Question 1

In a process cost system,the cost attributable to abnormal losses that occur due to unexpected circumstances such as machine operator error should be assigned to:

Accepted Answer

Abnormal losses are losses that occur due to unexpected circumstances beyond the control of the company, such as machine operator error. These losses should be recorded in a separate loss account in order to highlight production inefficiencies and allow for analysis of the causes of the losses. Assigning the cost to ending work in process inventory or cost of goods manufactured could result in an inaccurate reflection of the true cost of production.

Question 2

The following information is available for the month of April from the Second department of the Armque Corporation:  Materials are added at the end of the process in the Second department.Using the average cost method,what are the equivalent units of production for materials and conversion costs for the month of April?

Accepted Answer

D

Question 3

Plemmon Company adds materials at the beginning of the process in the forming department,which is the first of two stages of its production cycle.Information concerning the materials used in the forming department in April follows:  Using the average cost method,what is the materials cost of the work in process at April 30 (rounded to nearest dollar)?

Accepted Answer

B

Question 4

The following information is available for the month of October from the First department of the Vaughn Corporation:  Materials are added in the beginning of the process in the First department.Using the average cost method,what are the equivalent units of production for the month of October?

Accepted Answer

The answer of The following information is available for the...

Question 5

The following information is available for the month of August from the First department of the Twigg Corporation:  Materials are added in the beginning of the process in the First department.Using the average cost method,what are the equivalent units of production for the month of August?

Accepted Answer

The answer of The following information is available for the...

Question 6

CPG Company manufactures chemicals.Chemical agent PL62 is refined in the Refining department and,after it is transferred to the Mixing department,a reactive agent is added to it.In January,6,000 gallons of PL62 having a cost of $30,000 were transferred from the refining to the Mixing department where 4,000 gallons of the reactive agent were added.When calculating the inventory costs in the Mixing department,what will the cost per unit relating to gallons transferred in from the Refining department be?

Accepted Answer

To calculate the cost per unit relating to gallons transferred in from the Refining department, we need to divide the total cost of PL62 by the total number of gallons transferred. 
Total cost of PL62 = $30,000 
Total gallons transferred = 6,000 gallons

Therefore, cost per unit = Total cost / Total gallons = $30,000 / 6,000 gallons = $5.

However, the question specifically asks for the cost per unit relating to gallons transferred in from the Refining department, not the total cost per unit. Since only 6,000 gallons were transferred in from refining, the cost per unit for those gallons would be $5 / 6 = $0.83.

But we need to express the answer as a cost per gallon, not per unit. So, dividing $0.83 by the number of gallons per unit (which is 0.25, since 4,000 gallons of reactive agent were added to 6,000 gallons of PL62 to make 10,000 gallons of the final product), we get $3.32 which is closest to $3.00 (option B).

Question 7

Van Pelt Company uses the average cost method of process costing.The production report for the Mixing department follows:  What are the equivalent units for: Materials Conversion Costs

Accepted Answer

To calculate equivalent units for materials, we add the units in the beginning inventory to the units started during the period and multiply the total by the percentage of work done to complete the units in the ending inventory. 
For the Mixing department, the equivalent units for materials are:
9,000 + 32,000 = 41,000 units started and in beginning inventory
20,000 units in ending inventory × 80% completion = 16,000 equivalent units for materials

To calculate equivalent units for conversion costs, we use the same method, but we multiply the total by the percentage of conversion costs incurred during the period. 
For the Mixing department, the equivalent units for conversion costs are:
9,000 + 32,000 = 41,000 units started and in beginning inventory
20,000 units in ending inventory × 80% completion = 16,000 equivalent units for conversion costs
16,000 equivalent units × 85% completion = 13,600 equivalent units for conversion costs

Therefore, the correct answer is B, with equivalent units for materials of 16,000 and equivalent units for conversion costs of 13,600.

Question 8

Normal losses that occur in the manufacturing process are properly classified as:

Accepted Answer

Normal losses that occur in the manufacturing process are considered part of the cost of producing goods, hence they are classified as product costs. These costs are allocated to the cost of goods sold and are included in the inventory valuation until the product is sold.

Question 9

Materials are added at the end of the process in a company's curing department,the second stage of the production cycle.The following information is available for the month of July:  Under the cost accounting system,the costs incurred on the lost units are absorbed by the remaining good units.Using the average cost method,what are the equivalent units for the materials unit cost calculation?

Accepted Answer

To calculate the equivalent units for the materials unit cost calculation, we need to consider the percentage of completion of the lost units at the end of the curing department. As no information is given about the percentage of completion of lost units, we assume that lost units are 100% incomplete. So, the equivalent units for the materials unit cost calculation will be the units completed during the July month.

According to the information given, 65% of the 300,000 units were completed during the July month. Hence, the equivalent units for the materials unit cost calculation will be:
300,000 units x 65% = 195,000 units

Therefore, the best choice is B.

Question 10

If the amount of loss in a manufacturing process is normal,it should be classified as a:

Accepted Answer

Losses that are normal and occur as part of the manufacturing process are considered part of the cost of producing goods, hence they are classified as product costs. These costs are included in the cost of goods sold and are allocated to the products being manufactured.

Question 11

Information concerning Department A of Ali Company for the month of June is as follows: Units
Materials
Costs
Work in process,beginning of month
20,000
$14,550
Started in June
85,000
$66,300
Units completed
90,000
Work in process,end of month
15,000
All materials are added at the beginning of the process.Using the average cost method,the cost (rounded to two places)per equivalent unit for materials for June is:

Accepted Answer

To calculate the cost per equivalent unit for materials using the average cost method, we need to divide the total cost of materials by the total equivalent units. 
Total cost of materials = Cost of beginning work in process + Cost of materials added in June
= $14,550 + $66,300
= $80,850
Total equivalent units = Units completed + Units in ending work in process
= 90,000 + 15,000
= 105,000
Cost per equivalent unit for materials = Total cost of materials / Total equivalent units
= $80,850 / 105,000
= $0.77 (rounded to two decimal places)

Therefore, the best choice is C, $0.77.

Question 12

During June,Birch Bay Company's Department B equivalent unit product costs computed under the average cost method were as follows:  Materials are introduced at the end of the process in Department B.There were 4,000 units (50 % complete as to conversion costs)in work in process at June 30.The total costs assigned to the June 30 work in process inventory should be:

Accepted Answer

The answer of During June,Birch Bay Company's Department B equivalent...

Question 13

What losses should not affect the recorded cost of inventories?

Accepted Answer

Abnormal losses are not a regular occurrence in the production process or inventory management, and therefore, they should not affect the recorded cost of inventories. Normal, seasonal, and standard losses are considered part of the cost of production or procurement and are anticipated in the costing of inventories.

Question 14

An example of a process where all of the materials would be added at the end of the process would be:

Accepted Answer

In the second process of a snack factory, the snack chips are cooled and dried for an hour before being bagged. All of the materials (snack chips) are added at the end of the process. In contrast, in choices A and C, ingredients are added throughout the process. Choice D is incorrect because there is at least one process where all materials are added at the end of the process.

Question 15

Boron Refiners had 50,000 gallons started in its process in June.At June 30,35,000 gallons were completed and transferred to finished goods and 10,000 gallons were still in process,one-fourth completed as to materials,labor and overhead.The remaining 5,000 units were lost to evaporation,a normal result of the process.Costs of production during the month were $75,000,$50,000,and $25,000 for material,labor and overhead,respectively.What is the cost per equivalent unit in June?

Accepted Answer

The answer of Boron Refiners had 50,000 gallons started in...

Question 16

In a process cost system,how is the unit cost affected in a production cost report when materials are added in a department subsequent to the first department and the added materials result in additional units?

Accepted Answer

When additional materials are added in a subsequent department, it means that the units produced in that subsequent department will have a lower material cost per unit compared to the units produced in the preceding department. This will cause a decrease in the unit cost of the preceding department's output, which will require an adjustment of the transferred-in unit cost.

Question 17

Stanley Company adds materials at the beginning of the process in Department M.Data concerning the materials used in the March production follows:  Using the average cost method,the equivalent units for the materials unit cost calculation are:

Accepted Answer

The equivalent units for the material unit cost calculation using the average cost method are calculated by adding the number of units started and the equivalent units of work done during the period. From the given data, the number of units started and completed in March is 38,000. Therefore, the equivalent units for the material unit cost calculation is also 38,000. However, the problem states that materials are added at the beginning of the process, which means that there are also equivalent units of work in progress (WIP) at the end of the process. These WIP units must also be included in the equivalent units for the material cost calculation. Since there were 14,000 WIP units at the end of March, the total equivalent units for the material cost calculation is 38,000 + 14,000 = 52,000. Therefore, the correct answer is B.

Question 18

An example of a process where all of the materials would be added at the beginning of the process would be:

Accepted Answer

In a bakery where the ingredients for bread are combined and left to rise, all the necessary materials (flour, yeast, water, etc.) are added at the beginning of the process before the dough is left to rise. This is a common method used in bread-making.

Question 19

The following information is available for the month of August from the Second department of the Twigg Corporation:  Materials are added at the end of the process in the Second department.Using the average cost method,what are the equivalent units of production for materials and conversion costs for the month of August?

Accepted Answer

The answer of The following information is available for the...

Question 20

Blanche Corporation adds materials at the end of the process in the injection department,which is the second of two stages of its production cycle.Information concerning the materials used in the forming department in April follows:  Using the average cost method,what is the materials cost of the work in process at March 31 (rounded to nearest dollar)?

Accepted Answer

The answer of Blanche Corporation adds materials at the end...

Quiz 6: Process Cost Accounting--Additional Procedures

In a process cost system,the cost attributable to abnormal losses that occur due to unexpected circumstances such as machine operator error should be assigned to:

The following information is available for the month of October from the First department of the Vaughn Corporation: Materials are added in the beginning of the process in the First department.Using the average cost method,what are the equivalent units of production for the month of October?

The following information is available for the month of August from the First department of the Twigg Corporation: Materials are added in the beginning of the process in the First department.Using the average cost method,what are the equivalent units of production for the month of August?

Van Pelt Company uses the average cost method of process costing.The production report for the Mixing department follows: What are the equivalent units for: Materials Conversion Costs

Normal losses that occur in the manufacturing process are properly classified as:

If the amount of loss in a manufacturing process is normal,it should be classified as a:

What losses should not affect the recorded cost of inventories?

An example of a process where all of the materials would be added at the end of the process would be:

In a process cost system,how is the unit cost affected in a production cost report when materials are added in a department subsequent to the first department and the added materials result in additional units?

Stanley Company adds materials at the beginning of the process in Department M.Data concerning the materials used in the March production follows: Using the average cost method,the equivalent units for the materials unit cost calculation are:

An example of a process where all of the materials would be added at the beginning of the process would be: