ch03

CHAPTER 3

PROCESS COSTING

TRUE-FALSE STATEMENTS1. Process cost accounting focuses on the process involved in mass-producing products that

are very similar in nature.

Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

2. Process cost systems are used to apply costs to a specific job, such as the manufacturing of a specialized machine.

Ans: F, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

3. A company that produces motion pictures would likely use a process cost system.

Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

4. In a process cost system, costs are tracked through a series of connected manufacturing processes or departments, rather than by individual jobs.

Ans: T, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

5. In a process cost system, total costs are determined at the end of a month or year.


6. Separate work in process accounts are maintained for each production department or manufacturing process in a process cost system.

Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

7. In a process cost system, materials, labor and overhead are only added in the first production department.


8. The assignment of the three manufacturing cost elements to Work in Process in a process cost system is the same as in a job order cost system.


9. Fewer materials requisitions are generally required in a process cost system than in a job order cost system.


10. In a process cost system, labor costs incurred may be captured on time tickets.


11. A primary driver of overhead costs in continuous manufacturing operations is machine time used.

Test Bank for Managerial Accounting, Sixth Edition


12. Equivalent units of production are used to determine the cost per unit of completed products.


13. Equivalent units of production measure the work done during a period, expressed in fully completed units.


14. Equivalent units of production is the sum of units completed and transferred out plus equivalent units of beginning work in process.


15. The weighted-average method of computing equivalent units is the most widely used method in practice.


16. There are no units in process at the beginning of the period, 1,500 units in process at the end of the period that are 40% complete, and 15,000 units transferred out during the period. Based on this information, there were 14,400 equivalent units of production during the period.

Ans: F, LO: 5, Bloom: AP, Difficulty: Easy, Min: 2, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

17. The first step performed in preparing a production cost report is computing the equivalent units of production.

Ans: F, LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

18. Equivalent units of production must be calculated before the unit production costs can be computed.


19. The physical units in a department are another name for the equivalent units of production.


20. Unit material cost is computed by taking total material costs charged to the department for the period and dividing by the physical units in the process during the period.


21. When equivalent units of production are different for materials and conversion costs, unit costs are computed for materials, conversion, and total manufacturing.

Ans: T, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

22. The total manufacturing cost per unit is used in costing the units completed and transferred during the period.

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Process Costing


23. A production cost report is an internal document for management that shows production quantity and cost data for a particular job.


24. Production cost reports provide a basis for evaluating the productivity of a department.

Ans: T, LO: 7, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

25. Companies often use a combination of a process cost and a job order cost system, called operations costing.


a26. The FIFO method is easier to understand and use than the weighted-average method.

Ans: F, LO: 8, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Leverage Technology, AICPA PC: None, IMA: Cost Management

a27. The FIFO method is conceptually superior to the weighted-average method.

Ans: T, LO: 8, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Leverage Technology, AICPA PC: None, IMA: Cost Management

a28. When comparing the FIFO with the weighted-average method, the FIFO method provides current cost information.


a29. There are no units in ending work in process at the end of the period under the FIFO method.


a30. Companies using the weighted-average method do not complete units left over from the previous accounting periods, they start new units.


31. In continuous process manufacturing, generally once the production begins, it continues until the finished product emerges.


32. One similarity of process cost accounting with job order cost accounting is that both determine total manufacturing costs after each job.


33. The flow of costs in a process costing system requires that materials be added in one department, labor added in another department and manufacturing overhead in a third department.


34. When finished goods are sold, the entry to record the cost of goods sold is a debit to Finished Goods Inventory and a credit to Cost of Goods Sold.

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Ans: F, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

35. When there is no beginning work in process and materials are entered at the beginning of the process, equivalent units of materials are the same as the units started into production.


36. In order to compute the physical unit flow, a company must first compute unit production costs.


37. Under the FIFO method, it is assumed that the beginning work in process is completed before new work is started.

Ans: T, LO: 8, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

MULTIPLE CHOICE QUESTIONS38. A process cost accounting system is most appropriate when

a. a variety of different products are produced, each one requiring different types of materials, labor, and overhead.

b. the focus of attention is on a particular job or order.c. similar products are mass-produced.d. individual products are custom made to the specification of customers.

Ans: C, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Applications

39. A characteristic of products that are mass-produced in a continuous fashion is thata. the products are identical or very similar in nature.b. they are grouped in batches.c. they are produced at the time an order is received.d. their costs are accumulated on job cost sheets.

