Deck 17: Process Costing

Question 1

Why do we need to accumulate and calculate unit costs in process costing (and also job costing)?

Answer 1

We need to accumulate unit costs to:
1. Budget (planning)
2. Price
3. Account for the costs
1. Budgeting To operate a successful business, we should prepare budgets, review the results, and make decisions as to how well our business is doing. Our business has formulated plans for the future. The resources we need for the future (materials, conversion costs, facilities, etc.)will depend on our estimate of the resources we need to accomplish these goals. An important part of these estimates is the unit costs of the products we plan to produce. These unit costs will tell us how many dollars we must acquire to accomplish our plans.
2. Price In order to be a profitable business, we must sell our product at a price in excess of what it costs us to produce the product. Essential for the pricing decision is the cost per unit. We will also learn whether we can sell a product at a profit.
3. Accounting During the course of the accounting period, we will be accumulating costs. At the end of the accounting period, we must allocate this pool of costs between the units that were transferred out and the goods in ending inventory. Unit costs are essential for this purpose.

Question 2

An example of a business which would have no beginning or ending inventory but which could use process costing to compute unit costs would be a:

A)clothing manufacturer
B)corporation whose sole business activity is processing the customer deposits of several banks
C)manufacturer of custom houses
D)manufacturer of large TVs

Answer 2

B

Question 3

Describe the differences between process costing and job costing. Discuss some typical products which would be more likely to use process costing as compared to some which would be more likely to use job costing.

Answer 3

When products are unique, job costing is a more appropriate method to use in collecting costs and making decisions regarding price levels,. In a job-costing system, individual jobs require differing levels of resources. Each job is treated separately and the resources used to complete the job have to be calculated separately. Construction jobs are most likely to use job costing because of their unique specifications.
In a process-costing system, the units produced as output are very similar to one another. As a result, the means by which the raw material is converted to a finished product is common among all of the products. This allows the conversion costs to be summed up and divided by the total number of units for an accurate conversion cost on a unit by unit basis. Some typical types of products which are likely to use process costing are oil refineries, ice cream, various food preparation industries, etc. This is because the raw material is processed in a similar manner for all of the units produced.

Question 4

Which one of the following statements is true?

A)In a job-costing system, individual jobs use different quantities of production resources.
B)In a process-costing system each unit uses approximately the same amount of resources.
C)An averaging process is used to calculate unit costs in a job-costing system.
D)Both A and B are correct.

Question 5

In a process-costing system average unit costs are calculated

A)by dividing total costs in a given accounting period by total units produced in that period.
B)by multiplying total costs in a given accounting period by total units produced in that period.
C)by dividing total costs in a given accounting period by units started in that period.
D)by multiplying total costs in a given accounting period by units started in that period.

Question 6

There are basically two distinct methods of calculating product costs.
Required:
Compare and contrast the two methods.

Question 7

When identical or similar units of products or services are mass produced, job-costing is used to calculate an average production cost for all units produced.

Question 8

Which of the following manufactured products would NOT use process costing?

A)747 jet aircraft
B)46-inch television sets
C)Construction of a commercial office building
D)Both A and C are correct.

Question 9

Job-order costing would be most likely used by a firm that produces homogeneous products.

Question 10

The principal difference between process costing and job costing is that in job costing an averaging process is used to compute the unit costs of products or services.

Question 11

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

Question 12

In a process-costing system, the calculation of equivalent units is used for calculating:

A)the dollar amount of ending inventory
B)the dollar amount of the cost of goods sold for the accounting period
C)the dollar cost of a particular job
D)Both A and B are correct.

Question 13

The purpose of the equivalent-unit computation is to:

A)convert completed units into the amount of partially completed output units that could be made with that quantity of input
B)assist the business in determining the cost assigned to ending inventory and work-in-process inventory.
C)convert partially completed units into the amount of completed output units that could be made with that quantity of input
D)Both B and C are correct.

Question 14

Which of the following statement(s)concerning conversion costs is correct?

A)Estimating the degree of completion of direct materials in a partially completed unit is usually easier to calculate than estimating the degree of completion for conversion costs.
B)The calculation of equivalent units is relatively easy for the textile industry.
C)Estimates are usually not considered acceptable.
D)Both B and C are correct.

Question 15

Examples of industries that would use process costing include the soft-drink bottling and oil industry.

Question 16

Process costing should be used to assign costs to products when the:

A)units produced are similar
B)units produced are dissimilar
C)calculation of unit costs requires the averaging of unit costs over all units produced
D)Either A or C are correct.

Question 17

The president of the Gulf Coast Refining Corporation wants to know why his golfing partner, who is the chief financial officer of a large construction company, calculates his costs by the job, but his own corporation calculates costs by large units rather than by individual barrel of oil.

Question 18

Conversion costs:

A)include all the factors of production
B)include direct labor and overhead
C)in process costing are usually considered to be added evenly throughout the production process
D)Both B and C are correct.

Question 19

Costing systems that are used for the costing of like or similar units of products in mass production are called:

A)inventory-costing systems
B)job-costing systems
C)process-costing systems
D)weighted-average costing systems

Question 20

Process-costing systems separate costs into cost categories according to the timing of when costs are introduced into the process.

Question 21

Answer the following questions using the information below:
Dustin Plastics, Inc., manufactures plastic moldings for car seats. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through Department A and Department B. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production.
Data for Department A for February 2012 are:
Costs for Department A for February 2012 are:

What is the unit cost per equivalent unit of beginning inventory in Department A?

A)$2,000
B)$3,500
C)$7,000
D)$7,500

Question 22

In a process-costing system, there is always a separate Work-in-Process account for each different process.

Question 23

Answer the following questions using the information below:
Dustin Plastics, Inc., manufactures plastic moldings for car seats. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through Department A and Department B. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production.
Data for Department A for February 2012 are:
Costs for Department A for February 2012 are:

How many units were completed and transferred out of Department A during February?

A)100 units
B)600 units
C)700 units
D)800 units

Question 24

Equivalent units are calculated separately for each input.

Question 25

The last step in a process-costing system is to compute cost per equivalent unit.

Question 26

Cedar Rapids Chemical placed 220,000 liters of direct materials into the mixing process. At the end of the month, 10,000 liters were still in process, 30% converted as to labor and factory overhead. All direct materials are placed in mixing at the beginning of the process and conversion costs occur evenly during the process. Cedar Rapids Chemical uses weighted-average costing.
Required:
a. Determine the equivalent units in process for direct materials and conversion costs, assuming there was no beginning inventory.
b. Determine the equivalent units in process for direct materials and conversion costs, assuming that 12,000 liters of chemicals were 40% complete prior to the addition of the 220,000 liters.

Question 27

Answer the following questions using the information below:
Dustin Plastics, Inc., manufactures plastic moldings for car seats. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through Department A and Department B. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production.
Data for Department A for February 2012 are:
Costs for Department A for February 2012 are:

Dustin Plastics, Inc., manufactures plastic moldings for car seats. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through Department A and Department B. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Data for Department A for February 2012 are:
Costs for the Department A for February 2012 are:
What were the equivalent units of direct materials and conversion costs, respectively, at the end of February? Assume Dustin Plastics, Inc., uses the weighted-average process costing method.

A)800; 730
B)800; 800
C)800; 700
D)600; 500

Question 28

The equivalent unit concept is a means by which a process costing system can compare partially completed work done in each of the various process categories to obtain a total measure of work done.

Question 29

List and describe the five steps in process costing.

Question 30

Process-costing journal entries and job-costing journal entries are similar with respect to direct materials and conversion costs.

Question 31

Answer the following questions using the information below:
Roosevelt Cabinetry, Inc., manufactures standard sized modular cabinet units for kitchens and other applications within the home. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through the rough cut department and the finish department. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production.
Data for Finish Department for March 2012 are:
Costs for Finish department for March 2012 are:

How many units were completed and transferred out of the Finishing Department during March?

A)1,000 units
B)1,400 units
C)2,100 units
D)Unknown

Question 32

Marv and Vicki own and operate a vegetable canning plant. In recent years, their business has grown tremendously and, at any point in time, they may have 30 to 35 different vegetables being processed. Also, during the peak summer months there are several thousand bushels of vegetables in some stage of processing at any one time. With the company's growth during the past few years, the owners decided to employ an accountant to provide cost estimations on each vegetable category and prepare monthly financial statements. Although the accountant is doing exactly as instructed, Marv and Vicki are confused about the monthly operating costs. Although they process an average of 50,000 canned units a month, the monthly production report fluctuates wildly.
Required:
Explain how the production report can fluctuate wildly if they process a constant amount of vegetables each month.

Question 33

Creative Colors Paint Company placed 315,000 gallons of direct materials into the mixing process. All direct materials are placed in mixing at the beginning of the process and conversion costs occur evenly during the process. Creative Colors uses weighted-average costing. The initial forecast for the end of the month was to have 75,000 gallons still in process, 15% converted as to labor and factory overhead.
Required:
a. Determine the total equivalent units (in process and transferred out)for direct materials and for conversion costs, assuming there was no beginning inventory.
b. With the installation of a new paint processing filtration device, the forecast for the end of the month was to have 50,000 gallons still in process, 70% converted as to labor and factory overhead. In this event, determine the equivalent units (in process and transferred out)for direct materials and for conversion costs, assuming there was no beginning inventory.

Question 34

The Zygon Corporation was recently formed to produce a semiconductor chip that forms an essential part of the personal computer 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. June is Zygon's first month of operations, and therefore, there was no beginning inventory. Direct materials cost for the month totaled $895,000, while conversion costs equaled $4,225,000. Accounting records indicate that 475,000 chips were started in June and 425,000 chips were completed.
Ending inventory was 50% complete as to conversion costs.
Required:
a. What is the total manufacturing cost per chip for June?
b. Allocate the total costs between the completed chips and the chips in ending inventory.

Question 35

The weighted-average process-costing method calculates the equivalent units by:

A)considering only the work done during the current period
B)the units started during the current period minus the units in ending inventory
C)the units started during the current period plus the units in ending inventory
D)the equivalent units completed during the current period plus the equivalent units in ending inventory

Question 36

The Parson 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 $1,400,000, while conversion costs equaled $1,800,000. Accounting records indicate that 800,000 valves were started in September and 700,000 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.

Question 37

The accounting entry to record the transfer of rolls from the assembly department to the finishing department is:
Work in Process-Assembly Department

Question 38

Answer the following questions using the information below:
Roosevelt Cabinetry, Inc., manufactures standard sized modular cabinet units for kitchens and other applications within the home. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through the rough cut department and the finish department. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production.
Data for Finish Department for March 2012 are:
Costs for Finish department for March 2012 are:

What is the unit cost per equivalent unit of the beginning inventory in the Finishing Department?

A)$800.00
B)$300.00
C)$1,100.00
D)$500.00

Question 39

A production cost worksheet is used to summarize total costs to account for, compute cost per equivalent unit, and assign total costs to units completed and to units in ending work-in-process.

Question 40

Jordana Woolens is a manufacturer of wool cloth. The information for March is as follows:
Beginning work in process was half converted as to labor 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% complete.
Required:
Prepare a production cost worksheet using the weighted-average method. Include any necessary supporting schedules.

Question 41

Under the weighted-average method, the stage of completion of beginning work in process:

A)is relevant in determining the equivalent units
B)must be combined with the work done during the current period to determine the equivalent units
C)is irrelevant in determining the equivalent-unit calculation
D)can almost always be determined with a high degree of precision

Question 42

Answer the following questions using the information below:
The Daltry 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. Daltry Tractor uses weighted-average costing.
Data for the Assembly Department for April 2012 are:
Costs for April 2012:

What is the conversion cost per equivalent unit in April?

A)$1,250.00
B)$945.76
C)$872.50
D)$1,033.00

Question 43

Answer the following questions using the information below:
The Lumbar Chair Company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 150,000 chairs. During the month, the firm completed 170,000 chairs and transferred them to the Finishing Department. The firm ended the month with 20,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle. Weighted-average costing is used by Lumbar.
What were the equivalent units for conversion costs for February if the beginning inventory was 70% complete as to conversion costs and the ending inventory was 40% complete as to conversion costs?

A)178,000
B)150,000
C)170,000
D)190,000

Question 44

Answer the following questions using the information below:
The Lumbar Chair Company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 150,000 chairs. During the month, the firm completed 170,000 chairs and transferred them to the Finishing Department. The firm ended the month with 20,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle. Weighted-average costing is used by Lumbar.
Of the 150,000 units Lumbar started during February, how many were finished during the month?

A)150,000
B)170,000
C)130,000
D)190,000

Question 45

Answer the following questions using the information below:
The Cuckoo Clock Shop 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. Cuckoo Clock Shop uses weighted-average costing.
Data for the Assembly Department for June 2013 are:
Costs for June 2013:

What is the conversion cost per equivalent unit in June?

A)$627.16
B)$789.57
C)$865.10
D)$945.18

Question 46

Answer the following questions using the information below:
The Daltry 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. Daltry Tractor uses weighted-average costing.
Data for the Assembly Department for April 2012 are:
Costs for April 2012:

What is the total amount debited to the Work-in-Process account during the month of April?

A)$230,000
B)$430,000
C)$1,875000
D)$2,855,000

Question 47

If there was no beginning work in process and no ending work in process under the weighted-average process costing method, the number of equivalent units for direct materials, if direct materials were added at the start of the process, would be:

A)equal to the units started or transferred in
B)equal to the units completed
C)less than the units completed
D)Both A and B are correct.

Question 48

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

A)entering work in process from the units in beginning inventory plus the costs for the work completed during the current accounting period
B)costs that have entered work in process from the units started or transferred in during the current accounting period
C)that have entered work in process during the current accounting period from the units started or transferred in minus the costs associated with ending inventory
D)that have entered work in process during the current accounting period from the units started or transferred in plus the costs associated with ending inventory

Question 49

Answer the following questions using the information below:
The Cuckoo Clock Shop 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. Cuckoo Clock Shop uses weighted-average costing.
Data for the Assembly Department for June 2013 are:
Costs for June 2013:

What amount of conversion costs are assigned to the ending Work-in-Process account for June?

A)$509,78.32
B)$70,555.50
C)$63,225.25
D)$90,074

Question 50

Answer the following questions using the information below:
The Daltry 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. Daltry Tractor uses weighted-average costing.
Data for the Assembly Department for April 2012 are:
Costs for April 2012:

What amount of conversion costs are assigned to the ending Work-in-Process account for April?

A)$236,440.00
B)$145,312.50
C)$118,220.00
D)$250,000.00

Question 51

Answer the following questions using the information below:
The Daltry 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. Daltry Tractor uses weighted-average costing.
Data for the Assembly Department for April 2012 are:
Costs for April 2012:

What is the direct materials cost per equivalent unit during April?

A)$1,250.00
B)$1,241.94
C)$575.00
D)$581.25

Question 52

Answer the following questions using the information below:
The Lumbar Chair Company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 150,000 chairs. During the month, the firm completed 170,000 chairs and transferred them to the Finishing Department. The firm ended the month with 20,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle. Weighted-average costing is used by Lumbar.
What were the equivalent units for materials for February?

A)190,000 chairs
B)170,000 chairs
C)160,000 chairs
D)150,000 chairs

Question 53

Answer the following questions using the information below:
The Cuckoo Clock Shop 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. Cuckoo Clock Shop uses weighted-average costing.
Data for the Assembly Department for June 2013 are:
Costs for June 2013:

What is the direct materials cost per equivalent unit during June?

A)$561.90
B)$865.10
C)$789.50
D)$945.18

Question 54

Weighty Steel processes a single type of steel. For the current period the following information is given: All materials are added at the beginning of the production process. The beginning inventory was 40% complete as to conversion, while the ending inventory was 30% completed for conversion purposes.
Weighty uses the weighted-average costing method.
What is the total cost assigned to the units completed and transferred this period?

A)$107,010
B)$109,440
C)$113,160
D)$120,100

Question 55

Answer the following questions using the information below:
The Daltry 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. Daltry Tractor uses weighted-average costing.
Data for the Assembly Department for April 2012 are:
Costs for April 2012:

What are the equivalent units for direct materials and conversion costs, respectively, for April?

A)1,350 units; 1,350 units
B)1,600 units; 1,600 units
C)1,600 units; 1,475 units
D)250 units; 125 units

Question 56

Answer the following questions using the information below:
The Cuckoo Clock Shop 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. Cuckoo Clock Shop uses weighted-average costing.
Data for the Assembly Department for June 2013 are:
Costs for June 2013:

What is the total amount debited to the Work-in-Process account during the month of June?

A)$225,000
B)$1,000,000
C)$1,135,000
D)$1,225,000

Question 57

Answer the following questions using the information below:
The Lumbar Chair Company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 150,000 chairs. During the month, the firm completed 170,000 chairs and transferred them to the Finishing Department. The firm ended the month with 20,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle. Weighted-average costing is used by Lumbar.
How many chairs were in inventory at the beginning of the month? Conversion costs are incurred uniformly over the production cycle.

A)10,000 chairs
B)20,000 chairs
C)30,000 chairs
D)40,000 chairs

Question 58

Answer the following questions using the information below:
The Daltry 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. Daltry Tractor uses weighted-average costing.
Data for the Assembly Department for April 2012 are:
Costs for April 2012:

What amount of direct materials costs are assigned to the ending Work-in-Process account for April?

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

Question 59

Answer the following questions using the information below:
The Cuckoo Clock Shop 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. Cuckoo Clock Shop uses weighted-average costing.
Data for the Assembly Department for June 2013 are:
Costs for June 2013:

What are the equivalent units for direct materials and conversion costs, respectively, for June?

A)1,200.5 units; 1,160.64 units
B)1,050 units; 1,012.5 units
C)1,050 units; 1,050 units
D)962 units; 990 units

Question 60

Answer the following questions using the information below:
The Cuckoo Clock Shop 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. Cuckoo Clock Shop uses weighted-average costing.
Data for the Assembly Department for June 2013 are:
Costs for June 2013:

What amount of direct materials costs is assigned to the ending Work-in-Process account for June?

A)$84,285
B)$141,776.25
C)$129,765
D)$118,425

Question 61

Operating income can differ materially between the results for the weighted-average and FIFO methods when:

A)direct materials or conversion costs per unit vary significantly from period to period
B)the physical inventory levels of work in process are large relative to the total number of units transferred out
C)Neither of these answers is correct.
D)Both of these answers is correct.

Question 62

A reason(s)why "pure" FIFO is rarely encountered in process costing is that:

A)FIFO is usually applied within a department to compute the cost of units transferred out
B)the units transferred into the department during a given time period are usually carried at a single average unit cost
C)tracking costs on a "pure" FIFO basis is very difficult
D)All of these answers are correct.

Question 63

Standard costing is popular among companies that:

A)produce masses of similar or identical products
B)manufacture textiles or ceramics
C)produce a product that uses few direct materials items, and has relatively few operational activities
D)All of these answers are correct.

Question 64

FIFO Aluminum processes a single type of aluminum. During the current period the following information was given: All materials are added at the beginning of the production process. The beginning inventory was 30% complete as to conversion, while the ending inventory was 40% completed for conversion purposes.
FIFO Aluminum uses the first-in, first-out system of process costing.
What were the costs assigned to the units transferred out this period (round equivalent unit cost to the nearest penny)?

A)$113,160
B)$113,236
C)$113,980
D)$122,300

Question 65

Answer the following questions using the information below:
The Rest-a-Lot chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 75,000 chairs. During the month, the firm completed 80,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. There were 15,000 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 Rest-a-Lot. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 80% complete as to conversion costs.
Beginning inventory:
Manufacturing costs added during the accounting period:

How many of the units that were started during February were completed during February?

A)85,000
B)80,000
C)75,000
D)65,000

Question 66

Activity-based costing has less applicability in a process-costing environment because:

A)the use of activity-based costing makes the computational process more difficult
B)the products tend to be similar and thus use the resources in a similar manner
C)cost control in process costing is achieved by controlling the cost of the various processes rather than the individual activities
D)Both B and C are correct.

Question 67

Answer the following questions using the information below:
The Morgan Models company manufacturers replica plastic airplane and motorized vehicle models. During October, the firm's Assembly Department started production of 60,000 models. During the month, the firm completed 66,000 models, and transferred them to the Finishing Department. The firm ended the month with 22,000 models in ending inventory. There were 28,000 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 used by Morgan. 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 during October were completed during October?

A)30,000
B)38,000
C)32,000
D)60,000

Question 68

What is the cost of the goods transferred out during October?

A)$363,000
B)$330,000
C)$340,000
D)$375,000

Question 69

A distinct feature of the FIFO process-costing method is that the:

A)work done on beginning inventory before the current period is blended with the work done during the current period in the calculation of equivalent units
B)work done on beginning inventory before the current period is kept separate from the work done during the current period in the calculation of equivalent units
C)work done on ending inventory is kept separate from the work done during the current period in the calculation of equivalent units and is usually not included in the calculation
D)FIFO process-costing method is only minimally different from the weighted-average process-costing method

Question 70

Answer the following questions using the information below:
The Morgan Models company manufacturers replica plastic airplane and motorized vehicle models. During October, the firm's Assembly Department started production of 60,000 models. During the month, the firm completed 66,000 models, and transferred them to the Finishing Department. The firm ended the month with 22,000 models in ending inventory. There were 28,000 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 used by Morgan. 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:

What were the equivalent units for conversion costs during October?

A)21,000
B)62,000
C)70,000
D)87,000

Question 71

Answer the following questions using the information below:
The Rest-a-Lot chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 75,000 chairs. During the month, the firm completed 80,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. There were 15,000 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 Rest-a-Lot. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 80% 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?

A)$417,750
B)$456,015
C)$476,750
D)$505,000

Question 72

On occasion, the FIFO and the weighted-average methods of process costing will result in the same dollar amount of costs being transferred to the next department. Which of the following scenarios would have that result?

A)when the beginning and ending inventories are equal in terms of unit numbers
B)when the beginning and ending inventories are equal in terms of the percentage of completion for both direct materials, and conversion costs
C)when there is no ending inventory
D)when there is no beginning inventory

Question 73

Answer the following questions using the information below:
The Morgan Models company manufacturers replica plastic airplane and motorized vehicle models. During October, the firm's Assembly Department started production of 60,000 models. During the month, the firm completed 66,000 models, and transferred them to the Finishing Department. The firm ended the month with 22,000 models in ending inventory. There were 28,000 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 used by Morgan. 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:

What is the amount of direct materials cost assigned to ending work-in-process inventory at the end of October?

A)$22,000
B)$44,000
C)$39,200
D)$ 33,000

Question 74

Equivalent units in beginning work in process PLUS equivalent units of work done in the current period MINUS equivalent units completed and transferred out in the current period EQUALS equivalent units in ending work in process.

Question 75

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.

Question 76

An assumption of the FIFO process-costing method is that:

A)the units in beginning inventory are not necessarily assumed to be completed by the end of the period
B)the units in beginning inventory are assumed to be completed first
C)ending inventory will always be completed in the next accounting period
D)no calculation of conversion costs is possible

Question 77

Answer the following questions using the information below:
The Rest-a-Lot chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 75,000 chairs. During the month, the firm completed 80,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. There were 15,000 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 Rest-a-Lot. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 80% complete as to conversion costs.
Beginning inventory:
Manufacturing costs added during the accounting period:

What were the equivalent units for conversion costs during February?

A)83,500
B)85,000
C)75,000
D)79,500

Question 78

A disadvantage of the weighted-average method compared to the FIFO process-costing method is that:

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 79

Answer the following questions using the information below:
The Rest-a-Lot chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 75,000 chairs. During the month, the firm completed 80,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. There were 15,000 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 Rest-a-Lot. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 80% complete as to conversion costs.
Beginning inventory:
Manufacturing costs added during the accounting period:

What is the amount of direct materials cost assigned to ending work-in-process inventory at the end of February?

A)$19,200
B)$22,400
C)$25,600
D)$22,500

Question 80

A major advantage of using the FIFO process-costing method is that:

A)FIFO makes the unit cost calculations simpler
B)in contrast with the weighted-average method, FIFO is considered GAAP
C)FIFO provides managers with information about changes in the costs per unit from one period to the next
D)All of these answers are correct.