Deck 6: Process Costing

Question 1

The sum of the beginning inventory units and the number of units started during the period determines the:

A)Units completed during the period.
B)Units to account for.
C)Units transferred in during the period.
D)Units accounted for.
E)Units started during the period.

Answer 1

B

Question 2

In a given process costing system,the equivalent units are computed using the weighted-average method.With respect to conversion costs,the percentage of completion for the current period only is included in the calculation of the:

A)A
B)B
C)C
D)D

Answer 2

C

Question 3

Which of the statements below is not correct?

A)Normal spoilage is spoilage that occurs under efficient operating conditions.
B)Normal spoilage is controllable in the short term and considered a part of product cost.
C)Abnormal spoilage is spoilage in excess of that expected under efficient operating conditions.
D)Abnormal spoilage is charged as a loss to operations in the period detected.

Answer 3

B

Question 4

The fifth and final step in determining process costs is:

A)Analyzing physical flow of production units.
B)Calculating equivalent units of production.
C)Determining total cost for each manufacturing element.
D)Computing the cost per equivalent unit.
E)Assigning cost to completed and uncompleted production.

Question 5

Which one of the following process costing methods combines both current and prior costs in determining cost per equivalent unit?

A)FIFO method.
B)LIFO method.
C)Specific unit method.
D)Weighted-average method.
E)Moving-average method.

Question 6

Process cost systems are used in all of the following industries except:

A)Chemicals.
B)Ship building.
C)Oil refining.
D)Textiles.
E)Steel.

Question 7

The sum of units transferred out and ending inventory units,assuming no spoilage,determines the:

A)Units completed during the period.
B)Units spoiled.
C)Units transferred in during the period.
D)Units accounted for.
E)Units started during the period.

Question 8

Firms should use a process costing system when they produce products that:

A)Are semi-homogeneous.
B)Pass through a series of manufacturing processes.
C)Pass through only one department.
D)Have small batch sizes.

Question 9

In process costing,unit product cost is calculated by dividing process cost in each department by the equivalent units produced:

A)Less beginning inventory.
B)Plus beginning inventory.
C)In the prior period.
D)In the following period.
E)During the period.

Question 10

The percentage of completion of the beginning work-in-process inventory should be considered in the computation of the equivalent units for which of the following methods of process costing?

A)A
B)B
C)C
D)D

Question 11

From the industries listed below,which one is most likely to use process costing in accounting for production costs?

A)Printing shop.
B)Accounting firm.
C)Electrical contractor.
D)Steel mill.
E)Automobile repair shop.

Question 12

In calculating unit cost in a process costing system,"conversion cost" is defined as the sum of:

A)Direct and indirect material costs.
B)Direct and indirect labor costs.
C)Direct labor and factory overhead costs.
D)Indirect labor and factory overhead costs.
E)Indirect material and factory overhead costs.

Question 13

The key difference between weighted-average and FIFO process costing methods is the handling of the partially completed:

A)Beginning direct materials inventory.
B)Ending direct materials inventory.
C)Beginning work-in-process inventory.
D)Ending work-in-process inventory.
E)Beginning finished goods inventory.

Question 14

The journal entry to record the application of factory overhead would include a credit to:

A)Work-in-Process Inventory.
B)Accrued Payroll.
C)Factory Overhead.
D)Materials Inventory.
E)Finished Goods Inventory.

Question 15

Which of the following is not one of the key steps in determining process costs?

A)Assigning the total manufacturing costs to the units completed and transferred out and the units of work in process at the end of the period.
B)Analyzing the physical flow of production units.
C)Computing the cost per equivalent unit for each manufacturing cost element.
D)Calculating equivalent units of production for all manufacturing cost elements.
E)Determining the cost pools and cost objects.

Question 16

The first step in determining process costs is:

A)Assigning cost to completed and uncompleted production.
B)Computing the cost per equivalent unit.
C)Calculating equivalent units of production.
D)Analyzing physical flow of production units.
E)Determining total cost for each manufacturing element.