Ans: A, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

40. A process cost system would be used for all of the following products excepta. chemicals.b. computer chips.c. motion pictures.d. soft drinks.

Ans: C, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Applications

41. In a process cost system,a. a Work in Process account is maintained for each product.b. a materials requisition must identify the job on which the materials will be used.c. a Work in Process account is maintained for each process.d. one Work in Process account is maintained for all the processes, similar to a job order

cost system.

Ans: C, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

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Process Costing

42. Differences between a job order cost system and a process cost system include all of the following except thea. documents used to track costs.b. point at which costs are totaled.c. unit cost computations.d. flow of costs.

Ans: D, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Business Applications

43. Which of these best reflects a distinguishing factor between a job order cost system and a process cost system?a. The detail at which costs are calculated.b. The time period each covers.c. The number of work in process accounts.d. The manufacturing cost elements included.

Ans: C, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Business Applications

44. Which of the following is a true statement about process cost systems?a. In process cost systems, costs are accumulated but not assigned.b. A process cost system has one work in process account for each process.c. In process cost systems, costs are summarized on job cost sheets.d. Unit costs are not computed in process cost systems.

Ans: B, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Applications

45. Which of the following is correct regarding cost systems?Job Order Process

a. Work in process account several one for each processb. Work in process account one onec. Work in process account one one for each processd. Work in process account several one

Ans: C, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Applications

46. In a process cost system, unit costs are determined using aa. numerator of costs of each job.b. denominator of units produced during the period.c. denominator of units produced for the job.d. denominator of units produced for the day.

Ans: B, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

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47. In process cost accounting, manufacturing costs are summarized on aa. job order cost sheet.b. process order cost sheet.c. production cost report.d. manufacturing cost sheet.


48. Which of the following manufacturing cost elements occurs in a process cost system?a. Direct materials.b. Direct labor.c. Manufacturing overhead.d. All of these.

Ans: D, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

49. In a process cost system, product costs are summarized:a. on job cost sheets.b. on production cost reports.c. after each unit is produced.d. when the products are sold.

Ans: B, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

50. When manufacturing overhead costs are assigned to production in a process cost system, they are debited toa. the Finished Goods Inventory account.b. Cost of Goods Sold.c. a Manufacturing Overhead account.d. a Work in Process account.

Ans: D, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

51. A product requires processing in two departments, the Baking Department and then the Packaging Department, before it is completed. Costs transferred out of the Baking Department will be transferred to:a. Finished Goods Inventory.b. Cost of Goods Sold.c. Work in Process—Packaging Department.d. Manufacturing Overhead.

Ans: C, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

52. Which of the following would not appear as a debit in the Work in Process account of a second department in a two stage production process?a. Materials used.b. Overhead applied.c. Labor assigned.d. Cost of products transferred out.

Ans: D, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

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Process Costing

53. Materials requisitions are:a. not used in process costing.b. generally used more frequently in process costing than job order costing.c. generally used less frequently in process costing than job order costing.d. used more frequently by latter stage production departments.

Ans: C, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

54. A primary driver of overhead costs in continuous manufacturing operations is:a. direct labor dollars.b. direct labor hours.c. machine hours.d. machine maintenance dollars.

Ans: C, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

55. Price Company assigns overhead based on machine hours. The Milling Department logs 1,800 machine hours and Cutting Department shows 3,000 machine hours for the period. If the overhead rate is $5 per machine hour, the entry to assign overhead will show aa. debit to Manufacturing Overhead for $24,000.b. credit to Work in Process—Cutting Department for $15,000.c. debit to Work in Process for $15,000.d. credit to Manufacturing Overhead for $24,000.

Ans: D, LO: 4, Bloom: C, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

56. Barnes and Miller Manufacturing is trying to determine the equivalent units for conversion costs with 10,000 units of ending work in process at 80% completion and 28,000 physical units. There are no beginning units in the department. Conversion costs occur evenly throughout the entire production period. What are the equivalent units for conversion costs for the current period?a. 38,000.b. 36,000.c. 8,000.d. 26,000.

Ans: D, LO: 5, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

57. 15,000 units in a process that are 70% complete are referred to as:a. 15,000 equivalent units of production.b. 4,500 equivalent units of production.c. 10,500 equivalent units of production.d. 4,500 equivalent units of production.

Ans: C, LO: 5, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

58. A process with no beginning work in process, completed and transferred out 95,000 units during a period and had 50,000 units in the ending work in process inventory that were 30% complete. The equivalent units of production for the period were:a. 95,000 equivalent units.b. 145,000 equivalent units.c. 110,000 equivalent units.d. 47,500 equivalent units.

Ans: C, LO: 5, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics

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59. A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of January, there were no units in the beginning work in process inventory; 80,000 units were started into production in January; and there were 20,000 units that were 40% complete in the ending work in process inventory at the end of January. What were the equivalent units of production for materials for the month of January?a. 88,000 equivalent units.b. 72,000 equivalent units.c. 60,000 equivalent units.d. 80,000 equivalent units.

Ans: D, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

60. A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of January, there were no units in the beginning work in process inventory; 80,000 units were started into production in January; and there were 20,000 units that were 40% complete in the ending work in process inventory at the end of January. What were the equivalent units of production for conversion costs for the month of January?a. 60,000 equivalent units.b. 72,000 equivalent units.c. 68,000 equivalent units.d. 80,000 equivalent units.


61. Equivalent units are calculated bya. multiplying the percentage of work done by the equivalent units of output.b. dividing physical units by the percentage of work done.c. multiplying the percentage of work done by the physical units.d. dividing equivalent units by the percentage of work done.


62. Minor Company had the following department data:Physical Units

Work in process, July 1 30,000Completed and transferred out 135,000Work in process, July 31 45,000

Materials are added at the beginning of the process. What is the total number of equivalent units for materials in July?a. 135,000.b. 150,000.c. 210,000.d. 180,000.


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Process Costing

63. Corsi Company had the following department data:Physical Units

Work in process, beginning -0-Completed and transferred out 70,000Work in process, ending 7,000

Materials are added at the beginning of the process. What is the total number of equivalent units for materials during the period?a. 70,000.b. 7,000.c. 77,000.d. 63,000.


64. Gantner Company had the following department information about physical units and percentage of completion:

Physical UnitsWork in process, May 1 (60%) 60,000Completed and transferred out 150,000Work in process, May 31 (40%) 50,000

If materials are added at the beginning of the production process, what is the total number of equivalent units for materials during May?a. 210,000.b. 200,000.c. 194,000.d. 170,000.

Ans: B, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

65. It is necessary to calculate equivalent units of production in a department becausea. a physical count of units is impossible.b. some units worked on in the department are not fully complete.c. the physical units in the department are always 100% complete.d. at times a department may use a job order cost system and then switch to a process

cost system.

Ans: B, LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

66. In the month of June, a department had 20,000 units in beginning work in process that were 70% complete. During June, 80,000 units were transferred into production from another department. At the end of June there were 10,000 units in ending work in process that were 40% complete. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. How many units were transferred out of the process in June?a. 80,000 units.b. 70,000 units.c. 90,000 units.d. 100,000 units.

Ans: C, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

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67. In the month of June, a department had 20,000 units in beginning work in process that were 70% complete. During June, 80,000 units were transferred into production from another department. At the end of June there were 10,000 units in ending work in process that were 40% complete. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. The equivalent units of production for materials for June werea. 90,000 equivalent units.b. 100,000 equivalent units.c. 104,000 equivalent units.d. 80,000 equivalent units.


68. In the month of June, a department had 20,000 units in beginning work in process that were 70% complete. During June, 80,000 units were transferred into production from another department. At the end of June there were 10,000 units in ending work in process that were 40% complete. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. The equivalent units of production for conversion costs for June werea. 80,000 equivalent units.b. 94,000 equivalent units.c. 90,000 equivalent units.d. 100,000 equivalent units.

Ans: B, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

69. A process with no beginning work in process, completed and transferred out 28,000 units during a period and had 14,000 units in the ending work in process that were 50% complete. How much is equivalent units of production for the period for conversion costs? a. 35,000 equivalent units.b. 42,000 equivalent units.c. 49,000 equivalent units.d. 21,000 equivalent units.

Ans: A, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

70. A process with 1,600 units of beginning work in process, completed and transferred out 20,000 units during a period. There were 10,000 units in the ending work in process that were 50% complete as to conversion costs. Materials are added 80% at the beginning of the process and 20% when the units are 90% complete. How much is equivalent units of production for the period for material costs?a. 24,000 equivalent units.b. 30,000 equivalent units.c. 22,000 equivalent units.d. 28,000 equivalent units.

Ans: D, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

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Process Costing

71. Hanker Company had the following department data on physical units:

Work in process, beginning 3,000Completed and transferred out 12,000Work in process, ending 2,400

Materials are added at the beginning of the process. What is the total number of equivalent units for materials during the period?a. 12,600.b. 2,400.c. 14,400.d. 9,000.


72.Super-Tech Industries had the following department information about physical units and percentage of completion:

Physical UnitsWork in process, June 1 (75%) 8,000Completed and transferred out 18,000Work in process, June 30 (50%) 12,000

If materials are added at the beginning of the production process, what is the total number of equivalent units for materials during June? a. 15,000.b. 30,000.c. 32,000.d. 24,000.


73. Gloria Company had no beginning work in process. During the period, 12,000 units were completed, and there were 1,200 units of ending work in process. How many units were started into production?a. 13,200. b. 12,000. c. 10,800.d. 1,200.


74. Cohen Company is trying to determine the equivalent units for conversion costs with 5,000 units of ending work in process at 80% completion and 35,000 units that are 100% complete as to materials. There are no beginning units in the department. Materials are added at the beginning of the process, and conversion costs occur evenly throughout the entire production period. What is the equivalent units of production for conversion costs for the current period?a. 40,000.b. 39,000.c. 4,000.d. 34,000.

Ans: B, LO: 5, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

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75. If beginning work in process is 4,000 units, ending work in process is 2,000 units, and the units accounted for equals 12,000 units, what must units started into production be?a. 16,000.b. 14,000.c. 8,000.d. 10,000.


76. The Molding Department of Kennett Company has the following production data: beginning work in process 25,000 units (60% complete), started into production 425,000 units, completed and transferred out 400,000 units, and ending work in process 50,000 units (40% complete). Assuming materials are entered at the beginning of the process, equivalent units for materials are:a. 450,000.b. 375,000.c. 400,000.d. 475,000.


77. The Molding Department of Kennett Company has the following production data: beginning work in process 25,000 units (60% complete), started into production 425,000 units, completed and transferred out 400,000 units, and ending work in process 50,000 units (40% complete). Assuming conversion costs are incurred uniformly during the process, the equivalent units for conversion costs are:a. 450,000.b. 405,000.c. 420,000.d. 400,000.


78. The Molding Department of Boswell Company has the following production data: beginning work process 40,000 units (60% complete), started into production 680,000 units, completed and transferred out 640,000 units, and ending work in process 80,000 units (40% complete). Assuming materials are entered at the beginning of the process, equivalent units for materials are:a. 720,000.b. 600,000.c. 640,000.d. 760,000.


79. The Molding Department of Boswell Company has the following production data: beginning work process 40,000 units (60% complete), started into production 680,000 units, completed and transferred out 640,000 units, and ending work in process 80,000 units (40% complete). Assuming conversion costs are incurred uniformly during the process, the equivalent units for conversion costs are:a. 720,000.b. 760,000.c. 672,000.d. 600,000.


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Process Costing

80. Crawford Company has the following equivalent units for July: materials 20,000 and conversion costs 18,000. Production cost data are:

Materials ConversionWork in process, July 1 $ 3,200 $ 1,500Costs added in July 25,200 21,000

The unit production costs for July are:Materials Conversion Costs

a. $1.26 $1.25b. 1.42 1.17c. 1.26 1.17d. 1.42 1.25


81. In Moyer Company, the Cutting Department had beginning work in process of 6,000 units, transferred out 16,000 units, and had an ending work in process of 3,000 units. How many units were started by Moyer during the month?a. 10,000.b. 13,000.c. 16,000.d. 19,000.


82. In the Shaping Department of Rollins Company the unit materials cost is $5.00 and the unit conversions cost is $3.00. The department transferred out 20,000 units and had 2,500 units in ending work in process 20% complete. If all materials are added at the beginning of the process, the total cost to be assigned to the ending work in process isa. 4,000.b. 12,500.c. 14,000.d. 20,000.


83. Holton Company has the following equivalent units for July: materials 20,000 and conversion 18,000. Production cost data are:

Materials ConversionWork in process, July 1 $ 4,800 $ 2,250Costs added in July 37,800 31,500

The unit production costs for July are:

Materials Conversion Costsa. $1.89 $1.88b. 2.13 1.75c. 1.89 1.75d. 2.13 1.88


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84. In Kapler Company, the Cutting Department had beginning work in process of 8,000 units, transferred out 20,000 units, and had an ending work in process of 4,000 units. How many units were started by Kapler during the month?a. 12,000.b. 16,000.c. 20,000.d. 24,000.


85. In the Shaping Department of Jenkins Company the unit materials cost is $2.50 and the unit conversion cost is $1.50. The department transferred out 8,000 units and had 2,000 units in ending work in process 20% complete. If all materials are added at the beginning of the process, the total cost to be assigned to the ending work in process isa. $1,600.b. $5,000.c. $5,600.d. $8,000.


86. Cinder Company had the following department information for the month:

Total materials costs $ 80,000Equivalent units of materials 10,000Total conversion costs $120,000Equivalent units of conversion costs 20,000

How much is the total manufacturing cost per unit?a. $14.00.b. $6.66.c. $6.00.d. $8.00.


87. Materials costs of $500,000 and conversion costs of $535,500 were charged to a processing department in the month of September. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. There were no units in beginning work in process, 100,000 units were started into production in September, and there were 8,000 units in ending work in process that were 40% complete at the end of September.

What was the total amount of manufacturing costs assigned to those units that were completed and transferred out of the process in September?a. $460,000.b. $977,500.c. $1,035,500.d. $1,063,000.


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Process Costing

88. Materials costs of $500,000 and conversion costs of $535,500 were charged to a processing department in the month of September. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. There were no units in beginning work in process, 100,000 units were started into production in September, and there were 8,000 units in ending work in process that were 40% complete at the end of September.

What was the total amount of manufacturing costs assigned to the 8,000 units in the ending work in process?a. $40,000.b. $18,000.c. $34,000.d. $58,000.


89. Charley Company’s Assembly Department has materials cost at $3 per unit and conversion cost at $6 per unit. There are 20,000 units in ending work in process, all of which are 70% complete as to conversion costs and 100% complete as to materials. How much are total costs to be assigned to inventory?a. $84,000.b. $144,000.c. $126,000.d. $180,000.


90. Byrd Company decided to analyze certain costs for June of the current year. Units started into production equaled 14,000 and ending work in process equaled 2,000 units. With no beginning work in process inventory, how much is the conversion cost per unit if ending work in process was 25% complete and total conversion costs equaled $35,000?a. $2.19.b. $8.75.c. $2.80.d. $1.40.


91. Long Company has recently tried to improve its analysis for its manufacturing process. Units started into production equaled 6,000 and ending work in process equaled 400 units. Long had no beginning work in process inventory. Conversion costs are applied equally throughout production, and materials are applied at the beginning of the process. How much is the materials cost per unit if ending work in process was 25% complete and total materials costs equaled $24,000?a. $4.00.b. $4.21.c. $15.00.d. $3.75.


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92. Conversion cost per unit equals $7.00. Total materials costs are $60,000. Equivalent units are 20,000. How much is the total manufacturing cost per unit?a. $10.00.b. $7.00.c. $4.00.d. $3.00.


93. Physical units are 40,000. Total conversion costs are $237,000. There are 1,000 units in ending inventory which are 50% complete as to conversion costs. How much are conversion costs per unit? a. $6.00. b. $5.92. c. $11.86.d. $5.78.


94. Madison Industries has equivalent units of 4,000 for materials and for conversion costs. Total manufacturing costs are $160,000. Total materials costs are $120,000. How much is the conversion cost per unit?a. $4.00.b. $10.00.c. $40.00.d. $8.00.


95. Equivalent units for materials total 30,000. There were 24,000 units completed and transferred out. Equivalent units for conversion costs equal 27,000. How much are the physical units for conversion costs if ending work in process is 50% complete?a. 27,000.b. 30,000.c. 6,000.d. 24,000.


96. If equivalent units are 12,000 for conversion costs and units transferred out equals 8,000, what stage of completion should the ending work in process be for the 16,000 units remaining?a. 75%.b. 25%.c. 10%.d. 20%.


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Process Costing

97. In the month of April, a department had 500 units in the beginning work in process inventory that were 60% complete. These units had $40,000 of materials costs and $30,000 of conversion costs. Materials are added at the beginning of the process and conversion costs are added uniformly throughout the process. During April, 10,000 units were completed and transferred to the finished goods inventory and there were 2,000 units that were 25% complete in the ending work in process inventory on April 30. During April, manufacturing costs charged to the department were: Materials $920,000; Conversion costs $1,020,000.

The cost assigned to the units transferred to finished goods during April wasa. $1,800,000.b. $1,810,000.c. $1,880,000.d. $1,790,000.


98. In the month of April, a department had 500 units in the beginning work in process inventory that were 60% complete. These units had $40,000 of materials costs and $30,000 of conversion costs. Materials are added at the beginning of the process and conversion costs are added uniformly throughout the process. During April, 10,000 units were completed and transferred to the finished goods inventory and there were 2,000 units that were 25% complete in the ending work in process inventory on April 30. During April, manufacturing costs charged to the department were: Materials $920,000; Conversion costs $1,020,000.

