Question 1

In a process costing system, the cost of abnormal spoilage should be:

Accepted Answer

A) Prorated between units transferred out and ending inventory. 
B) Included in the cost of units transferred out. 
C) Treated as a loss in the period incurred. 
D) Added to overhead. 
A) Prorated between units transferred out and ending inventory. 
B) Included in the cost of units transferred out. 
C) Treated as a loss in the period incurred. 
D) Added to overhead.

Question 2

The following table was taken from Firm X's Production Cost Report: $\begin{array}{lr}
\text { Completed and transferred out units } & 44,000 \
\text { Ending work-in-process equivalent units } & 6,000 \
\text { Beginning work-in-process equivalent units } & 10,000
\end{array}$ What is the number of FIFO equivalent units?

Accepted Answer

A) 40,000. 
B) 50,000. 
C) 48,000. 
D) 38,000. 
A) 40,000. 
B) 50,000. 
C) 48,000. 
D) 38,000.

Question 3

The key difference between weighted-average and FIFO process costing methods is the handling of the partially completed:

Accepted Answer

A) Beginning direct materials inventory. 
B) Ending direct materials inventory. 
C) Beginning work-in-process inventory. 
D) Ending work-in-process inventory. 
E) Beginning finished goods inventory. 
A) Beginning direct materials inventory. 
B) Ending direct materials inventory. 
C) Beginning work-in-process inventory. 
D) Ending work-in-process inventory. 
E) Beginning finished goods inventory.

Question 4

Bob and Nancy Barnett have recently expanded their television-based educational film business by shooting 30-second television ads for a regional television market in southern Colorado. They began business about 15 years ago with a contract to film training videos for the U.S. Army, and that business continues to provide a steady revenue base, currently about 40 percent of total revenue. Nancy Barnett is the firm's accountant, and in a visit to your accounting class last week, made a presentation detailing her firm's costing activities. Your instructor has asked you to respond to one particular statement that Nancy Barnett made: "Since our contract for military training films requires us to detail all costs, we use the process cost method that gives the maximum amount of fixed overhead cost. This almost covers all of our overhead, giving us an edge in competitively pricing our 30-second TV ads, and explains why we have grown so much in this sector of our business." Nancy knows that the U.S. Army uses cost-plus contracts on services like the Barnetts provide.
Required:
Is there an ethical problem with this approach? Does it represent acceptable accounting procedure?

Accepted Answer

(Suggested response. Answer presentation

Question 5

In the computation of manufacturing cost per equivalent unit, the weighted-average method of process costing considers:

Accepted Answer

A) Current costs only. 
B) Current costs less cost of ending work-in-process inventory. 
C) Current costs plus cost of beginning work-in-process inventory. 
D) Current costs plus cost of ending work-in-process inventory. 
E) Current costs less cost of beginning work-in-process inventory. 
A) Current costs only. 
B) Current costs less cost of ending work-in-process inventory. 
C) Current costs plus cost of beginning work-in-process inventory. 
D) Current costs plus cost of ending work-in-process inventory. 
E) Current costs less cost of beginning work-in-process inventory.

Question 6

The sum of the beginning inventory units and the number of units started during the period determines the:

Accepted Answer

A) Units completed during the period. 
B) Units to account for. 
C) Units transferred in during the period. 
D) Units accounted for. 
E) Units started during the period. 
A) Units completed during the period. 
B) Units to account for. 
C) Units transferred in during the period. 
D) Units accounted for. 
E) Units started during the period.

Question 7

The advantage of the weighted-average method is its:

Accepted Answer

A) Complexity and comprehensiveness. 
B) Ability to handle spoilage and waste. 
C) Appropriateness regardless of inventory level changes. 
D) Effectiveness in a cost leadership strategy. 
E) Simplicity. 
A) Complexity and comprehensiveness. 
B) Ability to handle spoilage and waste. 
C) Appropriateness regardless of inventory level changes. 
D) Effectiveness in a cost leadership strategy. 
E) Simplicity.

