Test bank managerial accounting by kieso weygandt 5e ch03

CHAPTER 3
PROCESS COSTING
SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM’S TAXONOMY
Item

SO

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7
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98.
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146.
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AP
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True-False Statements

1.
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1
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K
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C

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K
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AP

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6
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K
C
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a
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a
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a
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a

30.
sg
31.
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a

sg

33.
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Multiple Choice Questions
38.
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48.
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1
1
1
1
1
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4
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4
5

5

C
C
K
K
K
C
K
C
K
K
C
K
C
C
C
C
K
C
AP
AP

58.
59.
60.
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64.

65.
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5
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5
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AP
AP
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K
AP
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C
AP
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AP
AP
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AP
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AP
AP

78.
79.
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82.
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AP
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C
C
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K
AP
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AP

Brief Exercises

137.
138.
139.
sg
st
a

5
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5

AP
AP
AP

140.
141.
142.

6
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AP
AP
AP

143.
144.
145.

6
6
6

AP
AP
AP

a

This question also appears in the Study Guide.
This question also appears in a self-test at the student companion website.
This topic is dealt with in an Appendix to the chapter.

a

118.
119.
a
120.
a
121.
a
122.
a
123.
a
124.
st

125.
sg
126.
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128.
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129.
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130.
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131.
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132.
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133.
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134.
st
135.
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136.
a


3-2

Test Bank for ISV Managerial Accounting, Fourth Edition

SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM’S TAXONOMY
Exercises
149.
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153.

4
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AP
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AP

154.
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158.

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5,6
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5,6

AP
AP
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AN
AP

159.
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5,6
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AP
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164.
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168.

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K

169.
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a
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180.

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K

a

Completion Statements
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178.
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SUMMARY OF STUDY OBJECTIVES BY QUESTION TYPE
Item

Type

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Type

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1.
2.

TF
TF

3.

31.

TF
TF

38.
39.

4.
5.
6.

TF
TF
TF

7.
32.
43.

TF
TF
MC

44.
45.
46.

33.

TF

8.
9.
10.

TF
TF
TF

11.
34.
50.

TF
TF
MC

51.
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53.

12.
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35.

TF

TF
TF
TF
TF
TF

56.
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MC
MC
MC
MC
MC
MC

62.
63.
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65.
66.
67.

17.
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20.
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22.
36.
76.
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78.

TF
TF
TF
TF
TF
TF
TF
MC
MC
MC

79.
80.
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MC
MC
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MC
MC

89.
90.
91.
92.
93.
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95.
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97.
98.

Type

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Study Objective 1
MC
40. MC
42.
MC
41. MC
125.
Study Objective 2
MC
47. MC
126.
MC
48. MC
127.
MC
49. MC
173.
Study Objective 3
Study Objective 4
MC
54. MC
149.
MC
55. MC
150.
MC
128. MC
151.
Study Objective 5
MC

68. MC
74.
MC
69. MC
75.
MC
70. MC
129.
MC
71. MC
130.
MC
72. MC
137.
MC
73. MC
138.
Study Objective 6
MC
99. MC
109.
MC
100. MC
110.
MC
101. MC
111.
MC
102. MC
112.

MC
103. MC
113.
MC
104. MC
131.
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105. MC
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106. MC
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107. MC
134.
MC
108. MC
135.

Type

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Type

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Type

MC

MC

172.

C

MC
MC
C

174.

C

Ex
Ex
Ex

152.
153.
175.

Ex
Ex
C

MC
MC
MC
MC

BE
BE

139.
154.
155.
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157.
158.

BE
Ex
Ex
Ex
Ex
Ex

159.
160.
161.
162.
176.

Ex
Ex
Ex
Ex
C

MC

MC
MC
MC
MC
MC
MC
MC
MC
MC

140.
141.
142.
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146.
156.
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BE
BE
BE
BE
BE
BE
BE
Ex
Ex

Ex

159.
160.
161.
162.
163.
164.
165.
177.
178.
179.

Ex
Ex
Ex
Ex
Ex
Ex
Ex
C
C
C


Process Costing

23.
24.

TF
TF

25.
114.

TF
MC

115.
116.

26.
27.
28.

TF
TF
TF

29.
30.
37.

TF
TF
TF

117.
118.

119.

Note: TF = True-False
MC = Multiple Choice

Study Objective 7
MC
136. MC
167.
MC
166. Ex
168.
a
Study Objective 8
MC
120. MC
123.
MC
121. MC
124.
MC
122. MC
147.

Ex
Ex

169.
180.

Ex
C

MC
MC
BE

148.
170.
171.

BE
Ex
Ex

BE = Brief Exercise
Ex = Exercise

3-3

C = Completion

The chapter also contains one set of eight Matching questions and four Short-Answer Essay
questions.

CHAPTER STUDY OBJECTIVES
1. Understand who uses process cost systems. Companies that mass-produce similar
products in a continuous fashion use process cost systems. Once production begins, it
continues until the finished product emerges. Each unit of finished product is
indistinguishable from every other unit.

