Question 1

Which of the following is an error when accounting for transferred-in costs?

Accepted Answer

A)  including transferred-in costs from previous departments 
B)  costing units at average costs 
C)  converting units to a common measurement when transferred in 
D)  consider costs assigned at the beginning of the period when calculating costs to be transferred on a weighted average basis 
E)  consider costs assigned at the beginning of the period when calculating costs to be transferred on a FIFO basis

Question 2

Answer the following questions using the information below:
The Townsend Tractor Company manufactures small garden tractors on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each tractor must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Townsend Tractor uses weighted-average costing.
 
-What is the total amount credited to the Work-in-Process account during the month of April?

Accepted Answer

A)  $1,875,000.00 
B)  $2,370,000.00 
C)  $1,999,687.50 
D)  $2,295,937.50 
E)  $450,000.00

Question 3

Activity-based costing has more applicability in a process-costing system than in a job-costing environment.

Accepted Answer

A) True 
 B)False

Question 4

Regardless of whether previous departments used the weighted-average or the FIFO method, all transferred-in costs during a given period are carried at

Accepted Answer

A)  the cost at which it was transferred in. 
B)  the previous period's costs. 
C)  multiple unit-cost figures. 
D)  the final cost. 
E)  one average unit-cost.

Question 5

Calendar Time Company prints calendars. All direct materials are included at the inception of the printing process. There were 20,000 units in beginning inventory with a direct material cost of $1,000 in March. Direct materials totalled $26,000 for the month. work-in-process records revealed that 160,000 calendars were started in March and that a total of 144,000 were completed. Ending work-in-process units are complete in respect to direct materials costs and contain no labour and overhead costs. The weighted-average method is used by Calendar Time.
Required:
a. Determine the equivalent units of materials.
b. What are the material costs assigned to completed calendars?
c. What amount of materials is assigned to the ending work-in-process inventory?

Accepted Answer

The answer of Calendar Time Company prints calendars. All direct...

Question 6

Excalibur Ltd. began operations on October 1 of the current year. Its production requires that direct materials are added at the beginning of the process and conversion costs are incurred uniformly. Direct materials costs for October were $380,000 and conversion costs were $1,750,000. There were 80,000 units started during the month. The ending inventory was 25,000 units which were 60% complete. The cost per equivalent unit for conversion was:

Accepted Answer

A)  $25.00 
B)  $21.88 
C)  $70.00 
D)  $116.67 
E)  $16.67

Question 7

Use the information below to answer the following question(s).
Plastic Molding, Inc.'s costing system utilizes two cost categories; direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Data for the Assembly Department for March are:
 
-Which of the following journal entries correctly reflects the transfer of goods completed from the Assembly Department to the Testing Department?

Accepted Answer

A)   
B)   
C)   
D)   
E)

Question 8

The final result of the process costing procedure is to compute the dollar amount of the credit to a work-in-process account and the corresponding debit to finished goods and/or other work-in-process accounts.

Accepted Answer

A) True 
 B)False

Question 9

General Fabricators assembles its product in several departments. It has two departments that process all units. During October the beginning work-in-process in the Assembly Department was half completed as to conversion and complete as to direct materials. The beginning inventory included $12,000 for materials and $3,000 for conversion costs. Ending work-in-process inventory in the Assembly Department was 40 percent complete. Direct materials are added at the beginning of the process; conversion costs are added evenly throughout the process.
Beginning work-in-process in the Finishing Department was 75 percent complete as to conversion. Direct materials are added at the end of the process; conversion costs are added evenly throughout the process. Beginning inventories included $16,000 for transferred-in costs and $20,000 for conversion costs. Ending inventory was 25 percent complete. Additional information about the two departments follows:
    Required:
Determine the assignment of costs to units transferred-out and ending inventory , using weighted-average for the Assembly Department and FIFO for the Finishing Department.

Accepted Answer

The answer of General Fabricators assembles its product in several...

Question 10

Use the information below to answer the following question(s).
Father Time Clock Shop manufactures clocks on an automated assembly line. It utilizes two cost categories: direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of production, while conversion costs are allocated evenly throughout production, and the company uses weighted-average costing.
Data for the Assembly Department are:
 
-Which one of the following methods focuses on the total costs and total equivalent units completed to date?

