for 160,000 How many units were started into production in Department 1? a 170,000.

b 110,000 c 160,000 d 150,000.

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106 Department 1 of a two department production process shows: Units

Total units to be accounted for 160,000 How many units were transferred out to Department 2? a 50,000.

b 110,000 c 160,000 d 150,000.

107 The Assembly Department shows the following information: Units

How many total units are to be accounted for by the Assembly Department? a 81,000.

b 50,000 c 70,000 d 61,000.

108 The last department in a production process shows the following information at the end of the period:

Units

How many units have been transferred out to finished goods during the period? a 200,000.

b 225,000 c 250,000 d 175,000.

109 A process began the month with 3,000 units in the beginning work in process inventory and ended the month with 2,000 units in the ending work in process If 15,000 units were completed and transferred out of the process during the month, how many units were started into production during the month?

a 14,000 b 16,000 c 15,000 d 13,000.

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110 If 120,000 units are started into production there was no beginning work in process, and 40,000 units are in process at the end of the period, how many units were completed and

111 Total units to be accounted for less units in beginning work in process equals a total units accounted for.

b units transferred out.

c units started into production d equivalent units.

Ans: C, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: Cost Management

112 If 120,000 units are transferred out of a department, there was no beginning work in process, and there are 20,000 units still in process at the end of a period, the number of units that were started into production during the period is

a 140,000 b 120,000 c 100,000 d 20,000.

113 A department adds materials at the beginning of the process and incurs conversion costs uniformly throughout the process For the month of July, there was no beginning work in process; 40,000 units were completed and transferred out; and there were 20,000 units in the ending work in process that were 40% complete During July, $96,000 materials costs and $84,000 conversion costs were charged to the department.

The unit production costs for materials and conversion costs for July was Materials Conversion Costs

114 Conversion cost per unit equals $6 Total materials cost equal $80,000 Equivalent units for materials are 10,000 How much is the total manufacturing cost per unit?

a $14 b $6 c $12 d $8.

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115 The following department data are available:

Equivalent units of conversion costs 30,000 What is the total manufacturing cost per unit?

a $4.00 b $4.50 c $8.50 d $6.25.

116 Byers Company had the following department information for the month:

Equivalent units of conversion costs 10,000 What is the total manufacturing cost per unit?

a $8.53 b $8.00 c $9.60 d $17.60.

117 Physical units accounted for are 160,000 Total conversion costs are $276,500 There are 4,000 units in ending inventory which are 50% complete as to conversion costs How much is the conversion cost per unit?

a $1.75 b $1.73 c $1.71 d $1.69.

118 A department had the following information for the month:

Total manufacturing cost per unit $5.00 What are the equivalent units of production for materials? a 105,000.

b 70,000 c 42,000.

d Cannot be determined

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119 Maisley Company decided to analyze certain costs for June of the current year Units started into production equaled 28,000 and ending work in process equaled 4,000 With no beginning work in process inventory, how much is the conversion cost per unit if ending work in process was 25% complete and total conversion costs equaled $105,000? a $3.30.

b $3.75 c $4.20 d $2.10.

120 Materials costs of $800,000 and conversion costs of $1,020,000 were charged to a processing department in the month of September Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process There were no units in beginning work in process, 20,000 units were started into production in September, and there were 5,000 units in ending work in process that were 40% complete at the end of September.

What was the total amount of manufacturing costs assigned to those units that were completed and transferred out of the process in September?

a $1,500,000 b $2,000,000 c $1,606,500 d $1,365,000.

121 Materials costs of $800,000 and conversion costs of $1,020,000 were charged to a processing department in the month of September Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process There were no units in beginning work in process, 20,000 units were started into production in September, and there were 5,000 units in ending work in process that were 40% complete at the end of September.

What was the total amount of manufacturing costs assigned to the 5,000 units in the ending work in process?

a $455,000 b $500,000 c $320,000 d $200,000.

122 Mayer Company has recently tried to improve its analysis for its manufacturing process Units started into production equaled 18,000 and ending work in process equaled 1,200 units Mayer had no beginning work in process inventory Conversion costs are applied equally throughout production, and materials are applied at the beginning of the process How much is the materials cost per unit if ending work in process was 25% complete and total materials costs equaled $90,000?

a $5.00 b $5.27 c $20.00 d $4.69.

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123 Madison Industries has equivalent units of 8,000 for materials and for conversion costs Total manufacturing costs are $160,000 Total materials costs are $120,000 How much is the conversion cost per unit?

a $15 b $5 c $20 d $4.

124 In a process cost system, a production cost report is prepared a only for the first processing department.

b for all departments in the aggregate c for each processing department.

d only for the last processing department.

125 A production cost report

a is prepared for each product b is prepared from a job cost sheet.

c will show quantity and cost data for a production department.

d will not identify a specific department if more than one department is involved in the production process.

126 In the production cost report, the total

a physical units accounted for equals the costs accounted for b physical units accounted for equals the units to be accounted for c costs charged equals the units to be accounted for.

d costs accounted for equals the costs of the units started into production.

Ans: B, LO: 7, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:Reporting

a127 The Cutting Department’s output during the period consists of 18,000 units completed and transferred out, and 4,000 units in ending work in process that were 25% complete as to materials and conversion costs Beginning inventory was 2,000 units that were 25% complete as to materials and conversion costs Under the FIFO method, what are the equivalent units of production for materials?

a 20,300 b 18,500 c 21,300 d 20,000

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a128 The Wrapping Department’s output during the period consists of 17,000 units completed and transferred out, and 900 units in ending work in process that were 75% complete as to materials and conversion costs Beginning inventory was 1,200 units that were 30% complete as to materials and conversion costs Under the FIFO method, what are the equivalent units of production for materials?

a 18,035 b 18,515 c 17,675 d 17,315

a129 Chicotti Company has 6,000 units in beginning work in process, 30% complete as to conversion costs, 60,000 units transferred out to finished goods, and 2,000 units in ending work in process 20% complete as to conversion costs The beginning and ending inventory is fully complete as to materials costs How much are equivalent units for conversion costs if the FIFO method

a130 Chicotti Company has 6,000 units in beginning work in process, 30% complete as to conversion costs, 60,000 units transferred out to finished goods, and 2,000 units in ending work in process 20% complete as to conversion costs The beginning and ending inventory is fully complete as to materials costs How much are equivalent units for materials if the FIFO method is used? a 60,400

b 62,000 c 56,000 d 68,000

a131 Schiller Company has unit costs of $3 for materials and $9 for conversion costs There are 5,600 units in ending work in process which are 25% complete as to conversion costs, and fully complete as to materials cost How much is the total cost assigned to the ending work in process inventory if the FIFO method is used?

a 29,400 b 67,200 c 16,800 d 12,600

a132 Solis Company uses the FIFO method to compute equivalent units It has 4,000 units in beginning work in process, 20% complete as to conversion costs and 50% complete as to materials costs, 55,000 units started, and 6,000 units in ending work in process, 30% complete as to conversion costs, and 80% complete as to materials cost How much are the equivalent units for materials under the FIFO method?

a 55,800 b 55,000 c 57,800 d 59,000

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a133 Special Company had the following department information about physical units and percentage of completion:

Physical Units Work in process, May 1 (60%) 36,000 Completed and transferred out 65,000 Work in process, May 31 (50%) 30,000

Materials are added at the beginning of the production process Conversion costs are added equally throughout production What is the total number of equivalent units during May for conversion costs if the FIFO method is used?

a 131,000 b 80,000 c 58,400 d 109,400

a134 Hanker Company had the following department data on physical units: Work in process, beginning 2,500

Materials are added at the beginning of the process What is the total number of equivalent units for materials if the FIFO method is used?

a 14,500 b 13,500 c 16,000 d 11,500

135 A process cost system would be used by all of the following except a(n)

a chemical company b advertising company c oil company.

d computer chip company.