Question 8

The following table was taken from Firm X's Production Cost Report: $\begin{array}{lr}
\text { Completed and transferred out units } & 44,000 \
\text { Ending work-in-process equivalent units } & 6,000 \
\text { Beginning work-in-process equivalent units } & 10,000
\end{array}$ What is the number of weighted-average equivalent units?

Accepted Answer

A) 40,000. 
B) 50,000. 
C) 48,000. 
D) 38,000. 
A) 40,000. 
B) 50,000. 
C) 48,000. 
D) 38,000.

Question 9

Landry Co. had the following information for the month of December. All direct materials were one hundred percent complete, and beginning materials cost $14,000. Cost per equivalent unit for materials under the FIFO method is calculated to be (rounded):

Accepted Answer

A) $112.103. 
B) $49.242. 
C) $109.496. 
D) $82.757. 
E) $60.185. 
A) $112.103. 
B) $49.242. 
C) $109.496. 
D) $82.757. 
E) $60.185.

Question 10

The fifth and final step in determining process costs is:

Accepted Answer

A) Analyzing physical flow of production units. 
B) Calculating equivalent units of production. 
C) Determining total cost for each manufacturing element. 
D) Computing the cost per equivalent unit. 
E) Assigning cost to completed and uncompleted production. 
A) Analyzing physical flow of production units. 
B) Calculating equivalent units of production. 
C) Determining total cost for each manufacturing element. 
D) Computing the cost per equivalent unit. 
E) Assigning cost to completed and uncompleted production.

Question 11

In calculating unit cost in a process costing system, "conversion cost" is defined as the sum of:

Accepted Answer

A) Direct and indirect material costs. 
B) Direct and indirect labor costs. 
C) Direct labor and factory overhead costs. 
D) Indirect labor and factory overhead costs. 
E) Indirect material and factory overhead costs. 
A) Direct and indirect material costs. 
B) Direct and indirect labor costs. 
C) Direct labor and factory overhead costs. 
D) Indirect labor and factory overhead costs. 
E) Indirect material and factory overhead costs.

Question 12

In process costing, unit product cost is calculated by dividing process cost in each department by the equivalent units produced:

Accepted Answer

A) Less beginning inventory. 
B) Plus beginning inventory. 
C) In the prior period. 
D) In the following period. 
E) During the period. 
A) Less beginning inventory. 
B) Plus beginning inventory. 
C) In the prior period. 
D) In the following period. 
E) During the period.

Question 13

Talamoto Co. manufactures a single product that goes through two processes — mixing and cooking. The following data pertains to the Mixing Department for September. Material P is added at the beginning of work in the Mixing Department. Material Q is also added in the Mixing Department, but not until units of product are forty percent completed with regard to conversion. Conversion costs are incurred uniformly during the process.
Total equivalent units for conversion under the weighted-average method are calculated to be:

Accepted Answer

A)  100,000 equivalent units. 
B)  92,000 equivalent units. 
C)  84,000 equivalent units. 
D)  72,000 equivalent units. 
E)  68,000 equivalent units. 
A)  100,000 equivalent units. 
B)  92,000 equivalent units. 
C)  84,000 equivalent units. 
D)  72,000 equivalent units. 
E)  68,000 equivalent units.

Question 14

Landry Co. had the following information for the month of December. All direct materials were one hundred percent complete, and beginning materials cost $14,000. Total equivalent units for materials under the FIFO method are calculated to be:

Accepted Answer

A) 1,110 equivalent units. 
B) 1,080 equivalent units. 
C) 1,032 equivalent units. 
D) 1,008 equivalent units. 
E) 1,320 equivalent units. 
A) 1,110 equivalent units. 
B) 1,080 equivalent units. 
C) 1,032 equivalent units. 
D) 1,008 equivalent units. 
E) 1,320 equivalent units.

Question 15

Firms should use a process costing system when they produce products that:

Accepted Answer

A) Are semi-homogeneous. 
B) Pass through a series of inspection points. 
C) Pass through a series of manufacturing departments. 
D) Have a small batch size. 
A) Are semi-homogeneous. 
B) Pass through a series of inspection points. 
C) Pass through a series of manufacturing departments. 
D) Have a small batch size.

