Question 1

The journal entry to record the transfer of soup out of the Canning Department during March would include:

Accepted Answer

A)  A credit to Work in Process Inventory, Canning Department of $9,000. 
B)  A credit to Work in Process Inventory, Canning Department of $63,000. 
C)  A debit to Finished Goods Inventory of $72,000. 
D)  A credit to Finished Goods Inventory, Mixing and Cooking Department of $72,000. 
A)  A credit to Work in Process Inventory, Canning Department of $9,000. 
B)  A credit to Work in Process Inventory, Canning Department of $63,000. 
C)  A debit to Finished Goods Inventory of $72,000. 
D)  A credit to Finished Goods Inventory, Mixing and Cooking Department of $72,000.

Question 2

Per-unit costs:

Accepted Answer

A)  Are relevant only when a company is engaged in manufacturing activities. 
B)  Are determined in job order costing systems but cannot be computed when a process costing system is in use. 
C)  Are relevant in manufacturing, merchandising, and service industries, regardless of the type of cost accounting system in use. 
D)  Are determined by relating manufacturing costs to the number of units sold. 
A)  Are relevant only when a company is engaged in manufacturing activities. 
B)  Are determined in job order costing systems but cannot be computed when a process costing system is in use. 
C)  Are relevant in manufacturing, merchandising, and service industries, regardless of the type of cost accounting system in use. 
D)  Are determined by relating manufacturing costs to the number of units sold.

Question 3

Elmer Corporation has the following information for the month of October, its first month of operations:
$\begin{array}{|l|r|}
\hline \text { Work in Process October } 1 & 0 \
\hline \text { Units completed \& transferred out in October } & 120,000 \
\hline \text { Work in process October } 30 & 32,000 \
\hline 100 \% \text { completed for materials } & \
\hline 80 \% \text { completed for conversion costs } & \
\hline
\end{array}$ 
Costs added in October:
 $$\begin{array} { | l | r | } 
\hline \text { Materials } & \$ 145,900 \
\hline \text { Direct Labor } & \$ 96,000 \
\hline \text { Overhead } & \$ 108,000 \
\hline
\end{array}$$
(1.) Determine the equivalent units of production for October.
(2.) Determine the cost of the ending work-in-process.
(3.) Determine the cost of goods completed.
(4.) If the company sold ¾ of its completed goods for $264,000, what is the gross profit?

Accepted Answer

(1.) Materials = 152,000 EU; D

Question 4

The unit cost per gallon of soup transferred to the Canning Department during March was:

Accepted Answer

A)  $1.50. 
B)  $1.62. 
C)  $1.71. 
D)  $1.83. 
A)  $1.50. 
B)  $1.62. 
C)  $1.71. 
D)  $1.83.

Question 5

Monfort Company had the following information
$\begin{array}{|l|c|r|r|}\hline && \% \text { of } & \
\hline& \text { \% of Materials } & \text { Direct Labor } & \
\hline& \text { Complete } & \text { \& Overhead Complete } & \text { Units } \
\hline \text { Beginning Inventory } & 100 \% & 75 \% & 125,000 \
\hline \text { Units Started \& Completed } & & & 200,000 \
\hline \text { Ending Inventory } & 100 \% & 60 \% & 40,000 \
\hline\\hline \text { Cost of direct materials } & \$ 748,000 \
\hline \text { Conversion costs } & 833,400 \
\hline \text { Beginning work-in-process } & 148,500 \
\hline
\end{array}$
(1.) What are equivalent units of production for materials?
(2.) What was the cost per equivalent unit of production for materials during the period?
(3.) What were the equivalent units of production for conversion cost?
(4.) What was the cost per equivalent unit of production for conversion costs?

Accepted Answer

(1.) 240,0

Question 6

Debiting Work in Process in Department Two and crediting Work in Process in Department One represents costs transferred from Department Two to Department One.

Accepted Answer

A) True 
 B)False

Question 7

Process costing systems:

Accepted Answer

A)  Are used when companies produce homogeneous units. 
B)  Does not have work-in-process accounts for each department. 
C)  Does not use equivalent units of production. 
D)  Track costs to individual products. 
A)  Are used when companies produce homogeneous units. 
B)  Does not have work-in-process accounts for each department. 
C)  Does not use equivalent units of production. 
D)  Track costs to individual products.

Question 8

The unit cost per case of mustard incurred by the Bottling Department in May was $__________.

Accepted Answer

The answer of The unit cost per case of mustard...

Question 9

United Construction Company, which manufactures residential buildings, would most likely use a process costing system.

Accepted Answer

A) True 
 B)False

Question 10

Assuming that the cost of direct materials used by Department Q in May was $440,000, the materials cost assigned to unfinished units at May 31 would be:

Accepted Answer

A)  $55,000. 
B)  $26,400. 
C)  $70,400. 
D)  Impossible to determine unless we know the percentage of completion for ending inventory units. 
A)  $55,000. 
B)  $26,400. 
C)  $70,400. 
D)  Impossible to determine unless we know the percentage of completion for ending inventory units.

Question 11

Process costing would be suitable for:

Accepted Answer

A)  Automobile repair. 
B)  Production of television sets. 
C)  Boat building. 
D)  Kitchen remodeling. 
A)  Automobile repair. 
B)  Production of television sets. 
C)  Boat building. 
D)  Kitchen remodeling.

Question 12

Refer to information above. If direct labor and overhead costs totaled $172,000, what would be the unit cost?

Accepted Answer

A)  $1.23. 
B)  $1.08. 
C)  $1.56. 
D)  $3.44. 
A)  $1.23. 
B)  $1.08. 
C)  $1.56. 
D)  $3.44.

Question 13

What are the equivalent units for direct labor and overhead?

Accepted Answer

A)  140,000. 
B)  80,000. 
C)  160,000. 
D)  130,000. 
A)  140,000. 
B)  80,000. 
C)  160,000. 
D)  130,000.

Question 14

An equivalent unit measures the percentage of a completed unit's cost that is present in a partially finished unit.

Accepted Answer

A) True 
 B)False

Question 15

If 8,000 units were in beginning inventory, 26,000 units were started, and 6,000 units were in the ending inventory, how many units were transferred out?

Accepted Answer

A)  40,000. 
B)  26,000. 
C)  28,000. 
D)  24,000. 
A)  40,000. 
B)  26,000. 
C)  28,000. 
D)  24,000.

Question 16

To identify the cause of a change in a product total unit cost, management may:

Accepted Answer

A)  Compute per unit product cost in total. 
B)  Compute per unit total cost. 
C)  Compute per unit product cost for each individual production department. 
D)  Compare prior period to current period per unit product cost in total. 
A)  Compute per unit product cost in total. 
B)  Compute per unit total cost. 
C)  Compute per unit product cost for each individual production department. 
D)  Compare prior period to current period per unit product cost in total.

Question 17

The Finishing Department of Berle Industries works on only one product, and all costs are incurred uniformly while these units remain in the department. On March 1, 6,000 units were in process that were 45% completed. An additional 60,000 units were transferred into the Finishing Department during March. At March 31, there were 25,000 units in process that were 75% completed. Compute the equivalent full units of production for the Finishing Department during March using the FIFO method.

Accepted Answer

A)  81,450. 
B)  60,000. 
C)  57,050. 
D)  69,550. 
A)  81,450. 
B)  60,000. 
C)  57,050. 
D)  69,550.

Question 18

A company may choose to use process costing or job costing, but never both simultaneously.

Accepted Answer

A) True 
 B)False

Question 19

Completing 3,000 units which were each 75% complete at the beginning of the period represents 2,250 equivalent full units of work during the current period.
If at the beginning of the period 3,000 units were 75% completed, then to complete these units during the current period, the equivalent units = 3,000 x (100% - 75%) = 750 equivalent full units.

Accepted Answer

A) True 
 B)False

Question 20

In Duffy's operation, the Finished Goods Inventory account is debited for:

Accepted Answer

A)  The cost of units transferred directly from the Mixing Department. 
B)  The cost of units transferred directly from the Packaging Department. 
C)  The cost of units transferred directly from both the Mixing Department and the Packaging Department. 
D)  The cost of the units sold. 
A)  The cost of units transferred directly from the Mixing Department. 
B)  The cost of units transferred directly from the Packaging Department. 
C)  The cost of units transferred directly from both the Mixing Department and the Packaging Department. 
D)  The cost of the units sold.

Exam 18: Process Costing

The journal entry to record the transfer of soup out of the Canning Department during March would include:

Per-unit costs:

The unit cost per gallon of soup transferred to the Canning Department during March was:

Debiting Work in Process in Department Two and crediting Work in Process in Department One represents costs transferred from Department Two to Department One.

Process costing systems:

The unit cost per case of mustard incurred by the Bottling Department in May was $__________.

United Construction Company, which manufactures residential buildings, would most likely use a process costing system.

Assuming that the cost of direct materials used by Department Q in May was $440,000, the materials cost assigned to unfinished units at May 31 would be:

Process costing would be suitable for:

Refer to information above. If direct labor and overhead costs totaled $172,000, what would be the unit cost?

What are the equivalent units for direct labor and overhead?

An equivalent unit measures the percentage of a completed unit's cost that is present in a partially finished unit.

If 8,000 units were in beginning inventory, 26,000 units were started, and 6,000 units were in the ending inventory, how many units were transferred out?

To identify the cause of a change in a product total unit cost, management may:

A company may choose to use process costing or job costing, but never both simultaneously.

In Duffy's operation, the Finished Goods Inventory account is debited for:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values Answer Key

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