Managerial Accounting Stacey Whitecotton 4th Edition- Test Bank

 

To Purchase this Complete Test Bank with Answers Click the link Below

 

https://tbzuiqe.com/product/managerial-accounting-stacey-whitecotton-4th-edition-test-bank/

 

If face any problem or Further information contact us At tbzuiqe@gmail.com

 

 

Sample Test

Managerial Accounting, 4e (Whitecotton)

Chapter 3   Process Costing

 

1) Process costing is used to calculate the cost of homogenous goods or services.

 

Answer:  TRUE

Explanation:  Process costing is used by companies that produce homogeneous products or services using a series of standardized processes.

Difficulty: 1 Easy

Topic:  Basic Concepts in Process Costing

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

2) A major difference between job order costing and process costing is the treatment of nonmanufacturing costs.

 

Answer:  FALSE

Explanation:  In both job order costing and process costing, nonmanufacturing costs are expensed in the period in which they are incurred.

Difficulty: 1 Easy

Topic:  Flow of Costs in Process Costing

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

3) A separate Work in Process Inventory account is used in process costing for each major production process.

 

Answer:  TRUE

Explanation:  In process costing, there will be a separate Work in Process Inventory account for each of the major processes.

Difficulty: 1 Easy

Topic:  Flow of Costs in Process Costing

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

4) Process costing often combines direct materials and direct labor into a single category called conversion costs.

 

Answer:  FALSE

Explanation:  In process costing, direct labor and manufacturing overhead (not direct materials) are often combined into a single category called conversion costs.

Difficulty: 1 Easy

Topic:  Flow of Costs in Process Costing

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

5) The process costing production report is used to determine how much manufacturing cost to transfer out of Finished Goods Inventory and into Cost of Goods Sold.

 

Answer:  FALSE

Explanation:  The process costing report is used to determine how much manufacturing cost to transfer out of Work in Process Inventory (not finished goods) and into the next processing department (or Finished Goods Inventory if it is the last production process).

Difficulty: 1 Easy

Topic:  Process Costing Production Report

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

6) The process costing production report can be prepared using either the weighted-average method or the last-in, first-out (LIFO) method.

 

Answer:  FALSE

Explanation:  The process costing production report can be prepared using either the weighted-average method or the first-in, first-out (FIFO) method (not the LIFO method).

Difficulty: 1 Easy

Topic:  Process Costing Production Report

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

7) The key difference between a process costing production report prepared using one of the two acceptable methods is how they deal with any units and costs that are in ending Work in Process Inventory.

 

Answer:  FALSE

Explanation:  The key difference between a process costing production report prepared using one of the two acceptable methods is how they deal with any units and costs that are in the beginning Work in Process Inventory.

Difficulty: 2 Medium

Topic:  Process Costing Production Report

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

 

8) Equivalent units for materials may differ from the equivalent units for conversion costs.

 

Answer:  TRUE

Explanation:  Equivalent units may differ for the two categories since the percentage of completion for each category may differ.

Difficulty: 1 Easy

Topic:  Convert Physical Units into Equivalent Units

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

9) An equivalent unit is a measure used to convert costs incurred in the previous period to costs incurred in the current period.

 

Answer:  FALSE

Explanation:  An equivalent unit is a measure used to convert partially completed units into the equivalent of a full unit.

Difficulty: 1 Easy

Topic:  Convert Physical Units into Equivalent Units

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

10) Under the weighted-average method, the only partially completed units that need to be addressed are the units in beginning inventory.

 

Answer:  FALSE

Explanation:  Under the weighted-average method, the only partially completed units that need to be addressed are the units in ending inventory (not beginning inventory).

Difficulty: 2 Medium

Topic:  Convert Physical Units into Equivalent Units

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

11) Cost per equivalent unit is calculated separately for direct materials and for conversion costs.

 

Answer:  TRUE

Explanation:  Because equivalent units are different for direct materials and conversion costs, we must make a separate calculation for each category.

Difficulty: 1 Easy

Topic:  Calculate Cost Per Equivalent Unit

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

12) The total cost of Work in Process incurred in one department during the period must be allocated between costs transferred to the next department and costs transferred to Finished Goods.

 

Answer:  FALSE

Explanation:  The total cost of Work in Process incurred during the period must be allocated between costs transferred to the next department and costs remaining in the current department as Work in Process Inventory.

Difficulty: 1 Easy

Topic:  Reconcile the Total Cost of Work In Process Inventory

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

13) The production report contains information about the number of physical units and equivalent units, but not their costs.

 

Answer:  FALSE

Explanation:  The production report includes information about the number of physical units, equivalent units, cost per equivalent unit, and a reconciliation of the cost of work in process.

Difficulty: 1 Easy

Topic:  Prepare a Production Report

Learning Objective:  03-04 Prepare a process costing production report using the weighted-average method.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

14) Under the FIFO method, the units completed during the period must be allocated between beginning units in process and units started and completed.

 

Answer:  TRUE

Explanation:  In FIFO, physical units are divided between beginning units in process, units started and completed, and ending units in process.

Difficulty: 1 Easy

Topic:  FIFO Method

Learning Objective:  03-S1 Prepare a process costing production report using the first-in, first-out (FIFO) method.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

15) Under process costing when the product is through the last production process, the journal entry for total manufacturing cost includes a debit to Work in Process Inventory and a credit to Finished Goods Inventory.

 

Answer:  FALSE

Explanation:  Under process costing when the product is through the last production process, the journal entry for total manufacturing cost includes a debit to Finished Goods Inventory and a credit to Work in Process Inventory.

Difficulty: 3 Hard

Topic:  Journal Entries for Process Costing

Learning Objective:  03-S2 Prepare journal entries to record manufacturing costs in a process cost system.

Bloom’s:  Analyze

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

16) Which of the following is not a characteristic of process costing?

1.   A) Products are homogenous.

2.   B) Costs are traced to production processes rather than products.

3.   C) Service firms cannot use process costing.

4.   D) Processes are standardized.

 

Answer:  C

Explanation:  Process costing is used when products or processes are standardized and when costs are traced to the overall process, rather than an individual project. Although process costing is most often identified with manufacturing companies, service firms can use process costing as well.

Difficulty: 1 Easy

Topic:  Basic Concepts in Process Costing

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

17) Which of the following is a characteristic of process costing?

1.   A) Products are unique.

2.   B) Costs are traced to products rather than to production processes.

3.   C) It is employed by companies that use standardized processes.

4.   D) It can only be used for manufacturing firms and not used for service firms.

 

Answer:  C

Explanation:  Process costing is used by companies that produce homogeneous products or services using a series of standardized processes.

Difficulty: 1 Easy

Topic:  Basic Concepts in Process Costing

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

18) Which of the following companies would most likely use process costing?

1.   A) A soft drink company

2.   B) A law firm

3.   C) A custom garden equipment manufacturer

4.   D) A home remodeling company

 

Answer:  A

Explanation:  Process costing is used by companies that produce homogeneous products or services using a series of standardized processes, such as a soft drink.

Difficulty: 1 Easy

Topic:  Basic Concepts in Process Costing

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

19) Consider a winery that employs eight people who work 40 hours per week (full time), four people who work 20 hours per week, and one person who works 10 hours per week. How many full-time equivalent employees does the winery employ?

1.   A) 8

2.   B) 10

3.   C) 10.25

4.   D) 10.5

 

Answer:  C

Explanation:  To calculate the number of full-time equivalent employees, determine the number of equivalent units of employees. Each employee who works 40 hours per week counts as one full-time equivalent employee (8 FTE = 8 employees × 1 FTE). Each employee who works 20 hours per week counts as one-half (2 FTE = 4 employees × 0.5 FTE). Each employee who works 10 hours per week counts as one-quarter (0.25 = 1 employee × 0.25 FTE). The sum is the number of full-time equivalent employees (10.25 = 8 + 2 + 0.25).

Difficulty: 3 Hard

Topic:  Convert Physical Units into Equivalent Units

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Apply

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

20) Which of the following statements is not correct with respect to Fetzer Vineyards’ sustainability efforts?

2014.         A) Barney Fetzer began producing wine in 1968, and he incorporated triple bottom line sustainability accounting in 2014.

2015.         B) Fetzer accounts for its profit (one component of the triple bottom line) based on growth and dollars.

2016.         C) Fetzer accounts for its planet impact (one component of the triple bottom line) by protecting its environment.

2017.         D) Fetzer accounts for its people impact (one component of the triple bottom line) by contributing to society.

 

Answer:  A

Explanation:  Fetzer has developed an innovative approach to winemaking that has enabled it to grow and prosper (profit), while protecting the environment (planet), and contributing to society (people). These practices have been in place at Fetzer since its founding in 1968, long before terms like “sustainability” or “green” became trendy.

Difficulty: 2 Medium

Topic:  Basic Concepts in Process Costing

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Understand

AACSB:  Ethics

Accessibility:  Keyboard Navigation

 

21) Conversion costs consist of:

1.   A) all costs of production.

2.   B) raw materials and direct labor.

3.   C) direct labor and manufacturing overhead.

4.   D) raw materials and manufacturing overhead.

 

Answer:  C

Explanation:  Direct labor and manufacturing overhead costs can be lumped together in a single category called conversion cost.

Difficulty: 1 Easy

Topic:  Flow of Costs in Process Costing

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

22) Under process costing, which manufacturing costs are assigned to the product as it moves from one manufacturing process to the next?

1.   A) Direct materials, direct labor, and conversion costs

2.   B) Direct materials, indirect materials, and manufacturing overhead

3.   C) Direct materials, direct labor, and manufacturing overhead

4.   D) Direct materials, direct labor, and indirect labor

 

Answer:  C

Explanation:  In process costing, direct materials, direct labor, and manufacturing overhead are assigned to the product as it moves from one manufacturing process to the next.

Difficulty: 1 Easy

Topic:  Flow of Costs in Process Costing

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

23) Which of the following statements is true?

1.   A) A process costing system will have a single Work in Process Inventory account.

2.   B) A process costing system will have a separate Work in Process Inventory account for each of the major processes.

3.   C) A job costing system will have a separate Work in Process Inventory account for each of the major processes.

4.   D) A process costing system will have a separate Raw Materials Inventory account for each of the major processes.

 

Answer:  B

Explanation:  In process costing, there will be a separate Work in Process Inventory account for each of the major processes the product must go through as it is being manufactured.

Difficulty: 2 Medium

Topic:  Flow of Costs in Process Costing

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

24) Which of the following accounts will be treated differently by a process costing system as compared to a job order costing system?

1.   A) Raw Materials Inventory

2.   B) Work in Process Inventory

3.   C) Finished Goods Inventory

4.   D) Cost of Goods Sold

 

Answer:  B

Explanation:  A process costing system determines the value of Work in Process Inventory by computing a cost per equivalent unit of production, while a job order costing system attaches a unique cost to each unit that passes through Work in Process Inventory.

Difficulty: 2 Medium

Topic:  Flow of Costs in Process Costing

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

25) Which of the following statements is incorrect regarding the production costing report?

1.   A) A separate production report is prepared for each major production process on an annual basis.

2.   B) The production report provides information about the number of units and manufacturing costs that flow through a production process during an accounting period.

3.   C) The production report is used to determine how much manufacturing cost to transfer out of Work in Process Inventory and into the next processing department or finished goods if it is the last production process.

4.   D) The production report is used to value any units that are in process at the end of the accounting period.

 

Answer:  A

Explanation:  The production report provides information about the number of units and manufacturing costs that flow through a production process during an accounting period. It is used to determine how much manufacturing cost to transfer out of Work in Process Inventory and into the next processing department (or Finished Goods Inventory if it is the last production process) and to value any units that are in process at the end of the accounting period. A separate production report is prepared for each major production process on either a monthly or quarterly basis.

Difficulty: 2 Medium

Topic:  Process Costing Production Report

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

26) Which of the following statements is correct with respect to the differences between using the weighted-average method or the FIFO method of preparing a process production report?

1.   A) Use of FIFO is acceptable for GAAP, while use of weighted-average method is not.

2.   B) FIFO is simpler to use than the weighted-average method.

3.   C) Use of FIFO or weighted-average results in large differences for companies that maintain minimal work-in-process inventory.

4.   D) The weighted-average method is often simpler, less costly to prepare, and provides useful information for decision-making.

 

Answer:  D

Explanation:  Both the use of FIFO and the weighted-average method to prepare a process production report is acceptable under GAAP, and use of either method provides approximately the same result for companies that maintain minimal work-in-process inventory. The weighted-average method is considered simpler and is more often used in the “real world,” particularly for companies that use just-in-time inventory.

Difficulty: 2 Medium

Topic:  Process Costing Production Report

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

27) Which of the following is not a category used to reconcile the number of physical units using the weighted average method of process costing?

1.   A) Units started

2.   B) Ending units in inventory

3.   C) Cost of goods sold

4.   D) Units completed

 

Answer:  C

Explanation:  The four categories used to reconcile the number of physical units under the weighted average method of process costing are beginning units in inventory, units started, units completed, and ending units in inventory.

Difficulty: 1 Easy

Topic:  Reconcile the Number of Physical Units

Learning Objective:  03-02 Reconcile the number of physical units using the weighted-average method.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

28) To reconcile the number of physical units using the weighted average method of process costing, one must determine whether the units were:

1.   A) completed or still in process at the end of the period.

2.   B) sold or still in inventory at the end of the period.

3.   C) in the next production process or sold at the end of the period.

4.   D) using direct materials or conversion costs at the end of the period.

 

Answer:  A

Explanation:  One must determine whether the units were completed during the period or are still being worked on at the end of the period.

Difficulty: 1 Easy

Topic:  Reconcile the Number of Physical Units

Learning Objective:  03-02 Reconcile the number of physical units using the weighted-average method.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

29) To reconcile the number of physical units using the weighted average method of process costing, one must determine whether the units were:

1.   A) in process at the beginning of the period or were completed at the beginning of the period.

2.   B) in process at the beginning of the current period or in process at the beginning of the previous period.

3.   C) in process at the beginning of the period or were sold at the beginning of the period.

4.   D) in process at the beginning of the period or were started during the period.

 

Answer:  D

Explanation:  One must add the number of units that were on hand at the beginning of the period to the units that were started during the current period.

Difficulty: 1 Easy

Topic:  Reconcile the Number of Physical Units

Learning Objective:  03-02 Reconcile the number of physical units using the weighted-average method.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

30) Which of the following relationships is correct?

1.   A) Beginning units in inventory + units started = units completed + ending units in inventory

2.   B) Units started = beginning units in inventory + units completed + ending units in inventory

3.   C) Units started −beginning units in inventory = units completed + ending units in inventory

4.   D) Ending units in inventory + beginning units in inventory = units started − units completed

 

Answer:  A

Explanation:  The formula to reconcile the number of physical units is the sum of beginning units in inventory and units started, which is equal to units completed and units in ending inventory.

Difficulty: 2 Medium

Topic:  Reconcile the Number of Physical Units

Learning Objective:  03-02 Reconcile the number of physical units using the weighted-average method.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

31) How could a firm using the weighted average method of process costing calculate how many units were worked on during a period?

1.   A) Add beginning units in inventory and units completed

2.   B) Add beginning units in inventory and ending units in inventory

3.   C) Add units completed and ending units in inventory

4.   D) Add units started and units completed

 

Answer:  C

Explanation:  The total of the units completed and those in ending inventory equals the total units worked on. (Alternatively, the number of units in beginning inventory plus the number of units started equals total units worked on as well.)

Difficulty: 2 Medium

Topic:  Reconcile the Number of Physical Units

Learning Objective:  03-02 Reconcile the number of physical units using the weighted-average method.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

32) Every unit that passes through the production process must have been counted in which category of physical units at some point?

1.   A) Beginning units in inventory

2.   B) Units started

3.   C) Ending units in inventory

4.   D) Units completed

 

Answer:  B

Explanation:  Every unit must have been started at some point, although it may not have been completed. Similarly, it would not have been counted in beginning or ending inventory if it was started and completed during the same period.

Difficulty: 2 Medium

Topic:  Reconcile the Number of Physical Units

Learning Objective:  03-02 Reconcile the number of physical units using the weighted-average method.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

33) Brody Corp. uses a process costing system. Beginning inventory for January consisted of 1,300 units that were 40% completed. 13,000 units were started during January. On January 31, the inventory consisted of 650 units that were 70% completed. How many units were completed during the period?

1.   A) 12,350

2.   B) 13,650

3.   C) 14,300

4.   D) 14,950

 

Answer:  B

Explanation:  Beginning inventory, plus units started, less ending inventory equals completed units. 1,300 + 13,000 − 650 = 13,650 (The percentage completed is distractor information.)

Difficulty: 3 Hard

Topic:  Reconcile the Number of Physical Units

Learning Objective:  03-02 Reconcile the number of physical units using the weighted-average method.

Bloom’s:  Apply

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

34) Braden Corp. uses a process costing system. Beginning inventory for January consisted of 1,300 units that were 60% completed. 13,000 units were started into the process during January. During January, 12,000 units were completed. How many units were in ending inventory on January 31?

1.   A) 1,950

2.   B) 1,300

3.   C) 650

4.   D) 2,300

 

Answer:  D

Explanation:  Beginning inventory, plus units started, less units completed equals ending inventory. 1,300 + 13,000 − 12,000 = 2,300

Difficulty: 3 Hard

Topic:  Reconcile the Number of Physical Units

Learning Objective:  03-02 Reconcile the number of physical units using the weighted-average method.

Bloom’s:  Apply

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

35) Bildy Corp. uses a process costing system. During January, 14,000 units were started, and 18,000 units were completed. On January 31, the inventory consisted of 500 units that were 70% completed. How many units were in beginning inventory on January 1?

1.   A) 0

2.   B) 500

3.   C) 3,500

4.   D) 4,500

 

Answer:  D

Explanation:  Units completed plus ending inventory, less units started equals beginning units in inventory. 18,000 + 500 − 14,000 = 4,500

Difficulty: 3 Hard

Topic:  Reconcile the Number of Physical Units

Learning Objective:  03-02 Reconcile the number of physical units using the weighted-average method.

Bloom’s:  Apply

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

36) Bosco Corp. uses a process costing system. Beginning inventory for January consisted of 1,500 units that were 50% completed. During January, 10,000 units were completed. On January 31, the inventory consisted of 750 units that were 75% completed. How many units were started during January?

1.   A) 8,500

2.   B) 9,250

3.   C) 10,000

4.   D) 10,750

 

Answer:  B

Explanation:  Units completed plus units in ending inventory, less units in beginning inventory equals units started during the period. 10,000 + 750 − 1,500 = 9,250

Difficulty: 3 Hard

Topic:  Reconcile the Number of Physical Units

Learning Objective:  03-02 Reconcile the number of physical units using the weighted-average method.

Bloom’s:  Apply

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

37) How could a firm using the weighted average method of process costing calculate how many units were started during a period?

1.   A) Add units completed and beginning units in inventory, then subtract ending units in inventory.

2.   B) Subtract beginning units in inventory from units completed, then add ending units in inventory.

3.   C) Add beginning units in inventory, units completed, and ending units in inventory.

4.   D) Subtract ending units in inventory from units completed, then add beginning units in inventory.

 

Answer:  B

Explanation:  Beginning units in inventory + units started = units completed + ending units in inventory. So units started = units completed + ending units in inventory − beginning units in inventory.

Difficulty: 3 Hard

Topic:  Reconcile the Number of Physical Units

Learning Objective:  03-02 Reconcile the number of physical units using the weighted-average method.

Bloom’s:  Analyze

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

38) A firm using process costing needs to reconcile the number of physical units in order to:

1.   A) account for units that have different percentages of completion.

2.   B) determine the number of units that were started during the period.

3.   C) reconcile beginning Work in Process Inventory with ending Work in Process Inventory.

4.   D) separate physical units from the equivalent units.

 

Answer:  A

Explanation:  The point of reconciling physical units is to separate completed units, which are 100% complete, from units in ending work in process inventory, which are partially complete.

Difficulty: 3 Hard

Topic:  Reconcile the Number of Physical Units

Learning Objective:  03-02 Reconcile the number of physical units using the weighted-average method.

Bloom’s:  Analyze

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

39) An equivalent unit is calculated by:

1.   A) dividing the number of physical units by the percentage of completion.

2.   B) multiplying the number of physical units by the percentage of completion.

3.   C) dividing the number of physical units into direct materials and conversion costs.

4.   D) subtracting the number of physical units in ending Work in Process Inventory from the total number of physical units.

 

Answer:  B

Explanation:  To calculate equivalent units, multiply the number of physical units by the percentage of completion.

Difficulty: 1 Easy

Topic:  Convert Physical Units into Equivalent Units

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

40) Equivalent units are tracked separately for which two categories of costs?

1.   A) Direct labor and manufacturing overhead.

2.   B) Direct materials and conversion cost.

3.   C) Direct materials and indirect materials.

4.   D) Finished goods and cost of goods sold.

 

Answer:  B

Explanation:  Direct materials and conversion costs have different percentages of completion so equivalent units are calculated separately for each category.

Difficulty: 1 Easy

Topic:  Convert Physical Units into Equivalent Units

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

41) Physical units multiplied by the percentage of completion yields:

1.   A) units completed and transferred out.

2.   B) beginning units in process.

3.   C) equivalent units.

4.   D) ending units in process.

 

Answer:  C

Explanation:  To calculate equivalent units, we multiply the number of physical units by the percentage of completion.

Difficulty: 1 Easy

Topic:  Convert Physical Units into Equivalent Units

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

42) For units that are completed and transferred out in a firm that uses the weighted average method of process costing:

1.   A) the number of units that came from beginning inventory is the same as the number of units that were started during the period.

2.   B) the number of equivalent units for direct materials is the same as the number of equivalent units for conversion cost.

3.   C) the number of equivalent units is less than the number of physical units.

4.   D) the number of equivalent units is more than the number of physical units.

 

Answer:  B

Explanation:  When units are completed and transferred out, the percentage of completion is 100% for both direct materials and conversion costs using the weighted average method.

Difficulty: 3 Hard

Topic:  Convert Physical Units into Equivalent Units

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Analyze

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

43) For a firm that uses the weighted average method of process costing, which of the following must be true?

1.   A) Physical units must be greater than or equal to equivalent units.

2.   B) Equivalent units must be greater than or equal to physical units.

3.   C) Physical units must be equal to equivalent units.

4.   D) Physical units can be greater than or less than equivalent units.

 

Answer:  A

Explanation:  Since units can never be more than 100% complete, physical units must always be greater than or equal to equivalent units.

Difficulty: 2 Medium

Topic:  Convert Physical Units into Equivalent Units

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Analyze

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

44) Brody Corp. uses a process costing system in which direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory for January consisted of 1,300 units that were 40% completed. 13,000 units were started into the process during January. On January 31, the inventory consisted of 650 units that were 70% completed. What would be the equivalent units for conversion cost using the weighted average method?

1.   A) 13,000

2.   B) 13,585

3.   C) 14,105

4.   D) 14,300

 

Answer:  C

Explanation:  First calculate completed units to be 13,650. 1,300 + 13,000 − 650 = 13,650 Then, convert completed units to equivalent units for both direct materials (100% complete) and conversion costs (70% complete). (13,650 × 100%) + (650 × 70%) = 14,105

Difficulty: 3 Hard

Topic:  Convert Physical Units into Equivalent Units

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Apply

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

45) Brody Corp. uses a process costing system in which direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory for January consisted of 1,300 units that were 40% completed. 13,000 units were started into the process during January. On January 31, the inventory consisted of 650 units that were 70% completed. What would be the equivalent units for direct materials cost using the weighted average method?

1.   A) 13,000

2.   B) 13,585

3.   C) 14,105

4.   D) 14,300

 

Answer:  D

Explanation:  First calculate completed units to be 13,650. 1,300 + 13,000 − 650 = 13,650 Both completed units and ending inventory are 100% complete with respect to direct materials, so the equivalent units for direct materials cost is the sum of 100% of the completed units plus 100% of the ending inventory. (13,650 × 100%) + (650 × 100%) = 14,300

Difficulty: 3 Hard

Topic:  Convert Physical Units into Equivalent Units

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Apply

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

46) Frost, Inc. is a service firm that uses process costing. The firm worked on a total of 1,600 cases this month, 800 of which were completed during the period. The remaining cases were 40% complete. The firm incurred $180,000 in direct labor and manufacturing overhead costs during the period, and had $4,800 in direct labor and manufacturing costs in beginning inventory. Using the weighted average method, what was the total number of equivalent units?

1.   A) 800

2.   B) 1,120

3.   C) 1,440

4.   D) 1,600

 

Answer:  B

Explanation:  800 cases were complete, leaving 800 (1,600 − 800 = 800) cases still in process at 40% complete. Equivalent units = (800 × 100%) + (800 × 40%) = 1,120.

Difficulty: 3 Hard

Topic:  Convert Physical Units into Equivalent Units

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Apply

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

47) For a firm using the weighted average method of process costing, it would not be necessary to translate physical units into equivalent units if:

1.   A) the FIFO method were used instead.

2.   B) direct materials were all added at the beginning of the process.

3.   C) direct labor and manufacturing overhead were combined into a single category called conversion costs.

4.   D) all units worked on during the period were completed during the period.

 

Answer:  D

Explanation:  Equivalent units = physical units × percentage of completion. If all units were 100% complete, equivalent units would equal physical units.

Difficulty: 2 Medium

Topic:  Convert Physical Units into Equivalent Units

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

48) For a firm that uses process costing, calculating equivalent units makes it possible to fulfill which of the following requirements of GAAP?

1.   A) Assigning an appropriate value to assets

2.   B) Assigning an appropriate value to liabilities

3.   C) Expensing period costs as they are incurred

4.   D) Recognizing revenue when it is realized or realizable

 

Answer:  A

Explanation:  By converting partially completed units into equivalent units, we can assign an appropriate value to work in process inventory for financial statement reporting purposes.

Difficulty: 2 Medium

Topic:  Convert Physical Units into Equivalent Units

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

49) Crador Corp. uses a process costing system in which direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory for January consisted of 1,300 units. 13,000 units were started into the process during January. On January 31, the inventory consisted of 650 units. Equivalent units for conversion costs were 14,235. What percentage complete was the ending inventory with respect to conversion costs on January 31 using the weighted-average method?

1.   A) 70%

2.   B) 80%

3.   C) 90%

4.   D) 100%

 

Answer:  C

Explanation:  Completed units = 1,300 + 13,000 − 650 = 13,650. Equivalent units = (13,650 × 100%) + (650 × percentage of completion) = 14,235. Solving for the percentage of completion, (14,235 − 13,650)/650 = 90%.

Difficulty: 3 Hard

Topic:  Convert Physical Units into Equivalent Units

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Apply

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

50) Gatlin Manufacturing adds direct materials at the beginning of the production process, while conversion costs are incurred uniformly throughout the process. At the end of the period, equivalent units for direct materials were 250 more than equivalent units for conversion costs. 1,000 units were started during the period, and 1,000 units were also completed. Ending Work in Process Inventory was 50% complete. How many physical units were in ending Work in Process Inventory?

1.   A) 250

2.   B) 500

3.   C) 750

4.   D) 1,000

 

Answer:  B

Explanation:  (100% × 1,000) + (100% × WIP) = 250 + (100% × 1,000) + (50% × WIP). WIP = 250/0.5 = 500.

Difficulty: 3 Hard

Topic:  Convert Physical Units into Equivalent Units

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Apply

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

51) Computing equivalent units is especially important for:

1.   A) goods that take a long time to produce, such as airplanes.

2.   B) goods that are started and completed during the same period.

3.   C) goods that take a relatively short time to produce, such as plastic bottles.

4.   D) goods with sustainability implications in their production processes.

 

Answer:  A

Explanation:  Computing equivalent units is especially important for products that take a long time to manufacture, such as wine or airplanes because the production process often spans fiscal years.

Difficulty: 2 Medium

Topic:  Convert Physical Units into Equivalent Units

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

52) Under the weighted average method of process costing, which of the following formulas is used to calculate the cost per equivalent unit?

1.   A) (Ending Inventory + Current Costs)/Physical Units

2.   B) (Beginning Inventory + Current Costs)/Physical Units

3.   C) (Ending Inventory + Current Costs)/Equivalent Units

4.   D) (Beginning Inventory + Current Costs)/Equivalent Units

 

Answer:  D

Explanation:  To calculate cost per equivalent unit under the weighted average method, divide total manufacturing cost by the total number of equivalent units. The total manufacturing cost includes the cost of the units in beginning inventory plus the costs that were incurred during the current period.

Difficulty: 1 Easy

Topic:  Calculate Cost Per Equivalent Unit

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

53) Under the weighted average method of process costing, the cost per equivalent unit is calculated for which of the following categories?

1.   A) Units sold and units in ending Finished Goods Inventory

2.   B) Direct materials and conversion costs

3.   C) Manufacturing costs and nonmanufacturing costs

4.   D) Completed units and ending units in process

 

Answer:  B

Explanation:  Because the equivalent units are different for direct materials and conversion costs, we must make a separate calculation for each category.

Difficulty: 1 Easy

Topic:  Calculate Cost Per Equivalent Unit

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

54) Cost per equivalent unit is kept separate for direct materials and conversion costs because:

1.   A) the physical units are different for the two categories.

2.   B) the total manufacturing costs are different for the two categories.

3.   C) the equivalent units are different for the two categories.

4.   D) the ending inventories are different for the two categories.

 

Answer:  C

Explanation:  Percentage completion, and therefore equivalent units, is often different for direct materials and conversion costs.

Difficulty: 1 Easy

Topic:  Calculate Cost Per Equivalent Unit

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

55) Which of the following is not used in the calculation of cost per equivalent unit?

1.   A) Current manufacturing costs

2.   B) Current nonmanufacturing costs

3.   C) Equivalent units

4.   D) Beginning inventory costs

 

Answer:  B

Explanation:  Nonmanufacturing costs are not involved in process costing. They are expensed as incurred.

Difficulty: 1 Easy

Topic:  Calculate Cost Per Equivalent Unit

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

56) To calculate cost per equivalent unit in process costing, divide total manufacturing costs by the total number of equivalent units. Under the weighted average method, what costs are reflected in total manufacturing costs?

1.   A) Only current period costs

2.   B) Only prior period costs

3.   C) Both current and prior period costs

4.   D) Both current and future period costs

 

Answer:  C

Explanation:  Under the weighted average method, total manufacturing costs include both beginning inventory (prior period) and current costs.

Difficulty: 1 Easy

Topic:  Calculate Cost Per Equivalent Unit

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

57) For a process costing firm, one could calculate the cost of beginning inventory in which of the following ways?

1.   A) (Cost per equivalent unit × equivalent units) − current costs

2.   B) Current costs − (equivalent units × cost per equivalent unit)

3.   C) (Current costs × cost per equivalent unit) − equivalent units

4.   D) Equivalent units × (current costs − cost per equivalent unit)

 

Answer:  A

Explanation:  Cost per equivalent unit = (beginning inventory + current costs)/equivalent units, so beginning inventory = cost per equivalent unit × equivalent units − current costs.

Difficulty: 3 Hard

Topic:  Calculate Cost Per Equivalent Unit

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Analyze

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

58) Frost, Inc. is a service firm that uses process costing. The firm worked on a total of 1,600 cases this month, 800 of which were completed during the period. The remaining cases were 40% complete. The firm incurred $180,000 in direct labor and manufacturing overhead costs during the period, and had $4,800 in direct labor and manufacturing costs in beginning inventory. Using the weighted average method, what was the cost per equivalent unit?

115.             A) $115.50

116.             B) $141.43

117.             C) $145.20

118.             D) $165.00

 

Answer:  D

Explanation:  800 cases were complete, leaving 800 (1,600− 800 = 800) cases still in process at 40% complete. Equivalent units = (800 × 100%) + (800 × 40%) = 1,120. Cost per equivalent unit = ($180,000 + $4,800)/1,120 = $165.

Difficulty: 3 Hard

Topic:  Calculate Cost Per Equivalent Unit

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Apply

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

59) Kenney Co. uses process costing to account for the production of canned energy drinks. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Equivalent units have been calculated to be 19,200 units for materials and 16,000 units for conversion costs. Beginning inventory consisted of $11,200 in materials and $6,400 in conversion costs. April costs were $57,600 for materials and $64,000 for conversion costs. Ending inventory still in process was 6,400 units (100% complete for materials, 50% for conversion). The cost per equivalent unit for conversion costs using the weighted average method would be:

4.   A) $4.00

5.   B) $4.40

6.   C) $1.10

7.   D) $8.70

 

Answer:  B

Explanation:  Cost per equivalent unit for conversion = ($6,400 + $64,000)/16,000 = $4.40.

Difficulty: 3 Hard

Topic:  Calculate Cost Per Equivalent Unit

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Apply

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

60) Kenney Co. uses process costing to account for the production of canned energy drinks. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Equivalent units have been calculated to be 19,200 units for materials and 16,000 units for conversion costs. Beginning inventory consisted of $11,200 in materials and $6,400 in conversion costs. April costs were $57,600 for materials and $64,000 for conversion costs. Ending inventory still in process was 6,400 units (100% complete for materials, 50% for conversion). The cost per equivalent unit for materials using the weighted average method would be closest to:

1.   A) $0.9167

2.   B) $3.0000

3.   C) $3.5833

4.   D) $7.2500

 

Answer:  C

Explanation:  Cost per equivalent unit for materials = ($11,200 + $57,600)/19,200 = $3.5833.

Difficulty: 3 Hard

Topic:  Calculate Cost Per Equivalent Unit

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Apply

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

61) Kenney Co. uses process costing to account for the production of canned energy drinks. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Equivalent units have been calculated to be 19,200 units for materials and 16,000 units for conversion costs. Beginning inventory consisted of $11,200 in materials and $6,400 in conversion costs. April costs were $57,600 for materials and $64,000 for conversion costs. Ending inventory still in process was 6,400 units (100% complete for materials, 50% for conversion). The total cost per unit using the weighted average method would be closest to:

7.   A) $7.9833

8.   B) $6.9091

9.   C) $7.0000

10.                D) $7.2500

 

Answer:  A

Explanation:  Cost per equivalent unit for conversion = ($6,400 + $64,000)/16,000 = $4.40.

Cost per equivalent unit for materials = ($11,200 + $57,600)/19,200 = $3.5833. Total cost per unit = $4.40 + $3.5833 = $7.9833.

Difficulty: 3 Hard

Topic:  Calculate Cost Per Equivalent Unit

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Apply

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

62) Livingston Co. uses process costing to account for the production of elastic bands. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory consisted of $14,000 in materials and $8,000 in conversion costs. April costs were $72,000 for materials and $80,000 for conversion costs. During April 8,000 units were completed. Ending work in process inventory was 4,000 units (100% complete for materials, 50% for conversion). The cost per equivalent unit for conversion costs using the weighted average method would be:

8.   A) $8.00

9.   B) $8.80

10.                C) $2.20

11.                D) $17.40

 

Answer:  B

Explanation:  For materials, EUs = (8,000 × 100%) + (4,000 × 100%) = 12,000, and for conversion costs, EUs = (8,000 × 100%) + (4,000 × 50%) = 10,000. Cost per equivalent unit = ($8,000 + $80,000)/10,000 = $8.80.

Difficulty: 3 Hard

Topic:  Convert Physical Units into Equivalent Units; Calculate Cost Per Equivalent Unit

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Apply

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

63) Livingston Co. uses process costing to account for the production of elastic bands. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory consisted of $14,000 in materials and $8,000 in conversion costs. April costs were $72,000 for materials and $80,000 for conversion costs. During April 8,000 units were completed. Ending work in process inventory was 4,000 units (100% complete for materials, 50% for conversion). The equivalent cost per unit for materials using the weighted average method would be closest to:

1.   A) $1.8333

2.   B) $6.0000

3.   C) $7.1667

4.   D) $14.5000

 

Answer:  C

Explanation:  EUs for materials = (8,000 × 100%) + (4,000 × 100%) = 12,000. Cost per equivalent unit for materials = ($14,000 + $72,000)/12,000 = $7.1667.

Difficulty: 3 Hard

Topic:  Convert Physical Units into Equivalent Units; Calculate Cost Per Equivalent Unit

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Apply

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

64) Livingston Co. uses process costing to account for the production of elastic bands. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory consisted of $14,000 in materials and $8,000 in conversion costs. April costs were $72,000 for materials and $80,000 for conversion costs. During April 8,000 units were completed. Ending work in process inventory was 4,000 units (100% complete for materials, 50% for conversion). The total cost per unit using the weighted average method would be:

15.                A) $15.9667

16.                B) $13.8382

17.                C) $14.0000

18.                D) $14.5000

 

Answer:  A

Explanation:  Equivalent units for materials = (8,000 × 100%) + (4,000 × 100%) = 12,000, and for conversion costs, (8,000 × 100%) + (4,000 × 50%) = 10,000. Cost per equivalent unit for conversion costs = ($8,000 + $80,000)/10,000 = $8.80. For materials, ($14,000 + $72,000)/12,000 = $7.1667. Total cost per unit = $8.80 + $7.1667 = $15.9667.

Difficulty: 3 Hard

Topic:  Convert Physical Units into Equivalent Units; Calculate Cost Per Equivalent Unit

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Apply

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

65) Macadam Corp. uses the weighted average method of process costing. Its cost per equivalent unit for direct materials was $5.00 this period, and it had 25,000 equivalent units for direct materials. Beginning inventory costs were 25% of current costs. How much were current costs?

1.   A) $25,000

2.   B) $75,000

3.   C) $100,000

4.   D) $125,000

 

Answer:  C

Explanation:  $5.00 = [(25% × current costs) + current costs]/25,000. Current costs = $125,000/1.25 = $100,000.

Difficulty: 3 Hard

Topic:  Calculate Cost Per Equivalent Unit

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Apply

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

66) To reconcile the total cost of Work in Process Inventory, account for:

1.   A) both beginning Work in Process Inventory and any costs that were added during the current period.

2.   B) only beginning Work in Process Inventory.

3.   C) only costs that were added during the period.

4.   D) beginning Work in Process Inventory, any costs that were added during the current period, and completed costs.

 

Answer:  A

Explanation:  To reconcile the total cost of Work in Process Inventory, we must account for any costs that were in Work in Process Inventory at the beginning of the period plus any costs that were added during the current period.

Difficulty: 2 Medium

Topic:  Reconcile the Total Cost of Work In Process Inventory

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

67) To determine how much cost should be assigned to ending Work in Process Inventory:

1.   A) multiply costs per equivalent unit by the number of equivalent units associated with units completed.

2.   B) multiply costs per equivalent unit by the number of equivalent units associated with ending Work in Process Inventory.

3.   C) subtract cost of beginning inventory from current period costs.

4.   D) add cost of beginning inventory and current period costs.

 

Answer:  B

Explanation:  To assign costs to ending inventory, multiply the costs per equivalent unit by the number of equivalent units in ending inventory.

Difficulty: 1 Easy

Topic:  Reconcile the Total Cost of Work In Process Inventory

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

68) To determine how much cost should be transferred out of Work in Process Inventory:

1.   A) multiply costs per equivalent unit by the number of equivalent units associated with units completed.

2.   B) multiply costs per equivalent unit by the number of equivalent units associated with ending inventory.

3.   C) subtract cost of beginning inventory from current period costs.

4.   D) add cost of beginning inventory and current period costs.

 

Answer:  A

Explanation:  To assign costs to units completed and transferred out, multiply the costs per equivalent unit by the number of equivalent units completed.

Difficulty: 1 Easy

Topic:  Reconcile the Total Cost of Work In Process Inventory

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

69) Stangol Co. uses process costing to account for the production of highlighter pens. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Cost per equivalent unit has been calculated to be $8.80 for conversion costs and $7.1667 for materials. 12,000 units were worked on during the period. Ending inventory still in process was 4,000 units (100% complete for materials, 50% for conversion). The value of ending inventory using the weighted average method would be closest to:

933.             A) $31,933.20

934.             B) $46,266.80

935.             C) $63,866.40

936.             D) $130,000.00

 

Answer:  B

Explanation:  Equivalent units = (4,000 × 50%) = 2,000 for conversion costs and (4,000 × 100%) = 4,000 for materials. ($8.80 × 2,000) + ($7.1667 × 4,000) = $46,266.80.

Difficulty: 3 Hard

Topic:  Convert Physical Units into Equivalent Units; Reconcile the Total Cost of Work In Process Inventory

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Apply

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

 

 

 

70) Stangol Co. uses process costing to account for the production of highlighter pens. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Cost per equivalent unit has been calculated to be $8.80 for conversion costs and $7.1667 for materials. 12,000 units were worked on during the period. Ending inventory still in process was 4,000 units (100% complete for materials, 50% for conversion). The value of units completed and transferred out using the weighted average method would be closest to:

733.             A) $127,733.60

734.             B) $130,000.00

735.             C) $152,000.00

736.             D) $159,666.00

 

Answer:  A

Explanation:  Completed units = 12,000 − 4,000 = 8,000 Total cost per unit = $8.80 + $7.1667 = $15.9667. Value of units completed and transferred out = $15.9667 ×

8,000 = $127,733.60.

Difficulty: 3 Hard

Topic:  Reconcile the Total Cost of Work In Process Inventory

Learning Objective:  03-03 Calculate the number of equivalent units using the weighted-average method.

Bloom’s:  Apply

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation