Question 1

Salter Corporation uses the FIFO method in its process costing system. The company reported 25,000 equivalent units for materials last month. The company's beginning work in process inventory consisted of 6,000 units, 40% complete with respect to materials. The ending work in process inventory consisted of 4,000 units, 70% complete with respect to materials. The number of units started during the month was:
A)25,400 units
B)23,400 units
C)22,600 units
D)24,600 units

Accepted Answer

C

Question 2

In the cost reconciliation report under the FIFO method, the costs accounted for equals the cost of beginning work in process inventory plus the cost of units transferred out.

Accepted Answer

The costs accounted for under the FIFO method include the cost of beginning work in process inventory, the cost of units started and completed during the period, and the cost of ending work in process inventory.

Question 3

Under which of the following conditions will the FIFO method of process costing result in the same amount of cost being transferred to the next department as the weighted-average method?
A)When the beginning and ending inventories are each fifty percent complete.
B)When there is no beginning inventory.
C)When there is no ending inventory.
D)When units in the beginning inventory are all completed and transferred at the same time.

Accepted Answer

B

Question 4

The equivalent units of production will be the same under the weighted-average and the FIFO method if there is no ending work in process inventory.

Accepted Answer

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Question 5

Winkle Corporation uses the FIFO method in its process costing system. Beginning inventory in the mixing processing center consisted of 5,000 units, 90% complete with respect to conversion costs. Ending work in process inventory consisted of 2,000 units, 60% complete with respect to conversion costs. If 10,000 units were transferred to the next processing center during the period, the equivalent units for conversion costs would be:
A)13,200 units
B)6,700 units
C)10,000 units
D)12,000 units

Accepted Answer

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Question 6

Carson Corporation uses the FIFO method in its process costing system. The Assembly Department started the month with 6,000 units in its beginning work in process inventory that were 20% complete with respect to conversion costs. An additional 74,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 8,000 units in the ending work in process inventory of the Assembly Department that were 60% complete with respect to conversion costs. What were the equivalent units for conversion costs in the Assembly Department for the month?
A)72,000
B)75,600
C)76,000
D)76,800

Accepted Answer

The equivalent units for conversion costs are calculated by considering the work needed to complete the beginning inventory, the units started and completed during the month, and the work done on the ending inventory. For the beginning inventory, 80% of the work is needed (6,000 units * 80% = 4,800 units). For the units started and completed, it's 66,000 units (74,000 units transferred in - 8,000 units in ending inventory). For the ending inventory, 60% of the work is needed (8,000 units * 60% = 4,800 units). Adding these gives 4,800 + 66,000 + 4,800 = 75,600 equivalent units.

Question 7

The equivalent units of production for a department using the FIFO process costing method is equal to the number of units completed plus the equivalent units in the ending inventory less the equivalent units in the beginning inventory.

Accepted Answer

This is correct according to the FIFO process costing method. The units that are completed are considered as fully completed and the ending inventory is based on the work that was started but not completed. Therefore, the equivalent units in ending inventory must be added to the completed units to get the overall equivalent units of production. Meanwhile, the equivalent units in the beginning inventory are subtracted as they were included in the previous period's calculation.

Question 8

Oxyrom Corporation uses the FIFO method in its process costing system. Operating data for the Brazing Department for the month of November appear below:  What were the equivalent units for conversion costs in the Brazing Department for November?
A)49,040
B)50,200
C)43,200
D)48,280

Accepted Answer

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Question 9

In computing the cost per equivalent unit, costs in the beginning work in process inventory are kept separate from current period costs when the FIFO method is used.

Accepted Answer

The FIFO (first-in, first-out) method of costing inventory assumes that the oldest items in inventory are sold first. Therefore, when computing the cost per equivalent unit, costs in the beginning work in process inventory are kept separate from current period costs. This is because the cost of beginning WIP inventory has already been incurred in a previous period and should not be mixed with current period costs.

Question 10

Karmen Corporation uses the FIFO method in its process costing system. Operating data for the Enameling Department for the month of May appear below:  What were the equivalent units for conversion costs in the Enameling Department for May?
A)85,000
B)85,960
C)93,200
D)80,800

Accepted Answer

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Question 11

In the cost reconciliation report under the FIFO method, the costs to be accounted for equals the cost of ending work in process inventory plus the cost of units transferred out.

Accepted Answer

In the FIFO method, the costs to be accounted for include the cost of beginning work in process inventory, the cost of units started and completed, and the cost of ending work in process inventory.

Question 12

There is no difference in the unit costs computed under the weighted-average and FIFO methods of process costing if there are no ending work in process inventories.

Accepted Answer

If there are no ending work in process inventories, the unit costs computed under the weighted-average and FIFO methods will still differ because FIFO considers only the costs of the current period, while weighted-average includes costs from both the current and previous periods.

Question 13

Under the FIFO method, unit costs would:
A)result from costs in the beginning inventory being added in with current period costs.
B)contain some element of cost from the prior period.
C)not contain some elements of cost from the prior period.
D)not include costs incurred to complete beginning inventory.

Accepted Answer

Under the FIFO (First-In, First-Out) method, unit costs are based on the costs of the most recent purchases, meaning they do not contain elements of cost from the prior period.

Question 14

If the FIFO cost method is used in a process costing system, costs in the beginning inventory are kept separate from current period costs.

Accepted Answer

FIFO (First-In, First-Out) method of cost accounting assumes that the first units purchased or produced are the first ones to be sold or used in production, and therefore the cost of the beginning inventory is kept separate from current period costs. This is because the cost of the beginning inventory may be different from the cost of the current purchases or production, and separating them allows for more accurate cost tracking and valuation.

Question 15

Any difference in the equivalent units calculated under the weighted-average and the FIFO methods is due to the units in the beginning work in process inventory.

Accepted Answer

The difference in the equivalent units calculated under the weighted-average and FIFO methods is due to the allocation of the units in the beginning work in process inventory. This is because the weighted-average method blends the costs and units from both the beginning and current periods, whereas the FIFO method assumes that the units in the beginning inventory were completed first and only considers the current period's units and costs. Therefore, any difference in equivalent units between the two methods is due to the assumption made about the units in the beginning inventory.

Question 16

In the cost reconciliation report under the FIFO method, the costs accounted for equals the cost of ending work in process inventory plus the cost of units transferred out.

Accepted Answer

This is correct as per the FIFO method, the cost of ending work in process inventory and the cost of units transferred out are added to reach the total cost accounted for.

Question 17

A major advantage of the FIFO method is that it allows managers to judge the performance of the current period independently of the performance of the prior period.

Accepted Answer

Since FIFO (First-In, First-Out) assumes that the oldest inventory items are sold first, the cost of goods sold (COGS) will reflect the current cost of inventory. This allows managers to measure the current period's profitability without being influenced by past inventory costs. Therefore, the statement is true.

Question 18

Garson Corporation uses the FIFO method in its process costing system. The Grinding Department started the month with 18,000 units in its beginning work in process inventory that were 10% complete with respect to conversion costs. An additional 98,000 units were transferred in from the prior department during the month to begin processing in the Grinding Department. During the month 115,000 units were completed in the Grinding Department and transferred to the next processing department. There were 1,000 units in the ending work in process inventory of the Grinding Department that were 20% complete with respect to conversion costs. What were the equivalent units for conversion costs in the Grinding Department for the month?
A)81,000
B)115,200
C)115,000
D)113,400

Accepted Answer

Equivalent units for conversion costs can be calculated as follows:

Units completed and transferred out + (Equivalent units in ending work in process inventory × Percentage complete with respect to conversion costs)
= 115,000 + (1,000 × 20%)
= 115,000 + 200
= 115,200

Therefore, the equivalent units for conversion costs in the Grinding Department for the month are 113,400 (98,000 units transferred in + 18,000 beginning work in process units × 90% complete + 1,000 ending work in process units × 20% complete). The closest option to this answer is D).

Question 19

Laurie Corporation uses the FIFO method in its process costing system. Department A is the first stage of Laurie Corporation's production process. The following information is available for conversion costs for the month of May for Department A:  The equivalent units of production for conversion costs for the month are:
A)42,000 units
B)38,000 units
C)44,000 units
D)36,000 units

Accepted Answer

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Question 20

In the cost reconciliation report under the FIFO method, the costs to be accounted for equals the cost of beginning work in process inventory plus the cost of units transferred out.

Accepted Answer

In the FIFO method, the costs to be accounted for include the cost of beginning work in process inventory plus the costs added during the period, not the cost of units transferred out.

Quiz 8: Fifo Method