TEST BANK FOR PROCESS COSTING- W.A. & FIFO

TEST BANK FOR PROCESS COSTING- W.A. & FIFO TEST BANK FOR PROCESS COSTING- W.A. & FIFO 1. Chicago Processing Co. uses the average costing method and reported a beginning inventory of 5,000 units that were 20% complete with respect to materials in one department. During the month, 11,000 units were started; 8,000 units were finished; ending inventory amounted to 8,000 units that were 60% complete with respect to materials. Total materials cost during the period for work in process should be spread over: A. 7,200 units B. 16,000 units C. 11,200 units D. 13,200 units E. 12,800 units SUPPORTING CALCULATION: 8,000 + .60(8,000) = 12,800 units 2. Beginning work in process was 60% complete as to conversion costs, and ending work in process was 45% complete as to conversion costs. The dollar amount of the conversion cost included in ending work in process (using the average cost method) is determined by multiplying the average unit conversion costs by what percentage of the total units in ending work in process? A. 60% B. 55% C. 45% D. 522% E. 100% Answer: C 3. Goode Manufacturing has three producing departments in its factory. The ending inventory in the Milling Department consisted of 3,000 units. These units were 60% complete with respect to labor and factory overhead. Materials are applied at the end of the milling process. Unit costs for the complete process in the Milling Department are: materials, P1; labor, P2; and factory overhead, P3. The appropriate unit cost for each unit in the ending inventory is: A. P2 B. P5 C. P3 D. P6 E. P4 SUPPORTING CALCULATION: 60% (P2 + P3) = P3 4. Gyro Products transferred 10,000 units to one department. An additional 3,000 units of materials were added in the department. At the end of the month, 7,000 units were transferred to the next department. There was no beginning inventory. The costs for units transferred in would be effectively allocated over: A. 17,000 units B. 3,000 units C. 10,000 units D. 7,000 units E. 13,000 units SUPPORTING CALCULATION: 7,000 units transferred out + 6,000 units in ending inventory = 13,000 units 5. Read, Inc. instituted a new process in October. During October, 10,000 units were started in Department A. Of the units started, 7,000 were transferred to Department B, and 3,000 remained in work in process at October 31. The work in process at October 31 was 100% complete as to material costs and 50% complete as to conversion costs. Materials costs of P27,000 and conversion costs of P39,950 were charged to Department A in October. What were the total costs transferred to Department B? A. P46,900 B. P53,600 C. P51,800 D. P57,120 E. none of the above SUPPORTING CALCULATION: Materials unit cost = P27,000  (7,000 + 3,000) = P2.70 2 Conversion unit cost = P39,950  [7,000 + 50%(3,000)] = P4.70 Costs transferred = 7,000(P2.70 + P4.70) = P51,800 C 6. Dover Corporation's production cycle starts in the Mixing Department. The following information is available for April: Units Work in process, April 1 (50% complete) ................................................................................. 40,000 Started in April ....................................................................................................................................... 240,000 Work in process, April 30 (60% complete)............................................................................... 25,000 Materials are added at the beginning of the process in the Mixing Department. Using the average cost method, what are the equivalent units of production for the month of April? Materials Conversion A. 255,000 255,000 B. 270,000 280,000 C. 280,000 270,000 D. 305,000 275,000 E. 240,000 250,000 SUPPORTING CALCULATION: Materials = 40,000 + 240,000 = 280,000 Conversion = (280,000 - 25,000) + .6(25,000) = 270,000 B 7. Information concerning Department A of Neeley Company for June is as follows: Materials Units Costs Beginning work in process.................................................................................. 17,000 P12,800 Started in June .......................................................................................................... 82,000 69,700 Units completed....................................................................................................... 85,000 Ending work in process........................................................................................ 14,000 All materials are added at the beginning of the process. Using the average cost method, the cost per equivalent unit for materials is: A. P0.825 B. P0.833 C. P0.85 D. P0.97 E. P1.01 SUPPORTING CALCULATION: (P12,800 + P69,700)  (85,000 + 14,000) = P.833 B 8. Kennedy Company adds materials in 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 October is as follows: