Process Costing[Document title]

NAME:__________________________________________________ Section:_________ Score:______

Part 1. Write the correct answer on the answer sheet.

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

environments?
a. standard
b. actual
c. process
d. job order

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

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.

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

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.
9. The first step in determining the cost per EUP per cost component under the weighted average method is
to
 Process Costing[Document title]

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.

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.

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.

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.

16. Material is added at the beginning of a process in a process costing system. The beginning Work in
Process Inventory for the process was 30 percent complete as to conversion costs. Using the FIFO method
of costing, the number of equivalent units of material for the process during this period is equal to the
a. beginning inventory this period for the process.
b. units started and completed this period in the process.
c. units started this period in the process plus the beginning Work in Process Inventory.
d. units started and completed this period plus the units in ending Work in Process Inventory.
17. In a cost of production report using process costing, transferred-in costs are similar to the
a. cost of material added at the beginning of production.
b. conversion cost added during the period.
c. cost transferred out to the next department.
 Process Costing[Document title]

d. cost included in beginning inventory.

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

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 work-in-process inventory and units started and
completed over all units transferred out is known as
a. strict FIFO.
b. modified FIFO.
c. weighted average costing.
d. normal costing.

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
 Process Costing[Document title]

b. no no
c. yes no
d. no yes

Part 2. Supply the answer. Support with solution in good form (in Yellow Paper)
1.Hulk Company uses a weighted average process costing system and started 30,000 units this month. Hulk 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?

2.Fisher Company makes small metal containers. The company began October with 300 containers in process
that were 35 percent complete as to material and 45 percent complete as to conversion costs. During the
month, 6,000 containers were started. At month end, 1,900 containers were still in process (40 percent
complete as to material and 75 percent complete as to conversion costs). Using the weighted average
method, what are the equivalent units for conversion costs?

Nice Corporation

Nice Corporation. has the following information for August:

Beginning Work in Process Inventory

(70% complete as to conversion) 6,000 units
Started 24,000 units
Ending Work in Process Inventory
(10% complete as to conversion) 8,500 units

Beginning WIP Inventory Costs:

Material P23,400
Conversion 50,607

Current Period Costs:

Material P31,500
Conversion 76,956

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

3. Refer to Nice Corporation. How many units were transferred out in August?
4.Assume that weighted average process costing is used. What is the cost per equivalent unit for material?
5. Refer to Nice Corporation. Assume that FIFO process costing is used. What is the cost per equivalent
unit for conversion?

Beautiful Creations Corporation

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

Beginning Work in Process Costs:

Material P1,000
Conversion 1,500
 Process Costing[Document title]

Current Costs:
Material P3,200
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 P1,170
Material 4,320
Conversion 6,210
Current Period:
Transferred In ?
Material P67,745
Conversion 95,820

6. Refer to Beautiful Creations Corporation. How many units were transferred to Decorating during the
month?
7. What was the cost transferred out of Forming during the month?
8. Refer to Beautiful Creations Corporation. Assume 8,000 units were transferred to Decorating. Compute the
number of equivalent units as to costs in Decorating for the transferred-in cost component.
9. Assume 8,000 units were transferred to Decorating. Compute the number of equivalent units in Decorating
for material.

10. Assume 8,000 units were transferred to Decorating. Compute the number of equivalent units in Decorating
for conversion.
11. Assume that 8,000 units were transferred to Decorating at a total cost of P16,000. What is the material cost
per equivalent unit in Decorating?
12. Assume that 8,000 units were transferred to Decorating at a total cost of P16,000. What is the conversion
cost per equivalent unit in Decorating?
13. the material cost per EUP is P8.00 and the conversion cost per EUP is P15 in Decorating. What is the cost
of completing the units in beginning inventory?
14.Jackson Company transferred 6,000 units to Finished Goods Inventory during August. On August 1, the
company had 400 units on hand (35 percent complete as to both material and conversion costs). On
August 31, the company had 750 units (20 percent complete as to material and 30 percent complete as to
conversion costs). The number of units started and completed during August was:
15. Daniels Company started 9,000 units in March. The company transferred out 7,000 finished units and
ended the period with 3,500 units that were 40 percent complete as to both material and conversion costs.
Beginning Work in Process Inventory units were _______________
Process Costing[Document title]

NAME:______________________________________ SECTION:_________SCORE:________

1 6 11 16 21 1 6 11

2 7 12 17 22 2 7 12

3 8 13 18 23 3 8 13

4 9 14 19 24 4 9 14

5 10 15 20 25 5 10 15