Question 17

When using the first-in,first-out method of process costing,equivalent units for work done during this period is equal to the number of units:

A)In work-in-process at the beginning of the period times the percent of work necessary to complete the items,plus the number of units started and completed during the period,plus the number of units remaining in work-in-process at the end of the period times the percent of work done during the period.
B)In work-in-process at the beginning of the period,plus the number of units started during the period,plus the number of units remaining in work-in-process at the end of the period times the percent of work necessary to complete the items.
C)Started into process during the period,plus the number of units in work-in-process at the beginning of the period.
D)Transferred out during the period,plus the number of units remaining in work-in-process at the end of the period times the percent of work necessary to complete the items.

Question 18

Which one of the following process costing methods includes only current costs in the calculations of cost per equivalent unit?

A)FIFO method.
B)LIFO method.
C)Throughput method.
D)Weighted-average method.
E)Moving-average method.

Question 19

The weighted-average method of process costing makes no distinction between the cost incurred prior to the current period and the cost incurred in:

A)A future period.
B)The current period.
C)Either a future period or the current period.
D)Both a future period and the current period.
E)The operational process.

Question 20

The advantage of the weighted-average method is its:

A)Complexity.
B)Computer-friendly nature.
C)Appropriateness regardless of inventory level changes.
D)Effectiveness in a cost leadership strategy.
E)Simplicity.

Question 21

Landry Co.had the following information for the month of December.All direct materials were one hundred percent complete,and beginning materials cost $14,000.
Cost per equivalent unit for conversion under the FIFO method is calculated to be (rounded to nearest dollar):

A)$112.103.
B)$49.242.
C)$109.496.
D)$82.757.
E)$60.185.

Question 22

Oregonian Fisheries Inc.processes king salmon for various distributors.Two departments are involved - processing and packaging.Data relating to tons of king salmon processed in the processing department during June 2010 are provided below:
Total equivalent units for materials under the FIFO method are calculated to be:

A)6,860 equivalent units.
B)8,480 equivalent units.
C)6,480 equivalent units.
D)7,440 equivalent units.
E)7,920 equivalent units.

Question 23

Zing Inc.calculates cost for an equivalent unit of production using both the weighted-average and the FIFO methods.
Cost per equivalent unit for conversion under the FIFO method is calculated to be:

A)$3.535.
B)$4.040.
C)$4.230.
D)$3.000.
E)$2.875.

Question 24

In a process costing system,the cost of abnormal spoilage should be:

A)Prorated between units transferred out and ending inventory.
B)Included in the cost of units transferred out.
C)Treated as a loss in the period incurred.
D)Ignored in the period incurred.

Question 25

Zing Inc.calculates cost for an equivalent unit of production using both the weighted-average and the FIFO methods.
Cost per equivalent unit for materials under the weighted-average method is calculated to be:

A)$3.535.
B)$4.040.
C)$4.230.
D)$3.000.
E)$2.875.

Question 26

In a process costing system,which assumes that normal spoilage occurs at the end of a process,the cost attributable to normal spoilage should be assigned to:

A)Beginning work-in-process inventory.
B)Ending work-in-process inventory.
C)Cost of goods manufactured and ending work-in-process inventory in the ratio of units worked on during the period to units remaining in work-in-process inventory.
D)Cost of goods manufactured (transferred out).
E)A separate loss account in order to highlight production inefficiencies.

Question 27

Oregonian Fisheries Inc.processes king salmon for various distributors.Two departments are involved - processing and packaging.Data relating to tons of king salmon processed in the processing department during June 2010 are provided below:
Total equivalent units for materials under the weighted-average method are calculated to be:

A)6,860 equivalent units.
B)8,480 equivalent units.
C)6,480 equivalent units.
D)7,440 equivalent units.
E)7,920 equivalent units.

Question 28

Normal spoilage and abnormal spoilage should be classified as:

A)A
B)B
C)C
D)D
E)E

Question 29

Landry Co.had the following information for the month of December.All direct materials were one hundred percent complete,and beginning materials cost $14,000.
Total equivalent units for materials under the FIFO method are calculated to be:

A)1,110 equivalent units.
B)1,080 equivalent units.
C)1,032 equivalent units.
D)1,008 equivalent units.
E)1,320 equivalent units.

Question 30

Landry Co.had the following information for the month of December.All direct materials were one hundred percent complete,and beginning materials cost $14,000.
Total equivalent units for conversion under the FIFO method are calculated to be:

A)1,110 equivalent units.
B)1,080 equivalent units.
C)1,032 equivalent units.
D)1,008 equivalent units.
E)1,320 equivalent units.

Question 31

Landry Co.had the following information for the month of December.All direct materials were one hundred percent complete,and beginning materials cost $14,000.
Cost per equivalent unit for materials under the FIFO method is calculated to be (rounded):

A)$112.103.
B)$49.242.
C)$109.496.
D)$82.757.
E)$60.185.

Question 32

Which of the following characteristics applies to process costing but not to job costing?

A)Identifiable batches of production.
B)Average costs.
C)Equivalent units.
D)Application of overhead.
E)Use of standard costs.

Question 33

In the computation of manufacturing cost per equivalent unit,the weighted-average method of process costing considers:

A)Current costs only.
B)Current costs less cost of ending work-in-process inventory.
C)Current costs plus cost of beginning work-in-process inventory.
D)Current costs plus cost of ending work-in-process inventory.
E)Current costs less cost of beginning work-in-process inventory.

Question 34

Zing Inc.calculates cost for an equivalent unit of production using both the weighted-average and the FIFO methods.
Total equivalent units for conversion under the FIFO method is calculated to be:

A)75,600 equivalent units.
B)79,500 equivalent units.
C)86,400 equivalent units.
D)60,000 equivalent units.
E)96,000 equivalent units.

Question 35

Oregonian Fisheries Inc.processes king salmon for various distributors.Two departments are involved - processing and packaging.Data relating to tons of king salmon processed in the processing department during June 2010 are provided below:
Total equivalent units for conversion under the weighted-average method are calculated to be:

A)6,860 equivalent units.
B)8,480 equivalent units.
C)6,480 equivalent units.
D)7,440 equivalent units.
E)7,920 equivalent units.

Question 36

Zing Inc.calculates cost for an equivalent unit of production using both the weighted-average and the FIFO methods.
Total equivalent units for materials under the weighted-average method are calculated to be:

A)75,600 equivalent units.
B)79,500 equivalent units.
C)86,400 equivalent units.
D)60,000 equivalent units.
E)96,000 equivalent units.

Question 37

Oregonian Fisheries Inc.processes king salmon for various distributors.Two departments are involved - processing and packaging.Data relating to tons of king salmon processed in the processing department during June 2010 are provided below:
Total equivalent units for conversion under the FIFO method are calculated to be:

A)6,860 equivalent units.
B)8,480 equivalent units.
C)6,480 equivalent units.
D)7,440 equivalent units.
E)7,920 equivalent units.

Question 38

Oregonian Fisheries Inc.processes king salmon for various distributors.Two departments are involved - processing and packaging.Data relating to tons of king salmon processed in the processing department during June 2010 are provided below:
The journal entry to record requisitioned and used direct materials would include a credit to:

A)Work-in-Process Inventory.
B)Accrued Payroll.
C)Factory Overhead.
D)Materials Inventory.
E)Finished Goods Inventory.

Question 39

In a production cost report using process costing,transferred-in costs are similar to:

A)Materials costs added at the end of the process.
B)Materials costs added at the beginning of the process.
C)Conversion costs added during the process.
D)Conversion costs transferred to the next process.
E)Conversion costs included in beginning inventory.

Question 40

Zing Inc.calculates cost for an equivalent unit of production using both the weighted-average and the FIFO methods.
The cost of goods completed and transferred out under the weighted-average method is calculated to be:

A)$497,880.
B)$492,144.
C)$499,788.
D)$493,536.
E)$495,837.

Question 41

The journal entry to record incurred direct labor would include a credit to:

A)Work-in-Process Inventory.
B)Accrued Payroll.
C)Factory Overhead.
D)Materials Inventory.
E)Finished Goods Inventory.

Question 42

Roussey Co.had the following information for the month of June:
Beginning work-in-process inventory is 30 percent complete as to conversion.Ending work-in-process inventory is 40 percent complete as to conversion.Materials are added at the end of the process.
The equivalent units for transferred-in costs under the FIFO method are calculated to be:

A)12,000.
B)10,000.
C)9,600.
D)9,000.
E)7,000.

Question 43

Talamoto Co.manufactures a single product that goes through two processes - mixing and cooking.The following data pertains to the Mixing Department for September.
Material P is added at the beginning of work in the Mixing Department.Material Q is also added in the Mixing Department,but not until units of product are forty percent completed with regard to conversion.Conversion costs are incurred uniformly during the process.
Total equivalent units for Material P under the weighted-average method are calculated to be:

A)104,000 equivalent units.
B)71,600 equivalent units.
C)85,400 equivalent units.
D)72,000 equivalent units.
E)94,000 equivalent units.

Question 44

On March 1,Atlanta Company had 20,000 units of WIP in Department A,which were 100% complete as to material costs and 30% complete as to conversion costs.During March,150,000 units were started in Department A and 160,000 units were completed and transferred to Department B.WIP on March 31 was 100% complete as to material costs and 50% complete as to conversion costs.By what amount would the equivalent units for conversion costs for the month of March differ if the FIFO method were used instead of the weighted-average method?

A)10,000 decrease.
B)8,000 decrease.
C)6,000 decrease.
D)5,000 decrease.

Question 45

Larsen Company adds materials at the beginning of the process in Department 2.Data concerning the materials used in May production are as follows:
Using the weighted-average method,the equivalent units for materials are:

A)44,000.
B)41,000.
C)36,000.
D)33,000.
E)32,000.

Question 46

Roussey Co.had the following information for the month of June:
Beginning work-in-process inventory is 30 percent complete as to conversion.Ending work-in-process inventory is 40 percent complete as to conversion.Materials are added at the end of the process.
How many units were completed in June?

A)12,000.
B)10,000.
C)9,600.
D)9,000.
E)7,000.

Question 47

Conversion costs in a process cost system include:

A)Direct materials and direct labor.
B)Direct labor and manufacturing overhead.
C)Direct materials and manufacturing overhead.
D)Manufacturing overhead and selling,general & administrative expenses.

Question 48

Talamoto Co.manufactures a single product that goes through two processes - mixing and cooking.The following data pertains to the Mixing Department for September.
Material P is added at the beginning of work in the Mixing Department.Material Q is also added in the Mixing Department,but not until units of product are forty percent completed with regard to conversion.Conversion costs are incurred uniformly during the process.
The cost of goods completed and transferred out under the weighted-average method is calculated to be:

A)$885,000.
B)$882,000.
C)$888,000.
D)$891,000.
E)$887,000.

Question 49

Talamoto Co.manufactures a single product that goes through two processes - mixing and cooking.The following data pertains to the Mixing Department for September.
Material P is added at the beginning of work in the Mixing Department.Material Q is also added in the Mixing Department,but not until units of product are forty percent completed with regard to conversion.Conversion costs are incurred uniformly during the process.
Cost per equivalent unit for Material Q under the weighted-average method is calculated to be:

A)$5.10.
B)$2.60.
C)$2.50.
D)$2.30.
E)$5.40.

Question 50

DeFond Company has a process costing system.All materials are introduced at the beginning of the process in Department One.The following information is available for the month of January:
What are the equivalent units for the month of July if the company uses the weighted-average method?

A)A
B)B
C)C
D)D
E)E

Question 51

Talamoto Co.manufactures a single product that goes through two processes - mixing and cooking.The following data pertains to the Mixing Department for September.
Material P is added at the beginning of work in the Mixing Department.Material Q is also added in the Mixing Department,but not until units of product are forty percent completed with regard to conversion.Conversion costs are incurred uniformly during the process.
Total equivalent units for conversion under the weighted-average method are calculated to be:

A)104,000 equivalent units.
B)71,600 equivalent units.
C)85,400 equivalent units.
D)72,000 equivalent units.
E)94,000 equivalent units.

Question 52

Talamoto Co.manufactures a single product that goes through two processes - mixing and cooking.The following data pertains to the Mixing Department for September.
Material P is added at the beginning of work in the Mixing Department.Material Q is also added in the Mixing Department,but not until units of product are forty percent completed with regard to conversion.Conversion costs are incurred uniformly during the process.
Cost per equivalent unit for Material P under the weighted-average method is calculated to be:

A)$5.10.
B)$2.60.
C)$2.50.
D)$2.30.
E)$5.40.

Question 53

The journal entry to record finished product units would include a debit to:

A)Work-in-Process Inventory.
B)Accrued Payroll.
C)Factory Overhead.
D)Materials Inventory.
E)Finished Goods Inventory.

Question 54

Talamoto Co.manufactures a single product that goes through two processes - mixing and cooking.The following data pertains to the Mixing Department for September.
Material P is added at the beginning of work in the Mixing Department.Material Q is also added in the Mixing Department,but not until units of product are forty percent completed with regard to conversion.Conversion costs are incurred uniformly during the process.
Cost per equivalent unit for conversion under the weighted-average method is calculated to be:

A)$5.10.
B)$2.60.
C)$2.50.
D)$2.30.
E)$5.40.

Question 55

DeFond Company has a process costing system.All materials are introduced at the beginning of the process in Department One.The following information is available for the month of January:
What are the equivalent units for the month of July if the company uses the FIFO method?

A)A
B)B
C)C
D)D
E)E

Question 56

Roussey Co.had the following information for the month of June:
Beginning work-in-process inventory is 30 percent complete as to conversion.Ending work-in-process inventory is 40 percent complete as to conversion.Materials are added at the end of the process.
The equivalent units for conversion under the FIFO method are calculated to be:

A)12,000.
B)10,000.
C)9,600.
D)9,000.
E)7,000.

Question 57

Talamoto Co.manufactures a single product that goes through two processes - mixing and cooking.The following data pertains to the Mixing Department for September.
Material P is added at the beginning of work in the Mixing Department.Material Q is also added in the Mixing Department,but not until units of product are forty percent completed with regard to conversion.Conversion costs are incurred uniformly during the process.
Total equivalent units for Material Q under the weighted-average method are calculated to be:

A)104,000 equivalent units.
B)71,600 equivalent units.
C)85,400 equivalent units.
D)72,000 equivalent units.
E)94,000 equivalent units.

Question 58

Which of the following companies (industries)would not use a process cost system?

A)Georgia-Pacific Corporation (Lumber & Paper).
B)Meyer Graphics (Printing).
C)Bayer Pharmaceuticals (Drugs).
D)Reichhold Chemical Co.(Chemicals).

Question 59

Roussey Co.had the following information for the month of June:
Beginning work-in-process inventory is 30 percent complete as to conversion.Ending work-in-process inventory is 40 percent complete as to conversion.Materials are added at the end of the process.
How many units were started and completed in June?

A)12,000.
B)10,000.
C)9,600.
D)9,000.
E)7,000.

Question 60

Roussey Co.had the following information for the month of June:
Beginning work-in-process inventory is 30 percent complete as to conversion.Ending work-in-process inventory is 40 percent complete as to conversion.Materials are added at the end of the process.
The equivalent units for materials under the weighted-average method are calculated to be:

A)12,000.
B)10,000.
C)9,600.
D)9,000.
E)7,000.

Question 61

Williams Pharmaceutical Company is a maker of drugs for high blood pressure and uses a process costing system.The following information pertains to the final department of William's blockbuster drug called "HBP".
Williams calculates separate costs of spoilage by computing both normal and abnormal spoiled units.Normal spoilage costs are reallocated to good units and abnormal spoilage costs are charged as a loss.The units of "HBP" that are spoiled are the result of defects not discovered before inspection of finished units.Materials are added at the beginning of the process.Using the weighted-average method,what are the total conversion costs transferred to finished goods?

A)$6,750.
B)$7,150.
C)$7,300.
D)$7,500.
(2,700 + 300)x $2.50 = $7,500

Question 62

The number of the same or similar units that could have been produced given the amount of work actually performed on both complete and partially complete units is referred to as:

A)Physical units.
B)Completed units.
C)Equivalent units.
D)Produced units.
E)Units to account for.

Question 63

Many industries,for example mining and other extractive industries,use process costing to provide information regarding sustainability.
Required: Give an example of how a company could use process costing to assist in making decisions regarding sustainability.
Please see Feedback for answers.

Question 64

Williams Pharmaceutical Company is a maker of drugs for high blood pressure and uses a process costing system.The following information pertains to the final department of William's blockbuster drug called "HBP".
Williams calculates separate costs of spoilage by computing both normal and abnormal spoiled units.Normal spoilage costs are reallocated to good units and abnormal spoilage costs are charged as a loss.The units of "HBP" that are spoiled are the result of defects not discovered before inspection of finished units.Materials are added at the beginning of the process.Using the weighted-average method,what are the total conversion costs of abnormal spoilage?

A)$375.
B)$500.
C)$625.
D)$750.
200 x $2.50 = $500

Question 65

Williams Pharmaceutical Company is a maker of drugs for high blood pressure and uses a process costing system.The following information pertains to the final department of William's blockbuster drug called "HBP".
Williams calculates separate costs of spoilage by computing both normal and abnormal spoiled units.Normal spoilage costs are reallocated to good units and abnormal spoilage costs are charged as a loss.The units of "HBP" that are spoiled are the result of defects not discovered before inspection of finished units.Materials are added at the beginning of the process.Using the weighted-average method,what are the unit conversion costs?

A)$1.75.
B)$2.00.
C)$2.50.
D)$2.75.
(1,600 + 6,900)/3,400 = $2.50

Question 66

Williams Pharmaceutical Company is a maker of drugs for high blood pressure and uses a process costing system.The following information pertains to the final department of William's blockbuster drug called "HBP".
Williams calculates separate costs of spoilage by computing both normal and abnormal spoiled units.Normal spoilage costs are reallocated to good units and abnormal spoilage costs are charged as a loss.The units of "HBP" that are spoiled are the result of defects not discovered before inspection of finished units.Materials are added at the beginning of the process.Using the weighted-average method,what are the total conversion costs in ending inventory?

A)$1,300.
B)$500.
C)$1,850.
D)$2,250.
(600 x 1/3)x $2.50 = $500

Question 67

James Automotive Group is a maker of engines for high performance cars and uses a process costing system.The following information pertains to the final department of James' outstanding engine called "Superior-1".
James calculates separate costs of spoilage by computing both normal and abnormal spoiled units.Normal spoilage costs are reallocated to good units and abnormal spoilage costs are charged as a loss.The units of "Superior-1" that are spoiled are the result of defects not discovered before inspection of finished units.Using the weighted-average method,what are the total conversion costs transferred to finished goods?

A)$810,000.
B)$855,000.
C)$900,000.
D)$910,000.
(1,700 + 200)x $450 = $855,000

Question 68

Abnormal spoilage is considered what kind of cost?

A)Period cost.
B)Product cost.
C)Opportunity cost.
D)Sunk cost.

Question 69

Amos and Son Manufacturing Company of Asheville,Tennessee,produces about 1,000 units of hand-crafted wooden chairs per month.Their chairs are known for quality and durability.Most of the chairs are marketed through two furniture outlets with over 200 stores in the southwestern United States.You have been hired as a cost consultant to recommend improvements in Amos and Son's process cost system,a system installed some fifty years ago.Since then,the number of product lines has increased tenfold,and the units sold each year have increased from 3,000 to 12,000.You discover a process cost system driven by volume only,with a single rate for factory overhead based on units produced.
Required: Given these limited facts,explain what impact changing to an activity-based process costing/management system (ABC/ABM)would have on Amos and Son's costing and pricing activities.

Question 70

A Production Cost Report summarizes all except:

A)The physical units of a department.
B)The equivalent units of a department.
C)The costs incurred during the period.
D)The costs assigned to both units completed and ending work-in-process inventories.
E)The budgeted labor and overhead application rates.

Question 71

Which method is a method used to prepare the departmental production cost report when using a process cost system?

A)LIFO method.
B)FIFO method.
C)Weighted production method.
D)Production average method.
E)Throughput average method

Question 72

Which equation correctly calculates the total weighted average equivalent units of production?

A)Completed and transferred out units + Beginning work-in-process equivalent units.
B)Ending work-in-process equivalent units - Completed and transferred out units.
C)Beginning work-in-process equivalent units - Completed and transferred out units.
D)Completed and transferred out units + Ending work-in-process equivalent units.
E)Ending work-in-process equivalent units + Beginning work-in-process equivalent units.

Question 73

James Automotive Group is a maker of engines for high performance cars and uses a process costing system.The following information pertains to the final department of James' outstanding engine called "Superior-1".
James calculates separate costs of spoilage by computing both normal and abnormal spoiled units.Normal spoilage costs are reallocated to good units and abnormal spoilage costs are charged as a loss.The units of "Superior-1" that are spoiled are the result of defects not discovered before inspection of finished units.Using the weighted-average method,what are the equivalent units for conversion costs?