The cost assigned to the units in the ending work in process inventory on April 30 wasa. $240,000.b. $210,000.c. $160,000.d. $290,000.


99. Zibba Company enters materials at the beginning of the process. In January, there was no beginning work in process, but there were 200 units in the ending work in process inventory. The number of units completed equals the number ofa. units started.b. units started less 200.c. units started plus 200.d. equivalent units.


100. If there are no units in process at the beginning of the period, thena. the company must be using a job order cost system.b. only one computation of equivalent units of production will be necessary.c. the units started into production will equal the number of units transferred out.d. the units to be accounted for will equal the units transferred out and the units in

process at the end of the period.

Ans: D, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

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101. Which of the following is not a necessary step in preparing a production cost report?a. Compute the equivalent units of production.b. Compute the physical unit flow.c. Prepare the job order cost sheet.d. Prepare a cost reconciliation schedule.

Ans: C, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

102. Honrad Company's Assembly Department has materials cost at $4 per unit and conversion cost at $8 per unit. There are 20,000 units in ending work in process, all of which are 70% complete as to conversion costs. How much are total costs to be assigned to inventory?a. $112,000.b. $192,000.c. $168,800.d. $240,000.


103. In a process cost system, units to be accounted for in a department are equal to thea. number of units started or transferred into the department.b. number of units transferred out of the department.c. units in the beginning inventory plus the units started or transferred into the department.d. ending inventory plus the units started or transferred into the department.


104. The total units accounted for equals units ina. beginning work in process – units transferred out.b. beginning work in process + ending work in process.c. ending work in process + units transferred out.d. ending work in process – units started into production.

Ans: C, LO: 6, Bloom: AP, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

105. The Slicing Department production process shows:

Units Beginning Work in Process 10,000Ending Work in Process 50,000Total units to be accounted for 160,000

How many units were started into production in Department 1?a. 170,000.b. 110,000.c. 160,000.d. 150,000.


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Process Costing

106. Department 1 of a two department production process shows:

Units Beginning Work in Process 10,000Ending Work in Process 50,000Total units to be accounted for 160,000

How many units were transferred out to Department 2?a. 50,000.b. 110,000.c. 160,000.d. 150,000.


107. The Assembly Department shows the following information:

Units Beginning Work in Process 20,000Ending Work in Process 50,000Units Transferred Out 31,000

How many total units are to be accounted for by the Assembly Department?a. 81,000.b. 50,000.c. 70,000.d. 61,000.


108. The last department in a production process shows the following information at the end of the period:

Units Beginning Work in Process 25,000Started into Production 200,000Ending Work in Process 50,000

How many units have been transferred out to finished goods during the period?a. 200,000.b. 225,000.c. 250,000.d. 175,000.


109. A process began the month with 3,000 units in the beginning work in process inventory and ended the month with 2,000 units in the ending work in process. If 15,000 units were completed and transferred out of the process during the month, how many units were started into production during the month?a. 14,000.b. 16,000.c. 15,000.d. 13,000.


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110. If 120,000 units are started into production there was no beginning work in process, and 40,000 units are in process at the end of the period, how many units were completed and transferred out?a. 120,000.b. 40,000.c. 80,000.d. 160,000.


111. Total units to be accounted for less units in beginning work in process equalsa. total units accounted for.b. units transferred out.c. units started into production.d. equivalent units.

Ans: C, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

112. If 120,000 units are transferred out of a department, there was no beginning work in process, and there are 20,000 units still in process at the end of a period, the number of units that were started into production during the period isa. 140,000.b. 120,000.c. 100,000.d. 20,000.


113. A department adds materials at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of July, there was no beginning work in process; 40,000 units were completed and transferred out; and there were 20,000 units in the ending work in process that were 40% complete. During July, $96,000 materials costs and $84,000 conversion costs were charged to the department.

The unit production costs for materials and conversion costs for July was

Materials Conversion Costsa. $1.60 $1.40b. $1.60 $1.75c. $2.00 $1.40d. $2.40 $2.13


114. Conversion cost per unit equals $6. Total materials cost equal $80,000. Equivalent units for materials are 10,000. How much is the total manufacturing cost per unit?a. $14.b. $6.c. $12.d. $8.


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Process Costing

115. The following department data are available:

Total materials costs $240,000Equivalent units of materials 60,000Total conversion costs $135,000Equivalent units of conversion costs 30,000

What is the total manufacturing cost per unit?a. $4.00.b. $4.50.c. $8.50.d. $6.25.


116. Byers Company had the following department information for the month:

Total materials costs $48,000Equivalent units of materials 5,000Total conversion costs $80,000Equivalent units of conversion costs 10,000

What is the total manufacturing cost per unit?a. $8.53.b. $8.00.c. $9.60.d. $17.60.


117. Physical units accounted for are 160,000. Total conversion costs are $276,500. There are 4,000 units in ending inventory which are 50% complete as to conversion costs. How much is the conversion cost per unit?a. $1.75.b. $1.73.c. $1.71.d. $1.69.


118. A department had the following information for the month:

Total materials costs $210,000Conversion cost per unit $3.00Total manufacturing cost per unit $5.00

What are the equivalent units of production for materials?a. 105,000.b. 70,000.c. 42,000.d. Cannot be determined


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119. Maisley Company decided to analyze certain costs for June of the current year. Units started into production equaled 28,000 and ending work in process equaled 4,000. With no beginning work in process inventory, how much is the conversion cost per unit if ending work in process was 25% complete and total conversion costs equaled $105,000?a. $3.30.b. $3.75.c. $4.20.d. $2.10.


120. Materials costs of $800,000 and conversion costs of $1,020,000 were charged to a processing department in the month of September. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. There were no units in beginning work in process, 20,000 units were started into production in September, and there were 5,000 units in ending work in process that were 40% complete at the end of September.

What was the total amount of manufacturing costs assigned to those units that were completed and transferred out of the process in September?a. $1,500,000.b. $2,000,000.c. $1,606,500.d. $1,365,000.


121. Materials costs of $800,000 and conversion costs of $1,020,000 were charged to a processing department in the month of September. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. There were no units in beginning work in process, 20,000 units were started into production in September, and there were 5,000 units in ending work in process that were 40% complete at the end of September.

What was the total amount of manufacturing costs assigned to the 5,000 units in the ending work in process?a. $455,000.b. $500,000.c. $320,000.d. $200,000.


122. Mayer Company has recently tried to improve its analysis for its manufacturing process. Units started into production equaled 18,000 and ending work in process equaled 1,200 units. Mayer had no beginning work in process inventory. Conversion costs are applied equally throughout production, and materials are applied at the beginning of the process. How much is the materials cost per unit if ending work in process was 25% complete and total materials costs equaled $90,000?a. $5.00.b. $5.27.c. $20.00.d. $4.69.


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Process Costing

123. Madison Industries has equivalent units of 8,000 for materials and for conversion costs. Total manufacturing costs are $160,000. Total materials costs are $120,000. How much is the conversion cost per unit?a. $15.b. $5.c. $20.d. $4.


124. In a process cost system, a production cost report is prepareda. only for the first processing department.b. for all departments in the aggregate.c. for each processing department.d. only for the last processing department.


125. A production cost reporta. is prepared for each product.b. is prepared from a job cost sheet.c. will show quantity and cost data for a production department.d. will not identify a specific department if more than one department is involved in the

production process.


126. In the production cost report, the totala. physical units accounted for equals the costs accounted for.b. physical units accounted for equals the units to be accounted for.c. costs charged equals the units to be accounted for.d. costs accounted for equals the costs of the units started into production.

Ans: B, LO: 7, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

a127. The Cutting Department’s output during the period consists of 18,000 units completed and transferred out, and 4,000 units in ending work in process that were 25% complete as to materials and conversion costs. Beginning inventory was 2,000 units that were 25% complete as to materials and conversion costs. Under the FIFO method, what are the equivalent units of production for materials?a. 20,300b. 18,500c. 21,300d. 20,000


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a128. The Wrapping Department’s output during the period consists of 17,000 units completed and transferred out, and 900 units in ending work in process that were 75% complete as to materials and conversion costs. Beginning inventory was 1,200 units that were 30% complete as to materials and conversion costs. Under the FIFO method, what are the equivalent units of production for materials?a. 18,035b. 18,515c. 17,675d. 17,315


a129. Chicotti Company has 6,000 units in beginning work in process, 30% complete as to conversion costs, 60,000 units transferred out to finished goods, and 2,000 units in ending work in process 20% complete as to conversion costs. The beginning and ending inventory is fully complete as to materials costs. How much are equivalent units for conversion costs if the FIFO method is used?a. 60,400b. 64,600c. 56,000d. 58,600


a130. Chicotti Company has 6,000 units in beginning work in process, 30% complete as to conversion costs, 60,000 units transferred out to finished goods, and 2,000 units in ending work in process 20% complete as to conversion costs. The beginning and ending inventory is fully complete as to materials costs. How much are equivalent units for materials if the FIFO method is used?a. 60,400b. 62,000c. 56,000d. 68,000


a131. Schiller Company has unit costs of $3 for materials and $9 for conversion costs. There are 5,600 units in ending work in process which are 25% complete as to conversion costs, and fully complete as to materials cost. How much is the total cost assigned to the ending work in process inventory if the FIFO method is used?a. 29,400b. 67,200c. 16,800d. 12,600


a132. Solis Company uses the FIFO method to compute equivalent units. It has 4,000 units in beginning work in process, 20% complete as to conversion costs and 50% complete as to materials costs, 55,000 units started, and 6,000 units in ending work in process, 30% complete as to conversion costs, and 80% complete as to materials cost. How much are the equivalent units for materials under the FIFO method?a. 55,800b. 55,000c. 57,800d. 59,000


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Process Costing

a133. Special Company had the following department information about physical units and percentage of completion:

Physical UnitsWork in process, May 1 (60%) 36,000Completed and transferred out 65,000Work in process, May 31 (50%) 30,000

Materials are added at the beginning of the production process. Conversion costs are added equally throughout production. What is the total number of equivalent units during May for conversion costs if the FIFO method is used?a. 131,000b. 80,000c. 58,400d. 109,400


a134. Hanker Company had the following department data on physical units:

Work in process, beginning 2,500Completed and transferred out 14,000Work in process, ending 2,000

Materials are added at the beginning of the process. What is the total number of equivalent units for materials if the FIFO method is used?a. 14,500b. 13,500c. 16,000d. 11,500


135. A process cost system would be used by all of the following except a(n)a. chemical company.b. advertising company.c. oil company.d. computer chip company.

Ans: B, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

136. Which of the following is considered a difference between a job order cost and a process cost system?a. The manufacturing cost elements.b. Documents used to track costs.c. The accumulation of the costs of materials, labor, and overhead.d. The flow of costs.


137. The basic similarities between job order cost and process cost systems include all of the following except thea. manufacturing cost elements.b. flow of costs.c. point at which costs are totaled.d. accumulation of the costs of materials, labor, and overhead.


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138 Equivalent units of production are a measure ofa. units completed and transferred out.b. units transferred out.c. units in ending work in process.d. the work done in a period expressed in fully completed units.

Ans: D, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

139. Total physical units to be accounted for are equal to the unitsa. started (or transferred) into production.b. started (or transferred) into production plus the units in beginning work in process.c. started (or transferred) into production less the units in beginning work in process.d. completed and transferred out.


140. In computing equivalent units, ___________ is not part of the equivalent units of production formula.a. units transferred outb. beginning work in processc. ending work in processd. None of these is correct.


141. In Saint-Simon, Inc., the Assembly Department started 30,000 units and completed 35,000 units. If beginning work in process was 15,000 units, how many units are in ending work in process?a. 0.b. 5,000.c. 10,000.d. 20,000.

Ans: C, LO: 6, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

142. The total units to be accounted for is computed by addinga. beginning units in process to units transferred out.b. ending units in process to units started into production.c. beginning units in process to units started into production.d. ending units in process to total units accounted for.


143. In the Camria Company, materials are entered at the beginning of the process. If there is no beginning work in process, but there is an ending work in process inventory, the number of equivalent units as to materials costs will bea. the same as the units started.b. the same as the units completed.c. less than the units started.d. less than the units completed.

Ans: A, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management

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Process Costing

144. For the Assembly Department, unit materials cost is $8 and unit conversion cost is $12. If there are 10,000 units in ending work in process 75% complete as to conversion costs, the costs to be assigned to the inventory area. $200,000.b. $170,000.c. $150,000.d. $180,000.


145. The total costs accounted for in a production cost report equal thea. cost of units completed and transferred out only.b. cost of units started into production.c. cost of units completed and transferred out plus the cost of ending work in process.d. cost of beginning work in process plus the cost of units completed and transferred out.


146. In a production cost report, which one of the following sections is not shown under Costs?a. Unit costs.b. Costs to be accounted for.c. Costs during the period.d. Units accounted for.

Ans: D, LO: 7, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

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ch03

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