Ans: B, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: Cost Management

136 Which of the following is considered a difference between a job order cost and a process cost system?

a The manufacturing cost elements b Documents used to track costs.

c The accumulation of the costs of materials, labor, and overhead d The flow of costs.

137 The basic similarities between job order cost and process cost systems include all of the

following except the

a manufacturing cost elements b flow of costs.

c point at which costs are totaled.

d accumulation of the costs of materials, labor, and overhead.

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138 Equivalent units of production are a measure of a units completed and transferred out.

b units transferred out.

c units in ending work in process.

d the work done in a period expressed in fully completed units.

Ans: D, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: Cost Management

139 Total physical units to be accounted for are equal to the units a started (or transferred) into production.

b started (or transferred) into production plus the units in beginning work in process c started (or transferred) into production less the units in beginning work in process d completed and transferred out.

140 In computing equivalent units, _ is not part of the equivalent units of production formula.

a units transferred out b beginning work in process c ending work in process d None of these is correct.

141 In Saint-Simon, Inc., the Assembly Department started 30,000 units and completed 35,000 units If beginning work in process was 15,000 units, how many units are in ending

Ans: C, LO: 6, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC:None, IMA: Cost Management

142 The total units to be accounted for is computed by adding a beginning units in process to units transferred out b ending units in process to units started into production c beginning units in process to units started into production d ending units in process to total units accounted for.

143 In the Camria Company, materials are entered at the beginning of the process If there is no beginning work in process, but there is an ending work in process inventory, the number of equivalent units as to materials costs will be

a the same as the units started b the same as the units completed c less than the units started d less than the units completed.

Ans: A, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,IMA: Cost Management

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144 For the Assembly Department, unit materials cost is $8 and unit conversion cost is $12 If there are 10,000 units in ending work in process 75% complete as to conversion costs, the costs to be assigned to the inventory are

a $200,000 b $170,000 c $150,000 d $180,000.

145 The total costs accounted for in a production cost report equal the a cost of units completed and transferred out only.

b cost of units started into production.

c cost of units completed and transferred out plus the cost of ending work in process d cost of beginning work in process plus the cost of units completed and transferred out Ans: C, LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:

146 In a production cost report, which one of the following sections is not shown under Costs?

a Unit costs.

b Costs to be accounted for c Costs during the period d Units accounted for.

Ans: D, LO: 7, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:Reporting

Answers to Multiple Choice Questions

ItemAns.ItemAns.ItemAns.ItemAns.ItemAns.ItemAns.ItemAns.

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BRIEF EXERCISES

BE 147

Tip Top Painting Company has the following production data for January:  Beginning work in process, 0 units

 Units transferred out, 35,000

 Units in ending work in process, 8,000, which are 30% complete for conversion costs Materials are added only at the beginning of the process.

Compute equivalent units of production for both materials and conversion costs.

Ans: N/A, LO: 5, Bloom: AP, Difficulty: Medium, Min: 4, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC:Problem Solving, IMA: Cost Management

Solution 147 (4 min.)

Equivalent Units

Units to be accounted for

Work in process, January 1 0 Started into production 43,000

Lowman Painting Company has the following production data for March:  Beginning work in process, 2,000 units

 Units transferred out, 42,000

 Units in ending work in process, 10,000, which are 80% complete for conversion costs Materials are added only at the beginning of the process.

Compute equivalent units of production for both materials and conversion costs

Ans: N/A, LO: 5, Bloom: AP, Difficulty: Medium, Min: 4, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC:Problem Solving, IMA: Cost Management

Solution 148 (4 min.)

Equivalent Units

Units to be accounted for

Work in process, March 1 2,000 Started into production 50,000