Chapter 4 Supplement
Process Costing Using the FIFO Method
True/False
1. (Appendix) Any difference in the equivalent units calculated under the weighted-average and the FIFO
methods is due to the units in the ending work in process inventory.
Level: Easy LO: 2,6 Ans: F
2. (Appendix) There is no difference in the unit costs computed under the weighted-average and FIFO
methods of process costing if there are no beginning work in process inventories.
Level: Hard LO: 4,8 Ans: T
3. (Appendix) In a process costing production report, the “Cost to be accounted for” will be the same
whether the weighted-average or the FIFO method is used.
Level: Medium LO: 5,9 Ans: T
4. (Appendix) Under the FIFO method of product costing, equivalent units of production consider units in
the beginning inventory as if they were started and completed during the current period.
Level: Medium LO: 6 Ans: F
5. (Appendix) The production report of a company using the FIFO cost method likely would show goods
transferred from a department in two parts--one part consisting of units from the beginning inventory
completed and transferred, and the other part consisting of units that were both started and completed
during the month.
Level: Medium LO: 7 Ans: T
6. (Appendix) In computing the cost per equivalent unit on the production report, costs in the beginning
work in process inventory are kept separate from current period costs when the FIFO method is used.
Level: Medium LO: 8 Ans: T
7. (Appendix) A major advantage of the FIFO method is that it allows managers to judge the performance
of the current period independently of the performance of the prior period.
Level: Medium LO: 9,10 Ans: T
8. (Appendix) Under a JIT inventory system, the differences between FIFO and weighted-average costing
methods are reduced.
Level: Easy LO: 9,10 Ans: T
Brewer, Introduction to Managerial Accounting, 3/e 1
,9. (Appendix) When the FIFO method is used to prepare a production report, costs to the next department
are accounted for in two separate blocks.
Level: Easy LO: 9 Ans: T
Multiple Choice
10. (Appendix) A process costing system was used for a department that began operations in January.
Approximately the same number of physical units, at the same degree of completion were in work in
process at the end of both January and February. Monthly conversion costs are allocated between ending
work in process and units completed. Compared to the FIFO method, would the weighted-average
method use the same or a greater number of equivalent units to calculate the monthly allocations?
A) A Above
B) B Above
C) C Above
D) D Above
Source: CPA, adapted
Level: Hard LO: 2,6 Ans: D
11. (Appendix) The FIFO method provides a major advantage over the weighted-average method in that:
A) the calculation of equivalent units is less complex under the FIFO method.
B) the FIFO method treats units in the beginning inventory as if they were started and completed during
the current period.
C) the FIFO method provides measurements of work done during the current period.
D) the weighted-average method ignores units in the beginning and ending work in process inventories.
Level: Medium LO: 2,6 Ans: C
12. (Appendix) The weighted-average method of process costing differs from the FIFO method of process
costing in that the weighted-average method:
A) can be used under any cost flow assumption.
B) does not require the use of predetermined overhead rates.
C) keeps costs in the beginning inventory separate from current period costs.
D) does not consider the degree of completion of units in the beginning work in process inventory when
computing equivalent units of production.
Level: Medium LO: 2,6 Ans: D
2 Brewer, Introduction to Managerial Accounting, 3/e
,13. (Appendix) Equivalent units for a process costing system using the FIFO method would be equal to:
A) units completed during the period plus equivalent units in the ending work in process inventory.
B) units started and completed during the period plus equivalent units in the ending work in process
inventory.
C) units completed during the period and transferred out.
D) units started and completed during the period plus equivalent units in the ending work in process
inventory plus work needed to complete units in the beginning work in process inventory.
Level: Medium LO: 6 Ans: D
14. (Appendix) Ebart Company uses the FIFO method in its process costing system. The first processing
department, the Welding Department, started the month with 14,000 units in its beginning work in
process inventory that were 70% complete with respect to conversion costs. The conversion cost in this
beginning work in process inventory was $20,580. An additional 53,000 units were started into
production during the month. There were 17,000 units in the ending work in process inventory of the
Welding Department that were 20% complete with respect to conversion costs. A total of $80,660 in
conversion costs were incurred in the department during the month.
What would be the cost per equivalent unit for conversion costs for the month on the department’s
production report? (Round off to three decimal places.)
