Deck 6: Process Costing Systems

Question 1

In the weighted average method, cost per equivalent unit is often calculated separately for materials costs and conversion costs.

Answer 1

True

Question 2

In the weighted average method, costs from beginning work in process are averaged with costs incurred during the current period and then allocated to units completed and ending work in process.

Answer 2

True

Question 3

Conversion costs must be incurred uniformly throughout the production process to calculate equivalent units.

Answer 3

False

Question 4

When using the weighted average method to calculate cost per equivalent unit, the cost is calculated as current period costs / equivalent units for total work.

Question 5

In a process costing system, direct materials are added during every production process.

Question 6

Conversion costs refer to the cost of direct labor and production overhead.

Question 7

Conversion costs may be separated into direct labor and overhead when it is relatively easy to track direct labor and the use of labor occurs in a different pattern than the use of overhead resources.

Question 8

Managers can only use the FIFO method in process costing if it is reflected in the physical flow of units.

Question 9

All spoilage in a process costing system is considered abnormal spoilage.

Question 10

In process costing using the FIFO method, the costs of units in beginning work in process are merged with current period costs to calculate the cost per equivalent unit.

Question 11

Process costing information is useful for measuring and monitoring production processes.

Question 12

In calculating the cost per equivalent unit using FIFO costing, the appropriate formula is current period costs / equivalent units for work performed this period.

Question 13

In a process costing system with multiple production departments, costs from the first department's ending work in process are transferred to the second department's finished goods before going into the second department's work in process.

Question 14

Equivalent units measure the resources used in partially completed units relative to the resources needed to complete the units.

Question 15

When an organisation uses a long-term procurement contract, direct labor costs are normally stable over long periods of time.

Question 16

In a process costing system, normal spoilage is allocated to good units produced.

Question 17

Process costing is simplified when a company uses just-in-time inventory methods.

Question 18

Spoilage costs from an unusual natural disaster would be allocated to good units produced in a process costing system.

Question 19

Using process costing managers can calculate costs per equivalent unit using the weighted average or the FIFO method.

Question 20

Equivalent units are calculated for work in process and finished goods inventory.

Question 21

Hendrix Ltd employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities: Using the FIFO method, the cost per equivalent unit for materials used during July was

A) $9.90
B) $9.80
C) $11.11
D) $10.00

Question 22

On 1^st September, Kelita Ltd had 20,000 units in process, which were 30% completed. Materials are added at the beginning of the process. During the month 160,000 units were started and 170,000 completed. Ending work in process was 50% complete. By what amount would the equivalent units of materials differ if weighted average were used instead of FIFO?

A) 20,000 more
B) -0-
C) 6,000 more
D) 14,000 less

Question 23

Salmon Manufacturing Ltd uses a process costing system. Direct materials are added at the beginning of the process. During January, Department Q had a beginning inventory of 2,000 units, 25% complete for conversion costs. During the month 14,000 units were started and there were 1,000 units in ending inventory, 60% complete for conversion costs. Using weighted average process costing, the equivalent units for conversion costs for the month were

A) 14,100
B) 14,000
C) 16,000
D) 15,600

Question 24

Hendrix Ltd employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities: Using the FIFO method, the number of equivalent units of conversion costs was

A) 14,400
B) 14,550
C) 14,850
D) 14,700

Question 25

Salmon Manufacturing Ltd uses a process costing system. Direct materials are added at the beginning of the process. During January, Department Q had a beginning inventory of 2,000 units, 25% complete for conversion costs. During the month 14,000 units were started and there were 1,000 units in ending inventory, 60% complete for conversion costs. Using weighted average process costing, the equivalent units for direct material for the month were

A) 13,600
B) 14,000
C) 16,000
D) 15,600

Question 26

Hendrix Ltd employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities: Using the FIFO method, the number of units started and completed in July was

A) 14,250
B) 15,000
C) 13,500
D) 15,750

Question 27

Hendrix Ltd employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities: Using the FIFO method, the cost of goods completed and transferred out during July was

A) $225,150
B) $225,060
C) $213,300
D) $213,000

Question 28

Gholson Ltd employs a process costing system in which direct materials are added at the beginning of the process. Direct material costs from the prior period for beginning work in process are $1,250. The current period's direct material costs total $31,500. The company began the period with 500 units, 70% complete, started 10,500 units, and finished the period with 1,000 units, 40% complete. Using the weighted average method, the direct material cost per equivalent unit for the period is

A) $3.00
B) $2.98
C) $3.20
D) $2.55

Question 29

Assume there were 6,000 units in beginning work in process, 60% complete. 20,000 units were completed during the month. Ending work in process is 40% complete, which is equivalent to 3,200 units for conversion costs. Materials are added at the beginning of the process. The FIFO method is used. The number of equivalent units of conversion costs is

A) 23,200
B) 17,680
C) 19,600
D) 21,280

Question 30

Hendrix Ltd employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities: Using the weighted average method, the cost of the ending work in process inventory for July was

A) $18,480
B) $18,540
C) $18,330
D) $18,390

Question 31

Hendrix Ltd employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities: Using the weighted average method, the cost of the goods completed and transferred out was

A) $225,150
B) $225,060
C) $213,300
D) $213,000

Question 32

Hendrix Ltd employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities: Using the weighted average method, the number of equivalent units of material was

A) 15,750
B) 14,250
C) 15,000
D) 13,500

Question 33

Salmon Manufacturing Ltd uses a process costing system. Direct materials are added at the beginning of the process. During January, Department Q had a beginning inventory of 2,000 units, 25% complete for conversion costs. During the month 14,000 units were started and there were 1,000 units in ending inventory, 60% complete for conversion costs. Using FIFO process costing, the equivalent units for direct materials for the month were

A) 13,600
B) 14,000
C) 16,000
D) 15,600

Question 34

Assume there were 6,000 units in beginning work in process, 60% complete. 20,000 units were completed during the month. Ending work in process is 40% complete, which is equivalent to 3,200 units for conversion costs. Materials are added at the beginning of the process. The FIFO method is used. The number of units started this month is

A) 20,000 units
B) 22,000 units
C) 28,000 units
D) 15,280 units

Question 35

Standard cost equivalent units are calculated the same way as FIFO equivalent units.

Question 36

When standard costs are used as benchmarks, they are compared to actual costs using either weighted average or FIFO costs.

Question 37

Hendrix Ltd employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities: Using the weighted average method, the cost per equivalent unit for conversion costs was

A) $5.80
B) $5.90
C) $6.00
D) $6.10

Question 38

Perry Ltd started 6,000 units during the month of March. 600 units were in the beginning work in process inventory and 400 units in the ending work in process inventory. Units completed and transferred out during March will be

A) 6,000
B) 6,400
C) 6,200
D) 5,400

Question 39

Assume that ending work in process is 8,000 units, 20% complete, and that 20,000 units were started during the month. The beginning work in process was 75% complete. Materials are added at the beginning of the process, and the cost of materials are added during the month was $61,500. Using the weighted average method, materials are allocated at $4.00 per equivalent unit. The cost of material included in the beginning work in process from last month was

A) $18,500
B) $20,000
C) $34,500
D) None of the above

Question 40

Gholson Ltd employs a process costing system in which direct materials are added at the beginning of the process. Direct material costs from the prior period for beginning work in process are $1,250. The current period's direct material costs total $31,500. The company began the period with 500 units, 70% complete, started 10,500 units, and finished the period with 1,000 units, 40% complete. Using a FIFO system, the direct material cost per equivalent unit is

A) $3.00
B) $2.98
C) $3.20
D) $2.55

Question 41

Zuniga Ltd uses a process costing system. During May, 1,200 units were transferred into Department 2 at a cost of $38,040. Direct materials are added at the beginning of the process. Additionally: Using the weighted average method, the total transferred-in costs for the month were

A) $38,040
B) $40,600
C) $30,800
D) $33,360

Question 42

Zuniga Ltd uses a process costing system. During May, 1,200 units were transferred into Department 2 at a cost of $38,040. Direct materials are added at the beginning of the process. Additionally: Using the weighted average method, the cost of the units transferred out was

A) $53,570
B) $44,710
C) $52,261
D) $66,219

Question 43

Zuniga Ltd uses a process costing system. During May, 1,200 units were transferred into Department 2 at a cost of $38,040. Direct materials are added at the beginning of the process. Additionally: Using the FIFO method, the equivalent units of material were

A) 1,200
B) 1,100
C) 850
D) 1,450

Question 44

Materials are added at the beginning of the process. The beginning work in process is 30% complete. The total equivalent units for direct materials for the period using FIFO is equal to

A) The units in beginning work in process
B) The units started this period
C) The units started plus 70% of the units in beginning work in process
D) The units started and completed plus the beginning work in process

Question 45

Zuniga Ltd uses a process costing system. During May, 1,200 units were transferred into Department 2 at a cost of $38,040. Direct materials are added at the beginning of the process. Additionally: Using the weighted average method, the cost of the ending work in process inventory was

A) $13,958
B) $13,944
C) $12,663
D) $12,649

Question 46

A costing system that determines an average cost for all units of product in a particular time period is a

A) Job costing system
B) Batch costing system
C) Process costing system
D) Direct costing system

Question 47

In a process costing system, transferred-in costs

A) Are computed for all production but not reported in the cost of process costing report
B) Usually do not include any indirect costs
C) Are the costs recorded in preceding departments
D) Are the costs of the completed units

Question 48

Production costs during the current period are kept separate from that of the previous period in the

A) FIFO method
B) Job costing method
C) Just-in-time method
D) Weighted average method

Question 49

Assume a company's beginning work in process consists of 20,000 units, 40% complete. Materials are added at the beginning of the process. During the month, 90,000 units are transferred in. The ending work in process consists of 10,000 units, 50% complete. Using the weighted average method, the equivalent units of production for the month are

A) 110,000/100,000/65,000
B) 90,000/100,000/97,000
C) 110,000/110,000,105,000
D) 105,000/60,000/100,000

Question 50

Because the weighted average and FIFO methods treat beginning inventory differently, if a firm has beginning inventory in a process costing system and the FIFO method is used, it will

A) Always have a higher number of equivalent units of production for conversion costs than weighted the average method
B) Always have a lower number of equivalent units of production for conversion costs than the weighted average method
C) Always have a higher cost per equivalent unit than the weighted average method for materials
D) Always have a lower cost per equivalent unit than the weighted average method for conversion costs

Question 51

Equivalent whole units of production

A) Are the number of whole units produced in a batch?
B) Include the number of units started and completed during the period
C) Compares the number of units that should have been completed with that actually produced
D) Consists of all units completed this period

Question 52

Which type of company would most likely use a process costing system?

A) Chemical producer
B) Custom furniture maker
C) Printer
D) Ship builder

Question 53

Zuniga Ltd uses a process costing system. During May, 1,200 units were transferred into Department 2 at a cost of $38,040. Direct materials are added at the beginning of the process. Additionally: Using the FIFO method, units transferred in and completed were

A) 1,200
B) 1,100
C) 850
D) 1,450

Question 54

When using weighted average process costing

A) The costs attached to beginning work in process are kept separate from all other costs
B) The current period costs will be added to the beginning work in process costs.
C) Units in the ending inventory are not considered in making equivalent unit computations.
D) Completed units are transferred out in two separate blocks.

Question 55

Assume a company's beginning work in process consists of 20,000 units, 40% complete. Materials are added at the beginning of the process. During the month, 90,000 units are transferred in. The ending work in process consists of 10,000 units, 50% complete. Using the FIFO method, the equivalent units of production are

A) 90,000/90,000/97,000
B) 110,000/100,000/105,000
C) 110,000/92,000/105,000
D) 90,000/100,000/105,000

Question 56

Zuniga Ltd uses a process costing system. During May, 1,200 units were transferred into Department 2 at a cost of $38,040. Direct materials are added at the beginning of the process. Additionally: Using the FIFO method, the cost of the beginning work in process units transferred out was

A) $2,385
B) $15,476
C) $7,551
D) $6,756

Question 57

Zuniga Ltd uses a process costing system. During May, 1,200 units were transferred into Department 2 at a cost of $38,040. Direct materials are added at the beginning of the process. Additionally: Using the weighted average method, the cost per equivalent unit for materials was

A) $5.00
B) $4.14
C) $6.04
D) $4.44

Question 58

Zuniga Ltd uses a process costing system. During May, 1,200 units were transferred into Department 2 at a cost of $38,040. Direct materials are added at the beginning of the process. Additionally: Using the FIFO method, the cost per equivalent unit for transferred-in units was

A) $28.00
B) $31.70
C) $26.23
D) $33.87

Question 59

Zuniga Ltd uses a process costing system. During May, 1,200 units were transferred into Department 2 at a cost of $38,040. Direct materials are added at the beginning of the process. Additionally: Using the FIFO method, the cost of the ending work in process was:

A) $2,863
B) $7,113
C) $12,649
D) $13,958

Question 60

Zuniga Ltd uses a process costing system. During May, 1,200 units were transferred into Department 2 at a cost of $38,040. Direct materials are added at the beginning of the process. Additionally: Using the weighted average method, the number of equivalent units for conversion costs was

A) 1,070
B) 1,020
C) 1,170
D) 1,380

Question 61

Tong Ltd is a manufacturing company that uses a process costing system. All direct material is added at the start of the process, and spoilage is discovered at the end. During the first period of operations 15,000 units of material were placed into production at a cost of $20 each (ignore conversion costs for this process). Ending work in process was 2,000 units, good units completed totaled 11,000 units, and normal spoilage is 15% of the units surviving inspection. Inspection takes place after the units are completed. The unit cost assigned to the good units completed is

A) $-0-
B) $20.00
C) $24.00
D) $23.00

Question 62

The total costs in work in process during the period were

A) $31,995
B) $70,600
C) $73,700
D) Cannot be determined

Question 63

Xeno Ltd operates a process costing system and uses the FIFO method. Beginning work in process consists of 1,000 units, 30% complete. Ending work in process is 15% complete, and direct materials are added at the 20% point. The equivalent units of production for materials are 14,000 and for conversion costs are 18,000. The number of units started this month was

A) 15,000
B) 18,000
C) 36,000
D) 37,000

Question 64

Tong Ltd is a manufacturing company that uses a process costing system. All direct material is added at the start of the process, and spoilage is discovered at the end. During the first period of operations 15,000 units of material were placed into production at a cost of $20 each (ignore conversion costs for this process). Ending work in process was 2,000 units, good units completed totaled 11,000 units, and normal spoilage is 15% of the units surviving inspection. Inspection takes place after the units are completed. The unit cost assigned to the normal spoilage is

A) $-0-
B) $22.61
C) $20.00
D) $24.00

Question 65

Macey Ltd uses a weighted-average process costing system. Beginning inventory consists of 6,000 units, 40% complete. Units started are 14,000, completed are 10,000, and ending inventories are 9,000 units, 70% complete. Normal spoilage is 5% of the units inspected. Direct material is added at the 75% point and spoilage inspection occurs at the 80% point. The cost per equivalent unit for materials was $1.00 and $3.00 for conversion costs. The number of equivalent units of material was

A) 20,000
B) 18,000
C) 18,200
D) 11,000

Question 66

Miramar Ltd uses a weighted-average process costing system which recognises normal spoilage as 5% of good output. During the current period, 14,000 units were started and 10,000 units completed. Materials are added at the beginning of the process, conversion costs occur uniformly, and the inspection point is at the 70% point. Beginning work in process was 6,000 units, 40% complete, and ending work in process 9,000 units, 80% complete. The cost per equivalent unit for material was $1.00 and for conversion costs $3.00. The cost of abnormal spoilage was

A) $200
B) $1,550
C) $155
D) $2,000

Question 67

Miramar Ltd uses a weighted-average process costing system which recognises normal spoilage as 5% of good output. During the current period, 14,000 units were started and 10,000 units completed. Materials are added at the beginning of the process, conversion costs occur uniformly, and the inspection point is at the 70% point. Beginning work in process was 6,000 units, 40% complete, and ending work in process 9,000 units, 80% complete. The cost per equivalent unit for material was $1.00 and for conversion costs $3.00. The cost of goods completed was

A) $41,550
B) $40,000
C) $40,816
D) $41,053

Question 68

Macey Ltd uses a weighted-average process costing system. Beginning inventory consists of 6,000 units, 40% complete. Units started are 14,000, completed are 10,000, and ending inventories are 9,000 units, 70% complete. Normal spoilage is 5% of the units inspected. Direct material is added at the 75% point and spoilage inspection occurs at the 80% point. The cost per equivalent unit for materials was $1.00 and $3.00 for conversion costs. The cost of the units completed was

A) $40,000
B) $42,200
C) $41,760
D) $41,870

Question 69

Assume a company's beginning work in process consists of 20,000 units, 40% complete. Materials are added at the beginning of the process. During the month, 90,000 units are transferred in. The ending work in process consists of 10,000 units, 50% complete. Under the standard cost method, the equivalent units of production are

A) 90,000/90,000/97,000
B) 110,000/100,000/105,000
C) 110,000, 92,000/105,000
D) 90,000/100,000/105,000

Question 70

Miramar Ltd uses a weighted-average process costing system which recognises normal spoilage as 5% of good output. During the current period, 14,000 units were started and 10,000 units completed. Materials are added at the beginning of the process, conversion costs occur uniformly, and the inspection point is at the 70% point. Beginning work in process was 6,000 units, 40% complete, and ending work in process 9,000 units, 80% complete. The cost per equivalent unit for material was $1.00 and for conversion costs $3.00. The number of equivalent units of conversion costs was

A) 17,200
B) 19,700
C) 20,000
D) 17,900

Question 71

Assume there were 6,000 units in beginning work in process, 60% complete. 20,000 units were completed during the month. Ending work in process is 40% complete, which is equivalent to 3,200 units for conversion costs. Materials are added at the beginning of the process. The standard cost method is used. Assume that conversion costs are $122,100 for the month, and the equivalent unit cost for conversion is $5.50. The ending work in process is 80% complete, and the beginning work in process consisted of 2,000 units, 40% complete. The company completed 17,000 units. What is the number of whole units in the ending work in process under the FIFO method?

A) 6,000 units
B) 6,500 units
C) 7,500 units
D) 5,200 units

Question 72

Assume there were 6,000 units in beginning work in process, 60% complete. 20,000 units were completed during the month. Ending work in process is 40% complete, which is equivalent to 3,200 units for conversion costs. Materials are added at the beginning of the process. The standard cost method is used. The number of units started this month is

A) 20,000 units
B) 22,000 units
C) 28,000 units
D) 15,280 units

Question 73

Assume there were 6,000 units in beginning work in process, 60% complete. 20,000 units were completed during the month. Ending work in process is 40% complete, which is equivalent to 3,200 units for conversion costs. Materials are added at the beginning of the process. The standard cost method is used. The number of equivalent units of conversion costs is

A) 23,200
B) 17,680
C) 19,600
D) 21,280

Question 74

Xeno Ltd operates a process costing system and uses the FIFO method. Beginning work in process consists of 1,000 units, 30% complete. Ending work in process is 15% complete, and direct materials are added at the 20% point. The equivalent units of production for materials are 14,000 and for conversion costs are 18,000. The number of units in ending work in process was

A) 37,000
B) 14,000
C) 18,000
D) 22,000

Question 75

Tong Ltd is a manufacturing company that uses a process costing system. All direct material is added at the start of the process, and spoilage is discovered at the end. During the first period of operations 15,000 units of material were placed into production at a cost of $20 each (ignore conversion costs for this process). Ending work in process was 2,000 units, good units completed totaled 11,000 units, and normal spoilage is 15% of the units surviving inspection. Inspection takes place after the units are completed. The unit cost assigned to the ending work in process inventory is

A) $-0-
B) $22.61
C) $20.00
D) $24.00

Question 76

Tong Ltd is a manufacturing company that uses a process costing system. All direct material is added at the start of the process, and spoilage is discovered at the end. During the first period of operations 15,000 units of material were placed into production at a cost of $20 each (ignore conversion costs for this process). Ending work in process was 2,000 units, good units completed totaled 11,000 units, and normal spoilage is 15% of the units surviving inspection. Inspection takes place after the units are completed. The unit cost assigned to the abnormal spoilage is

A) $-0-
B) $22.61
C) $20.00
D) $24.00

Question 77

Assume there were 6,000 units in beginning work in process, 60% complete. 20,000 units were completed during the month. Ending work in process is 40% complete, which is equivalent to 3,200 units for conversion costs. Materials are added at the beginning of the process. The standard cost method is used. Assume the total conversion costs allocated to the completed units was $91,650. What amount of conversion costs are attached to the beginning work in process at the beginning of the month?

A) $1,850
B) $2,550
C) $4,400
D) None of the above

Question 78

Macey Ltd uses a weighted-average process costing system. Beginning inventory consists of 6,000 units, 40% complete. Units started are 14,000, completed are 10,000, and ending inventories are 9,000 units, 70% complete. Normal spoilage is 5% of the units inspected. Direct material is added at the 75% point and spoilage inspection occurs at the 80% point. The cost per equivalent unit for materials was $1.00 and $3.00 for conversion costs. The loss from abnormal spoilage was

A) $1,530
B) $1,800
C) $1,440
D) $1,080

Question 79

Miramar Ltd uses a weighted-average process costing system which recognises normal spoilage as 5% of good output. During the current period, 14,000 units were started and 10,000 units completed. Materials are added at the beginning of the process, conversion costs occur uniformly, and the inspection point is at the 70% point. Beginning work in process was 6,000 units, 40% complete, and ending work in process 9,000 units, 80% complete. The cost per equivalent unit for material was $1.00 and for conversion costs $3.00. The cost of ending work in process was

A) $31,995
B) $30,600
C) $31,334
D) $31,547

Question 80

Miramar Ltd uses a weighted-average process costing system which recognises normal spoilage as 5% of good output. During the current period, 14,000 units were started and 10,000 units completed. Materials are added at the beginning of the process, conversion costs occur uniformly, and the inspection point is at the 70% point. Beginning work in process was 6,000 units, 40% complete, and ending work in process 9,000 units, 80% complete. The cost per equivalent unit for material was $1.00 and for conversion costs $3.00. The number of units in abnormal spoilage was

A) 500
B) 50
C) -0-
D) 550