Chapter 6-Process Costing Multiple Choice

Chapter 6Process 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 DIF: Easy OBJ: 6-1
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.
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 DIF: Easy OBJ: 6-1
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.
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
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.
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ANS: C DIF: Moderate OBJ: 6-2
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 DIF: Easy 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 DIF: Moderate OBJ: 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 DIF: Moderate OBJ: 6-3
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 DIF: Moderate OBJ: 6-3,6-4
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 DIF: Moderate OBJ: 6-5
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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
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.
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.
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 DIF: Easy OBJ: 6-3,6-4
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 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 DIF: Moderate OBJ: 6-3,6-4
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.
182
b. conversion cost added during the period.
c. cost transferred out to the next department.
d. cost included in beginning inventory.
ANS: A DIF: Easy OBJ: 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.
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.
20. Which of the following is(are) the same between the weighted average and FIFO methods of
calculating EUPs?
Units to EUP Total cost to

account for calculations account for
a. no yes no
b. yes yes yes
c. yes no no
d. yes no yes
ANS: D DIF: Easy OBJ: 6-3,6-4
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.
22. Averaging the total cost of completed beginning inventory and units started and completed over all
units transferred out is known as
a. strict FIFO.
b. modified FIFO.
c. weighted average costing.
183
d. normal costing.
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.
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
25. A process costing system
Calculates average cost Determines total units to

per whole unit account for
a. yes yes
b. no no
c. yes no
d. no yes
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.
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.
184
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 DIF: Easy OBJ: 6-2,6-4
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.
30. Abnormal spoilage can be
continuous discrete
a. yes no
b. no no
c. yes yes
d. no yes
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.
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.
33. Which of the following would be considered a discrete loss in a production process?
185
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
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.
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.
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.
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.
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.
186
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
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
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.
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.
43. Taylor 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 yes yes
187
b. yes yes yes
c. no no yes
d. yes no no
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 DIF: Moderate OBJ: 6-8
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.
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.
47. Long Company transferred 5,500 units to Finished Goods Inventory during September. On September
1, the company had 300 units on hand (40 percent complete as to both material and conversion costs).
On June 30, 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 September was:
a. 5,200.
b. 5,380.
c. 5,500.
d. 6,300.
ANS: A
Units Transferred Out 5,500
Less: Units in Beginning Inventory (300)
Units Started and Completed 5,200
DIF: Easy OBJ: 6-2
188
48. Green Company started 9,000 units in February. 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
DIF: Easy OBJ: 6-2
49. Bush Company had beginning Work in Process Inventory of 5,000 units that were 40 percent complete
as to conversion costs. X 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

DIF: Moderate OBJ: 6-2
50. Dixie Company uses a weighted average process costing system. Material is added at the start of
production. Dixie 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 Dixie 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

189
DIF: Easy OBJ: 6-2
51. Taylor Company uses a weighted average process costing system and started 30,000 units this month.
Taylor 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
DIF: Easy OBJ: 6-2,6-3
52. Kerry Company makes small metal containers. The company began December 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
ANS: D
Beginning Work in Process 250 40% 100

+ Completion of Units in Process 250 60% 150
DIF: Moderate OBJ: 6-2,6-3
53. Mehta Company Co. 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
190
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.
54. Julia Company makes fabric-covered hatboxes. The company began September 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 September
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
+ Ending Work in Process 350 70% 245
Reed Company
Reed Company. has the following information for November:
Beginning Work in Process Inventory

(70% complete as to conversion) 6,000 units
Started 24,000
units
Ending Work in Process Inventory
Beginning WIP Inventory Costs:

Material $23,400
Conversion 50,607
Current Period Costs:

Material $31,500
Conversion 76,956
191
All material is added at the start of the process and all finished products are transferred out.
55. Refer to Reed Company. How many units were transferred out in November?
a. 15,500
b. 18,000
c. 21,500
d. 24,000
ANS: C

DIF: Easy OBJ: 6-2
56. Refer to Reed Company. 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 = $ 1.83
units
57. Refer to Reed Company. 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) $ -
192
$ 76,956
Equivalent Units
Beginning Inventory (6,000 * 1,800
30%)
Started and Completed (15,500) 15,500
Ending Inventory (8,500 * 10%) 850
18,150 equivalent units
Cost per equivalent unit $ 4.24
Holiday Company
The Holiday Company 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 $1,000
Conversion 1,500
Current Costs:
Material $3,200
Conversion 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 $1,170
Material 4,320
Conversion 6,210
Current Period:
Transferred In ?
Material $67,745
Conversion 95,820
58. Refer to Holiday Company. How many units were transferred to Decorating during the month?
a. 600
b. 4,900
c. 5,950
d. 7,000
193
ANS: B
Wreaths completed from BWIP 500

Wreaths started and completed 4400
4900
DIF: Easy OBJ: 6-2
59. Refer to Holiday Company. What was the cost transferred out of Forming during the month?
a. $5,341
b. $6,419
c. $8,245
d. $8,330
ANS: D
Units
Transferred Cost per
Out Eq. Unit Total
4,900 1.70 $8,330
60. Refer to Holiday Company. 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.
of equivalent units in Decorating for material.
a. 7,970
b. 8,000
c. 8,330
d. 8,450
ANS: A
Materials: Decorating: FIFO Units % Eqiv.

Complet Units
e
194
1
Equivalent Units of 7,970

Production
of equivalent units in Decorating for conversion.
a. 7,925
b. 7,985
c. 8,360
d. 8,465
ANS: B
Conversion: Decorating: Units % Equiv.

FIFO Complet Units
e
+ Units Started and 7,700 100% 7,700

Completed

Equivalent Units of
Production 7,985
63. Refer to Holiday Company. 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 Equiv Cost/

Costs Units Equiv
195
Unit
$67,745 7,970 $8.50
64. Refer to Holiday Company. 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 Equiv Cost/

Costs Units Equiv
Unit
$95,820 7,985 $12.00
65. Refer to Holiday Company. 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. $ 960
b. $ 1,380
c. $ 1,860
d. $11,940
ANS: C
Costs to Complete Percent to Cost

Beg Inv Unit Complete per Total
s Unit
Materials 600 20% $8 $960
Conversion 600 10% $15 $900
Total Costs to $1,860
Complete
Ryan Company
Ryan Company adds material at the start to its production process and has the following information
available for March:
196
Started this period 32,000 units
Transferred out ?
66. Refer to Ryan Company. Compute the number of units started and completed in March.
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
67. Refer to Ryan Company. Calculate equivalent units of production for material using FIFO.
a. 32,000
b. 36,800
c. 37,125
d. 39,000
ANS: A
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.
68. Refer to Ryan 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
Beginning Inventory (7,000 * 60%) 4,200
197
69. Refer to Ryan 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
Beginning Inventory (7,000 7,00
units) 0
Started this Period (32,000) 32,00
0
39,00 equivalent
0 units
70. Refer to Ryan 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
Maxwell Company
Maxwell Company adds material at the start of production. The following production information is
available for June:

Started this period 120,000 units
198
Beginning Work in Process Inventory Costs:
Material $24,500
Conversion 68,905
Current Period Costs:

Material $
75,600
Conversion 130,053
71. Refer to Maxwell Company. How many units must be accounted for?
a. 118,200
b. 128,200
c. 130,000
d. 138,200
ANS: C
Units Started 120,000
Total Units 130,000
DIF: Easy OBJ: 6-2
72. Refer to Maxwell 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
DIF: Easy OBJ: 6-2
73. Refer to Maxwell 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 120,000
199
Less: Ending Work in Process 8,200
Units started and completed this period 111,800
DIF: Easy OBJ: 6-2
74. Refer to Maxwell 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
Ending Inventory (8,200 * 25%) 8,200
DIF: Easy OBJ: 6-3
75. Refer to Maxwell 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 0
FIFO)
Ending Inventory (8,200 * 25%) 8,200
DIF: Easy OBJ: 6-4
76. Refer to Maxwell Company. What are the equivalent units for conversion using the weighted average
method?
a. 120,000
b. 123,440
c. 128,360
d. 130,000
200
ANS: C

0 0
+ Completion of Units in 10,00 55% 5,50
Process 0 0
0 0
0 0
Production
77. Refer to Maxwell 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 10,00 0%

(ignored) 0 -
+ Completion of Units in Process 10,00 55% 5,50
0 0
0 0
0 0
78. Refer to Maxwell 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
100,100 130,000 = $ 0.77
201
units per unit
79. Refer to Maxwell 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
ANS: B
Conversion Costs:
Beginning $ 68,905
198,958 128,360 $ 1.55
=
units per unit
80. Refer to Maxwell Company. What is the cost of units completed using the weighted average?
a. $237,510
b. $266,742
c. $278,400
d. $282,576
ANS: D
Units Completed Costs per Equivalent Unit Total

121,800 (1.55 + .77) = $2.32 $282,576
DIF: Difficult OBJ: 6-3
81. Refer to Maxwell 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)
202
130,053 123,860 = $ 1.05
units per unit
82. Refer to Maxwell 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
Units Completed Costs per Equivalent Unit Total

121,800 (1.05 + .63) = $1.68 $204,624
DIF: Difficult OBJ: 6-4
Cherub Co.
Beginning inventory (30% complete as to Material B 700 units
and 60% complete for conversion)
Started this cycle 2,000 units
Ending inventory (50% complete as to Material B and 500 units
80% complete for conversion)
Beginning inventory costs:

Material A $14,270
Material B 5,950
Conversion 5,640
Current Period costs:

Material A $40,000
Material B 70,000
Conversion 98,100
Material A is added at the start of production, while Material B is added uniformly throughout the
process.
83. Refer to Cherub Company. 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 Material A Material B

Beginning Work in Process 700 700
203
Units Started and Completed 1500 1500
Ending Work in Process 500 250
EUP Materials 2700 2450
84. Refer to Cherub Company 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 1500 1500
Ending Work in Process 500 250
EUP Materials 2000 2240
85. Refer to Cherub Company 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 700
Units Started and Completed 1500
Ending Work in Process 400
2600
86. Refer to Cherub Company 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
204
FIFO
Beginning Work in Process (700 * 40%) 280
Units Started and Completed 1500
Ending Work in Process (500 * 400
80%)
2180
87. Refer to Cherub Company 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 $
14,270
0
54,27 2,700 = $ 20.10
0
units per unit
88. Refer to Cherub Company 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 Equivalent Average Cost

(Current Period) Units per EUP
$40,000 2,000 $20.00
EUP for Material B.
a. $20.10
205
b. $31.25
c. $20.00
d. $31.00
ANS: B
Material B Costs Equivalent Average Cost

$70,000 2,240 $31.25
average cost per EUP for Material B.
a. $20.00
b. $31.25
c. $20.10
d. $31.00
ANS: D
Material B Costs Equivalent Average Cost

(Beginning Units per EUP
Inventory and
Current Period)
$75,950 2,450 $31.00
EUP for conversion.
a. $45.50
b. $45.00
c. $43.03
d. $47.59
ANS: B
Conversion Costs Equivalent Average Cost
$98,100 2,180 $45.00
average cost per EUP for conversion.
a. $39.90
b. $45.00
206
c. $43.03
d. $47.59
ANS: A
Conversion Costs Equivalent Average Cost
(Beginning WIP Units per EUP
and Current
Period)
$98,100 + $5,640 2,600 $39.90
Talmidge Company
The following information is available for Talmidge Company for the current year:
Beginning Work in Process Costs of Beginning Work in Process:

(75% complete) 14,500 units Material $25,100
Started 75,000 units Conversion 50,000
Ending Work in Process Current Costs:
(60% complete) 16,000 units Material $120,000
Abnormal spoilage 2,500 units Conversion 300,000
Normal spoilage 5,000 units
(continuous)
Transferred out 66,000 units
All materials are added at the start of production.
93. Refer to Talmidge Company. Using weighted average, what are equivalent units for material?
a. 82,000
b. 89,500
c. 84,500
d. 70,000
ANS: C
Materials: Weighted Average Units % Complete Eq. Units

0 0
0 0
0 0
+ Abnormal Spoilage 2,50 100% 2,50
0 0
DIF: Easy OBJ: 6-2,6-3,6-8
207
94. Refer to Talmidge Company. Using weighted average, what are equivalent units for conversion costs?
a. 80,600
b. 78,100
c. 83,100
d. 75,600
ANS: B
Conversion: Weighted Average Units % Complete Eq Units

0 0
0 0
0 0
0 0
DIF: Easy OBJ: 6-2,6-3,6-8
95. Refer to Talmidge Company. What is the cost per equivalent unit for material using weighted average?
a. $1.72
b. $1.62
c. $1.77
d. $2.07
ANS: A
Weighted Average: Materials

Beginning $
25,100
0
145,10 84,500 = $
0 1.72
units per unit
96. Refer to Talmidge Company. What is the cost per equivalent unit for conversion costs using weighted
average?
a. $4.62
b. $4.21
c. $4.48
d. $4.34
ANS: C
208
Weighted Average: Conversion
Beginning $
50,000
0
350,00 78,100 = $
0 4.48
units per unit
97. Refer to Talmidge Company. What is the cost assigned to normal spoilage using weighted average?
a. $31,000
b. $15,500
c. $30,850
d. None of the responses are correct
ANS: D
No costs are assigned to normal, continuous spoilage. Higher costs are assigned to good units
produced.
DIF: Easy OBJ: 6-8
98. Refer to Talmidge Company. Assume that the cost per EUP for material and conversion are $1.75 and
$4.55, respectively. What is the cost assigned to ending Work in Process?
a. $100,800
b. $87,430
c. $103,180
d. $71,680
ANS: D
Equivalent Cost per Total

Units Equivalent Unit
16,000 $1.75 $28,000
9,600 $4.55 $43,680
$71,680
99. Refer to Talmidge Company. Using FIFO, what are equivalent units for material?
a. 75,000
b. 72,500
c. 84,500
d. 70,000
209
ANS: D
Materials: FIFO
Beginning Work in Process 0%
- -
0 0
0 0
0 0
DIF: Easy OBJ: 6-2,6-4,6-8
100. Refer to Talmidge Company. Using FIFO, what are equivalent units for conversion costs?
a. 72,225
b. 67,225
c. 69,725
d. 78,100
ANS: B
Conversion: FIFO
0 5
0 0
0 0
0 0
DIF: Easy OBJ: 6-2,6-3,6-8
101. Refer to Talmidge Company. Using FIFO, what is the cost per equivalent unit for material?
a. $1.42
b. $1.66
c. $1.71
d. $1.60
ANS: C
FIFO: Materials
Current Period $
120,000
120,00 70,000 = $
210
0 1.71
units per unit
102. Refer to Talmidge Company. Using FIFO, what is the cost per equivalent unit for conversion costs?
a. $4.46
b. $4.15
c. $4.30
d. $3.84
ANS: A
FIFO: Conversion
Current Period $
300,000
300,00 67,225 = $
0 4.46
units per unit
103. Refer to Talmidge Company. Assume that the FIFO EUP cost for material and conversion are $1.50
and $4.75, respectively. Using FIFO what is the total cost assigned to the units transferred out?
a. $414,194
b. $339,094
c. $445,444
d. $396,975
ANS: A
Transferred Out Units: FIFO Equiv Cost per Total

Units Equiv
Unit
0
+ Completion of Beginning Inventory (14,500 * 3,625 4.75 17,21
25%) 9
+Units Started and Completed 51,50 6.25 321,87
0 5
DIF: Difficult OBJ: 6-2,6-4
Bowman Company
Bowman Company has the following information for July:
211
Units started 100,000 units
Beginning Work in Process: (35% complete) 20,000 units
Normal spoilage (discrete) 3,500 units
Abnormal spoilage 5,000 units
Ending Work in Process: (70% complete) 14,500 units
Material $15,000
Conversion 10,000
All materials are added at the start of the production process. Bowman Company inspects goods at 75
percent completion as to conversion.
104. Refer to Bowman Company. What are equivalent units of production for material, assuming FIFO?
a. 100,000
b. 96,500
c. 95,000
d. 120,000
ANS: A
Materials: FIFO
Beginning Work in Process 0%
- -
0 0
+ Normal Spoilage--Discrete 3,50 100% 3,50
0 0
0 0
0 0
DIF: Moderate OBJ: 6-2,6-4,6-8
105. Refer to Bowman Company. What are equivalent units of production for conversion costs, assuming
FIFO?
a. 108,900
b. 103,900
c. 108,650
d. 106,525
ANS: D
Conversion: FIFO
0 0
0 0
+Normal Spoilage--Discrete 3,50 75% 2,62
0 5
212
0 0
0 0
106. Refer to Bowman Company. Assume that the costs per EUP for material and conversion are $1.00 and
$1.50, respectively. What is the amount of the period cost for July using FIFO?
a. $0
b. $9,375
c. $10,625
d. $12,500
ANS: C
Abnormal spoilage is a period cost.
Materials 5,000 * $1.00/unit $5,000

Conversion Costs 3,750 * $1.50/unit 5,625
Total Abnormal Spoilage $10,625
$1.50, respectively. Using FIFO, what is the total cost assigned to the transferred-out units (rounded to
the nearest dollar)?
a. $245,750
b. $244,438
c. $237,000
d. $224,938
ANS: B
Transferred Out Units: FIFO
0
+ Completion of Beginning Inventory (20,000 * 13,00 1.50 19,50
65%) 0 0
+ Units Started and Completed 77,00 2.50 192,50
0 0
+Normal Spoilage--Discrete-Materials 3,50 1.00 3,50
0 0
+Normal Spoilage--Discrete- 2,62 1.50 3,93
Conversion 5 8
DIF: Difficult OBJ: 6-2,6-4,6-8
213
108. Refer to Bowman Company. What are equivalent units of production for material assuming weighted
average is used?
a. 107,000
b. 116,500
c. 120,000
d. 115,000
ANS: C
Materials: Weighted
Average
0 0
0 0
+ Normal Spoilage--Discrete 3,50 100% 3,50
0 0
0 0
0 0
DIF: Easy OBJ: 6-2,6-3,6-8
109. Refer to Bowman Company. What are equivalent units of production for conversion costs assuming
weighted average is used?
a. 113,525
b. 114,400
c. 114,775
d. 115,650
ANS: A
Conversion: Weighted
Average
0
0
+Normal Spoilage--Discrete 3,500 75% 2,62
5
0
0
Production
DIF: Easy OBJ: 6-2,6-3,6-8
214
$1.50, respectively. What is the cost assigned to normal spoilage, using weighted average, and where is
it assigned?
Value Assigned To
a. $7,437.50 Units transferred out and Ending Inventory

b. $7,437.50 Units transferred out
c. $8,750.00 Units transferred out and Ending Inventory
d. $8,750.00 Units transferred out
ANS: B
Equivalen Cost per Total
t Units Equivalent Unit
3,500 $1.00 $3,500.0
0
2,625 $1.50 3,937.50
$7,437.5
0
This amount is transferred out.
DIF: Easy OBJ: 6-2,6-3,6-8
$1.50, respectively. Assuming that weighted average is used, what is the cost assigned to ending
inventory?
a. $29,725.00
b. $37,162.50
c. $38,475.00
d. $36,250.00
ANS: A
Ending Inventory: Weighted

Average
Materials 14,50 $1.00 $ 14,500.00
0
Conversion (14,500 * 70%) 10,15 1.50 15,225.00
0
Total $ 29,725.00
Jones Company
The following information is available for Jones Company for April:
Started this month 80,000 units

Beginning WIP
(40% complete) 7,500 units
215
Normal spoilage (discrete) 1,100 units
Abnormal spoilage 900 units
Ending WIP
(70% complete) 13,000 units

Material $10,400
Conversion 13,800
Current Costs:
Material $120,00
0
Conversion 350,000
All materials are added at the start of production and the inspection point is at the end of the process.
112. Refer to Jones Company. What are equivalent units of production for material using FIFO?
a. 80,000
b. 79,100
c. 78,900
d. 87,500
ANS: A
Materials: FIFO
Beginning Work in Process - 0% -

65,
+ Units Started and Completed 000 100% 65,000
13,
+ Ending Work in Process 000 100% 13,000
1,
+ Normal Spoilage (discrete) 100 100% 1,100
+ Abnormal Spoilage 900 100% 900

113. Refer to Jones Company. What are equivalent units of production for conversion costs using FIFO?
a. 79,700
b. 79,500
c. 81,100
d. 80,600
ANS: D
Conversion: FIFO %
Units Comple EUP
te
216
7,
Beginning Work in Process 500 60% 4,500
65,
13,
1,

0
114. Refer to Jones Company. What are equivalent units of production for material using weighted average?
a. 86,600
b. 87,500
c. 86,400
d. 85,500
ANS: B
Materials: Weighted Average Units % EUP

Comple
te

65,
13,
1,

DIF: Easy OBJ: 6-2,6-3,6-8

115. Refer to Jones Company. What are equivalent units of production for conversion costs using weighted
average?
a. 83,600
b. 82,700
c. 82,500
d. 81,600
ANS: A
Conversion: FIFO %
217
Units Comple EUP
te
7,
Beginning Work in Process 500 100% 7,500
65,
13,
1,

0
DIF: Easy OBJ: 6-2,6-3,6-8
116. Refer to Jones Company. What is cost per equivalent unit for material using FIFO?
a. $1.63
b. $1.37
c. $1.50
d. $1.56
ANS: C
FIFO:
Materials
Current $ 120,000
Period
120,000 80,000 $ 1.50
=
units per unit
117. Refer to Jones Company. What is cost per equivalent unit for conversion costs using FIFO?
a. $4.00
b. $4.19
c. $4.34
d. $4.38
ANS: C
FIFO:
Conversion
Current $
Period 350,000
350,00 80,600 $
218
0 = 4.34
units per
unit
118. Refer to Jones Company. What is cost per equivalent unit for material using weighted average?
a. $1.49
b. $1.63
c. $1.56
d. $1.44
ANS: A
Weighted Average:
Materials
Beginning $
10,400
Current 120,00
Period 0
130,40 87,500 = $ 1.49
0
units per unit
119. Refer to Jones Company. What is cost per equivalent unit for conversion costs using weighted
average?
a. $4.19
b. $4.41
c. $4.55
d. $4.35
ANS: D
Weighted Average:
Conversion
Beginning $
13,800
Current 350,00
Period 0
363,80 83,600 = $
0 4.35
units per
unit
219
120. Refer to Jones Company. What is the cost assigned to ending inventory using FIFO?
a. $75,920
b. $58,994
c. $56,420
d. $53,144
ANS: B
Ending Inventory: FIFO
Materials 13,00 $ 1.50 $ 19,500.00

0
9,1
Conversion (13,000 * 70%) 00 4.34 39,494.00
Total $ 58,994.00
121. Refer to Jones Company. What is the cost assigned to abnormal spoilage using FIFO?
a. $1,350
b. $3,906
c. $5,256
d. $6,424
ANS: C
Abnormal Price per

Spoiled Units Equivalent
Unit Total
900 $5.84 $5,256
122. Refer to Jones Company. What is the cost assigned to normal spoilage and how is it classified using
weighted average?
a. $6,193 allocated between WIP and Transferred Out
b. $6,424 allocated between WIP and Transferred Out
c. $6,193 assigned to loss account
d. $6,424 assigned to units Transferred Out
ANS: D
Normal Price per

Spoiled Equivalen
Units t Unit Total
1,100 $5.84 $6,424
220
Transferred
Out
123. Refer to Jones Company. What is the total cost assigned to goods transferred out using weighted
average?
a. $435,080
b. $429,824
c. $428,656
d. $423,400
ANS: B
Price per
Goods Equivalent
Transferred Unit Total
Out
73,600 $5.84 $429,824
DIF: Difficult OBJ: 6-2,6-3
221

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Chapter 6-Process Costing Multiple Choice

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Chapter 6Process Costing

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

ANS: C DIF: Easy OBJ: 6-1

2. Process costing is used in companies that

ANS: C DIF: Easy OBJ: 6-1

3. A producer of ________ would not use a process costing system.

ANS: D DIF: Easy OBJ: 6-1

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

ANS: C DIF: Easy OBJ: 6-1

ANS: D DIF: Easy OBJ: 6-1

6. Equivalent units of production are equal to the

ANS: B DIF: Easy OBJ: 6-2

ANS: D DIF: Moderate OBJ: 6-3

ANS: A DIF: Moderate OBJ: 6-3

ANS: B DIF: Moderate OBJ: 6-3,6-4

ANS: B DIF: Moderate OBJ: 6-5

ANS: B DIF: Easy OBJ: 6-4

ANS: B DIF: Moderate OBJ: 6-4

ANS: B DIF: Easy OBJ: 6-4

ANS: A DIF: Easy OBJ: 6-3,6-4

ANS: D DIF: Moderate OBJ: 6-3,6-4

ANS: A DIF: Easy OBJ: 6-3

ANS: C DIF: Easy OBJ: 6-3

19. Transferred-in cost represents the cost from

ANS: C DIF: Easy OBJ: 6-3

Units to EUP Total cost to

ANS: D DIF: Easy OBJ: 6-3,6-4

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

ANS: C DIF: Easy OBJ: 6-1

ANS: B DIF: Moderate OBJ: 6-3

23. A process costing system

ANS: B DIF: Easy OBJ: 6-2

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

Calculates EUPs Assigns costs to inventories

ANS: C DIF: Easy OBJ: 6-3

25. A process costing system

Calculates average cost Determines total units to

ANS: D DIF: Easy OBJ: 6-2

26. A hybrid costing system combines characteristics of

ANS: B DIF: Easy OBJ: 6-6

27. When standard costs are used in process costing,

ANS: B DIF: Easy OBJ: 6-2,6-4

29. The cost of abnormal continuous losses is

ANS: C DIF: Easy OBJ: 6-8

30. Abnormal spoilage can be

ANS: C DIF: Easy OBJ: 6-8

ANS: D DIF: Moderate OBJ: 6-8

32. A continuous loss

ANS: D DIF: Easy OBJ: 6-8

ANS: C DIF: Easy OBJ: 6-8

34. The method of neglect handles spoilage that is

ANS: D DIF: Moderate OBJ: 6-8

35. The cost of normal discrete losses is

ANS: A DIF: Easy OBJ: 6-8

36. The cost of abnormal continuous losses is

ANS: C DIF: Easy OBJ: 6-8

37. Normal spoilage units resulting from a continuous process

ANS: B DIF: Easy OBJ: 6-8

ANS: D DIF: Moderate OBJ: 6-8

ANS: D DIF: Easy OBJ: 6-8

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

ANS: D DIF: Easy OBJ: 6-8

ANS: D DIF: Moderate OBJ: 6-8