Deck 6: Process Cost Accounting--Additional Procedures

Question 1

In a process cost system,the cost attributable to abnormal losses that occur due to unexpected circumstances such as machine operator error should be assigned to:

A)Ending work in process inventory.
B)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.
C)A separate loss account in order to highlight production inefficiencies
D)Cost of good manufactured (transferred out)

Answer 1

C

Question 2

The following information is available for the month of April from the Second department of the Armque Corporation: Materials are added at the end of the process in the Second department.Using the average cost method,what are the equivalent units of production for materials and conversion costs for the month of April?

A)304,000 250,000
B)280,000 295,000
C)340,000 316,000
D)280,000 304,000

Answer 2

D

Question 3

Plemmon Company adds materials at the beginning of the process in the forming department,which is the first of two stages of its production cycle.Information concerning the materials used in the forming department in April follows: Using the average cost method,what is the materials cost of the work in process at April 30 (rounded to nearest dollar)?

A)$7,154
B)$6,200
C)$7,750
D)$6,417

Answer 3

B

Question 4

The following information is available for the month of October from the First department of the Vaughn Corporation: Materials are added in the beginning of the process in the First department.Using the average cost method,what are the equivalent units of production for the month of October?

A)43,000 39,500
B)39,500 36,000
C)38,500 34,300
D)39,500 38,200

Question 5

The following information is available for the month of August from the First department of the Twigg Corporation: Materials are added in the beginning of the process in the First department.Using the average cost method,what are the equivalent units of production for the month of August?

A)192,000 240,000
B)190,000 192,000
C)240,000 208,000
D)240,000 192,000

Question 6

CPG Company manufactures chemicals.Chemical agent PL62 is refined in the Refining department and,after it is transferred to the Mixing department,a reactive agent is added to it.In January,6,000 gallons of PL62 having a cost of $30,000 were transferred from the refining to the Mixing department where 4,000 gallons of the reactive agent were added.When calculating the inventory costs in the Mixing department,what will the cost per unit relating to gallons transferred in from the Refining department be?

A)$3.33
B)$3.00
C)$5.00
D)$7.50

Question 7

Van Pelt Company uses the average cost method of process costing.The production report for the Mixing department follows: What are the equivalent units for: Materials Conversion Costs

A)5,650 5,450
B)5,450 5,275
C)4,850 4,400
D)5,400 5,220

Question 8

Normal losses that occur in the manufacturing process are properly classified as:

A)Extraordinary items.
B)Product costs.
C)Period costs.
D)Deferred charges.

Question 9

Materials are added at the end of the process in a company's curing department,the second stage of the production cycle.The following information is available for the month of July: Under the cost accounting system,the costs incurred on the lost units are absorbed by the remaining good units.Using the average cost method,what are the equivalent units for the materials unit cost calculation?

A)210,000
B)195,000
C)250,000
D)235,000

Question 10

If the amount of loss in a manufacturing process is normal,it should be classified as a:

A)Product cost.
B)Deferred charge.
C)Joint cost.
D)Period cost.

Question 11

Information concerning Department A of Ali Company for the month of June is as follows: Units
Materials
Costs
Work in process,beginning of month
20,000
$14,550
Started in June
85,000
$66,300
Units completed
90,000
Work in process,end of month
15,000
All materials are added at the beginning of the process.Using the average cost method,the cost (rounded to two places)per equivalent unit for materials for June is:

A)$0.74.
B)$0.90.
C)$0.77.
D)$0.78.

Question 12

During June,Birch Bay Company's Department B equivalent unit product costs computed under the average cost method were as follows: Materials are introduced at the end of the process in Department B.There were 4,000 units (50 % complete as to conversion costs)in work in process at June 30.The total costs assigned to the June 30 work in process inventory should be:

A)$20,000.
B)$32,000.
C)$26,000.
D)$35,200.

Question 13

What losses should not affect the recorded cost of inventories?

A)Normal losses
B)Abnormal losses
C)Seasonal losses
D)Standard losses

Question 14

An example of a process where all of the materials would be added at the end of the process would be:

A)A bakery where the ingredients for bread are combined and left to rise.
B)The second process of a snack factory where snack chips coming from the frying process are cooled and dried for an hour,then bagged.
C)A baker where the wet ingredients for a cake are added one-at-a-time after the dry ingredients have been thoroughly blended.
D)None of the above.