2. Explain the similarities and differences between job order cost and process cost
systems. Job order cost systems are similar to process cost systems in three ways: (1)
Both systems track the same cost elements—direct materials, direct labor, and
manufacturing overhead. (2) Both accumulate costs in the same accounts—Raw Materials
Inventory, Factory Labor, and Manufacturing Overhead. (3) Both assign accumulated costs
to the same accounts—Work in Process, Finished Goods Inventory, and Cost of Goods
Sold. However, the method of assigning costs differs significantly.
There are four main differences between the two cost systems: (1) A process cost system
uses separate accounts for each department or manufacturing process, rather than only
one work in process account used in a job order cost system. (2) A process cost system
summarizes costs in a production cost report for each department. A job cost system
charges costs to individual jobs and summarizes them in a job cost sheet. (3) Costs are
totaled at the end of a time period in a process cost system, but at the completion of a job in
a job cost system. (4) A process cost system calculates unit cost as: Total manufacturing
costs for the period ÷ Units produced during the period. A job cost system calculates unit
cost as: Total cost per job ÷ Units produced.
3. Explain the flow of costs in a process cost system. A process cost system assigns
manufacturing costs for raw materials, labor, and overhead to work in process accounts for
various departments or manufacturing processes. It transfers the costs of partially
completed units from one department to another as those units move through the
manufacturing process. The system transfers the costs of completed work to Finished
Goods Inventory. Finally, when inventory is sold, the system transfers the costs to Cost of
Goods Sold.


3-4

Test Bank for ISV Managerial Accounting, Fourth Edition

4. Make the journal entries to assign manufacturing costs in a process cost system.

Entries to assign the costs of raw materials, labor, and overhead consist of a credit to Raw
Materials Inventory, Factory Labor, and Manufacturing Overhead, and a debit to Work in
Process for each department. Entries to record the cost of goods transferred to another
department are a credit to Work in Process for the department whose work is finished and a
debit to the department to which the goods are transferred. The entry to record units
completed and transferred to the warehouse is a credit for the department whose work is
finished and a debit to Finished Goods Inventory. The entry to record the sale of goods is a
credit to Finished Goods Inventory and a debit to Cost of Goods Sold.
5. Compute equivalent units. Equivalent units of production measure work done during a
period, expressed in fully completed units. Companies use this measure to determine the
cost per unit of completed product. Equivalent units are the sum of the units completed and
transferred out plus equivalent units of ending work in process.
6. Explain the four steps necessary to prepare a production cost report. The four steps to
complete a production cost report are: (1) Compute the physical unit flow—that is, the total
units to be accounted for. (2) Compute the equivalent units of production. (3) Compute the
unit production costs, expressed in terms of equivalent units of production. (4) Prepare a
cost reconciliation schedule, which shows that the total costs accounted for equal the total
costs to be accounted for.
7. Prepare a production cost report. The production cost report contains both quantity and
cost data for a production department. There are four sections in the report: (1) number of
physical units, (2) equivalent units determination, (3) unit costs, and (4) cost reconciliation
schedule.
a

8. Compute equivalent units using the FIFO method. Equivalent units under the FIFO
method are the sum of the work performed to: (1) Finish the units of beginning work in
process inventory, if any. (2) Complete the units started into production during the period. (3)
Start, but only partially complete, the units in ending work in process inventory.

Process Costing

3-5

TRUE-FALSE STATEMENTS
1.

Process cost accounting focuses on the process involved in mass-producing products that
are very similar in nature.

2.

Process cost systems are used to apply costs to a specific job, such as the manufacturing
of a specialized machine.

3.

A company that produces motion pictures would likely use a process cost system.

4.

In a process cost system, costs are tracked through a series of connected manufacturing
processes or departments, rather than by individual jobs.

5.

In a process cost system, total costs are determined at the end of a month or year.

6.

Separate work in process accounts are maintained for each production department or
manufacturing process in a process cost system.

7.

In a process cost system, materials, labor and overhead are only added in the first
production department.

8.

The assignment of the three manufacturing cost elements to Work in Process in a process
cost system is the same as in a job order cost system.

9.

Fewer materials requisitions are generally required in a process cost system than in a job
order cost system.

10.

In a process cost system, all labor costs incurred within a producing department are a cost
of processing the raw materials.

11.

A primary driver of overhead costs in continuous manufacturing operations is machine
time used.

12.

Equivalent units of production are used to determine the cost per unit of completed
products.

13.

Equivalent units of production measure the work done during a period, expressed in fully
completed units.

14.

Equivalent units of production is the sum of units completed and transferred out plus
equivalent units of beginning work in process.

15.

The weighted-average method of computing equivalent units is the most widely used
method in practice.

16.

There are no units in process at the beginning of the period, 1,000 units in process at the
end of the period that are 40% complete, and 10,000 units transferred out during the
period. Based on this information, there were 9,600 equivalent units of production during
the period.

17.

The first step performed in preparing a production cost report is computing the equivalent
units of production.

3-6

Test Bank for ISV Managerial Accounting, Fourth Edition

18.

Equivalent units of production must be calculated before the unit production costs can be
computed.

19.

The physical units in a department are another name for the equivalent units of
production.

20.

Unit material cost is computed by taking total material costs charged to the department for
the period and dividing by the physical units in the process during the period.

21.

When equivalent units of production are different for materials and conversion costs, unit
costs are computed for materials, conversion, and total manufacturing.

22.

The total manufacturing cost per unit is used in costing the units completed and
transferred during the period.

23.

A production cost report is an internal document for management that shows production
quantity and cost data for a particular job.

24.

Production cost reports provide a basis for evaluating the productivity of a department.

25.

Companies often use a combination of a process cost and a job order cost system, called
operations costing.

a

26.

The FIFO method is easier to understand and use than the weighted-average method.

a

27.

The FIFO method is conceptually superior to the weighted-average method.

a

28.

When comparing the FIFO with the weighted-average method, the FIFO method provides
current cost information.

a

29.

There are no units in ending work in process at the end of the period under the FIFO
method.

a

30.

Companies using the weighted-average method do not complete units left over from the
previous accounting periods. They start new units.

Additional True-False Questions
31.

In continuous process manufacturing, generally once the production begins, it continues
until the finished product emerges.

32.

One similarity of process cost accounting with job order cost accounting is that both
determine total manufacturing costs after each job.

33.

The flow of costs in a process costing system requires that materials be added in one
department, labor added in another department and manufacturing overhead in a third
department.

34.

When finished goods are sold, the entry to record the cost of goods sold is a debit to
Finished Goods Inventory and a credit to Cost of Goods Sold.


Process Costing

a

3-7

35.

When there is no beginning work in process and materials are entered at the beginning of
the process, equivalent units of materials are the same as the units started into
production.

36.

In order to compute the physical unit flow, a company must first compute unit production
costs.

37.

Under the FIFO method, it is assumed that the beginning work in process is completed

before new work is started.

Answers to True-False Statements
Item

1.
2.
3.
4.
5.
6.

Ans.

T
F
F
T
T
T

Item

7.
8.
9.
10.
11.
12.

Ans.

F
F
T
T
T
T

Item

13.
14.
15.
16.
17.
18.

Ans.

T
F
T
F
F
T

Item

19.

20.
21.
22.
23.
24.

Ans.

F
F
T
T
F
T

Item

25.
26.
a
27.
a
28.
a
29.
a
30.
a

Ans.

T
F
T
T
F
F

Item

31.
32.
33.
34.
35.
36.

Ans.

T
F
F
F
T
F

Item
a

37.

Ans.

T

MULTIPLE CHOICE QUESTIONS
38.

A process cost accounting system is most appropriate when
a. a variety of different products are produced, each one requiring different types of
materials, labor, and overhead.
b. the focus of attention is on a particular job or order.
c. similar products are mass-produced.
d. individual products are custom made to the specification of customers.

39.

A characteristic of products that are mass-produced in a continuous fashion is that
a. the products are identical or very similar in nature.
b. they are grouped in batches.
c. they are produced at the time an order is received.
d. their costs are accumulated on job cost sheets.

40.

A process cost system would be used for all of the following products except
a. chemicals.
b. computer chips.
c. motion pictures.
d. soft drinks.

41.

In a process cost system,
a. a Work in Process account is maintained for each product.
b. a materials requisition must identify the job on which the materials will be used.
c. a Work in Process account is maintained for each process.
d. one Work in Process account is maintained for all the processes, similar to a job order
cost system.


3-8

Test Bank for ISV Managerial Accounting, Fourth Edition

42.

Differences between a job order cost system and a process cost system include all of the
following except the
a. documents used to track costs.
b. point at which costs are totaled.
c. unit cost computations.
d. flow of costs.

43.

Which of these best reflects a distinguishing factor between a job order cost system and a
process cost system?
a. The detail at which costs are calculated
b. The time period each covers

c. The number of work in process accounts
d. The manufacturing cost elements included

44.

Which of the following is a true statement about process cost systems?
a. In process cost systems, costs are accumulated but not assigned.
b. A process cost system has one work in process account for each process.
c. In process cost systems, costs are summarized on job cost sheets.
d. Unit costs are not computed in process cost systems.

45.

Which of the following is correct regarding cost systems?
a.
b.
c.
d.

Work in process account
Work in process account
Work in process account
Work in process account

Job Order
several
one
one
several

Process
one for each process
one
one for each process
one

46.

In a process cost system, unit costs are determined using a
a. numerator of costs of each job.
b. denominator of units produced during the period.
c. denominator of units produced for the job.
d. denominator of units produced for the day.

47.

In process cost accounting, manufacturing costs are summarized on a
a. job order cost sheet.
b. process order cost sheet.
c. production cost report.
d. manufacturing cost sheet.

48.

Which of the following manufacturing cost elements occurs in a process cost system?
a. Direct materials
b. Direct labor
c. Manufacturing overhead
d. All of these

49.

In a process cost system, product costs are summarized
a. on job cost sheets.
b. on production cost reports.
c. after each unit is produced.
d. when the products are sold.


Process Costing

3-9

50.

When manufacturing overhead costs are assigned to production in a process cost system,
they are debited to
a. the Finished Goods Inventory account.
b. Cost of Goods Sold.
c. a Manufacturing Overhead account.
d. the Work in Process account.

51.

A product requires processing in two departments, Department A and then Department B,
before it is completed. Costs transferred out of Department A will be transferred to
a. Finished Goods Inventory.
b. Cost of Goods Sold.
c. Work in Process—Department B.
d. Manufacturing Overhead.

