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Chapter 6Process Costing

Chapter 6 — Process Costing

MULTIPLE CHOICE

1. Which cost accumulation procedure is most applicable in continuous mass-production manufacturing environments?

a. standard

b. actual

c. process

d. job order

ANS: C

PTS:

1

DIF:

Easy

OBJ:

6-1

NAT: AACSB: Reflective Thinking

 

LOC:

AICPA Functional Competencies: Measurement, Reporting

 

2. Process costing is used in companies that

 

a. engage in road and bridge construction.

b. produce sailboats made to customer specifications.

 

c. produce bricks for sale to the public.

 

d. construct houses according to customer plans.

 

ANS: C

PTS:

1

DIF:

Easy

OBJ:

6-1

NAT: AACSB: Reflective Thinking

 

LOC:

AICPA Functional Competencies: Measurement, Reporting

 

3. A producer of

would not use a process costing system.

a. gasoline

b. potato chips

c. blank videotapes

d. stained glass windows

 

ANS: D

PTS:

1

DIF:

Easy

OBJ:

6-1

NAT: AACSB: Reflective Thinking

LOC:

AICPA Functional Competencies: Measurement, Reporting

Chapter 6

2

4. A process costing system is used by a company that

a. produces heterogeneous products.

b. produces items by special request of customers.

c. produces homogeneous products.

d. accumulates costs by job.

ANS: C

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Easy

AICPA Functional Competencies: Measurement, Reporting

OBJ:

6-1

5. Which is the best cost accumulation procedure to use for continuous mass production of like units?

a. actual

b. standard

c. job order

d. process

ANS: D

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Easy

AICPA Functional Competencies: Measurement, Reporting

OBJ:

6-1

6. Equivalent units of production are equal to the

a. units completed by a production department in the period.

b. number of units worked on during the period by a production department.

c. number of whole units that could have been completed if all work of the period had been used to produce whole units.

d. identifiable units existing at the end of the period in a production department.

ANS: C

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Moderate

OBJ:

6-2

AICPA Functional Competencies: Measurement, Reporting

7. In a process costing system using the weighted average method, cost per equivalent unit for a given cost component is found by dividing which of the following by EUP?

a. only current period cost

b. current period cost plus the cost of beginning inventory

c. current period cost less the cost of beginning inventory

d. current period cost plus the cost of ending inventory

ANS: B

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Easy

AICPA Functional Competencies: Measurement, Reporting

OBJ:

6-2

8. The weighted average method is thought by some accountants to be inferior to the FIFO method because it

a. is more difficult to apply.

b. only considers the last units worked on.

c. ignores work performed in subsequent periods.

d. commingles costs of two periods.

ANS: D

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Moderate

AICPA Functional Competencies: Measurement, Reporting

OBJ:

6-3

Chapter 6

3

9.

The first step in determining the cost per EUP per cost component under the weighted average method is to

a. add the beginning Work in Process Inventory cost to the current period's production cost.

b. divide the current period's production cost by the equivalent units.

 

c. subtract the beginning Work in Process Inventory cost from the current period's production cost.

d. divide the current period's production cost into the EUP.

 

ANS: A

PTS:

1

DIF:

Moderate

OBJ:

6-3

NAT: AACSB: Reflective Thinking

 

LOC:

AICPA Functional Competencies: Measurement, Reporting

 

10.

The difference between EUP calculated using FIFO and EUP calculated using weighted average is the equivalent units

a. started and completed during the period.

 

b. residing in beginning Work in Process Inventory.

c. residing in ending Work in Process Inventory.

d. uncompleted in Work in Process Inventory.

ANS: B

PTS:

1

DIF:

Moderate

OBJ:

6-3

NAT: AACSB: Reflective Thinking

 

LOC:

AICPA Functional Competencies: Measurement, Reporting

 

11.

EUP calculations for standard process costing are the same as

a. the EUP calculations for weighted average process costing.

b. the EUP calculations for FIFO process costing.

 

c. LIFO inventory costing for merchandise.

d. the EUP calculations for LIFO process costing.

ANS: B

PTS:

1

DIF: Moderate

OBJ:

6-5

NAT: AACSB: Reflective Thinking

 

LOC:

AICPA Functional Competencies: Measurement, Reporting

 

12.

In a FIFO process costing system, which of the following are assumed to be completed first in the current period?

a. units started this period

 

b. units started last period

c. units transferred out

d. units still in process

ANS: B

PTS:

1

DIF:

Easy

OBJ:

6-4

NAT: AACSB: Reflective Thinking

 

LOC:

AICPA Functional Competencies: Measurement, Reporting

 

13.

To compute equivalent units of production using the FIFO method of process costing, work for the current period must be stated in units

a. completed during the period and units in ending inventory.

b. completed from beginning inventory, units started and completed during the period, and units partially completed 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.

ANS: B

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Moderate

OBJ:

6-4

AICPA Functional Competencies: Measurement, Reporting

Chapter 6

4

14. The FIFO method of process costing will produce the same cost of goods transferred out amount as the weighted average method when

a. the goods produced are homogeneous.

b. there is no beginning Work in Process Inventory.

c. there is no ending Work in Process Inventory.

d. beginning and ending Work in Process Inventories are each 50 percent complete.

ANS: B

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Easy

OBJ:

6-4

AICPA Functional Competencies: Measurement, Reporting

15. The primary difference between the FIFO and weighted average methods of process costing is

a.

in the treatment of beginning Work in Process Inventory.

b.

in the treatment of current period production costs.

c.

in the treatment of spoiled units.

d.

none of the above.

ANS: A

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Easy

AICPA Functional Competencies: Measurement, Reporting

OBJ:

6-4

16. Material is added at the beginning of a process in a process costing system. The beginning Work in Process Inventory for the process was 30 percent complete as to conversion costs. Using the FIFO method of costing, the number of equivalent units of material for the process during this period is equal to the

a. beginning inventory this period for the process.

b. units started and completed this period in the process.

c. units started this period in the process plus the beginning Work in Process Inventory.

d. units started and completed this period plus the units in ending Work in Process Inventory.

ANS: D

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Moderate

OBJ:

6-4

AICPA Functional Competencies: Measurement, Reporting

17. In a cost of production report using process costing, transferred-in costs are similar to the

a. cost of material added at the beginning of production.

b. conversion cost added during the period.

c. cost transferred out to the next department.

d. cost included in beginning inventory.