Accepted Answer

A)  equivalent-units method 
B)  first-in, first-out method 
C)  standard-costs method 
D)  weighted-average method 
E)  last-in, last-out method

Question 11

Use the information below to answer the following question(s).
Father Time Clock Shop manufactures clocks on an automated assembly line. It utilizes two cost categories: direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of production, while conversion costs are allocated evenly throughout production, and the company uses weighted-average costing.
Data for the Assembly Department are:
 
-What is the total amount debited to the work-in-process account during the month of June?

Accepted Answer

A)  $450,000 
B)  $2,000,000 
C)  $2,270,000 
D)  $2,450,000 
E)  $3,250,000

Question 12

Which of the following is False concerning equivalent units?

Accepted Answer

A)  Equivalent units are calculated separately for each cost category. 
B)  Equivalent units are equal to physical units. 
C)  Equivalent units measure output in terms of the physical quantities of the inputs consumed. 
D)  Equivalent units are necessary when process costing is used. 
E)  The number of equivalent units may be identical for direct materials and for conversion costs.

Question 13

Use the information below to answer the following question(s).
Father Time Clock Shop manufactures clocks on an automated assembly line. It utilizes two cost categories: direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of production, while conversion costs are allocated evenly throughout production, and the company uses weighted-average costing.
Data for the Assembly Department are:
 
-Process-costing systems separate costs into cost categories according to which factor(s)?

Accepted Answer

A)  physical units 
B)  indirect labour 
C)  fixed and variable costs 
D)  standard costs 
E)  direct materials, conversion costs, and in some cases, transferred-in costs

Question 14

Answer the following questions using the information below:
The Townsend Tractor Company manufactures small garden tractors on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each tractor must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Townsend Tractor uses weighted-average costing.
 
-What amount of direct materials costs are assigned to the ending Work-in-Process account for April?

Accepted Answer

A)  $248,387.10 
B)  $250,000.00 
C)  $143,750.00 
D)  $145,312.50 
E)  $116,250.00

Question 15

Use the information below to answer the following question(s).
Canadian Oil Company manufactures cooking oils. All direct materials are added at the beginning of the production process. The company currently uses the FIFO method. Data for the month of July is listed below.
 
-How many units were started and completed with respect to direct materials during the month?

Accepted Answer

A)  170,000 units 
B)  200,000 units 
C)  270,000 units 
D)  300,000 units 
E)  330,000 units

Question 16

It is possible to design a hybrid costing system, to combine elements of both job costing and of process costing.

Accepted Answer

A) True 
 B)False

Question 17

Pet Products Company uses an automated process to manufacture its pet replica products. For June, the company had the following activities:
  Direct materials are placed into production at the beginning of the process and conversion costs are incurred evenly throughout the process.
Required:
Prepare a production cost worksheet using the FIFO method.

Accepted Answer

The answer of Pet Products Company uses an automated process...

Question 18

In the weighted-average method, costs of units completed and transferred out, and in ending work-in-process, are calculated using average total costs obtained after merging costs of beginning work-in-process and costs added in the current period.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following journal entries properly records direct materials requisitions for the work-in-process inventory and direct materials variances assuming that the Assembly department used 10 percent less materials than expected?

Accepted Answer

A)   
B)   
C)   
D)   
E)

Question 20

Amana Woolens is a manufacturer of wool cloth. The information for February is as follows:
   Beginning work-in-process was half converted as to labour and overhead. Direct materials are added at the beginning of the process. All conversion costs are incurred evenly throughout the process. Ending work-in-process was 60 percent complete.
Required:
Using the weighted-average method determine the assignment of costs to units transferred-out and ending inventory.

Accepted Answer

The answer of Amana Woolens is a manufacturer of wool...

Exam 17: Process Costing

Which of the following is an error when accounting for transferred-in costs?

Activity-based costing has more applicability in a process-costing system than in a job-costing environment.

Regardless of whether previous departments used the weighted-average or the FIFO method, all transferred-in costs during a given period are carried at

The final result of the process costing procedure is to compute the dollar amount of the credit to a work-in-process account and the corresponding debit to finished goods and/or other work-in-process accounts.

Which of the following is False concerning equivalent units?

It is possible to design a hybrid costing system, to combine elements of both job costing and of process costing.

In the weighted-average method, costs of units completed and transferred out, and in ending work-in-process, are calculated using average total costs obtained after merging costs of beginning work-in-process and costs added in the current period.

Which of the following journal entries properly records direct materials requisitions for the work-in-process inventory and direct materials variances assuming that the Assembly department used 10 percent less materials than expected?