Question 16

Place the following Process costing steps in the correct order: 1 - Calculate equivalent units
2 - Determine the total costs to account for
3 - Analyze flow of physical units
4 - Assign total manufacturing costs
5 - Compute unit costs

Accepted Answer

A) 3, 5, 2, 1, 4. 
B) 2, 1, 5, 4, 3. 
C) 2, 3, 5, 4, 1. 
D) 3, 1, 2, 5, 4. 
E) None of the above. 
A) 3, 5, 2, 1, 4. 
B) 2, 1, 5, 4, 3. 
C) 2, 3, 5, 4, 1. 
D) 3, 1, 2, 5, 4. 
E) None of the above.

Question 17

Atlantic Manufacturing Company uses process costing.All materials are added at the beginning of the process.The normal spoilage rate is calculated as 10% of good units completed.
The cost of the beginning work-in-process in the Month of May is $3,000,000, including $1,600,000 of input of materials, 100,000 units, and $1,400,000 for conversion costs.The beginning work-in-process is 70% complete.
During May, the input includes $7,400,000 for materials, 800,000 units started and $4,190,000 for conversion costs.There were 700,000 good units finished.In addition, the ending work-in-process in May is 100,000 units with 60% complete.The abnormal spoilage is 30,000 units.All spoilage occurred when all processing was complete, at the final inspection.
Required: Use the weighted-average method to calculate:
(a) The dollar value of abnormal spoilage.
(b) The cost of the good units finished.
(c) The cost of ending work-in-process inventory.

Accepted Answer

(a) The dollar value of the ab

Question 18

Which one of the following process costing methods includes only current costs in the calculations of cost per equivalent unit?

Accepted Answer

A) FIFO method. 
B) LIFO method. 
C) Specific unit method. 
D) Weighted-average method. 
E) Moving-average method. 
A) FIFO method. 
B) LIFO method. 
C) Specific unit method. 
D) Weighted-average method. 
E) Moving-average method.

Question 19

Edenton Boat Company manufactures small pleasure boats on an assembly-line basis. The units are started in the Department A. On July 1 of this year, the Work-in-Process inventory of the Department A consisted of 200 units 100% complete as to materials and 40% complete as to conversion. During the month, 400 units were started and 500 units were completed and transferred out. The Work-in-Process on July 31 was 100% complete as to materials and 30% complete as to conversion.
Costs in process at the beginning of the period amounted to $600,000 for materials and $160,000 for conversion. Costs added during the period were materials costs of $1,802,700 and conversion costs of $905,512.
Required:
Prepare a production cost report using the weighted-average method.

Accepted Answer

The answer of Edenton Boat Company manufactures small pleasure boats...

Question 20

Giddings Pharmaceutical Company is a maker of drugs for high blood pressure and uses a process costing system. The following information pertains to the final department of Giddings's blockbuster drug called Solcax.$\begin{array}{lr}
\text { Beginning work-in-process }(40 \% \text { completed) } & 800 \text { units } \
\text { Transferred-in } & 4,000 \text { units } \
\text { Normal spoilage } & 400 \text { units } \
\text { Abnormal spoilage } & 200 \text { units } \
\text { Good units transferred out } & 3,600 \text { units } \
\text { Ending work-in-process }(1 / 3 \text { completed) } & 600 \text { units }\\text { Conversion costs in beginning inventory } & \$ 2,560 \
\text { Current conversion costs } & \$ 6,900
\end{array}$Giddings calculates separate costs of spoilage by computing both normal and abnormal spoiled units. Normal spoilage costs are reallocated to good units and abnormal spoilage costs are charged as a loss. The units of Solcax that are spoiled are the result of defects not discovered before inspection of finished units. Materials are added at the beginning of the process. Using the weighted-average method, answer the following question:
What are the unit conversion costs?