ANS: A

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Easy

OBJ:

AICPA Functional Competencies: Measurement, Reporting

6-3

18. In a process costing system, the journal entry to record the transfer of goods from Department #2 to Finished Goods Inventory is a

a. debit Work in Process Inventory #2, credit Finished Goods Inventory.

b. debit Finished Goods Inventory, credit Work in Process Inventory #1.

c. debit Finished Goods Inventory, credit Work in Process Inventory #2.

d. debit Cost of Goods Sold, credit Work in Process Inventory #2.

ANS: C

NAT: AACSB: Reflective Thinking

LOC:

AICPA Functional Competencies: Measurement, Reporting

PTS:

1

DIF:

Easy

OBJ:

6-3

Chapter 6

5

19. Transferred-in cost represents the cost from

a. the last department only.

b. the last production cycle.

c. all prior departments.

d. the current period only.

ANS: C

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Easy

AICPA Functional Competencies: Measurement, Reporting

OBJ:

6-3

20. Which of the following is(are) the same between the weighted average and FIFO methods of calculating EUPs?

Units to

account for

EUP

calculations

Total cost to account for

a. no

b. yes

c. yes

d. yes

yes

no

yes

yes

no

no

no

yes

ANS: D

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Easy

AICPA Functional Competencies: Measurement, Reporting

OBJ:

6-4

21. Process costing techniques should be used in assigning costs to products

a. if a product is manufactured on the basis of each order received.

b. when production is only partially completed during the accounting period.

c. if a product is composed of mass-produced homogeneous units.

d. whenever standard-costing techniques should not be used.

ANS: C

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Easy

OBJ:

6-1

AICPA Functional Competencies: Measurement, Reporting

22. Averaging the total cost of completed beginning work-in-process inventory and units started and completed over all units transferred out is known as

a. strict FIFO.

b. modified FIFO.

c. weighted average costing.

d. normal costing.

ANS: B

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Moderate

AICPA Functional Competencies: Measurement, Reporting

OBJ:

6-3

Chapter 6

6

23. A process costing system

a. cannot use standard costs.

b. restates Work in Process Inventory in terms of completed units.

c. accumulates costs by job rather than by department.

d. assigns direct labor and manufacturing overhead costs separately to units of production.

ANS: B

PTS:

1

DIF:

Easy

OBJ:

6-2

NAT: AACSB: Reflective Thinking

 

LOC:

AICPA Functional Competencies: Measurement, Reporting

 

24. A process costing system does which of the following?

Calculates EUPs

Assigns costs to inventories

 

a. no

no

b. no

yes

c. yes

yes

d. yes

no

ANS: C

PTS:

1

DIF:

Easy

OBJ:

6-3

NAT: AACSB: Reflective Thinking

 

LOC:

AICPA Functional Competencies: Measurement, Reporting

 

25. A process costing system

 

Calculates average cost per whole unit

Determines total units to account for

 

a. yes

yes

b. no

no

c. yes

no

d. no

yes

ANS: D

PTS:

1

DIF:

Easy

OBJ:

6-2

NAT: AACSB: Reflective Thinking

 

LOC:

AICPA Functional Competencies: Measurement, Reporting

 

26. A hybrid costing system combines characteristics of

a. job order and standard costing systems.

 

b. job order and process costing systems.

c. process and standard costing systems.

 

d. job order and normal costing systems.

 

ANS: B

PTS:

1

DIF:

Easy

OBJ:

6-6

NAT: AACSB: Reflective Thinking

LOC:

AICPA Functional Competencies: Measurement, Reporting

Chapter 6

7

27. When standard costs are used in process costing,

a. variances can be measured during the production period.

b. total costs rather than current production and current costs are used.

c. process costing calculations are made simpler.

d. the weighted average method of calculating EUPs makes computing transferred-out costs easier.

ANS: D

DIF:

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

Moderate

OBJ:

6-5

AICPA Functional Competencies: Measurement, Reporting

28. Which of the following is subtracted from weighted average EUP to derive FIFO EUP?

a. beginning WIP EUP completed in current period

b. beginning WIP EUP produced in prior period

c. ending WIP EUP not completed

d. ending WIP EUP completed

ANS: B

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Easy

AICPA Functional Competencies: Measurement, Reporting

OBJ:

6-4

29. The cost of abnormal continuous losses is

a. considered a product cost.

b. absorbed by all units in ending inventory and transferred out on an equivalent unit basis.

c. written off as a loss on an equivalent unit basis.

d. absorbed by all units past the inspection point.

ANS: C

PTS:

1

DIF:

Easy

OBJ:

6-8

NAT: AACSB: Reflective Thinking

 

LOC:

AICPA Functional Competencies: Measurement, Reporting

 

30. Abnormal spoilage can be

 

continuous

discrete

a. yes

no

b. no

no

c. yes

yes

d. no

yes

ANS: C

PTS:

1

DIF:

Easy

OBJ:

6-8

NAT: AACSB: Reflective Thinking

LOC:

AICPA Functional Competencies: Measurement, Reporting

31. When the cost of lost units must be assigned, and those same units must be included in an equivalent unit schedule, these units are considered

a. normal and discrete.

b. normal and continuous.

c. abnormal and discrete.

d. abnormal and continuous.

ANS: D

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Moderate

AICPA Functional Competencies: Measurement, Reporting

OBJ:

6-8

Chapter 6

8

32. A continuous loss

a. occurs unevenly throughout a process.

b. never occurs during the production process.

c. always occurs at the same place in a production process.

d. occurs evenly throughout the production process.

ANS: D

NAT: AACSB: Reflective Thinking

LOC:

1

PTS:

DIF:

Easy

AICPA Functional Competencies: Measurement, Reporting

OBJ:

6-8

33. Which of the following would be considered a discrete loss in a production process?

a. adding the correct ingredients to make a bottle of ketchup

b. putting the appropriate components together for a stereo

c. adding the wrong components when assembling a stereo

d. putting the appropriate pieces for a bike in the box

ANS: C

PTS:

1

DIF:

Easy

OBJ:

6-8

NAT: AACSB: Reflective Thinking

 

LOC:

AICPA Functional Competencies: Measurement, Reporting

 

34. The method of neglect handles spoilage that is

 

a. discrete and abnormal.

 

b. discrete and normal.

c. continuous and abnormal.

d. continuous and normal.

ANS: D

PTS:

1

DIF:

Moderate

OBJ:

6-8

NAT: AACSB: Reflective Thinking

LOC:

AICPA Functional Competencies: Measurement, Reporting

35. The cost of normal discrete losses is

a. absorbed by all units past the inspection point on an equivalent unit basis.

b. absorbed by all units in ending inventory.

c. considered a period cost.

d. written off as a loss on an equivalent unit basis.

ANS: A

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Easy

OBJ:

6-8

AICPA Functional Competencies: Measurement, Reporting

36. The cost of abnormal continuous losses is

a. considered a product cost.

b. absorbed by all units in ending inventory and transferred out on an equivalent unit basis.

c. written off as a loss on an equivalent unit basis.

d. absorbed by all units past the inspection point.

ANS: C

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Easy

OBJ:

6-8

AICPA Functional Competencies: Measurement, Reporting

Chapter 6

9

37. Normal spoilage units resulting from a continuous process

a. are extended to the EUP schedule.

b. result in a higher unit cost for the good units produced.

c. result in a loss being incurred.

d. cause estimated overhead to increase.

ANS: B

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Easy

OBJ:

AICPA Functional Competencies: Measurement, Reporting

6-8

38. When the cost of lost units must be assigned, and those same units must be included in an equivalent unit schedule, these units are considered

a. normal and discrete.

b. normal and continuous.

c. abnormal and discrete.

d. abnormal and continuous.

ANS: D

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Moderate

AICPA Functional Competencies: Measurement, Reporting

OBJ:

6-8

39. Which of the following accounts is credited when abnormal spoilage is written off in an actual cost system?

a. Miscellaneous Revenue

b. Loss from Spoilage

c. Finished Goods

d. Work in Process

ANS: D

PTS:

1

DIF:

Easy

OBJ:

6-8

NAT: AACSB: Reflective Thinking

 

LOC:

AICPA Functional Competencies: Measurement, Reporting

 

40. The cost of abnormal discrete units must be assigned to

good units

lost units

a. yes

yes

b. no

no

c. yes

no

d. no

yes

ANS: D

PTS:

1

DIF:

Easy

OBJ:

6-8

NAT: AACSB: Reflective Thinking

LOC:

AICPA Functional Competencies: Measurement, Reporting

Chapter 6

10

41. Which of the following statements is false? The cost of rework on defective units, if

a. abnormal, should be assigned to a loss account.

b. normal and if actual costs are used, should be assigned to material, labor and overhead costs of the good production.

c. normal and if standard costs are used, should be considered when developing the overhead application rate.

d. abnormal, should be prorated among Work In Process, Finished Goods, and Cost of Goods Sold.

ANS: D

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Moderate

OBJ:

6-8

AICPA Functional Competencies: Measurement, Reporting

42. If normal spoilage is detected at an inspection point within the process (rather than at the end), the cost of that spoilage should be

a. included with the cost of the units sold during the period.

b. included with the cost of the units completed in that department during the period.

c. allocated to ending work in process units and units transferred out based on their relative values.

d. allocated to the good units that have passed the inspection point.

ANS: D

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Moderate

OBJ:

6-8

AICPA Functional Competencies: Measurement, Reporting

43. Dallas Co. has a production process in which the inspection point is at 65 percent of conversion. The beginning inventory for July was 35 percent complete and ending inventory was 80 percent complete. Normal spoilage costs would be assigned to which of the following groups of units, using FIFO costing?

Beginning

Ending

Units Started

Inventory

Inventory

& Completed

a. no

b. yes

c. no

d. yes

yes

yes

yes

yes

no

yes

no

no

ANS: B

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Moderate

AICPA Functional Competencies: Measurement, Reporting

OBJ:

6-8

44. Which of the following is not a question that needs to be answered with regard to quality control?

a. What happens to the spoiled units?

b. What is the actual cost of spoilage?

c. How can spoilage be controlled?

d. Why does spoilage happen?

ANS: A

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Moderate

AICPA Functional Competencies: Measurement, Reporting

OBJ:

6-8

Chapter 6

11

45. Normal spoilage units resulting from a continuous process

a. are extended to the EUP schedule.

b. result in a higher unit cost for the good units produced.

c. result in a loss being incurred.

d. cause estimated overhead to increase.

ANS: B

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Easy

AICPA Functional Competencies: Measurement, Reporting

OBJ:

6-8

46. The addition of material in a successor department that causes an increase in volume is called

a. accretion.

b. reworked units.

c. complex procedure.

d. undetected spoilage.

ANS: A

NAT: AACSB: Reflective Thinking

LOC:

PTS:

1

DIF:

Easy

OBJ:

AICPA Functional Competencies: Measurement, Reporting

6-8

47. Wood Company transferred 5,500 units to Finished Goods Inventory during October. On October 1,

the company had 300 units on hand (40 percent complete as to both material and conversion costs). On October 31, the company had 800 units (10 percent complete as to material and 20 percent complete as to conversion costs). The number of units started and completed during October was:

a. 5,200.

b. 5,380.

c. 5,500.

d. 6,300.

ANS: A

Units Transferred Out Less: Units in Beginning Inventory Units Started and Completed

5,500

(300)

5,200

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Easy

OBJ:

6-2

NAT: AACSB: Analytical Skills

48. Cole Company transferred 6,000 units to Finished Goods Inventory during August. On August 1, the

company had 400 units on hand (35 percent complete as to both material and conversion costs). On August 31, the company had 750 units (20 percent complete as to material and 30 percent complete as to conversion costs). The number of units started and completed during August was:

a. 5,600

b. 5,860

c. 6,000

d. 6,750

ANS: A

Units Transferred Out Less: Units in Beginning Inventory Units Started and Completed

6,000

(400)

5,600

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Easy

OBJ:

6-2

NAT: AACSB: Analytical Skills

Chapter 6

12

49. Boggs Company started 9,000 units in March. The company transferred out 7,000 finished units and ended the period with 3,500 units that were 40 percent complete as to both material and conversion costs. Beginning Work in Process Inventory units were

a. 500.

b. 600.

c. 1,500.

d. 2,000.

ANS: C

Beginning Work in Process

1,500

Add: Units Started

9,000

Deduct: Units Transferred Out

(7,000)

Ending Work in Process

3,500

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Easy

OBJ:

6-2

NAT: AACSB: Analytical Skills

50. Williams Company started 8,600 units in April. The company transferred out 6,400 finished units and ended the period with 3,200 units that were 40 percent complete as to both material and conversion costs. Beginning Work in Process Inventory units were

a. 400.

b. 1,000.

c. 1,280.

d. 2,200.

ANS: B

Beginning Work in Process

1,000

Add: Units Started

8,600

Deduct: Units Transferred Out

(6,400)

Ending Work in Process

3,200

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Easy

OBJ:

6-2

NAT: AACSB: Analytical Skills

51. Lincoln Company had beginning Work in Process Inventory of 5,000 units that were 40 percent complete as to conversion costs. Lincoln Company started and completed 42,000 units this period and had ending Work in Process Inventory of 12,000 units. How many units were started this period?

a. 42,000

b. 47,000

c. 54,000

d. 59,000

ANS: C

Beginning Work in Process

5,000

Add: Units Started

54,000

Deduct: Units Transferred Out

( 47,000)

Ending Work in Process

12,000

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Moderate

OBJ:

6-2

NAT: AACSB: Analytical Skills

Chapter 6

13

52. Douglas Company had beginning Work in Process Inventory of 6,000 units that were 45 percent complete as to conversion costs. Douglas Company started and completed 46,000 units this period and had ending Work in Process Inventory of 11,000 units. How many units were started this period?

a. 46,000

b. 52,000

c. 57,000

d. 63,000

ANS: C

Beginning Work in Process

6,000

Add: Units Started

57,000

Deduct: Units Transferred Out

( 52,000)

Ending Work in Process

11,000

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Moderate

OBJ:

6-2

NAT: AACSB: Analytical Skills

53. Streete Company uses a weighted average process costing system. Material is added at the start of production. Streete Company started 13,000 units into production and had 4,500 units in process at the

start of the period that were 60 percent complete as to conversion costs. If Streete Company transferred out 11,750 units, how many units were in ending Work in Process Inventory?

a. 1,250

b. 3,000

c. 3,500

d. 5,750

ANS: D

Beginning Work in Process

4,500

Add: Units Started

13,000

Deduct: Units Transferred Out

( 11,750)

Ending Work in Process

5,750

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Easy

OBJ:

6-2

NAT: AACSB: Analytical Skills

54. Roache Company uses a weighted average process costing system. Material is added at the start of production. Roache Company started 14,000 units into production and had 5,000 units in process at the start of the period that were 75 percent complete as to conversion costs. If Roache Company transferred out 12,250 units, how many units were in ending Work in Process Inventory?

a. 1,750

b. 3,000

c. 5,500

d. 6,750

ANS: D

Beginning Work in Process

5,000

Add: Units Started

14,000

Deduct: Units Transferred Out

( 12,250)

Ending Work in Process

6,750

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Easy

OBJ:

6-2

NAT: AACSB: Analytical Skills

Chapter 6

14

55. Jones Company uses a weighted average process costing system and started 30,000 units this month. Jones had 12,000 units that were 20 percent complete as to conversion costs in beginning Work in Process Inventory and 3,000 units that were 40 percent complete as to conversion costs in ending Work in Process Inventory. What are equivalent units for conversion costs?

a. 37,800

b. 40,200

c. 40,800

d. 42,000

ANS: B

Beginning Work in Process

12,000

20%

2,400

+ Completion of Units in Process

12,000

80%

9,600

+ Units Started and Completed

27,000

100%

27,000

+ Ending Work in Process

3,000

40%

1,200

Equivalent Units of Production

40,200

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Easy

OBJ:

6-3

NAT: AACSB: Analytical Skills

56. Summers Company uses a weighted average process costing system and started 36,000 units this month. Jones had 15,000 units that were 25 percent complete as to conversion costs in beginning Work in Process Inventory and 6,000 units that were 35 percent complete as to conversion costs in ending Work in Process Inventory. What are equivalent units for conversion costs?

a. 43,350

b. 47,100

c. 48,900

d. 51,000

ANS: B

Beginning Work in Process

15,000

25%

3,750

+ Completion of Units in Process

15,000

75%

11,250

+ Units Started and Completed

30,000

100%

30,000

+ Ending Work in Process

6,000

35%

2,100

Equivalent Units of Production

47,100

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Easy

OBJ:

6-3

NAT: AACSB: Analytical Skills

57. Weston Company makes small metal containers. The company began April with 250 containers in process that were 30 percent complete as to material and 40 percent complete as to conversion costs. During the month, 5,000 containers were started. At month end, 1,700 containers were still in process (45 percent complete as to material and 80 percent complete as to conversion costs). Using the weighted average method, what are the equivalent units for conversion costs?

a. 3,450

b. 4,560

c. 4,610

d. 4,910

Chapter 6

15

ANS: D

Beginning Work in Process

250

40%

100

+ Completion of Units in Process

250

60%

150

+ Units Started and Completed

3,300

100%

3,300

+ Ending Work in Process

1,700

80%

1,360

Equivalent Units of Production

4,910

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Moderate

OBJ:

6-3

NAT: AACSB: Analytical Skills

58. Meade Company makes small metal containers. The company began October with 300 containers in

process that were 35 percent complete as to material and 45 percent complete as to conversion costs. During the month, 6,000 containers were started. At month end, 1,900 containers were still in process (40 percent complete as to material and 75 percent complete as to conversion costs). Using the weighted average method, what are the equivalent units for conversion costs?

a. 4,265

b. 5,590

c. 5,825

d. 6,300

ANS: C

Beginning Work in Process

300

45%

135

+ Completion of Units in Process

300

55%

165

+ Units Started and Completed

4,100

100%

4,100

+ Ending Work in Process

1,900

75%

1,425

Equivalent Units of Production

5,825

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Moderate

OBJ:

6-3

NAT: AACSB: Analytical Skills

59. Ormandy Company uses a FIFO process costing system. The company had 5,000 units that were 60 percent complete as to conversion costs at the beginning of the month. The company started 22,000 units this period and had 7,000 units in ending Work in Process Inventory that were 35 percent complete as to conversion costs. What are equivalent units for material, if material is added at the beginning of the process?

a. 18,000

b. 22,000

c. 25,000

d. 27,000

ANS: B

The material is added at the beginning of the process; therefore there are 22,000 equivalent units of material.

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Easy

OBJ:

6-4

NAT: AACSB: Analytical Skills

60. Bernstein Company uses a FIFO process costing system. The company had 6,000 units that were 75 percent complete as to conversion costs at the beginning of the month. The company started 25,000 units this period and had 8,000 units in ending Work in Process Inventory that were 40 percent complete as to conversion costs. What are equivalent units for material, if material is added at the beginning of the process?

Chapter 6

16

a. 18,500

b. 25,000

c. 26,500

d. 31,000

ANS: B

The material is added at the beginning of the process; therefore there are 25,000 equivalent units of material.

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Easy

OBJ:

6-4

NAT: AACSB: Analytical Skills

61. Montgomery Company makes fabric-covered hatboxes. The company began July with 500 boxes in process that were 100 percent complete as to cardboard, 80 percent complete as to cloth, and 60

percent complete as to conversion costs. During the month, 3,300 boxes were started. On April 30, 350 boxes were in process (100 percent complete as to cardboard, 70 percent complete as to cloth, and 55 percent complete as to conversion costs). Using the FIFO method, what are equivalent units for cloth?

a. 3,295

b. 3,395

c. 3,450

d. 3,595

ANS: A

Beginning Work in Process (Ignored for FIFO)

500

0%

-

+ Completion of Units in Process

500

20%

100

+ Units Started and Completed

2,950

100%

2,950

+ Ending Work in Process

350

70%

245

Equivalent Units of Production

3,295

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Moderate

OBJ:

6-4

NAT: AACSB: Analytical Skills

62. Hahn Company makes fabric-covered storage totes. The company began July with 600 totes in process that were 100 percent complete as to cardboard, 75 percent complete as to cloth, and 65 percent complete as to conversion costs. During the month, 3,600 totes were started. On April 30, 450 totes were in process (100 percent complete as to cardboard, 60 percent complete as to cloth, and 50 percent complete as to conversion costs). Using the FIFO method, what are equivalent units for cloth?

a. 3,570

b. 3,750

c. 3,870

d. 4,020

ANS: A

Beginning Work in Process (Ignored for FIFO)

600

0%

-

+ Completion of Units in Process

600

25%

150

+ Units Started and Completed

3,150

100%

3,150

+ Ending Work in Process

450

60%

270

Equivalent Units of Production

3,570

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Moderate

OBJ:

6-4

NAT: AACSB: Analytical Skills

Chapter 6

17

Brewer Corporation

Brewer Corporation. has the following information for August:

Beginning Work in Process Inventory (70% complete as to conversion) Started Ending Work in Process Inventory (10% complete as to conversion)

Beginning WIP Inventory Costs:

Material

Conversion

Current Period Costs:

Material

Conversion

6,000 units

24,000 units

$23,400

50,607

$31,500

76,956

8,500 units

All material is added at the start of the process and all finished products are transferred out.

63. Refer to Brewer Corporation. How many units were transferred out in August?

a. 15,500

b. 18,000

c. 21,500

d. 24,000

ANS: C

Beginning Work in Process Add: Units Started Deduct: Units Transferred Out Ending Work in Process

6,000

24,000

(21,500)

8,500

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Easy

OBJ:

6-2

NAT: AACSB: Analytical Skills

64. Refer to Brewer Corporation. Assume that weighted average process costing is used. What is the cost per equivalent unit for material?

a. $0.55

b. $1.05

c. $1.31

d. $1.83

ANS: D

Material Costs:

Beginning

$23,400

Current Period

31,500

54,900 ÷ 30,000 units =

$

1.83

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Moderate

OBJ:

6-3

NAT: AACSB: Analytical Skills

Chapter 6

18

65. Refer to Brewer Corporation. Assume that FIFO process costing is used. What is the cost per equivalent unit for conversion?

a. $3.44

b. $4.24

c. $5.71

d. $7.03

ANS: B

Conversion Costs:

Beginning (Ignored for FIFO) Current Period

 

$

-

 

76,956

 

$

76,956

Equivalent Units Beginning Inventory (6,000 * 30%) Started and Completed (15,500) Ending Inventory (8,500 * 10%)

1,800

15,500

850

 

18,150 eq units

Cost per equivalent unit

$ 4.24

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Moderate

OBJ:

6-4

NAT: AACSB: Analytical Skills

Collins Corporation

Collins Corporation. has the following information for May:

Beginning Work in Process Inventory (75% complete as to conversion) Started Ending Work in Process Inventory (15% complete as to conversion)

Beginning WIP Inventory Costs:

Material

Conversion

Current Period Costs:

Material

Conversion

7,500 units

27,000 units

$25,500

52,725

$34,300

80,845

9,400 units

All material is added at the start of the process and all finished products are transferred out.

66. Refer to Collins Corporation. How many units were transferred out in May?

a. 17,600

b. 19,500

c. 25,100

d. 27,000

Chapter 6

19

ANS: C

Beginning Work in Process

7,500

Add: Units Started

27,000

Deduct: Units Transferred Out

(25,100)

Ending Work in Process

9,400

PTS:

LOC:

1

DIF:

Easy

OBJ:

6-2

NAT: AACSB: Analytical Skills

AICPA Functional Competencies: Measurement, Reporting

67. Refer to Collins Corporation. Assume that weighted average process costing is used. What is the cost per equivalent unit for material?

a. $0.99

b. $1.18

c. $1.64

d. $1.73

ANS: D

Material Costs:

Beginning

$25,500

Current Period

_34,300

$59,800 ÷ 34,500 units =

$

1.73

PTS:

1

DIF:

Moderate

OBJ:

6-3

NAT: AACSB: Analytical Skills

LOC:

AICPA Functional Competencies: Measurement, Reporting

68. Refer to Collins Corporation. Assume that FIFO process costing is used. What is the cost per equivalent unit for conversion?

a. $3.05

b. $3.87

c. $4.25

d. $6.40

ANS: B

Conversion Costs:

Beginning (Ignored for FIFO) Current Period

 

$

-

 

80,845

 

$

80,845

Equivalent Units Beginning Inventory (7,500 * 25%) Started and Completed (17,600) Ending Inventory (9,400 * 15%)

1,875

17,600

1,410

 

20,885 equivalent units

Cost per equivalent unit ($80,845/20885)

$ 3.87

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Moderate

OBJ:

