Question 1

Kelly Ltd uses a weighted-average process costing system that calculates normal rework as 2% of the units passing inspection. The inspection point is at the 75% point and units failing inspection are returned to the 40% point. During the current period, 50,000 units were started; 62,000 units inspected; and 52,000 units completed. Direct material is added at the 50% point and conversion costs occur uniformly. Beginning work in process was 10,000 units, 55% complete and ending work in process was 8,000 units, 85% complete. Costs per equivalent unit for material were $1.00 and $3.00 for conversion costs. The loss from abnormal rework was

Accepted Answer

A)   $3,200
B)   $1,640
C)   $1,120
D)   $4,018 B

Question 2

Kelly Ltd uses a weighted-average process costing system that calculates normal rework as 2% of the units passing inspection. The inspection point is at the 75% point and units failing inspection are returned to the 40% point. During the current period, 50,000 units were started; 62,000 units inspected; and 52,000 units completed. Direct material is added at the 50% point and conversion costs occur uniformly. Beginning work in process was 10,000 units, 55% complete and ending work in process was 8,000 units, 85% complete. Costs per equivalent unit for material were $1.00 and $3.00 for conversion costs. The cost of the ending work in process was

Accepted Answer

A)   $28,400
B)   $30,532
C)   $32,328
D)   $28,728 D

Question 3

Miramar Ltd uses a weighted-average process costing system which recognises normal spoilage as 5% of good output. During the current period, 14,000 units were started and 10,000 units completed. Materials are added at the beginning of the process, conversion costs occur uniformly, and the inspection point is at the 70% point. Beginning work in process was 6,000 units, 40% complete, and ending work in process 9,000 units, 80% complete. The cost per equivalent unit for material was $1.00 and for conversion costs $3.00. The cost of abnormal spoilage was

Accepted Answer

A)   $200
B)   $1,550
C)   $155
D)   $2,000 C

Question 4

Kelly Ltd uses a weighted-average process costing system that calculates normal rework as 2% of the units passing inspection. The inspection point is at the 75% point and units failing inspection are returned to the 40% point. During the current period, 50,000 units were started; 62,000 units inspected; and 52,000 units completed. Direct material is added at the 50% point and conversion costs occur uniformly. Beginning work in process was 10,000 units, 55% complete and ending work in process was 8,000 units, 85% complete. Costs per equivalent unit for material were $1.00 and $3.00 for conversion costs. The number of units reworked was

Accepted Answer

A)   3,000
B)   2,000
C)   8,000
D)   10,000

Question 5

Kelly Ltd uses a weighted-average process costing system that calculates normal rework as 2% of the units passing inspection. The inspection point is at the 75% point and units failing inspection are returned to the 40% point. During the current period, 50,000 units were started; 62,000 units inspected; and 52,000 units completed. Direct material is added at the 50% point and conversion costs occur uniformly. Beginning work in process was 10,000 units, 55% complete and ending work in process was 8,000 units, 85% complete. Costs per equivalent unit for material were $1.00 and $3.00 for conversion costs. The cost of the goods completed was

Accepted Answer

A)   $210,132
B)   $208,000
C)   $210,460
D)   $208,328

Question 6

Equivalent units are calculated for work in process and finished goods inventory.

Accepted Answer

A) True 
 B)False

Question 7

Assume there were 6,000 units in beginning work in process, 60% complete. 20,000 units were completed during the month. Ending work in process is 40% complete, which is equivalent to 3,200 units for conversion costs. Materials are added at the beginning of the process. The standard cost method is used. The number of units started this month is

Accepted Answer

A)   20,000 units
B)   22,000 units
C)   28,000 units
D)   15,280 units

Question 8

Assume there were 6,000 units in beginning work in process, 60% complete. 20,000 units were completed during the month. Ending work in process is 40% complete, which is equivalent to 3,200 units for conversion costs. Materials are added at the beginning of the process. The standard cost method is used. The number of equivalent units of conversion costs is

Accepted Answer

A)   23,200
B)   17,680
C)   19,600
D)   21,280

Question 9

When an organisation uses a long-term procurement contract, direct labor costs are normally stable over long periods of time.

Accepted Answer

A) True 
 B)False

Question 10

Tong Ltd is a manufacturing company that uses a process costing system. All direct material is added at the start of the process, and spoilage is discovered at the end. During the first period of operations 15,000 units of material were placed into production at a cost of $20 each (ignore conversion costs for this process). Ending work in process was 2,000 units, good units completed totaled 11,000 units, and normal spoilage is 15% of the units surviving inspection. Inspection takes place after the units are completed. The unit cost assigned to the normal spoilage is

Accepted Answer

A)   $-0-
B)   $22.61
C)   $20.00
D)   $24.00

Question 11

Using process costing managers can calculate costs per equivalent unit using the weighted average or the FIFO method.

Accepted Answer

A) True 
 B)False

Question 12

Macey Ltd uses a weighted-average process costing system. Beginning inventory consists of 6,000 units, 40% complete. Units started are 14,000, completed are 10,000, and ending inventories are 9,000 units, 70% complete. Normal spoilage is 5% of the units inspected. Direct material is added at the 75% point and spoilage inspection occurs at the 80% point. The cost per equivalent unit for materials was $1.00 and $3.00 for conversion costs. The cost of the units completed was

Accepted Answer

A)   $40,000
B)   $42,200
C)   $41,760
D)   $41,870

Question 13

Spoilage costs from an unusual natural disaster would be allocated to good units produced in a process costing system.

Accepted Answer

A) True 
 B)False

Question 14

Assume a company's beginning work in process consists of 20,000 units, 40% complete. Materials are added at the beginning of the process. During the month, 90,000 units are transferred in. The ending work in process consists of 10,000 units, 50% complete. Using the weighted average method, the equivalent units of production for the month are

Accepted Answer

A)   110,000/100,000/65,000
B)   90,000/100,000/97,000
C)   110,000/110,000,105,000
D)   105,000/60,000/100,000

Question 15

Hendrix Ltd employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities: Using the weighted average method, the number of equivalent units of material was

Accepted Answer

A)   15,750
B)   14,250
C)   15,000
D)   13,500

Question 16

Zuniga Ltd uses a process costing system. During May, 1,200 units were transferred into Department 2 at a cost of $38,040. Direct materials are added at the beginning of the process. Additionally:  Using the FIFO method, units transferred in and completed were

Accepted Answer

A)   1,200
B)   1,100
C)   850
D)   1,450

Question 17

Hendrix Ltd employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities: Using the FIFO method, the number of equivalent units of conversion costs was

Accepted Answer

A)   14,400
B)   14,550
C)   14,850
D)   14,700

Question 18

Assume there were 6,000 units in beginning work in process, 60% complete. 20,000 units were completed during the month. Ending work in process is 40% complete, which is equivalent to 3,200 units for conversion costs. Materials are added at the beginning of the process. The standard cost method is used. Assume the total conversion costs allocated to the completed units was $91,650. What amount of conversion costs are attached to the beginning work in process at the beginning of the month?

Accepted Answer

A)   $1,850
B)   $2,550
C)   $4,400
D)   None of the above

Question 19

Tong Ltd is a manufacturing company that uses a process costing system. All direct material is added at the start of the process, and spoilage is discovered at the end. During the first period of operations 15,000 units of material were placed into production at a cost of $20 each (ignore conversion costs for this process). Ending work in process was 2,000 units, good units completed totaled 11,000 units, and normal spoilage is 15% of the units surviving inspection. Inspection takes place after the units are completed. The unit cost assigned to the good units completed is

Accepted Answer

A)   $-0-
B)   $20.00
C)   $24.00
D)   $23.00

Question 20

Macey Ltd uses a weighted-average process costing system. Beginning inventory consists of 6,000 units, 40% complete. Units started are 14,000, completed are 10,000, and ending inventories are 9,000 units, 70% complete. Normal spoilage is 5% of the units inspected. Direct material is added at the 75% point and spoilage inspection occurs at the 80% point. The cost per equivalent unit for materials was $1.00 and $3.00 for conversion costs. The number of equivalent units of material was

Accepted Answer

A)   20,000
B)   18,000
C)   18,200
D)   11,000

Exam 6: Process Costing Systems

Equivalent units are calculated for work in process and finished goods inventory.

When an organisation uses a long-term procurement contract, direct labor costs are normally stable over long periods of time.

Using process costing managers can calculate costs per equivalent unit using the weighted average or the FIFO method.

Spoilage costs from an unusual natural disaster would be allocated to good units produced in a process costing system.

Hendrix Ltd employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities: Using the weighted average method, the number of equivalent units of material was

Zuniga Ltd uses a process costing system. During May, 1,200 units were transferred into Department 2 at a cost of $38,040. Direct materials are added at the beginning of the process. Additionally: Using the FIFO method, units transferred in and completed were

Hendrix Ltd employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities: Using the FIFO method, the number of equivalent units of conversion costs was