MULTIPLE CHOICES-THEORETICAL (page 441-442)

1. If a company reports two different unit costs for goods transferred to the next department, it is reasonable to
assume that:
a. a FIFO costing method is used
b. an average costing method is used
c. errors must have occurred in recording costs
d. a LIFO costing method is used
2. In order to compute equivalent units of production using the FIFO method, work for the period must be broken
down to units:
a. started and completed during the period
b. completed during the period and units in ending inventory
c. completed from beginning inventory, started and completed during the month, and units in ending
inventory
d. started during the period and units transferred out during the period
3. The FIFO method will produce the same cost of goods manufactured amount as the average cost method when:
a. there is no beginning inventory
b. there is no ending inventory
c. beginning and ending inventories are each 50% complete
d. beginning and ending inventories are each 100% complete
4. The FIFO method differs from the average cost method in that FIFO:
a. allocates costs based on whole units, but the average cost method uses equivalent units
b. considers the stage of completion of beginning work in process in computing equivalent production, but the
average cost method does not
c. does not consider the stage of completion of beginning work in process in computing equivalent production,
but the average cost method does
d. is applicable only to those companies using the FIFO costing method, but the average method may be used
with any costing method
5. In computing the current periods manufacturing cost per equivalent unit, the FIFO method of process costing
considers current period costs
a. Only
b. Plus cost of beginning work in process inventory
c. Less cost of beginning work in process inventory
d. Plus cost of ending work in process inventory
6. In Process 2, Material G is added when a batch is 60% complete. Ending work in process unit, which are 50%
complete, would be included in computation of equivalent units for:
Conversion costs Material G
a. Yes No
b. No Yes
c. No No
d. Yes Yes
7. A process costing system was used for a department that began operations in January 2010. Approximately the
same number of physical units, at the same degree of completion, was in work in process at the end of both
January and February. Monthly conversion costs are allocated between ending work in process and units
completed. Compared to the FIFO method, would the average method use the same or a greater number of
equivalent units to calculate the monthly allocations?
Equivalent units for average method

Compared to FIFO

January February

a. Same Same
b. Greater number Greater number
c. Greater number Same
d. Same Greater number
MULTIPLE CHOICES-COMPUTATIONAL (pages 443-450)

1. Sony Manufacturing Company uses a process cost system to manufacture laptop computers. The following
information summarizes operations relating to laptop computer model SS88 during the quarter ending March
31, 2014:
Units Direct Materials

_______________________________________________________________________________________________

Work in process inventory, January 1 100 P50,000

Started during the quarter 500
Completed during the quarter 400
Work in process inventory, March 31 200
Costs added during the quarter P720,000

______________________________________________________________________________________________

Beginning work in process inventory was 50% complete for direct materials. Ending work in process inventory was
75% complete for direct materials.

What were the equivalent units of production under the FIFO method with regard to materials for March?
a. 450
b. 500
c. 550
d. 600
2. Using the data in Number 1, what is the total value of material costs in ending work in process inventory using
the FIFO unit cost, inventory valuation method?
a. P183,000
b. P194,000
c. P210,000
d. P216,000
3. The following information is given for the final producing department of the German Company:
Beginning work in process inventory, Jan,1
(40% complete as to labor) 1,000 units
Transferred in during month 30,000 units
Transferred out during month 27,000 units
Ending work in process (70% complete as to labor) 4,000 units
Labor cost in the beginning work in process P3,600
Labor costs incurred during month P238,140
____________________________________________________________________________________________

What is the labor cost in the units transferred out of the department during the month?
a. P219,060
b. P219,300
c. P213,676
d. P213,390
4. The following information is given for the Assembling Department of the Danny Company, a metal producer, for
the month of June:
Beginning work in process inventory
(1/3 complete as to overhead) 3,300 units
Transferred in during month 15,200 units
Transferred out during month 16,500 units
Ending work in process inventory
(3/4 complete as to overhead) 2,000 units
Overhead cost incurred in beginning work in process P2,332
Overhead cost incurred during month P38,025
 What is the overhead cost of the units transferred out of the department during the month?
a. P36,892
b. P32,032
c. P34,650
d. P36,892

Questions 5 through 9 are based on the following data:

Tom Manufacturing Company uses the FIFO costing method to account for their inventories. The following
information pertains to operations for the month of May 2014:
________________________________________________________________________________________
Beginning work in process inventory, May 1 16,000 units
Started in production during May 100,000 units
Completed production during May 92,000 units
Ending work in process inventory, May 31 24,000 units
_________________________________________________________________________________________

The beginning inventory was 60% complete for materials and 201% complete for conversion costs. The ending
Inventory was 90% complete for materials and 40% complete for conversion costs.

Costs pertaining to the month of May are as follows:

The beginning inventory costs are: materials, P54,560; direct labor, P20,320; and overhead, P15,240.
Costs incurred during May are: materials used, P468,000; direct labor, P182,880; and overhead,P391,160.
5. What are the equivalent units of production for materials?
a. 97,600 units
b. 104,000 units
c. 107,200 units
d. 108,000 units
6. What are the equivalent units of production for conversion costs?
a. 85,600 units
b. 88,800 units
c. 95,200 units
d. 98,400 units
7. What is the equivalent unit cost of materials for May?
a. P4.12
b. P4.50
c. P4.60
d. P4.80
8. What is the equivalent unit conversion cost for May?
a. P5.65
b. P5.83
c. P6.00
d. P6.20
9. What is the total cost of units in the ending work in process inventory at May 31?
a. P153,168
b. P145,800
c. P155,328
d. P156,960

Items 10 and 11 are based on the following information:

The following data has been gathered from the records of Gerry Manufacturing Company for August 2014.
The company uses the FIFO process costing method. Materials are added at the beginning of processing; overhead is
applied on a direct labor basis. The units are transferred to a second department for packaging.
Beginning work in process inventory
(40% complete as to conversion costs) 5,000 units
Started in August 90,400 units
Ending work in process inventory 4,000 units
(70% complete as to conversion cost)
Materials cost incurred in August P433,920
Conversion costs incurred in August P115,250

Beginning inventory cost totaled P24,875.

10. What is the cost of units transferred out to the Packaging Department in August?
a. P551,345
b. P522,720
c. P547,595
d. P526,470
11. What is the cost of Augusts ending work in process inventory?
a. P22,700
b. P19,200
c. P23,700
d. P22,000
Items 12 through 16 are based on the following:
Four Seasons Company is a contract manufacturer for the Mayon Dressing Company. Four Seasons uses a FIFO
method to account for its salad dressing. All materials are added at the start of the process. Mayon provides
reusable vats to Four Seasons for the completed product to be shipped to Mayon for bottling so Four Seasons
incurs no packaging costs. April 2014 production and cost data for Four Seasons Company is as follows:
__________________________________________________________________________________________
Gallons of dressing in beginning inventory 36,000
Gallons transferred out during April 242,000
Gallons of dressing ending inventory 23,500
Costs of beginning inventory:
Direct labor 26,100
Overhead 70,300
Costs incurred in April:
Direct materials P1,131,435
Direct labor 451,728
Overhead 773,330
_________________________________________________________________________________________
The beginning and ending inventories had the following stages of completion for labor and overhead:
_________________________________________________________________________________________
Beginning Inventory Ending Inventory
_________________________________________________________________________________________
Direct Labor 35% 25%
Overhead 60% 30%
_________________________________________________________________________________________
12. How many gallons of dressing ingredients were started in April?
a. 229,500
b. 220,500
c. 229,000
d. 230,000
13. What is the total cost of