Question 1

Which of the following is a disadvantage of the weighted-average method compared to the FIFO process-costing method?

Accepted Answer

A) FIFO is computationally simpler 
B) FIFO provides better management information for planning and control purposes 
C) when unit cost per input prices fluctuate markedly from month to month,its per unit cost is less representative than FIFO 
D) the information it provides about changes in unit prices from one period to the next is less useful than the information provided by FIFO 
A) FIFO is computationally simpler 
B) FIFO provides better management information for planning and control purposes 
C) when unit cost per input prices fluctuate markedly from month to month,its per unit cost is less representative than FIFO 
D) the information it provides about changes in unit prices from one period to the next is less useful than the information provided by FIFO

Question 2

Conversion costs include direct materials and direct labor but excludes all other manufacturing and non-manufacturing costs.

Accepted Answer

A) True 
 B)False

Question 3

Jane Industries manufactures plastic toys.During October,Jane's Fabrication Department started work on 10,300 models.During the month,the company completed 11,900 models,and transferred them to the Distribution Department.The company ended the month with 1100 models in ending inventory.There were 2700 models in beginning inventory.All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process.The FIFO method of process costing is being followed.Beginning work in process was 25% complete as to conversion costs,while ending work in process was 50% complete as to conversion costs.
Beginning inventory:
 
Manufacturing costs added during the accounting period:
 
How many of the units that were started and completed during October?

Accepted Answer

A) 14,600 
B) 9200 
C) 8825 
D) 10,300 
A) 14,600 
B) 9200 
C) 8825 
D) 10,300

Question 4

Stefan Ceramics is in the business of selling ceramic vases.It has two departments - molding and finishing.Molding department purchases tungsten carbide and produces ceramic vases out of it.Ceramic Vases are then transferred to finishing department,which designs it as per the requirement of the customers.
During the month of July,molding department purchased 720 kgs of tungsten carbide at $280 per kg.It started manufacture of 4200 vases and completed and transferred 3800 vases during the month.It has 400 vases in the process at the end of the month.It incurred direct labor charges of $1500 and other manufacturing costs of $1300,which included electricity costs of $300.Stefan had no inventory of tungsten carbide at the end of the month.It also had no beginning inventory of vases.The ending inventory was 50% complete in respect of conversion costs.
Which of the following journal entry would record the tungsten carbide purchased and used in production during July?

Accepted Answer

B
Explanat

Question 5

Which of the following is true of weighted-average process-costing?

Accepted Answer

A) It does not represent the average cost of units when inputs prices fluctuates markedly from month to month. 
B) It facilitates period-to-period comparisons and hence is very useful in analyzing the performances of managers for different periods. 
C) It arrives at the same unit costs as arrived under FIFO method,but the computations are easier under weighted-average process-costing. 
D) It calculates the cost per equivalent unit of all work done to date,regardless of the accounting period in which it was done. 
A) It does not represent the average cost of units when inputs prices fluctuates markedly from month to month. 
B) It facilitates period-to-period comparisons and hence is very useful in analyzing the performances of managers for different periods. 
C) It arrives at the same unit costs as arrived under FIFO method,but the computations are easier under weighted-average process-costing. 
D) It calculates the cost per equivalent unit of all work done to date,regardless of the accounting period in which it was done.

Question 6

The Esther Valve Corporation was recently formed to produce a brass valve that forms an essential part of a compressor manufactured by a major corporation.The direct materials are added at the start of the production process while conversion costs are added uniformly throughout the production process.September is Parson's first month of operations,and therefore,there was no beginning inventory.Direct materials cost for the month totaled $2,800,000,while conversion costs equaled $3,600,000.Accounting records indicate that 1,600,000 valves were started in September and 1,400,000 valves were completed.
Ending inventory was 20% complete as to conversion costs.
Required:
a.What is the total manufacturing cost per valve for September?
b.Allocate the total costs between the completed valves and the valves in ending inventory.

Accepted Answer

a.
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Question 7

The weighted-average process costing method does not distinguish between units started in the previous period but completed during the current period and units started and completed during the current period.

Accepted Answer

A) True 
 B)False

Question 8

Comfort chair company manufacturers a standard recliner.During February,the firm's Assembly Department started production of 73,000 chairs.During the month,the firm completed 78,600 chairs,and transferred them to the Finishing Department.The firm ended the month with 10,100 chairs in ending inventory.There were 15,700 chairs in beginning inventory.All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process.The FIFO method of process costing is used by Comfort.Beginning work in process was 35% complete as to conversion costs,while ending work in process was 85% complete as to conversion costs.
Beginning inventory:
 
Manufacturing costs added during the accounting period:
 
What is the cost of the goods transferred out during February?
(Round intermediary calculations to the nearest cent. )

Accepted Answer

A) $429,194.09 
B) $454,987.05 
C) $478,261.76 
D) $507,400.00 
A) $429,194.09 
B) $454,987.05 
C) $478,261.76 
D) $507,400.00

Question 9

Which of the following statements is true of conversion costs?

Accepted Answer

A) Estimating the degree of completion is usually easier for direct material costs than for conversion costs. 
B) The calculation of equivalent units is relatively easy for the textile industry. 
C) The conversion cost needed for a completed unit and the conversion cost in a partially completed unit can be measured accurately. 
D) If conversion costs are added evenly during the assembly we can conclude that there are more than one indirect-cost category. 
A) Estimating the degree of completion is usually easier for direct material costs than for conversion costs. 
B) The calculation of equivalent units is relatively easy for the textile industry. 
C) The conversion cost needed for a completed unit and the conversion cost in a partially completed unit can be measured accurately. 
D) If conversion costs are added evenly during the assembly we can conclude that there are more than one indirect-cost category.

Question 10

Morgan Clay Products manufactures clay molded pottery on an assembly line.Its standard costing system uses two cost categories,direct materials and conversion costs.Each product must pass through the Molding Department and the Finishing Department.Direct materials are added at the beginning of the production process.Conversion costs are allocated evenly throughout production.
Data for the Assembly Department for August 2017 are:

Costs for August:

Which of the following journal entries records the Molding Department's conversion costs for the month,assuming conversion costs are 20% higher than expected?

Accepted Answer

C
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Question 11

Comfort chair company manufacturers a standard recliner.During February,the firm's Assembly Department started production of 73,900 chairs.During the month,the firm completed 78,400 chairs,and transferred them to the Finishing Department.The firm ended the month with 11,200 chairs in ending inventory.There were 15,700 chairs in beginning inventory.All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process.The FIFO method of process costing is used by Comfort.Beginning work in process was 25% complete as to conversion costs,while ending work in process was 70% complete as to conversion costs.
Beginning inventory:
 
Manufacturing costs added during the accounting period:
 
How many of the units that were started and completed during February?

Accepted Answer

A) 85,100 
B) 78,400 
C) 73,900 
D) 62,700 
A) 85,100 
B) 78,400 
C) 73,900 
D) 62,700

Question 12

Which of the following companies is most likely to use an operation-costing system?

Accepted Answer

A) a company involved in manufacture of ball bearing on a large scale 
B) a company that has been awarded a contract to construct a bridge for the government 
C) a company that makes suits for which the basic design is same,but depending on specifications,each batch of suits varies somewhat from other batches 
D) a furniture making company which makes furniture pieces as per the specifications of the customers 
A) a company involved in manufacture of ball bearing on a large scale 
B) a company that has been awarded a contract to construct a bridge for the government 
C) a company that makes suits for which the basic design is same,but depending on specifications,each batch of suits varies somewhat from other batches 
D) a furniture making company which makes furniture pieces as per the specifications of the customers

Question 13

Which of the following best describes transferred-in costs?

Accepted Answer

A) they are the cost of transferring products from a vendor 
B) they are value-added costs that are only considered in the first-in,first out process costing system 
C) costs incurred in a previous department or process that are carried forward as the product's cost as that product moves to another department or process in the production cycle 
D) they are the shipping costs related to finished goods that are transported to a customer's location 
A) they are the cost of transferring products from a vendor 
B) they are value-added costs that are only considered in the first-in,first out process costing system 
C) costs incurred in a previous department or process that are carried forward as the product's cost as that product moves to another department or process in the production cycle 
D) they are the shipping costs related to finished goods that are transported to a customer's location

Question 14

In hybrid-costing systems,managers use process costing to account for the conversion costs and job costing for the material and customizable components.

Accepted Answer

A) True 
 B)False

Question 15

Timekeeper Inc.manufactures clocks on a highly automated assembly line.Its costing system uses 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 the production process.Conversion costs are allocated evenly throughout production.Timekeeper Inc.uses weighted-average costing.
Data for the Assembly Department for June 2017 are:

Costs for June 2017:
 
What amount of direct materials costs is assigned to the ending Work-in-Process account for June?
(Round intermediary calculations to the nearest whole dollar. )

Accepted Answer

A) $108,000 
B) $77,389 
C) $108,076 
D) $55,779 
A) $108,000 
B) $77,389 
C) $108,076 
D) $55,779

Question 16

Estimating the degree of completion for the calculation of equivalent units is usually easier for conversion costs than it is for direct materials.

Accepted Answer

A) True 
 B)False

Question 17

Vital Industries manufactured 2400 units of its product Huge in the month of April.It incurred a total cost of $132,000 during the month.Out of this $132,000,$45,700 comprised of direct materials used in the product and the rest was incurred because of the conversion cost involved in the process.Ryan had no opening or closing inventory.What will be the total cost per unit of the product,assuming conversion costs contained $10,000 of indirect labor?

Accepted Answer

A) $55 
B) $50 
C) $39 
D) $35 
A) $55 
B) $50 
C) $39 
D) $35

Question 18

Job-costing and process-costing are mutually exclusive,hence a hybrid costing system that combines elements of both job and process costing cannot be used.

Accepted Answer

A) True 
 B)False

Question 19

Emerging Dock Company manufactures boat docks on an assembly line.Its standard costing system uses two cost categories,direct materials and conversion costs.Each product must pass through the Assembly Department and the Finishing Department.Direct materials are added at the beginning of the production process.Conversion costs are allocated evenly throughout production.
Data for the Assembly Department for May 2017 are:

Costs for May:

Which of the following journal entries records the Assembly Department's conversion costs at actual costs for the month,assuming conversion costs are 15% higher than expected?

Accepted Answer

A
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Question 20

Stefan Ceramics is in the business of selling ceramic vases.It has two departments - molding and finishing.Molding department purchases tungsten carbide and produces ceramic vases out of it.Ceramic Vases are then transferred to finishing department,which designs it as per the requirement of the customers.
During the month of July,molding department purchased 720 kgs of tungsten carbide at $280 per kg.It started manufacture of 4200 vases and completed and transferred 3200 vases during the month.It has 1000 vases in the process at the end of the month.It incurred direct labor charges of $1900 and other manufacturing costs of $500,which included electricity costs of $900.Stefan had no inventory of tungsten carbide at the end of the month.It also had no beginning inventory of vases.The ending inventory was 45% complete in respect of conversion costs.What is the cost of tungsten carbide that will be assigned to vases finished and transferred to the finishing department for the month of July?

Accepted Answer

A) $201,600 
B) $156,900 
C) $189,280 
D) $153,600 
A) $201,600 
B) $156,900 
C) $189,280 
D) $153,600

Which of the following is a disadvantage of the weighted-average method compared to the FIFO process-costing method?

Conversion costs include direct materials and direct labor but excludes all other manufacturing and non-manufacturing costs.

Which of the following is true of weighted-average process-costing?

The weighted-average process costing method does not distinguish between units started in the previous period but completed during the current period and units started and completed during the current period.

Which of the following statements is true of conversion costs?

Which of the following companies is most likely to use an operation-costing system?

Which of the following best describes transferred-in costs?

In hybrid-costing systems,managers use process costing to account for the conversion costs and job costing for the material and customizable components.

Estimating the degree of completion for the calculation of equivalent units is usually easier for conversion costs than it is for direct materials.

Job-costing and process-costing are mutually exclusive,hence a hybrid costing system that combines elements of both job and process costing cannot be used.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets,direct-Cost Variances,and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters

Exam 17: Process Costing

Which of the following is a disadvantage of the weighted-average method compared to the FIFO process-costing method?

Conversion costs include direct materials and direct labor but excludes all other manufacturing and non-manufacturing costs.

Which of the following is true of weighted-average process-costing?

The weighted-average process costing method does not distinguish between units started in the previous period but completed during the current period and units started and completed during the current period.

Which of the following statements is true of conversion costs?

Which of the following companies is most likely to use an operation-costing system?

Which of the following best describes transferred-in costs?

In hybrid-costing systems,managers use process costing to account for the conversion costs and job costing for the material and customizable components.

Estimating the degree of completion for the calculation of equivalent units is usually easier for conversion costs than it is for direct materials.

Job-costing and process-costing are mutually exclusive,hence a hybrid costing system that combines elements of both job and process costing cannot be used.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets,direct-Cost Variances,and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters