Question 1

If a business operates in an industry that experiences significant cost changes,it would be to its benefit to use the first-in,first-out (FIFO)method.

Accepted Answer

FIFO assumes that the first items purchased are the first sold. In a period of rising costs, using FIFO will result in lower cost of goods sold and a higher ending inventory, which can lead to a better overall financial position for the business. This is because the older, lower cost items are being sold first, leaving newer, higher cost items in inventory.

Question 2

The Assembling Department of Weathercoat Liners,Inc.had 8000 units in process on December 1 and received 15,000 units from the Sewing Department.The company uses FIFO.Calculate the number of units to account for by the Assembling Department for December.
A) 23,000 units
B) 15,000 units
C) 8000 units
D) 7000 units

Accepted Answer

To account for = Beginning balance + Units transferred in
To account for = 8000 + 15,000 = 23,000 units

Question 3

Which of the following is used to calculate the number of units to account for under the first-in,first-out (FIFO)method of inventory valuation of process costing? This is the second department in a company using process costing.
A) To account for = Beginning balance + Started and completed + In process
B) To account for = Beginning balance + Amount transferred in
C) To account for = Beginning balance + In process
D) To account for = Beginning balance + Started and completed

Accepted Answer

The FIFO method in process costing assumes that the first units that enter the process are the first ones to be completed and transferred out. Therefore, the number of units to account for under this method is equal to the beginning balance of units in the department plus the amount transferred in from the previous department. Option B is the correct formula, which calculates the total units to account for. Options A, C, and D either do not include the amount transferred in or include additional units that are still in process and not yet completed.

Question 4

Production cost reports prepared using the first-in,first-out (FIFO)method determine the cost of equivalent units of production by accounting for beginning inventory costs separately from current period costs.

Accepted Answer

The statement accurately describes the FIFO method for preparing production cost reports.

Question 5

Which of the following is used to calculate the number of units accounted for under first-in,first-out (FIFO)method of inventory valuation of process costing? This is the first department in a company using process costing.
A) Accounted for = Beginning balance + Started and completed + In process
B) Accounted for = Beginning balance + Started and completed
C) Accounted for = Beginning balance + In process
D) Accounted for = Beginning balance + Amount transferred in

Accepted Answer

Under the FIFO method of inventory valuation in process costing, the number of units accounted for includes the beginning balance of units, the units that were started and completed during the period, and the units that are still in process at the end of the period. This approach ensures that the costs associated with the oldest inventory are accounted for first.

Question 6

When calculating the cost per equivalent unit in process costing,what is the difference between the weighted-average and FIFO methods?
A) With FIFO, prior period costs are not combined with current period costs.
B) With FIFO, prior period costs are combined with current period costs.
C) With weighted-average, prior period costs are not combined with current period costs.
D) There is no difference between the two methods.

Accepted Answer

The difference between the weighted-average and FIFO methods when calculating the cost per equivalent unit in process costing is that with FIFO, prior period costs are not combined with current period costs. This is because the FIFO method assumes that the units worked on during the current period are completed and transferred out before any units from the previous period. The weighted-average method, on the other hand, combines the costs of the current period with the costs of the previous period to calculate the average cost per equivalent unit.

Question 7

Production cost reports prepared using the first-in,first-out (FIFO)method assume that the first units started in the production process are the last units completed and sold.

Accepted Answer

Production cost reports prepared using the FIFO method assume that the first units started in the production process are the first units completed and sold, not the last.

Question 8

List five ways in which managers use a production cost report to make decisions for their companies.

Accepted Answer

The answer of List five ways in which managers use...

Question 9

Production cost reports prepared using the first-in,first-out (FIFO)method assume that the first units started in the production process are the first units completed and transferred out.

Accepted Answer

This statement is true. FIFO method assumes that the first units started in the production process are the first units completed and transferred out. Therefore, production cost reports prepared using the FIFO method assume that the costs incurred for the first units produced are also the costs transferred out first.

Question 10

Under the first-in,first-out (FIFO)method,the cost of equivalent units of production is calculated by ________.
A) summing up only the transferred in costs of each department
B) combining beginning inventory costs with current period costs
C) considering only the transferred out costs of each department
D) accounting for beginning inventory costs separately from current period costs

Accepted Answer

Under the FIFO method, the cost of equivalent units of production is calculated by accounting for beginning inventory costs separately from current period costs. This means that the cost of units that were started and completed during the current period are calculated separately from the cost of units that were started in the previous period and completed in the current period. Therefore, option D is the correct answer.

Question 11

In a production cost report prepared under the FIFO method,equivalent units of production are NOT computed for ________.
A) units completed in beginning work-in-process inventory
B) units started and completed in the current period
C) units in ending work-in-process inventory
D) units started in the current period

Accepted Answer

The answer of In a production cost report prepared under...

Question 12

Under the first-in,first-out (FIFO)method,the current period equivalent units of production for the units in the beginning inventory are always 100% complete.

Accepted Answer

Under the FIFO method, the units in the beginning inventory are considered in their state of completion at the start of the period. The current period's equivalent units of production only account for the work done during the current period to complete those units, not for the work done in previous periods.

Question 13

During August,the Filtering Department of Speedwell,Inc.had a beginning Work-in-Process Inventory balance of 120 units with costs of $60,000.During the month,it started and completed 260 units.It had 30 units in the ending Work-in-Process Inventory.What is the number of equivalent units of production for transferred in units in the Filtering Department in August under the first-in,first-out (FIFO)method?
A) 120 units
B) 410 units
C) 290 units
D) 230 units

Accepted Answer

Under the FIFO method, we only consider the units that were started and completed in the current period. The equivalent units for transferred in units would be equal to the units that were started and completed, which is 260 units. However, we also need to account for the work-in-process inventory at the end of the period, which has 30 units. These 30 units are partially completed and need to be converted into equivalent completed units of production. Since we are using the FIFO method, we assume that the ending work-in-process inventory consists of units that were started in the current period, and thus we take into account the work done on these units. Therefore, we multiply the ending work-in-process inventory by the percentage of completion to arrive at the equivalent completed units of production.

Equivalent units for transferred in units = units started and completed + (ending work-in-process inventory x percentage of completion) 
Equivalent units for transferred in units = 260 + (30 x 100%) 
Equivalent units for transferred in units = 290 units

Question 14

Under the first-in,first-out (FIFO)method,the current period equivalent units of production for transferred in units in beginning inventory are zero because ________.
A) these units are transferred back to the previous department for further processing in the current period
B) these units are expected to be sold by the receiving department without subjecting them to further processing
C) no additional costs for these units were incurred in the current period
D) costs involved in inter-departmental transfers are accounted for only once when sales are made to customers

Accepted Answer

Under the FIFO method, the costs associated with transferred-in units are assumed to have been incurred in a previous period. Therefore, these units are not included in the calculation of equivalent units of production for the current period, as no additional costs were incurred in the current period.

Question 15

During September,the Filtering Department of Tithonia,Inc.had a beginning Work-in-Process Inventory of 600 units with costs of $140,000.During the month,it started and completed 800 units.It had 220 units in the ending Work-in-Process Inventory.What is the number of equivalent units of production for transferred in units in the Filtering Department in September under the first-in,first-out (FIFO)method?
A) 600 units
B) 1020 units
C) 1620 units
D) 380 units

Accepted Answer

Under the FIFO method, equivalent units of production for transferred-in units are calculated based on units completed and transferred out during the period. In this case, 800 units were completed and transferred out, so the equivalent units of production for transferred-in units are also 800 units. The 600 units in the beginning work-in-process inventory and the 220 units in the ending work-in-process inventory are not relevant for this calculation. Therefore, the answer is 1020 units (800 units completed and transferred out + 220 units in the ending work-in-process inventory).

Question 16

Which of the following is an example of how managers use production cost reports to control costs?
A) setting product prices high enough for the company to be profitable
B) providing cost of goods sold for the income statement
C) determining if newer, more efficient equipment should be acquired
D) promoting products that are most profitable

Accepted Answer

Production cost reports can help managers identify which aspects of production are costing the most money. With this information, managers can decide whether to invest in newer, more efficient equipment or adjust production methods to reduce costs. This can ultimately help control overall production costs. Choices A, B, and D may all be related to controlling costs, but they do not directly involve the use of production cost reports.

Question 17

During August,the Filtering Department of Rudbeckia,Inc.had beginning Work-in-Process inventory of 120 units with costs of $50,000.525 units were transferred in during the month.It had 60 units in ending Work-in-Process Inventory.Under the first-in,first-out (FIFO)method,current period equivalent units of production for transferred in units in beginning Work-in-Process Inventory of the Filtering Department is ________.
A) 0 units
B) 525 units
C) 120 units
D) 60 units

Accepted Answer

Under the FIFO method, the equivalent units for transferred-in units in beginning WIP inventory are considered 0 because these units were already accounted for in the previous period.

Question 18

The Polishing Department of Gaura,Inc.had 18,000 units in process on June 1 and received 30,000 units from the Machining Department.What is the number of units to account for by the Polishing Department for June? The company uses the FIFO costing method.
A) 30,000 units
B) 18,000 units
C) 48,000 units
D) 12,000 units

Accepted Answer

To account for = Beginning balance + Units transferred in
To account for = 18,000 + 30,000 = 48,000 units

Question 19

Production cost reports prepared using first-in,first-out (FIFO)method determine the average cost of equivalent units of production by combining beginning inventory costs with current period costs.

Accepted Answer

Production cost reports prepared using FIFO method do not combine beginning inventory costs with current period costs to determine average cost of equivalent units of production. Instead, they assume that the units in beginning inventory are completed first and assign the cost of these units to the first units completed in the current period, and so on.

Question 20

Under the first-in,first-out (FIFO)method,prior period costs are not merged with current period costs.

Accepted Answer

Under FIFO method, the assumption is that the first items purchased or produced are the first to be sold or used, and thus the costs of these items are charged against revenue first. This means that prior period costs are not merged with current period costs, and are instead matched with revenue from prior periods.

Quiz 20: Process Costing

If a business operates in an industry that experiences significant cost changes,it would be to its benefit to use the first-in,first-out (FIFO)method.

The Assembling Department of Weathercoat Liners,Inc.had 8000 units in process on December 1 and received 15,000 units from the Sewing Department.The company uses FIFO.Calculate the number of units to account for by the Assembling Department for December.

Which of the following is used to calculate the number of units to account for under the first-in,first-out (FIFO) method of inventory valuation of process costing? This is the second department in a company using process costing.

Production cost reports prepared using the first-in,first-out (FIFO)method determine the cost of equivalent units of production by accounting for beginning inventory costs separately from current period costs.

Which of the following is used to calculate the number of units accounted for under first-in,first-out (FIFO) method of inventory valuation of process costing? This is the first department in a company using process costing.

When calculating the cost per equivalent unit in process costing,what is the difference between the weighted-average and FIFO methods?

Production cost reports prepared using the first-in,first-out (FIFO)method assume that the first units started in the production process are the last units completed and sold.

List five ways in which managers use a production cost report to make decisions for their companies.

Production cost reports prepared using the first-in,first-out (FIFO)method assume that the first units started in the production process are the first units completed and transferred out.

Under the first-in,first-out (FIFO) method,the cost of equivalent units of production is calculated by ________.

In a production cost report prepared under the FIFO method,equivalent units of production are NOT computed for ________.

Under the first-in,first-out (FIFO)method,the current period equivalent units of production for the units in the beginning inventory are always 100% complete.

Under the first-in,first-out (FIFO) method,the current period equivalent units of production for transferred in units in beginning inventory are zero because ________.

Which of the following is an example of how managers use production cost reports to control costs?

The Polishing Department of Gaura,Inc.had 18,000 units in process on June 1 and received 30,000 units from the Machining Department.What is the number of units to account for by the Polishing Department for June? The company uses the FIFO costing method.

Production cost reports prepared using first-in,first-out (FIFO)method determine the average cost of equivalent units of production by combining beginning inventory costs with current period costs.

Under the first-in,first-out (FIFO)method,prior period costs are not merged with current period costs.