6-4

NAT: AACSB: Analytical Skills

Chapter 6

20

Fantastic Decorations Corporation

The Fantastic Decorations Corporation makes wreaths in two departments: Forming and Decorating. Forming began the month with 500 wreaths in process that were 100 percent complete as to material and 40 percent complete as to conversion. During the month, 6,500 wreaths were started. At month end, Forming had 2,100 wreaths that were still in process that were 100 percent complete as to material and 50 percent complete as to conversion. Assume Forming uses the weighted average method of process costing. Costs in the Forming Department are as follows:

Beginning Work in Process Costs:

Material

Conversion

Current Costs:

Material

Conversion

$1,000

1,500

$3,200

5,045

The Decorating Department had 600 wreaths in process at the beginning of the month that were 80 percent complete as to material and 90 percent complete as to conversion. The department had 300 units in ending Work in Process that were 50 percent complete as to material and 75 percent complete as to conversion. Decorating uses the FIFO method of process costing, and costs associated with Decorating are:

Beginning WIP Inventory:

Transferred In

Material

Conversion

Current Period:

Transferred In

Material

Conversion

$1,170

4,320

6,210

?

$67,745

95,820

69. Refer to Fantastic Decorations Corporation. How many units were transferred to Decorating during the month?

600

b. 4,900

c. 5,950

d. 7,000

ANS: B

a.

Wreaths completed from BWIP

500

Wreaths started and completed

4,400

4,900

PTS:

1

DIF:

Easy

OBJ:

6-2

NAT: AACSB: Analytical Skills

LOC:

AICPA Functional Competencies: Measurement, Reporting

70. Refer to Fantastic Decorations Corporation. What was the cost transferred out of Forming during the month?

a. $5,341

b. $6,419

c. $8,245

Chapter 6

21

ANS: D

Units Transferred Out

4,900

Cost per Eq. Unit

1.70

Total

$8,330

PTS:

LOC:

1

DIF:

Moderate

OBJ:

6-3

NAT: AACSB: Analytical Skills

AICPA Functional Competencies: Measurement, Reporting

71. Refer to Fantastic Decorations Corporation. Assume 8,000 units were transferred to Decorating. Compute the number of equivalent units as to costs in Decorating for the transferred-in cost

component.

a. 7,400

b. 7,700

c. 8,000

d. 8,600

ANS: C

The transferred-in cost component is the 8,000 units that were transferred in.

PTS:

LOC:

1

DIF:

Moderate

OBJ:

6-4

NAT: AACSB: Analytical Skills

AICPA Functional Competencies: Measurement, Reporting

72. Refer to Fantastic Decorations Corporation. Assume 8,000 units were transferred to Decorating. Compute the number of equivalent units in Decorating for material.

a. 7,970

b. 8,000

c. 8,330

d. 8,450

ANS: A

Materials: Decorating: FIFO Beginning Work in Process

Units

% Complete

Eqiv. Units

600

20%

120

+ Units Started and Completed

7,700

100%

7,700

+ Ending Work in Process

300

50%

150

Equivalent Units of Production

7,970

PTS:

1

DIF:

Moderate

OBJ:

6-4

NAT: AACSB: Analytical Skills

LOC:

AICPA Functional Competencies: Measurement, Reporting

73. Refer to Fantastic Decorations Corporation. Assume 8,000 units were transferred to Decorating. Compute the number of equivalent units in Decorating for conversion.

a. 7,925

b. 7,985

c. 8,360

d. 8,465

Chapter 6

22

ANS: B

Conversion: Decorating: FIFO

Units

% Complete

Equiv.

Units

Beginning Work in Process

600

10%

60

+ Units Started and Completed

7,700

100%

7,700

+ Ending Work in Process

300

75%

225

Equivalent Units of Production

   

7,985

PTS:

LOC:

1

DIF:

Moderate

OBJ:

6-4

NAT: AACSB: Analytical Skills

AICPA Functional Competencies: Measurement, Reporting

74. Refer to Fantastic Decorations Corporation. Assume that 8,000 units were transferred to Decorating at

a total cost of $16,000. What is the material cost per equivalent unit in Decorating?

a. $8.50

b. $8.65

c. $8.80

d. $9.04

ANS: A When FIFO is used, consider only current costs.

Current Costs

Equiv

Cost/

Units

Equiv Unit

$67,745

7,970

$8.50

PTS:

LOC:

1

DIF:

Moderate

OBJ:

6-4

NAT: AACSB: Analytical Skills

AICPA Functional Competencies: Measurement, Reporting

75. Refer to Fantastic Decorations Corporation. Assume that 8,000 units were transferred to Decorating at

a total cost of $16,000. What is the conversion cost per equivalent unit in Decorating?

a. $11.32

b. $11.46

c. $12.00

d. $12.78

ANS: C When FIFO is used, consider only current costs.

Current Costs

Equiv

Cost/

Units

Equiv Unit

$95,820

7,985

$12.00

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Moderate

OBJ:

6-4

NAT: AACSB: Analytical Skills

Chapter 6

23

76. Refer to Fantastic Decorations Corporation. Assume the material cost per EUP is $8.00 and the conversion cost per EUP is $15 in Decorating. What is the cost of completing the units in beginning inventory?

a. $

b. $ 1,380

c. $ 1,860

960

d. $11,940

ANS: C

Costs to Complete Beg Inv Materials Conversion Total Costs to Complete

 

Percent to

Cost per

Units

Complete

Unit

Total

600

20%

$8

$960

600

10%

$15

$900

 

$1,860

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Moderate

OBJ:

6-4

NAT: AACSB: Analytical Skills

Four Seasons Company

Four Seasons Company adds material at the start to its production process and has the following information available for August:

Beginning Work in Process Inventory (40% complete as to conversion) Started this period Ending Work in Process Inventory (25% complete as to conversion) Transferred out

7,000

units

32,000 units

2,500

?

units

77. Refer to Four Seasons Company. Compute the number of units started and completed in August.

a. 29,500

b. 34,500

c. 36,500

d. 39,000

ANS: A

Units started this period

32,000

Less: Ending Work in Process

2,500

Units started and completed this period

29,500

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Moderate

OBJ:

6-2

NAT: AACSB: Analytical Skills

78. Refer to Four Seasons Company. Calculate equivalent units of production for material using FIFO.

a. 32,000

b. 36,800

c. 37,125

d. 39,000

Chapter 6

ANS: A

24

Materials are added at the beginning of the process. 32,000 units were started in the current period; therefore there are 32,000 equivalent units for materials.

PTS:

LOC:

1

DIF:

Easy

OBJ:

6-4

NAT: AACSB: Analytical Skills

AICPA Functional Competencies: Measurement, Reporting

79. Refer to Four Seasons Company. Calculate equivalent units of production for conversion using FIFO.

a. 30,125

b. 34,325

c. 37,125

d. 39,000

ANS: B

Equivalent Units for Conversion Beginning Inventory (7,000 * 60%) Started and Completed (29,500) Ending Inventory (2,500 * 25%)

Units for Conversion Beginning Inventory (7,000 * 60%) Started and Completed (29,500) Ending Inventory (2,500 *
Units for Conversion Beginning Inventory (7,000 * 60%) Started and Completed (29,500) Ending Inventory (2,500 *

4,200

29,500

625

34,325 eq. units

PTS:

LOC:

1

DIF:

Moderate

OBJ:

6-4

NAT: AACSB: Analytical Skills

AICPA Functional Competencies: Measurement, Reporting

80. Refer to Four Seasons Company. Calculate equivalent units of production for material using weighted

average.

a. 32,000

b. 34,325

c. 37,125

d. 39,000

ANS: D

Equivalent Units--Materials Beginning Inventory (7,000 units) Started this Period (32,000)

7,000

32,000

 

39,000 eq. units

PTS:

LOC:

1

DIF:

Easy

OBJ:

6-3

NAT: AACSB: Analytical Skills

AICPA Functional Competencies: Measurement, Reporting

81. Refer to Four Seasons Company. Calculate equivalent units of production for conversion using weighted average.

a. 34,325

b. 37,125

c. 38,375

d. 39,925

ANS: B

Equivalent Units--Conversion Beginning Inventory (7,000 * 100%) Started and Completed (29,500) Ending Inventory (2,500 * 25%)

Units--Conversion Beginning Inventory (7,000 * 100%) Started and Completed (29,500) Ending Inventory (2,500 * 25%)
Units--Conversion Beginning Inventory (7,000 * 100%) Started and Completed (29,500) Ending Inventory (2,500 * 25%)

7,000

29,500

625

37,125 eq. units

Chapter 6

25

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Moderate

OBJ:

6-3

NAT: AACSB: Analytical Skills

Simpson Company

Simpson Company adds material at the start of production. The following production information is available for September:

Beginning Work in Process Inventory (45% complete as to conversion) Started this period Ending Work in Process Inventory (80% complete as to conversion)

10,000

units

120,000 units

8,200

units

Beginning Work in Process Inventory Costs:

Material

Conversion

Current Period Costs:

Material

Conversion

$24,500

68,905

$ 75,600

130,053

82. Refer to Simpson Company. How many units must be accounted for?

a. 118,200

b. 128,200

c. 130,000

d. 138,200

ANS: C

Beginning Work in Process

10,000

Units Started

120,000

Total Units

130,000

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Easy

OBJ:

6-2

NAT:

AACSB: Analytical Skills

83. Refer to Simpson Company. What is the total cost to account for?

a. $ 93,405

b. $205,653

c. $274,558

d. $299,058

ANS: D

BWIP: Materials

$

24,500

BWIP: Conversion

68,905

Current Period:

Materials

75,600

Current Period:

Conversion

130,053

Total Costs

$299,058

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Easy

OBJ:

6-2

NAT:

AACSB: Analytical Skills

Chapter 6

26

84. Refer to Simpson Company. How many units were started and completed in the period?

a. 111,800

b. 120,000

c. 121,800

d. 130,000

ANS: A

Units started this period Less: Ending Work in Process Units started and completed this period

120,000

8,200

111,800

PTS:

1

DIF:

Easy

OBJ:

6-2

NAT: AACSB: Analytical Skills

LOC:

AICPA Functional Competencies: Measurement, Reporting

85. Refer to Simpson Company. What are the equivalent units for material using the weighted average method?

a. 120,000

b. 123,860

c. 128,360

d. 130,000

ANS: D

Equivalent Units Beginning Inventory (10,000 * 100%)

10,000

Started and Completed (111,800)

111,800

130,000 eq. units

Ending

Inventory (8,200 * 25%)

8,200

PTS:

LOC:

1

DIF:

Easy

OBJ:

6-3

NAT: AACSB: Analytical Skills

AICPA Functional Competencies: Measurement, Reporting

86. Refer to Simpson Company. What are the equivalent units for material using the FIFO method?

a. 111,800

b. 120,000

c. 125,500

d. 130,000

ANS: B

Equivalent Units Beginning Inventory (Ignored for FIFO) Started and Completed (111,800) Ending Inventory (8,200 * 25%)

0

111,800

8,200

120,000 eq. units

PTS:

1

DIF:

Easy

OBJ:

6-4

NAT: AACSB: Analytical Skills

LOC:

AICPA Functional Competencies: Measurement, Reporting

87. Refer to Simpson Company. What are the equivalent units for conversion using the weighted average method?

a. 120,000

b. 123,440

c. 128,360

Chapter 6

27

ANS: C

Beginning Work in Process

10,000

45%

4,500

+ Completion of Units in Process

10,000

55%

5,500

+ Units Started and Completed

111,800

100%

111,800

+ Ending Work in Process

8,200

80%

6,560

Equivalent Units of Production

128,360

PTS:

LOC:

1

DIF:

Moderate

OBJ:

6-3

NAT: AACSB: Analytical Skills

AICPA Functional Competencies: Measurement, Reporting

88. Refer to Simpson Company. What are the equivalent units for conversion using the FIFO method?

a. 118,360

b. 122,860

c. 123,860

d. 128,360

ANS: C

Beginning Work in Process (ignored)

10,000

0%

-

+ Completion of Units in Process

10,000

55%

5,500

+ Units Started and Completed

111,800

100%

111,800

+ Ending Work in Process

8,200

80%

6,560

Equivalent Units of Production

123,860

PTS:

1

DIF:

Moderate

OBJ:

6-4

NAT: AACSB: Analytical Skills

LOC:

AICPA Functional Competencies: Measurement, Reporting

89. Refer to Simpson Company. What is the material cost per equivalent unit using the weighted average method?

a. $.58

b. $.62

c. $.77

d. $.82

ANS: C

Material Costs:

Beginning

$

24,500

Current Period

75,600

100,100 ÷ 130,000 units=

$ 0.77 per unit

PTS:

1

DIF:

Moderate

OBJ:

6-3

NAT: AACSB: Analytical Skills

LOC:

AICPA Functional Competencies: Measurement, Reporting

90. Refer to Simpson Company. What is the conversion cost per equivalent unit using the weighted average method?

a. $1.01

b. $1.05

c. $1.55

d. $1.61

Chapter 6

28

ANS: C

Conversion Costs:

Beginning

$

68,905

Current Period

130,053

198,958 ÷ 128,360 units=

$

1.55 per unit

PTS:

LOC:

1

DIF:

Moderate

OBJ:

6-3

NAT: AACSB: Analytical Skills

AICPA Functional Competencies: Measurement, Reporting

91. Refer to Simpson Company. What is the cost of units completed using the weighted average method?

a. $237,510

b. $266,742

c. $278,400

d. $282,576

ANS: D

Units Completed

121,800

Costs per Equivalent Unit (1.55 + .77) = $2.32

Total

$282,576

PTS:

LOC:

1

DIF:

Difficult

OBJ:

6-3

NAT: AACSB: Analytical Skills

AICPA Functional Competencies: Measurement, Reporting

92. Refer to Simpson Company. What is the conversion cost per equivalent unit using the FIFO method?

a. $1.05

b. $.95

c. $1.61

d. $1.55

ANS: A

Conversion Costs:

Beginning (Ignored) Current Period

$130,053

$130,053 ÷ 123,860 units=

$1.05 per unit

PTS:

LOC:

1

DIF:

Moderate

OBJ:

6-4

NAT: AACSB: Analytical Skills

AICPA Functional Competencies: Measurement, Reporting

93. Refer to Simpson Company. What is the cost of all units transferred out using the FIFO method?

a. $204,624

b. $191,289

c. $287,004

d. $298,029

ANS: C

Beginning Inventory 10,000 units:

Raw Materials (prior period)

$24,500

Direct Labor (prior period

68,905

FOH (10,000 * .55 * $1.05)

5,775

$99,180

Units Started and Completed 111,800 units * $ (.63+1.05):

$187,824

Total

$287,004

Chapter 6

29

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Difficult

OBJ:

6-4

NAT: AACSB: Analytical Skills

Mercury Corporation

Beginning inventory (30% complete as to Material B and 60% complete for conversion) Started this cycle Ending inventory (50% complete as to Material B and 80% complete for conversion)

700 units

2,000

units

500 units

Beginning inventory costs:

Material A

Material B

Conversion

$14,270

5,950

5,640

Current Period costs:

Material A

Material B

Conversion

$40,000

70,000

98,100

Material A is added at the start of production, while Material B is added uniformly throughout the

process.

94. Refer to Mercury Corporation. Assuming a weighted average method of process costing, compute EUP units for Materials A and B.

a. 2,700 and 2,280, respectively

b. 2,700 and 2,450, respectively

c. 2,000 and 2,240, respectively

d. 2,240 and 2,700, respectively

ANS: B

Weighted Average Beginning Work in Process Units Started and Completed Ending Work in Process EUP Materials

Material A

Material B

700

700

1,500

1,500

500

250

2,700

2,450

PTS:

LOC:

1

DIF:

Easy

OBJ:

6-3

NAT: AACSB: Analytical Skills

AICPA Functional Competencies: Measurement, Reporting

95. Refer to Mercury Corporation Assuming a FIFO method of process costing, compute EUP units for Materials A and B.

a. 2,700 and 2,280, respectively

b. 2,700 and 2,450, respectively

c. 2,000 and 2,240, respectively

d. 2,450 and 2,880, respectively

ANS: C

FIFO

Material A

Material B

Beginning Work in Process

0

490

Units Started and Completed

1,500

1,500

Ending Work in Process

500

250

Chapter 6

30

EUP Materials

2,000

2,240

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Moderate

OBJ:

6-4

NAT: AACSB: Analytical Skills

96. Refer to Mercury Corporation Assuming a weighted average method of process costing, compute EUP for conversion.

a. 2,600

b. 2,180

c. 2,000

d. 2,700

ANS: A

Weighted Average Beginning Work in Process Units Started and Completed Ending Work in Process

700

1,500

400

2,600

PTS:

1

DIF:

Moderate

OBJ:

6-3

NAT: AACSB: Analytical Skills

LOC:

AICPA Functional Competencies: Measurement, Reporting

97. Refer to Mercury Corporation Assuming a FIFO method of process costing, compute EUP for

conversion.

a. 2,240

b. 2,180

c. 2,280

d. 2,700

ANS: B

FIFO Beginning Work in Process (700 * 40%) Units Started and Completed Ending Work in Process (500 * 80%)

280

1,500

400

2,180

PTS:

LOC:

1

DIF:

Moderate

OBJ:

6-4

NAT: AACSB: Analytical Skills

AICPA Functional Competencies: Measurement, Reporting

98. Refer to Mercury Corporation Assuming a weighted average method of process costing, compute the average cost per unit for Material A.

a. $20.10

b. $20.00

c. $31.25

d. $31.00

ANS: A

Weighted Average: Material A Beginning Current Period

$

14,270

40,000

54,270 ÷ 2,700 units=

$ 20.10 per unit

PTS:

LOC: AICPA Functional Competencies: Measurement, Reporting

1

DIF:

Moderate

OBJ:

6-3

NAT: AACSB: Analytical Skills

Chapter 6

31

99.

Refer to Mercury Corporation Assuming a FIFO method of process costing, compute the average cost per EUP for Material A.

a. $31.25

 

b. $20.10

c. $20.00

d. $31.00

ANS: C

 

Material A Costs (Current Period)

 

Equivalent Units

Average Cost per EUP

 
 

$40,000

2,000

$20.00

PTS:

1

DIF:

Moderate

OBJ:

6-4

NAT: AACSB: Analytical Skills

LOC:

AICPA Functional Competencies: Measurement, Reporting

100.

Refer to Mercury Corporation Assuming a FIFO method of process costing, compute the average cost per EUP for Material B.

a. $20.10

 

b. $31.25

c. $20.00

d. $31.00

ANS: B

 

Material B Costs (Current Period)

 

Equivalent Units