Accepted Answer

A)  $2.15. 
B)  $2.36. 
C)  $2.50. 
D)  $2.75. 
A)  $2.15. 
B)  $2.36. 
C)  $2.50. 
D)  $2.75.

In a process costing system, the cost of abnormal spoilage should be:

The following table was taken from Firm X's Production Cost Report: Completed and transferred out units 44,000 Ending work-in-process equivalent units 6,000 Beginning work-in-process equivalent units 10,000 What is the number of FIFO equivalent units?

The key difference between weighted-average and FIFO process costing methods is the handling of the partially completed:

In the computation of manufacturing cost per equivalent unit, the weighted-average method of process costing considers:

The sum of the beginning inventory units and the number of units started during the period determines the:

The advantage of the weighted-average method is its:

The following table was taken from Firm X's Production Cost Report: Completed and transferred out units 44,000 Ending work-in-process equivalent units 6,000 Beginning work-in-process equivalent units 10,000 What is the number of weighted-average equivalent units?

Landry Co. had the following information for the month of December. All direct materials were one hundred percent complete, and beginning materials cost $14,000.Cost per equivalent unit for materials under the FIFO method is calculated to be (rounded):

The fifth and final step in determining process costs is:

In calculating unit cost in a process costing system, "conversion cost" is defined as the sum of:

In process costing, unit product cost is calculated by dividing process cost in each department by the equivalent units produced:

Landry Co. had the following information for the month of December. All direct materials were one hundred percent complete, and beginning materials cost $14,000.Total equivalent units for materials under the FIFO method are calculated to be:

Firms should use a process costing system when they produce products that:

Place the following Process costing steps in the correct order: 1 - Calculate equivalent units 2 - Determine the total costs to account for 3 - Analyze flow of physical units 4 - Assign total manufacturing costs 5 - Compute unit costs

Which one of the following process costing methods includes only current costs in the calculations of cost per equivalent unit?

Cost Management and Strategy

Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Job Costing

Activity-Based Costing and Customer Profitability Analysis

Cost Allocation: Departments, Joint Products, and By-Products

Cost Estimation

Short-Term Profit Planning: Cost-Volume-Profit CVP Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

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Exam 6: Process Costing

In a process costing system, the cost of abnormal spoilage should be:

The following table was taken from Firm X's Production Cost Report: Completed and transferred out units 44,000 Ending work-in-process equivalent units 6,000 Beginning work-in-process equivalent units 10,000 What is the number of FIFO equivalent units?

The key difference between weighted-average and FIFO process costing methods is the handling of the partially completed:

In the computation of manufacturing cost per equivalent unit, the weighted-average method of process costing considers:

The sum of the beginning inventory units and the number of units started during the period determines the:

The advantage of the weighted-average method is its:

The following table was taken from Firm X's Production Cost Report: Completed and transferred out units 44,000 Ending work-in-process equivalent units 6,000 Beginning work-in-process equivalent units 10,000 What is the number of weighted-average equivalent units?

Landry Co. had the following information for the month of December. All direct materials were one hundred percent complete, and beginning materials cost $14,000.Cost per equivalent unit for materials under the FIFO method is calculated to be (rounded):

The fifth and final step in determining process costs is:

In calculating unit cost in a process costing system, "conversion cost" is defined as the sum of:

In process costing, unit product cost is calculated by dividing process cost in each department by the equivalent units produced:

Landry Co. had the following information for the month of December. All direct materials were one hundred percent complete, and beginning materials cost $14,000.Total equivalent units for materials under the FIFO method are calculated to be:

Firms should use a process costing system when they produce products that:

Place the following Process costing steps in the correct order: 1 - Calculate equivalent units 2 - Determine the total costs to account for 3 - Analyze flow of physical units 4 - Assign total manufacturing costs 5 - Compute unit costs

Which one of the following process costing methods includes only current costs in the calculations of cost per equivalent unit?

Cost Management and Strategy

Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Job Costing

Activity-Based Costing and Customer Profitability Analysis

Cost Allocation: Departments, Joint Products, and By-Products

Cost Estimation

Short-Term Profit Planning: Cost-Volume-Profit CVP Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

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