Question 1

Which of the following product features would best suit a hybrid costing system?

Accepted Answer

A)  Identical and unique features 
B)  Identical and very similar features 
C)  Some unique and common features 
D)  Some unique and individual features

Question 2

Normal spoilage can always be avoided by a more efficient approach to production.

Accepted Answer

A) True 
 B)False

Question 3

South River Chemicals Pty Ltd manufactures a product called Zybek. Direct materials are added at the beginning of the process and conversion activity occurs uniformly throughout the process. The following data pertain to the month of May. 
What are the unit costs for the period (rounded to two decimal places) assuming FIFO costing?

Accepted Answer

A)  DM $7.25; CC $15.62 
B)  DM $5.90; CC $13.55 
C)  DM $5.90; CC $15.62 
D)  None of the given answers

Question 4

Healthy Flavour is a food processing company that makes a product called Health Nut soup in two processes-blending and condensing. The output of the blending department is transferred to the condensing department. All materials are added at the beginning of the blending process, and conversion activity occurs uniformly throughout both processes. The following data pertain to the month of April in the blending department. 
Using the FIFO method of process costing, calculate the equivalent units of direct materials for the month of April.

Accepted Answer

A)  60 000 
B)  58 000 
C)  55 000 
D)  50 000

Question 5

Collins Chemicals produces a compound through two processes. For its second process for a particular period, Collins had an opening WIP inventory of 100 units halfway through the process; 2300 units completed in the period; and a closing WIP inventory of 400 units three-quarters of the way through the process. Materials are added at the beginning of the process and conversion costs are incurred uniformly. Calculate the equivalent units for transferred in costs for the period if the firm used FIFO costing.

Accepted Answer

A)  2300 
B)  2400 
C)  2500 
D)  2600

Question 6

For a manufacturer that produces large batches of automotive parts, which type of costing system would you recommend? Justify your answer.

Accepted Answer

The answer of For a manufacturer that produces large batches...

Question 7

What is the inventory formula that shows the physical flow of production units during a given month, under the weighted average method?

Accepted Answer

A)  Physical units in beginning work in process + units started - units completed and transferred out = units in ending work in process. 
B)  Units in beginning work in process + units completed and transferred out + units started = units in ending work in process. 
C)  Units started + units completed and transferred out + units in ending work in process = units in beginning work in process. 
D)  Units in beginning work in process - units started + units completed and transferred out = units in ending work in process.

Question 8

When accounting for the costs of abnormal spoilage at the end of the period, the costs of abnormal spoilage are

Accepted Answer

A)  included as part of the cost of unit completed. 
B)  expensed as loss on abnormal spoilage in the current period. 
C)  included in the cost of finished goods. 
D)  expensed as closing work in process in the current period.

Question 9

The following data apply to Zilch Ltd in its mixing department for the month of April. All material is introduced at the start of the process and conversion occurs evenly through the process. Spoilage occurred at the midpoint in the process.

Using the weighted average method, what are the equivalent units for conversion?

Accepted Answer

A)  85 000 
B)  75 000 
C)  77 000 
D)  82 000

Question 10

South River Chemicals Pty Ltd manufactures a product called Zybek. Direct materials are added at the end of the process and conversion activity occurs uniformly throughout the process. The following data pertain to the month of May. 
Using the weighted average method of process costing, calculate the equivalent units of direct materials and conversion costs for the month of May.

Accepted Answer

A)  DM 75 000; CC 69 400 
B)  DM 75 000; CC 60 400 
C)  DM 60 000; CC 60 400 
D)  DM 68 000; CC 69 400

Question 11

Which of the following represents the production units used to calculate equivalent units under the weighted average method?

Accepted Answer

A)  Work to date on ending work in process + units started and completed. 
B)  All units completed + work to date on ending work in process. 
C)  Work to complete beginning work in process + work to date on ending work in process. 
D)  Work to complete beginning work in process + units completed - work done on ending work in process.

Question 12

Operational costing is appropriate where
i. there are different material inputs.
ii. there are common material inputs.
iii. processes are identical.
iv. different combinations of specific processes apply to different products.

Accepted Answer

A)  i and ii 
B)  ii and iii 
C)  ii and iv 
D)  i and iv

Question 13

The difference in cost per equivalent units between the weighted average method and the FIFO method

Accepted Answer

A)  will be higher if there is no beginning work in process. 
B)  will be higher if there is no ending work in process. 
C)  will disappear if there is no beginning work in process. 
D)  will be lower if there is no ending work in process.

Question 14

In which of the following ways is abnormal spoilage accounted for?

Accepted Answer

A)  Expensed in the period in which it occurred 
B)  Included as part of the unit cost of output 
C)  Written off to cost of goods sold 
D)  Included in inventory valuation until year-end and then written off

Question 15

Assuming that there was no beginning work in process inventory and the ending work in process inventory is 50 per cent complete as to conversion costs, the number of equivalent units as to conversion costs would be

Accepted Answer

A)  the same as the units completed. 
B)  the same as the units placed in process. 
C)  less than the units completed. 
D)  less than the units placed in process.

Question 16

Process costing can be used in service businesses if the service is routine and repetitive.

Accepted Answer

A) True 
 B)False

Question 17

In both job and process costing, the journal entry to record predetermined overhead is.

Accepted Answer

A)  debit work in process and credit raw materials inventory, salaries payable and manufacturing overhead. 
B)  debit work in process and credit manufacturing overhead applied. 
C)  debit manufacturing overhead and credit work in process and raw materials inventory. 
D)  debit manufacturing overhead and credit work in process inventory.

Question 18

South River Chemicals Pty Ltd manufactures a product called Zybek. Direct materials are added at the beginning of the process and conversion activity occurs uniformly throughout the process. The following selected data pertain to the month of May. 
What are the unit costs for the period (rounded to two decimal places) assuming weighted average costing?

Accepted Answer

A)  DM $7.38; CC $17.03 
B)  DM $6; CC $14.78 
C)  DM $7.38; CC $14.78 
D)  DM $6; CC $17.03

Question 19

Heara Ltd manufactures metal sheets, and uses the FIFO process costing. On 1 May the Rolling Department had 3000 units work in progress, which were 50 per cent completed as to conversion costs. During May 8000 units were completed and transferred out. The remaining work in progress on 30 May was 2000 units at 50 per cent complete in terms of conversion rate. What is the equivalent unit of conversion?

Accepted Answer

A)  2000 units 
B)  7500 units 
C)  9000 units 
D)  10 500 units

Question 20

Which of the following are components of conversion costs?

Accepted Answer

A)  Direct labour and direct materials 
B)  Indirect materials and manufacturing overhead 
C)  Direct labour and manufacturing overhead 
D)  Direct labour and indirect labour

Exam 5: Process Costing and Operation Costing