52.

Which of the following would not appear as a debit in the Work in Process account of a
second department in a two stage production process?
a. Materials used
b. Overhead applied
c. Labor assigned
d. Cost of products transferred out

53.

Materials requisitions are
a. not used in process costing.
b. generally used more frequently in process costing than job order costing.
c. generally used less frequently in process costing than job order costing.
d. used more frequently by latter stage production departments.

54.

A primary driver of overhead costs in continuous manufacturing operations is
a. direct labor dollars.
b. direct labor hours.
c. machine hours.
d. machine maintenance dollars.

55.

Price Manufacturing assigns overhead based on machine hours. Department A logs 1,200
machine hours and Department B shows 2,000 machine hours for the period. If the

overhead rate is $5 per machine hour, the entry to assign overhead will show a
a. debit to Manufacturing Overhead for $16,000.
b. credit to Work in Process—Department B for $10,000.
c. debit to Work in Process for $10,000.
d. credit to Manufacturing Overhead for $16,000.

56.

Barnes and Miller Manufacturing is trying to determine the equivalent units for conversion
costs with 3,000 units of ending work in process at 80% completion and 14,000 physical
units. There are no beginning units in the department. Conversion costs occur evenly
throughout the entire production period. What are the equivalent units for conversion costs
for the current period?
a. 17,000
b. 16,800
c. 2,400
d. 13,400


3 - 10

Test Bank for ISV Managerial Accounting, Fourth Edition

57.

7,000 units in a process that are 70% complete are referred to as
a. 7,000 equivalent units of production.
b. 2,100 equivalent units of production.
c. 4,900 equivalent units of production.
d. 2,100 unequivalent units of production.

58.

A process with no beginning work in process, completed and transferred out 45,000 units
during a period and had 30,000 units in the ending work in process inventory that were
30% complete. The equivalent units of production for the period were
a. 45,000 equivalent units.
b. 75,000 equivalent units.
c. 54,000 equivalent units.
d. 22,500 equivalent units.

Use the following information for questions 59–60.
A department adds raw materials to a process at the beginning of the process and incurs
conversion costs uniformly throughout the process. For the month of January, there were no units
in the beginning work in process inventory; 80,000 units were started into production in January;
and there were 20,000 units that were 40% complete in the ending work in process inventory at
the end of January.
59.

What were the equivalent units of production for materials for the month of January?
a. 88,000 equivalent units
b. 72,000 equivalent units
c. 60,000 equivalent units
d. 80,000 equivalent units

60.

What were the equivalent units of production for conversion costs for the month of
January?
a. 60,000 equivalent units

b. 72,000 equivalent units
c. 68,000 equivalent units
d. 80,000 equivalent units

61.

Equivalent units are calculated by
a. multiplying the percentage of work done by the equivalent units of output.
b. dividing physical units by the percentage of work done.
c. multiplying the percentage of work done by the physical units.
d. dividing equivalent units by the percentage of work done.

62.

Minor Company had the following department data:
Physical Units
Work in process, July 1
16,000
Completed and transferred out
72,000
Work in process, July 31
24,000
Materials are added at the beginning of the process. What is the total number of
equivalent units for materials in July?
a. 72,000
b. 80,000
c. 112,000
d. 96,000

Process Costing
63.

3 - 11

Corsi Company had the following department data:
Physical Units
Work in process, beginning
-0Completed and transferred out
70,000
Work in process, ending
7,000
Materials are added at the beginning of the process. What is the total number of
equivalent units for materials during the period?
a. 70,000
b. 7,000
c. 77,000
d. 63,000

64.

Gantner Company had the following department information about physical units and
percentage of completion:
Physical Units
Work in process, May 1 (60%)
36,000
Completed and transferred out
90,000
Work in process, May 31 (40%)
30,000

If materials are added at the beginning of the production process, what is the total number
of equivalent units for materials during May?
a. 126,000
b. 120,000
c. 116,400
d. 102,000

65.

It is necessary to calculate equivalent units of production in a department because
a. a physical count of units is impossible.
b. some units worked on in the department are not fully complete.
c. the physical units in the department are always 100% complete.
d. at times a department may use a job order cost system and then switch to a process
cost system.

Use the following information for questions 66–68.
In the month of June, a department had 10,000 units in beginning work in process that were 70%
complete. During June, 40,000 units were transferred into production from another department. At
the end of June there were 5,000 units in ending work in process that were 40% complete.
Materials are added at the beginning of the process, while conversion costs are incurred
uniformly throughout the process.
66.

How many units were transferred out of the process in June?
a. 40,000 units
b. 35,000 units
c. 45,000 units
d. 50,000 units

67.

The equivalent units of production for materials for June were
a. 45,000 equivalent units.
b. 50,000 equivalent units.
c. 52,000 equivalent units.
d. 40,000 equivalent units.


3 - 12

Test Bank for ISV Managerial Accounting, Fourth Edition

68.

The equivalent units of production for conversion costs for June were
a. 40,000 equivalent units.
b. 47,000 equivalent units.
c. 45,000 equivalent units.
d. 50,000 equivalent units.

69.

A process with no beginning work in process, completed and transferred out 10,000 units
during a period and had 5,000 units in the ending work in process that were 50%
complete. How much is equivalent units of production for the period for conversion costs?
a. 12,500 equivalent units
b. 15,000 equivalent units
c. 17,500 equivalent units
d. 7,500 equivalent units

70.

A process with 800 units of beginning work in process, completed and transferred out
10,000 units during a period. There were 5,000 units in the ending work in process that
were 50% complete as to conversion costs. Materials are added 80% at the beginning of
the process and 20% when the units are 90% complete. How much is equivalent units of
production for the period for material costs?
a. 12,000 equivalent units
b. 15,000 equivalent units
c. 11,000 equivalent units
d. 14,000 equivalent units

71.

Hanker Company had the following department data on physical units:
Work in process, beginning
Completed and transferred out
Work in process, ending

1,000
4,000
800

Materials are added at the beginning of the process. What is the total number of
equivalent units for materials during the period?
a. 4,200
b. 800
c. 4,800
d. 3,000

72.

Super-Tech Industries had the following department information about physical units and
percentage of completion:
Physical Units
Work in process, June 1 (75%)
2,000
Completed and transferred out
4,500
Work in process, June 30 (50%)
3,000
If materials are added at the beginning of the production process, what is the total number
of equivalent units for materials during June?
a. 3,750
b. 7,500
c. 8,000
d. 6,000


Process Costing

3 - 13

73.

Gloria Company had no beginning work in process. During the period, 5,000 units were
completed, and there were 500 units of ending work in process. How many units were
started into production?
a. 5,500
b. 5,000

c. 4,500
d. 500

74.

Cohen Manufacturing is trying to determine the equivalent units for conversion costs with
2,000 units of ending work in process at 80% completion and 14,000 physical units that
are 100% completed. There are no beginning units in the department. Materials are added
at the beginning of the process, and conversion costs occur evenly throughout the entire
production period. What is the equivalent units for conversion costs for the current period?
a. 16,000
b. 15,600
c. 1,600
d. 13,600

75.

If beginning work in process is 2,000 units, ending work in process is 1,000 units, and the
units accounted for equals 5,000 units, what must units started into production be?
a. 7,000
b. 6,000
c. 3,000
d. 4,000

76.

Cinder Company had the following department information for the month:
Total materials costs
Equivalent units of materials
Total conversion costs

Equivalent units of conversion costs

$ 80,000
10,000
$120,000
20,000

How much is the total manufacturing cost per unit?
a. $14.00
b. $6.67
c. $6.00
d. $8.00
Use the following information for questions 77–78.
Materials costs of $200,000 and conversion costs of $214,200 were charged to a processing
department in the month of September. Materials are added at the beginning of the process,
while conversion costs are incurred uniformly throughout the process. There were no units in
beginning work in process, 100,000 units were started into production in September, and there
were 8,000 units in ending work in process that were 40% complete at the end of September.
77.

What was the total amount of manufacturing costs assigned to those units that were
completed and transferred out of the process in September?
a. $184,000
b. $391,000
c. $414,200
d. $425,200


3 - 14

Test Bank for ISV Managerial Accounting, Fourth Edition

78.

What was the total amount of manufacturing costs assigned to the 8,000 units in the
ending work in process?
a. $16,000
b. $7,200
c. $13,600
d. $23,200

79.

Charley Company’s Assembly Department has materials cost at $3 per unit and
conversion cost at $6 per unit. There are 9,000 units in ending work in process, all of
which are 70% complete as to conversion costs. How much are total costs to be assigned
to inventory?
a. $37,800
b. $64,800
c. $56,700
d. $81,000

80.

Byrd Manufacturing decided to analyze certain costs for June of the current year. Units
started into production equaled 14,000 and ending work in process equaled 2,000 units.
With no beginning work in process inventory, how much is the conversion cost per unit if
ending work in process was 25% complete and total conversion costs equaled $50,000?
a. $3.13
b. $12.50

c. $4.00
d. $2.00

81.

Reed Manufacturing has recently tried to improve its analysis for its manufacturing
process. Units started into production equaled 6,000 and ending work in process equaled
400 units. Reed had no beginning work in process inventory. Conversion costs are applied
equally throughout production, and materials are applied at the beginning of the process.
How much is the materials cost per unit if ending work in process was 25% complete and
total materials costs equaled $60,000?
a. $10.00
b. $10.53
c. $37.50
d. $9.38

82.

Conversion cost per unit equals $6.00. Total materials costs are $40,000. Equivalent units
are 20,000. How much is the total manufacturing cost per unit?
a. $8.00
b. $6.00
c. $10.00
d. $2.00

83.

Physical units are 40,000. Total conversion costs are $197,500. There are 1,000 units in
ending inventory which are 50% complete as to conversion costs. How much are
conversion costs per unit?

a. $5.00
b. $4.93
c. $9.88
d. $4.82


Process Costing

3 - 15

84.

Madison Industries has equivalent units of 2,000 for materials and for conversion costs.
Total manufacturing costs are $200,000. Total materials costs are $150,000. How much is
the conversion cost per unit?
a. $10.00
b. $25.00
c. $100.00
d. $20.00

85.

Equivalent units for materials total 15,000. There were 12,000 units completed and
transferred out. Equivalent units for conversion costs equals 13,500. How much are the
physical units for conversion costs if ending work in process is 50% complete?
a. 14,000
b. 15,000
c. 4,000
d. 12,000

86.

If equivalent units are 6,000 for conversion costs and units transferred out equals 4,000,
what stage of completion should the ending work in process be for the 8,000 units
remaining?
a. 75%
b. 25%
c. 10%
d. 20%

Use the following information for questions 87–88.
In the month of April, a department had 500 units in the beginning work in process inventory that
were 60% complete. These units had $20,000 of materials costs and $15,000 of conversion
costs. Materials are added at the beginning of the process and conversion costs are added
uniformly throughout the process. During April, 10,000 units were completed and transferred to
the finished goods inventory and there were 2,000 units that were 25% complete in the ending
work in process inventory on April 30. During April, manufacturing costs charged to the
department were: Materials $460,000; Conversion costs $510,000.
87.

The cost assigned to the units transferred to finished goods during April was
a. $900,000.
b. $905,000.
c. $940,000.
d. $895,000.

88.

The cost assigned to the units in the ending work in process inventory on April 30 was
a. $180,000.

b. $105,000.
c. $80,000.
d. $145,000.

89.

Zibba Company enters materials at the beginning of the process. In January, there was no
beginning work in process, but there were 100 units in the ending work in process
inventory. The number of units completed equals the number of
a. units started.
b. units started less 100.
c. units started plus 100.
d. equivalent units.


3 - 16

Test Bank for ISV Managerial Accounting, Fourth Edition

90.

If there are no units in process at the beginning of the period, then
a. the company must be using a job order cost system.
b. only one computation of equivalent units of production will be necessary.
c. the units started into production will equal the number of units transferred out.
d. the units to be accounted for will equal the units transferred out and the units in
process at the end of the period.

91.

Which of the following is not a necessary step in preparing a production cost report?
a. Compute the equivalent units of production
b. Compute the physical unit flow
c. Prepare the job order cost sheet
d. Prepare a cost reconciliation schedule

92.

Honrad Company's Assembly Department has materials cost at $4 per unit and
conversion cost at $8 per unit. There are 9,000 units in ending work in process, all of
which are 70% complete as to conversion costs. How much are total costs to be assigned
to inventory?
a. $50,400
b. $86,400
c. $75,600
d. $108,000

93.

In a process cost system, units to be accounted for in a department are equal to the
a. number of units started or transferred into the department.
b. number of units transferred out of the department.
c. units in the beginning inventory plus the units started or transferred into the department.
d. ending inventory plus the units started or transferred into the department.

94.

The total units accounted for equals units in
a. beginning work in process – units transferred out.
b. beginning work in process + ending work in process.

c. ending work in process + units transferred out.
d. ending work in process – units started into production.

Use the following information for questions 95–96.
Department 1 of a two department production process shows:
Beginning Work in Process
Ending Work in Process
Total units to be accounted for

Units
10,000
50,000
120,000

95.

How many units were started into production in Department 1?
a. 50,000
b. 70,000
c. 120,000
d. 110,000

96.

How many units were transferred out to Department 2?
a. 50,000
b. 70,000
c. 120,000
d. 110,000

Process Costing
97.

3 - 17

The Assembly Department shows the following information:
Beginning Work in Process
Ending Work in Process
Units Transferred Out

Units
20,000
50,000
90,000

How many total units are to be accounted for by the Assembly Department?
a. 140,000
b. 50,000
c. 70,000
d. 120,000
98.

The last department in a production process shows the following information at the end of
the period:
Units
Beginning Work in Process
15,000
Started into Production
105,000

Ending Work in Process
30,000
How many units have been transferred out to finished goods during the period?
a. 105,000
b. 120,000
c. 135,000
d. 90,000

99.

A process began the month with 3,000 units in the beginning work in process inventory
and ended the month with 2,000 units in the ending work in process. If 9,000 units were
completed and transferred out of the process during the month, how many units were
started into production during the month?
a. 8,000
b. 10,000
c. 9,000
d. 7,000

100.

If 75,000 units are started into production and 30,000 units are in process at the end of
the period, how many units were completed and transferred out?
a. 75,000
b. 30,000
c. 45,000
d. 105,000

101.

Total units to be accounted for less units in beginning work in process equals
a. total units accounted for.
b. units transferred out.
c. units started into production.
d. equivalent units.

102.

If 80,000 units are transferred out of a department and there are 16,000 units still in
process at the end of a period, the number of units that were started into production
during the period is
a. 96,000.
b. 80,000.
c. 64,000.
d. 16,000.


3 - 18
103.

Test Bank for ISV Managerial Accounting, Fourth Edition
A department adds materials at the beginning of the process and incurs conversion costs
uniformly throughout the process. For the month of July, there was no beginning work in
process; 20,000 units were completed and transferred out; and there were 10,000 units in
the ending work in process that were 40% complete. During July, $72,000 materials costs
and $63,000 conversion costs were charged to the department.
The unit production costs for materials and conversion costs for July was
a.
b.
c.

d.

Materials
$2.40
$2.40
$3.00
$3.60

Conversion Costs
$2.10
$2.63
$2.10
$3.15

104.

Conversion cost per unit equals $6.00. Total materials costs equal $60,000. Equivalent
units for materials are 20,000. How much is the total manufacturing cost per unit?
a. $9.00
b. $6.00
c. $12.00
d. $3.00

105.

The following department data are available:
Total materials costs
Equivalent units of materials
Total conversion costs
Equivalent units of conversion costs

$120,000
60,000
$70,000
30,000

What is the total manufacturing cost per unit?
a. $2.00
b. $2.33
c. $4.33
d. $2.11
106.

Byers Company had the following department information for the month:
Total materials costs
Equivalent units of materials
Total conversion costs
Equivalent units of conversion costs

$30,000
5,000
$50,000
10,000

What is the total manufacturing cost per unit?
a. $5.34
b. $5.00
c. $6.00
d. $11.00
107.

Physical units are 80,000. Total conversion costs are $197,500. There are 2,000 units in
ending inventory which are 50% complete as to conversion costs. How much is the
conversion cost per unit?
a. $2.50
b. $2.47
c. $2.44
d. $2.41


Process Costing
108.

3 - 19

A department had the following information for the month:
Total materials costs
Conversion cost per unit
Total manufacturing cost per unit

$120,000
$3.00
$5.00

What are the equivalent units of production for materials?
a. 60,000
b. 40,000
c. 24,000
d. Cannot be determined
109.

Maisley Manufacturing decided to analyze certain costs for June of the current year. Units
started into production equaled 28,000 and ending work in process equaled 4,000. With
no beginning work in process inventory, how much is the conversion cost per unit if ending
work in process was 25% complete and total conversion costs equaled $50,000?
a. $1.57
b. $6.25
c. $2.00
d. $1.00

Use the following information for questions 110–111.
Materials costs of $400,000 and conversion costs of $510,000 were charged to a processing
department in the month of September. Materials are added at the beginning of the process,
while conversion costs are incurred uniformly throughout the process. There were no units in
beginning work in process, 20,000 units were started into production in September, and there
were 5,000 units in ending work in process that were 40% complete at the end of September.
110.

What was the total amount of manufacturing costs assigned to those units that were
completed and transferred out of the process in September?
a. $750,000
b. $1,000,000
c. $803,250
d. $682,500

111.

What was the total amount of manufacturing costs assigned to the 5,000 units in the
ending work in process?
a. $227,500

b. $250,000
c. $160,000
d. $100,000

112.

Snead Manufacturing has recently tried to improve its analysis for its manufacturing
process. Units started into production equaled 9,000 and ending work in process equaled
600 units. Snead had no beginning work in process inventory. Conversion costs are
applied equally throughout production, and materials are applied at the beginning of the
process. How much is the materials cost per unit if ending work in process was 25%
complete and total materials costs equaled $60,000?
a. $6.67
b. $7.02
c. $25.00
d. $6.25


3 - 20

Test Bank for ISV Managerial Accounting, Fourth Edition

113.

Madison Industries has equivalent units of 4,000 for materials and for conversion costs.
Total manufacturing costs are $200,000. Total materials costs are $150,000. How much is
the conversion cost per unit?
a. $37.50
b. $12.50
c. $50.00

d. $10.00

114.

In a process cost system, a production cost report is prepared
a. only for the first processing department.
b. for all departments in the aggregate.
c. for each processing department.
d. only for the last processing department.

115.

A production cost report
a. is prepared for each product.
b. is prepared from a job cost sheet.
c. will show quantity and cost data for a production department.
d. will not identify a specific department if more than one department is involved in the
production process.

116.

In the production cost report, the total
a. physical units accounted for equals the costs accounted for.
b. physical units accounted for equals the units to be accounted for.
c. costs charged equals the units to be accounted for.
d. costs accounted for equals the costs of the units started into production.

a

117.

The Cutting Department’s output during the period consists of 12,000 units completed and
transferred out, and 3,000 units in ending work in process that were 25% complete as to
materials and conversion costs. Beginning inventory was 1,500 units that were 25%
complete as to materials and conversion costs. Under the FIFO method, what are the
equivalent units of production for materials?
a. 13,725
b. 12,375
c. 14,475
d. 13,500

a

118.

The Wrapping Department’s output during the period consists of 10,000 units completed
and transferred out, and 600 units in ending work in process that were 75% complete as
to materials and conversion costs. Beginning inventory was 800 units that were 30%
complete as to materials and conversion costs. Under the FIFO method, what are the
equivalent units of production for materials?
a. 10,690
b. 11,010
c. 10,450
d. 10,210

Use the following information to answer questions 119–120.
Chicotti Company has 3,000 units in beginning work in process, 30% complete as to conversion
costs, 25,000 units transferred out to finished goods, and 1,000 units in ending work in process
20% complete as to conversion costs. The beginning and ending inventory is fully complete as to
materials costs.

Process Costing
a

119.

How much are equivalent units for conversion costs if the FIFO method is used?
a. 25,200
b. 27,300
c. 23,000
d. 24,300

a

120.

How much are equivalent units for materials if the FIFO method is used?
a. 25,200
b. 26,000
c. 23,000
d. 29,000

3 - 21

a

121. Schiller Company has unit costs of $5 for materials and $15 for conversion costs. There
are 4,200 units in ending work in process which are 25% complete as to conversion costs,
and fully complete as to materials cost. How much is the total cost assignable to the

ending work in process inventory if the FIFO method is used?
a. 36,750
b. 84,000
c. 21,000
d. 15,750

a

122.

