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Exam 8: Process Costing

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Question 41

True/False

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Process costing assumes all units are homogeneous and follow the same path through the production process.This statement is a basic concept of process costing;whereas,job costing assumes differing units.

A) True
B) False

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Question 42

Multiple Choice

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Of the following process costing steps,which must be done last?

A) Compute the equivalent units of production.
B) Compute the costs per equivalent unit of production.
C) Measure the physical flow of resources.
D) Identify the product costs to account for.

E) A) and B)
F) A) and C)

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Question 43

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The FIFO method provides a major advantage over the weighted-average method in that:

The Finishing Department had 5,000 incomplete units in its beginning Work-in-Process Inventory which were 100% complete as to materials and 30% complete as to conversion costs.15,000 units were received from the previous department.The ending Work-in-Process Inventory consisted of 2,000 units which were 50% complete as to materials and 30% complete as to conversion costs.The Finishing Department uses first-in,first-out (FIFO) process costing.How many units were transferred-out during the period?

The debits to Work-in-Process for Department #2 for the month of April of the current year,together with information concerning production,are presented below.All direct materials come from Department #1.The units completed include the 1,200 in process at the beginning of the period.Department #2 uses FIFO costing. The conversion costs per equivalent units is:

Which of the following characteristics applies to process costing,but does not apply to job order costing?

The ALG Manufacturing Company has gathered the following information for the month of September: • 6,000 units in the beginning Work-in-Process Inventory (75% complete as to materials,1/3 complete with respect to the conversion costs) .• 60,000 units were started into production.• 50,000 units were completed and transferred to the next department.• The ending Work-in-Process Inventory is complete as to materials but only 3/8 complete with respect to conversion costs.What are the equivalent units of production (EUP) for materials in the month of September assuming ALG uses weighted-average process costing?

Which of the following statements concerning a process cost accounting system is false?

The WISCO Company uses a weighted-average process costing system.The following data are available: Equivalent units of production for labor and overhead are:

The degree of completion associated with prior department costs is always 100%.It is the same as a material added at the start of the process.All the effort is there.

The computation of equivalent units under the FIFO method:

The WISCO Company uses a weighted-average process costing system.The following data are available: Equivalent units of production for material are:

Which of the following statements is (are) true regarding product costing? (A) Twenty cans of paint that are 25% full are equivalent to four cans of paint that are completely full.(B) The equivalent unit concept refers to the actual amount of work during the period stated in terms of whole units.

Department A had no Work-in-Process at the beginning of the period,1,000 units were completed during the period,200 units were 50% completed at the end of the period,and the following manufacturing costs were debited to the departmental Work-in-Process account during the period Assuming that all direct materials are added at the beginning of production and Department A uses weighted-average process costing,what is the total cost of the departmental Work-in-Process Inventory at the end of the period?

If materials are only added at the beginning of the production process,then the degree of completion for materials in the ending Work-in-Process Inventory is always 100%.All the materials would be there,otherwise the units would not be in process.This is the most likely scenario in process costing.

Which of the following organizations would most likely use a process costing system?

A process costing system:

Kimbeth Manufacturing uses process costing to control costs in the manufacture of Dust Sensors for the mining industry.The following information pertains to operations for November.(CMA Exam adapted) The beginning inventory was 60% complete as to materials and 20% complete as to conversion costs.The ending inventory was 90% complete as to materials and 40% complete as to conversion costs.Costs pertaining to November are as follows: Beginning inventory: direct materials,$54,560;direct labor,$20,320;manufacturing overhead,$15,240.Costs incurred during the month: direct materials,$468,000;direct labor,$182,880;manufacturing overhead,$391,160.What is the equivalent unit cost for the conversion costs assuming Kimbeth uses first-in,first-out (FIFO) process costing?

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Beattie Company completed and transferred out 2,300 units in May 2012.There were 200 units in the Work-in-Process Inventory on May 31,2012,30% complete as to conversion costs and 100% complete as to materials.The month's charges for conversion costs and material costs were $9,440 and $6,250,respectively.There was no beginning inventory on May 1,2012.What is the cost of the work transferred-out during May?