A)1,790 units.
B)1,800 units.
C)1,900 units.
D)2,090 units.
1,700 + 200 + 100 + (.3 x 300)= 2,090

Question 74

Bob and Nancy Barnett have recently expanded their television-based educational film business by shooting 30-second television ads for a regional television market in southern Colorado.They began business about 15 years ago with a contract to film training videos for the U.S.Army,and that business continues to provide a steady revenue base,currently about 40 percent of total revenue.Nancy Barnett is the firm's accountant,and in a visit to your accounting class last week,made a presentation detailing her firm's costing activities.Your instructor has asked you to respond to one particular statement that Nancy Barnett made: "Since our contract for military training films requires us to detail all costs,we use the process cost method that gives the maximum amount of fixed overhead cost.This almost covers all of our overhead,giving us an edge in competitively pricing our 30-second TV ads,and explains why we have grown so much in this sector of our business."
Required: Is there an ethical problem with this approach? Does it represent acceptable accounting procedure?

Question 75

James Automotive Group is a maker of engines for high performance cars and uses a process costing system.The following information pertains to the final department of James' outstanding engine called "Superior-1".
James calculates separate costs of spoilage by computing both normal and abnormal spoiled units.Normal spoilage costs are reallocated to good units and abnormal spoilage costs are charged as a loss.The units of "Superior-1" that are spoiled are the result of defects not discovered before inspection of finished units.Using the weighted-average method,what are the unit conversion costs?

A)$46.70.
B)$363.64.
C)$450.00.
D)$536.36.
($180,500 + $760,000)/2,090 = $450

Question 76

Place the following Process costing steps in the correct order:
1 - Calculate equivalent units
2 - Determine the total costs to account for
3 - Analyze flow of physical units
4 - Assign total manufacturing costs
5 - Compute unit costs

A)3,5,2,1,4.
B)2,1,5,4,3.
C)2,3,5,4,1.
D)3,1,2,5,4.

Question 77

James Automotive Group is a maker of engines for high performance cars and uses a process costing system.The following information pertains to the final department of James' outstanding engine called "Superior-1".
James calculates separate costs of spoilage by computing both normal and abnormal spoiled units.Normal spoilage costs are reallocated to good units and abnormal spoilage costs are charged as a loss.The units of "Superior-1" that are spoiled are the result of defects not discovered before inspection of finished units.Using the weighted-average method,what are the total conversion costs in ending inventory?

A)$22,500.
B)$40,000.
C)$40,500.
D)$180,000.
(300 x.3)x $450 = $40,500

Question 78

Williams Pharmaceutical Company is a maker of drugs for high blood pressure and uses a process costing system.The following information pertains to the final department of William's blockbuster drug called "HBP".
Williams calculates separate costs of spoilage by computing both normal and abnormal spoiled units.Normal spoilage costs are reallocated to good units and abnormal spoilage costs are charged as a loss.The units of "HBP" that are spoiled are the result of defects not discovered before inspection of finished units.Materials are added at the beginning of the process.Using the weighted-average method,what are the equivalent units for conversion costs?

A)2,200 units.
B)2,700 units.
C)3,000 units.
D)3,400 units.
2,700 + 300 + 200 + (600/3)= 3,400

Question 79

Backflush costing:

A)Is a simplified approach to determining product cost that is used when there is little or no work-in-process inventory.
B)Works when there is a lot of work-in-process inventory.
C)Is a complex method.
D)Is a complex approach to determining product cost that is used when there is little or no work-in-process inventory.

Question 80

James Automotive Group is a maker of engines for high performance cars and uses a process costing system.The following information pertains to the final department of James' outstanding engine called "Superior-1".
James calculates separate costs of spoilage by computing both normal and abnormal spoiled units.Normal spoilage costs are reallocated to good units and abnormal spoilage costs are charged as a loss.The units of "Superior-1" that are spoiled are the result of defects not discovered before inspection of finished units.Using the weighted-average method,what are the total conversion costs of abnormal spoilage?

A)$45,000.
B)$53,636.
C)$90,000.
D)$180,500.
100 x $450 = $45,000