A) $1.522
B) $2.100
C) $1.850
D) $1.511
Level: Medium LO: 6,7,8 Ans: C
15. (Appendix) Eden Company uses the FIFO method in its process costing system. The first processing
department, the Welding Department, started the month with 10,000 units in its beginning work in
process inventory that were 50% complete with respect to conversion costs. The conversion cost in this
beginning work in process inventory was $35,500. An additional 76,000 units were started into
production during the month. There were 10,000 units in the ending work in process inventory of the
Welding Department that were 80% complete with respect to conversion costs. A total of $541,150 in
conversion costs were incurred in the department during the month.
What would be the cost per equivalent unit for conversion costs for the month on the department’s
production report? (Round off to three decimal places.)
A) $6.850
B) $7.120
C) $6.705
D) $7.100
Level: Medium LO: 6,7,8 Ans: A
Brewer, Introduction to Managerial Accounting, 3/e 3
, 16. (Appendix) Maenhout Corporation uses the FIFO method in its process costing system. Operating
data for the Casting Department for the month of September appear below:
According to the company’s records, the conversion cost in beginning work in process inventory was
$31,500 at the beginning of September. Additional conversion costs of $172,396 were incurred in the
department during the month.
What would be the cost per equivalent unit for conversion costs for September on the Casting
Department’s production report? (Round off to three decimal places.)
A) $2.399
B) $2.694
C) $2.500
D) $2.620
Level: Medium LO: 6,7,8 Ans: D
17. (Appendix) Maher Corporation uses the FIFO method in its process costing system. Operating data
for the Casting Department for the month of September appear below:
According to the company’s records, the conversion cost in beginning work in process inventory was
$8,960 at the beginning of September. Additional conversion costs of $671,560 were incurred in the
department during the month.
What would be the cost per equivalent unit for conversion costs for September on the Casting
Department’s production report? (Round off to three decimal places.)
A) $6.520
B) $6.923
C) $6.400
D) $6.131
Level: Medium LO: 6,7,8 Ans: A
4 Brewer, Introduction to Managerial Accounting, 3/e
Process Costing Using the FIFO Method
True/False
1. (Appendix) Any difference in the equivalent units calculated under the weighted-average and the FIFO
methods is due to the units in the ending work in process inventory.
Level: Easy LO: 2,6 Ans: F
2. (Appendix) There is no difference in the unit costs computed under the weighted-average and FIFO
methods of process costing if there are no beginning work in process inventories.
Level: Hard LO: 4,8 Ans: T
3. (Appendix) In a process costing production report, the “Cost to be accounted for” will be the same
whether the weighted-average or the FIFO method is used.
Level: Medium LO: 5,9 Ans: T
4. (Appendix) Under the FIFO method of product costing, equivalent units of production consider units in
the beginning inventory as if they were started and completed during the current period.
Level: Medium LO: 6 Ans: F
5. (Appendix) The production report of a company using the FIFO cost method likely would show goods
transferred from a department in two parts--one part consisting of units from the beginning inventory
completed and transferred, and the other part consisting of units that were both started and completed
during the month.
Level: Medium LO: 7 Ans: T
6. (Appendix) In computing the cost per equivalent unit on the production report, costs in the beginning
work in process inventory are kept separate from current period costs when the FIFO method is used.
Level: Medium LO: 8 Ans: T
7. (Appendix) A major advantage of the FIFO method is that it allows managers to judge the performance
of the current period independently of the performance of the prior period.
Level: Medium LO: 9,10 Ans: T
8. (Appendix) Under a JIT inventory system, the differences between FIFO and weighted-average costing
methods are reduced.
Level: Easy LO: 9,10 Ans: T
Brewer, Introduction to Managerial Accounting, 3/e 1
,9. (Appendix) When the FIFO method is used to prepare a production report, costs to the next department
are accounted for in two separate blocks.
Level: Easy LO: 9 Ans: T
Multiple Choice
10. (Appendix) A process costing system was used for a department that began operations in January.
Approximately the same number of physical units, at the same degree of completion were in work in
process at the end of both January and February. Monthly conversion costs are allocated between ending
work in process and units completed. Compared to the FIFO method, would the weighted-average
method use the same or a greater number of equivalent units to calculate the monthly allocations?
A) A Above
B) B Above
C) C Above
D) D Above
Source: CPA, adapted
Level: Hard LO: 2,6 Ans: D
11. (Appendix) The FIFO method provides a major advantage over the weighted-average method in that:
A) the calculation of equivalent units is less complex under the FIFO method.
B) the FIFO method treats units in the beginning inventory as if they were started and completed during
the current period.
C) the FIFO method provides measurements of work done during the current period.
D) the weighted-average method ignores units in the beginning and ending work in process inventories.
Level: Medium LO: 2,6 Ans: C
12. (Appendix) The weighted-average method of process costing differs from the FIFO method of process
costing in that the weighted-average method:
A) can be used under any cost flow assumption.
B) does not require the use of predetermined overhead rates.
C) keeps costs in the beginning inventory separate from current period costs.
D) does not consider the degree of completion of units in the beginning work in process inventory when
computing equivalent units of production.
Level: Medium LO: 2,6 Ans: D
2 Brewer, Introduction to Managerial Accounting, 3/e
,13. (Appendix) Equivalent units for a process costing system using the FIFO method would be equal to:
A) units completed during the period plus equivalent units in the ending work in process inventory.
B) units started and completed during the period plus equivalent units in the ending work in process
inventory.
C) units completed during the period and transferred out.
D) units started and completed during the period plus equivalent units in the ending work in process
inventory plus work needed to complete units in the beginning work in process inventory.
Level: Medium LO: 6 Ans: D
14. (Appendix) Ebart Company uses the FIFO method in its process costing system. The first processing
department, the Welding Department, started the month with 14,000 units in its beginning work in
process inventory that were 70% complete with respect to conversion costs. The conversion cost in this
beginning work in process inventory was $20,580. An additional 53,000 units were started into
production during the month. There were 17,000 units in the ending work in process inventory of the
Welding Department that were 20% complete with respect to conversion costs. A total of $80,660 in
conversion costs were incurred in the department during the month.
What would be the cost per equivalent unit for conversion costs for the month on the department’s
production report? (Round off to three decimal places.)
A) $1.522
B) $2.100
C) $1.850
D) $1.511
Level: Medium LO: 6,7,8 Ans: C
15. (Appendix) Eden Company uses the FIFO method in its process costing system. The first processing
department, the Welding Department, started the month with 10,000 units in its beginning work in
process inventory that were 50% complete with respect to conversion costs. The conversion cost in this
beginning work in process inventory was $35,500. An additional 76,000 units were started into
production during the month. There were 10,000 units in the ending work in process inventory of the
Welding Department that were 80% complete with respect to conversion costs. A total of $541,150 in
conversion costs were incurred in the department during the month.
What would be the cost per equivalent unit for conversion costs for the month on the department’s
production report? (Round off to three decimal places.)
A) $6.850
B) $7.120
C) $6.705
D) $7.100
Level: Medium LO: 6,7,8 Ans: A
Brewer, Introduction to Managerial Accounting, 3/e 3
, 16. (Appendix) Maenhout Corporation uses the FIFO method in its process costing system. Operating
data for the Casting Department for the month of September appear below:
According to the company’s records, the conversion cost in beginning work in process inventory was
$31,500 at the beginning of September. Additional conversion costs of $172,396 were incurred in the
department during the month.
What would be the cost per equivalent unit for conversion costs for September on the Casting
Department’s production report? (Round off to three decimal places.)
A) $2.399
B) $2.694
C) $2.500
D) $2.620
Level: Medium LO: 6,7,8 Ans: D
17. (Appendix) Maher Corporation uses the FIFO method in its process costing system. Operating data
for the Casting Department for the month of September appear below:
According to the company’s records, the conversion cost in beginning work in process inventory was
$8,960 at the beginning of September. Additional conversion costs of $671,560 were incurred in the
department during the month.
What would be the cost per equivalent unit for conversion costs for September on the Casting
Department’s production report? (Round off to three decimal places.)
A) $6.520
B) $6.923
C) $6.400
D) $6.131
Level: Medium LO: 6,7,8 Ans: A
4 Brewer, Introduction to Managerial Accounting, 3/e