Question 15

Boron Refiners had 50,000 gallons started in its process in June.At June 30,35,000 gallons were completed and transferred to finished goods and 10,000 gallons were still in process,one-fourth completed as to materials,labor and overhead.The remaining 5,000 units were lost to evaporation,a normal result of the process.Costs of production during the month were $75,000,$50,000,and $25,000 for material,labor and overhead,respectively.What is the cost per equivalent unit in June?

A)$4.00
B)$3.33
C)$3.53
D)$3.75

Question 16

In a process cost system,how is the unit cost affected in a production cost report when materials are added in a department subsequent to the first department and the added materials result in additional units?

A)It causes an increase in the preceding department's unit cost that necessitates an adjustment of the transferred-in unit cost.
B)It causes a decrease in the preceding department's unit cost that necessitates an adjustment of the transferred-in unit cost.
C)It causes an increase in the preceding department's unit cost but does not necessitate an adjustment of the transferred-in unit cost.
D)It causes a decrease in the preceding department's unit cost but does not necessitate an adjustment of the transferred-in unit cost.

Question 17

Stanley Company adds materials at the beginning of the process in Department M.Data concerning the materials used in the March production follows: Using the average cost method,the equivalent units for the materials unit cost calculation are:

A)38,000.
B)52,000.
C)56,000.
D)37,000.

Question 18

An example of a process where all of the materials would be added at the beginning of the process would be:

A)A bakery where the ingredients for bread are combined and left to rise.
B)The second process of a snack factory where snack chips coming from the frying process are cooled and dried for an hour,then bagged.
C)A baker where the wet ingredients for a cake are added one-at-a-time after the dry ingredients have been thoroughly blended.
D)None of the above.

Question 19

The following information is available for the month of August from the Second department of the Twigg Corporation: Materials are added at the end of the process in the Second department.Using the average cost method,what are the equivalent units of production for materials and conversion costs for the month of August?

A)192,000 160,000
B)160,000 192,000
C)160,000 208,000
D)240,000 192,000

Question 20

Blanche Corporation adds materials at the end of the process in the injection department,which is the second of two stages of its production cycle.Information concerning the materials used in the forming department in April follows: Using the average cost method,what is the materials cost of the work in process at March 31 (rounded to nearest dollar)?

A)$108,000
B)$126,000
C)$120,000
D)$0

Question 21

The following information is available for the month of April from the Second department of the Armque Corporation: Materials are added at the end of the process in the Second department.Using the first-in,first-out method,what are the equivalent units of production for materials and conversion costs for the month of April?

A)250,000 271,000
B)280,000 271,000
C)340,000 259,000
D)280,000 259,000

Question 22

The average cost method of process costing differs from the FIFO method of process costing in that the average cost method:

A)Requires that ending work in process inventory be stated in terms of equivalent units of production.
B)Can be used under any cost-flow assumption.
C)Does not consider the degree of completion of beginning work in process inventory when computing equivalent units of production.
D)Considers the ending work in process inventory only partially complete.

Question 23

When two products are produced during a common process,what is the factor that determines whether the products are joint products or one principal product and a by-product?

A)Potential marketability for each product
B)Amount of additional work expended in the production of each product
C)Management policy
D)Relative total sales value

Question 24

Which of the following is most likely to be accounted for as a by-product?

A)Heating oil resulting from processing crude oil at a refinery.
B)Cream resulting from processing raw milk at a dairy.
C)Sawdust resulting from processing lumber at a lumber mill.
D)Ground beef resulting from processing beef at a meat packer.

Question 25

The following information is available for the month of April from the First department of the Armque Corporation: Materials are added in the beginning of the process in the First department.Using the first-in,first-out method,what are the equivalent units of production for the month of April?

A)250,000 259,000
B)340,000 259,000
C)280,000 271,000
D)250,000 271,000

Question 26

Each of the following is a method by which to allocate joint costs except:

A)Chemical or engineering analysis.
B)Relative sales value.
C)Relative weight,volume,or linear measure.
D)Relative advertising costs.

Question 27

During June,Birch Bay Company's Department B equivalent unit product costs computed under the FIFO method were as follows: Materials are introduced at the end of the process in Department B.There were 4,000 units (70 % complete as to conversion costs)in work in process at June 30.The total costs assigned to the June 30 work in process inventory should be:

A)$20,000.
B)$24,800.
C)$28,400.
D)$35,200.

Question 28

Material is added at the beginning of a process in a process costing system.The beginning work in process inventory for this process this period was 30 percent complete as to conversion costs.Using the first-in,first-out method of costing,the total equivalent units for material for this process during this period are equal to the:

A)Units started this period in this process.
B)Beginning inventory this period for this process.
C)Units started this period in this process plus the beginning inventory.
D)Units started this period in this process plus 70 percent of the beginning inventory.

Question 29

Budde Chemicals produces two industrial chemical compounds,X15 and Z24,from the same process,which last year cost $600,000.Budde produced 10,000 gallons of X15,which sells for $40 per gallon and 40,000 gallons of Z24,which sells for $20 per gallon.Using the relative sales method,how much of the joint cost should be allocated to X15?

A)$200,000
B)$400,000
C)$120,000
D)$150,000

Question 30

In order to compute equivalent units of production using the FIFO method of process costing,work for the period must be broken down to units:

A)Completed from beginning inventory,started and completed during the month,and units in ending inventory.
B)Completed during the period and units in ending inventory.
C)Started during the period and units transferred out during the period.
D)Processed during the period and units completed during the period.

Question 31

Under which of the following conditions will the first-in,first-out method of process costing produce the same cost of goods manufactured amount as the average cost method?

A)When goods produced are homogeneous in nature
B)When there is no beginning inventory
C)When there is no ending inventory
D)When beginning and ending inventories are each 50 percent complete

Question 32

If two or more products share a common process before they are separated,the joint costs should be allocated in a manner that:

A)Assigns a proportionate amount of the total cost to each product equitably.
B)Maximizes total earnings.
C)Minimizes variations in a unit of production cost.
D)Does not introduce an element of estimation into the process of accumulating costs for each product.

Question 33

Regina Manufacturing uses the FIFO method of process costing.The production report for the Curing Department,where the materials are added at the beginning of the period,for September was as follows: The number of units started and completed during the period was:

A)12,000
B)9,000
C)15,000
D)6,000

Question 34

Klug Industries adds materials at the beginning of the process in the molding department,which is the first of two stages of its production cycle.Information concerning the materials used in the molding department in August follows: Using the FIFO method,what is the materials cost of the work in process at August 31 (rounded to nearest dollar)?

A)$28,000
B)$29,400
C)$29,639
D)$25,358

Question 35

A major difference between FIFO and average costing is:

A)The number of equivalent units in ending work in process.
B)It is not possible to use FIFO when there is more than one department.
C)FIFO separates beginning inventory from current production.
D)The current month's cost of production will be less.

Question 36

Joint costs are commonly allocated based upon relative:

A)Sales value.
B)Marketing costs.
C)Conversion costs.
D)Prime costs.

Question 37

Information concerning Department A of Ali Company for the month of June is as follows: Units
Materials
Costs
Work in process,beginning of month
20,000
$14,550
Started in June
85,000
$66,300
Units completed
90,000
Work in process,end of month
15,000
All materials are added at the beginning of the process.Using the first-in,first-out method,the cost (rounded to two places)per equivalent unit for materials for June is:

A)$0.63.
B)$0.90.
C)$0.77.
D)$0.78.

Question 38

Which of the following statements best describes a by-product?

A)A product with a value that can easily and accurately be determined.
B)A product that has a greater value than the main product.
C)A product created along with the main product whose sales value does not cover the cost of its production.
D)A product that usually produces a small amount of revenue when compared to the main product revenue.

Question 39

If a company using the adjusted sales value method to assign joint costs produces two products,A and B,from a joint process,and B requires additional processing after the split-off in order to be salable,how is the joint cost allocated to B determined?

A)The costs of the additional processing are ignored in allocating joint costs.
B)The costs of the additional processing are subtracted from the joint costs allocated to B.
C)The relative sales value used to allocate the joint cost are determined after the costs of further processing are subtracted from the ultimate sales value of B.
D)None of these are correct.

Question 40

Regina Manufacturing uses the FIFO method of process costing.The production report for the Curing Department,where the materials are added at the beginning of the period,for September was as follows: The number of equivalent units for conversion costs during the period was:

A)13,500
B)16,500
C)12,300
D)14,700

Question 41

Which of the following is not an acceptable method for accounting for by-products in a joint manufacturing process?

A)Costs before the split-off point are allocated to by-products.
B)The estimated sales value of the by-product reduces the cost of the main product.
C)The value of by-products is included in an account called "By-products Inventory."
D)In some instances,the revenue from selling by-products may be treated as "other income" on the income statement.

Question 42

Jim Davis Company processes hogs into three products,chops,bacon and sausage.Production and selling price data follow: Hogs are processed in the Processing Department.From the split-off point,bacon is smoked,sliced and packaged in the Bacon Department.The cost incurred for these processes was $100,000.In addition,sausage was ground and formed into patties in the Sausage Department after the split-off.This process cost $60,000.
Required:
a)If joint processing costs were $1,500,000,calculate the total cost of each product using the adjusted sales value method.
b)Prepare the journal entries to 1)record the joint processing and movement of product out of the Processing Department after the split off,and 2)record the additional processing and completion of the bacon and sausage.

Question 43

Information for Milton,Inc.in July for the Finishing Department,the second stage of the production cycle,is as follows: Material costs are added at the end of the process.The ending work in process is 40% complete as to conversion costs.Ignoring any transferred in costs,how would the total costs accounted for be distributed using the average cost method?

Question 44

Highlander Corporation is a manufacturer that uses the average cost method to account for costs of production.Highlander manufactures a product that is produced in three separate departments: molding,assembling,and finishing.The following information was obtained for the assembling department for the month of June:
Work in process,June 1: 4,000 units composed of the following: The following activity occurred during the month of June: (3)Materials are added at the end of the process. Prepare in good form a cost of production report for the assembling department for the month of June.Show supporting computations in good form.The report should include:
a.Equivalent units of production.
b.Total manufacturing costs.
c.Cost per equivalent unit.
d.Dollar amount of ending work in process.
e.Dollar amount of inventory cost transferred out.

Question 45

The Roberto Company had computed the flow of units for Department B for the month of May as follows: ​ Materials are added at the end of the process.There were 8,000 units of work in process at May 31.The work in process at May 1 was 30 percent complete as to conversion costs and the work in process at May 31 was 20 percent complete as to conversion costs.What was the cost of the goods transferred out and in ending work in process using the FIFO method? (Ignore transferred-in costs).

Question 46

Information for Chaucer,Ltd.in July for the Prep Department,the first stage of the production cycle,is as follows: Material costs are added at the beginning of the process.The ending work in process is two-thirds complete as to conversion costs.How would the total costs accounted for be distributed using the average cost method?

Question 47

Kyle,Inc. ,instituted a new process in October.During October,18,000 units were started in Department A.Of the units started,2,000 were lost in the process,12,000 were transferred to Department B,and 4,000 remained in work in process at October 31.The work in process at October 31 was 100 percent complete as to material costs and 15% complete as to conversion costs.Material costs of $78,400 and conversion costs of $52,920 were charged to Department A in October.What were the total costs transferred to Department B and assigned to ending work in process using the average cost method?

Question 48

Dover Enterprises has two products,Chalk V and Alabaster X,that come from a joint process,blending.Alabaster X undergoes additional curing after the split-off before it can be sold.The entry to account for the movement of products from the blending department is:

A)Debit - Finished Goods Credit - Work in Process - Blending
B)Debit - Finished Goods Debit - Work in Process - Curing
Credit - Work in Process - Blending
C)Debit - Work in Process - Curing Credit - Work in Process - Blending
D)Debit - Work in Process - Curing Credit - Factory Overhead

Question 49

Howard Poster Incorporated had 12,000 units of work in process in Department B on October 1.These units were 60 percent complete as to conversion costs.Materials are added at the end of the process.During the month of October,38,000 units were transferred in from Department A and 40,000 units were completed.Howard had 10,000 units of work in process on October 31.These units were 75 percent complete as to conversion costs.
1)Compute the equivalent units for materials and conversion costs for the month of October using the FIFO method.(Ignore units transferred in. )
2)Using the average cost method determine the equivalent units for materials and conversion costs for the month of October.(Ignore transferred in costs. )

Question 50

Nate Company manufactures Products A and B from a joint process that also yields a by-product,X.Nate Company accounts for the revenue from its by-product sales as a deduction from the cost of its main products.Additional information is as follows: ​
(1)Assuming that joint product costs are allocated using the relative sales value at split-off approach,what was the joint cost allocated to Products A and B?
(2)Prepare the journal entry to transfer the finished products to separate inventory accounts.
(3)Assuming the sales value of X is stable,prepare the journal entries to:
(a)place the by-product in stock
(b)record the sale of 3,000 units for $10,500 on account.

Question 51

Anderson Compounds produces two industrial chemical compounds,Gorp and Gumm,from the same process,which last year,cost $240,000.Anderson produced 20,000 pounds of Gorp,which sells for $60 per gallon and 60,000 gallons of Gumm,which sells for $30 per gallon.After the split-off point,Gorp required additional processing costing $300,000 to make it salable.Using the adjusted sales method,what is the completed cost of Gorp?

A)$300,000
B)$380,000
C)$520,000
D)$540,000

Question 52

Logan,Inc. ,had 9,000 units of work in process in Department M on March 1 that were 50 percent complete as to conversion costs.Materials are introduced at the beginning of the process.During March,18,000 units were started,20,000 units were completed,and there were 1,000 units of normal losses.Logan had 6,000 units of work in process at March 31 that were 70 percent complete as to conversion costs.Under Logan's cost accounting system,lost units reduce the number of units over which total cost can be spread.Using the average cost method,what were the equivalent units for March for conversion costs?

Question 53

Anderson Compounds produces two industrial chemical compounds,Gorp and Gumm,from the same process,which last year,cost $480,000.Anderson produced 20,000 pounds of Gorp,which sells for $60 per gallon and 60,000 gallons of Gumm,which sells for $30 per gallon.After the split-off point,Gorp required additional processing costing $300,000 to make it salable.Using the adjusted sales method,how much of the joint cost should be allocated to Gorp?

A)$120,000
B)$320,000
C)$160,000
D)$192,000

Question 54

The Roberto Company had computed the flow of units for Department A for the month of May as follows: ​ Materials are added at the beginning of the process.There were 8,000 units of work in process at May 31.The work in process at May 1 was 70 percent complete as to conversion costs and the work in process at May 31 was 60 percent complete as to conversion costs.What was the cost of the goods transferred out and in ending work in process using the FIFO method?

Question 55

Thomas Lumber Company produces furniture grade lumber and building grade lumber from a joint process.Sawdust,a by-product of the manufacturing process is sold to a local toy manufacturer to stuff leather toys for $10 per ton.In February,the company produced 3,000 tons of sawdust.What is the entry to reduce the cost of the main products by the estimated sales value of the by-product?

A)By-product inventory $30,000 Work in process $30,000
B)Work in process $30,000 Other income $30,000
​
C)Cost of goods sold $30,000 By-product inventory $30,000
​
D)By-product inventory $30,000 Gain or loss on sale of by-product $30,000

Question 56

Howard Poster Incorporated had 12,000 units of work in process in Department A on October 1.These units were 60 percent complete as to conversion costs.Materials are added in the beginning of the process.During the month of October,38,000 units were started and 40,000 units were completed.Howard had 10,000 units of work in process on October 31.These units were 75 percent complete as to conversion costs.
1)Compute the equivalent units for materials and conversion costs for the month of October using the FIFO method.
2)Using the average cost method determine the equivalent units for materials and conversion costs for the month of October.

Question 57

Terrell Corporation manufactures Products X,Y,and Z from a joint process.Additional information is as follows: Assuming that joint costs are allocated using the relative sales value at split-off approach,what was the sales value at split off for Product X?

Question 58

Braun Company produces two chemical compounds,Herzog and Lomax from a joint process.Joint costs to produce 500 gallons of Herzog and 300 gallons of Lomax were $80,000.A by-product,Horst,results from the joint process and has a market value of $1,000.Assuming Braun accounts for the by-product as a reduction in the costs assigned to the products,what are the joint costs assigned to Herzog?

A)$39,500
B)$49,375
C)$50,000
D)$40,000