Solis Company uses the FIFO method to compute equivalent units. It has 2,000 units in
beginning work in process, 20% complete as to conversion costs and 50% complete as to
materials costs, 25,000 units started, and 3,000 units in ending work in process, 30%
complete as to conversion costs, and 80% complete as to materials cost. How much are
the equivalent units for materials under the FIFO method?
a. 25,400
b. 25,000
c. 26,400
d. 27,000

a

123.

Special Company had the following department information about physical units and
percentage of completion:
Physical Units
Work in process, May 1 (60%)
14,400
Completed and transferred out

26,000
Work in process, May 31 (50%)
12,000
Materials are added at the beginning of the production process. Conversion costs are
added equally throughout production. What is the total number of equivalent units during
May for conversion costs if the FIFO method is used?
a. 52,400
b. 32,000
c. 23,360
d. 43,760

a

124.

Hanker Company had the following department data on physical units:
Work in process, beginning
Completed and transferred out
Work in process, ending

1,000
4,000
800


3 - 22

Test Bank for ISV Managerial Accounting, Fourth Edition
Materials are added at the beginning of the process. What is the total number of
equivalent units for materials if the FIFO method is used?

a. 4,200
b. 3,800
c. 4,800
d. 3,000

Additional Multiple Choice Questions
125.

A process cost system would be used by all of the following except a(n)
a. chemical company.
b. advertising company.
c. oil company.
d. computer chip company.

126.

Which of the following is considered a difference between a job order cost and a process
cost system?
a. The manufacturing cost elements
b. Documents used to track costs
c. The accumulation of the costs of materials, labor, and overhead
d. The flow of costs

127.

The basic similarities between job order cost and process cost systems include all of the
following except the
a. manufacturing cost elements.
b. flow of costs.
c. point at which costs are totaled.

d. accumulation of the costs of materials, labor, and overhead.

128

Equivalent units of production are a measure of
a. units completed and transferred out.
b. units transferred out.
c. units in ending work in process.
d. the work done in a period expressed in fully completed units.

129.

Total physical units to be accounted for are equal to the units
a. started (or transferred) into production.
b. started (or transferred) into production plus the units in beginning work in process.
c. started (or transferred) into production less the units in beginning work in process.
d. completed and transferred out.

130.

In computing equivalent units, ___________ is not part of the equivalent units of
production formula.
a. units transferred out
b. beginning work in process
c. ending work in process
d. None of these is correct.


Process Costing

3 - 23

131.

In Saint-Simon, Inc., the Assembly Department started 12,000 units and completed
14,000 units. If beginning work in process was 6,000 units, how many units are in ending
work in process?
a. 0
b. 2,000
c. 4,000
d. 8,000

132.

The total units to be accounted for is computed by adding
a. beginning units in process to units transferred out.
b. ending units in process to units started into production.
c. beginning units in process to units started into production.
d. ending units in process to total units accounted for.

133.

In the Camria Company, materials are entered at the beginning of the process. If there is
no beginning work in process, but there is an ending work in process inventory, the
number of equivalent units as to materials costs will be
a. the same as the units started.
b. the same as the units completed.
c. less than the units started.
d. less than the units completed.

134.

For the Assembly Department, unit materials cost is $8 and unit conversion cost is $12. If
there are 6,000 units in ending work in process 75% complete as to conversion costs, the
costs to be assigned to the inventory are
a. $120,000.
b. $102,000.
c. $90,000.
d. $108,000.

135.

The total costs accounted for in a production cost report equal the
a. cost of units completed and transferred out only.
b. cost of units started into production.
c. cost of units completed and transferred out plus the cost of ending work in process.
d. cost of beginning work in process plus the cost of units completed and transferred out.

136.

In a production cost report, which one of the following sections is not shown under Costs?
a. Unit costs
b. Costs to be accounted for
c. Costs during the period
d. Units accounted for


3 - 24

Test Bank for ISV Managerial Accounting, Fourth Edition

Answers to Multiple Choice Questions
Item

38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.

Ans.

c
a
c
c
d
c
b
c

b
c
d
b
d
c
d

Item

53.
54.
55.
56.
57.
58.
59.
60.
61.
62.
63.
64.
65.
66.
67.

Ans.

c
c

d
d
c
c
d
c
c
d
c
b
b
c
b

Item

Ans.

68.
69.
70.
71.
72.
73.
74.
75.
76.
77.
78.
79.

80.
81.
82.

b
a
d
c
b
a
b
c
a
b
d
b
c
a
a

Item

83.
84.
85.
86.
87.
88.
89.
90.

91.
92.
93.
94.
95.
96.
97.

Ans.

Item

Ans.

Item

Ans.

a
b
b
b
a
b
b
d
c
b
c
c

d
b
a

98.
99.
100.
101.
102.
103.
104.
105.
106.
107.
108.
109.
110.
111.
112.

d
a
c
c
a
b
a
c
d
a

a
c
a
c
a

113.
114.
115.
116.
a
117.
a
118.
a
119.
a
120.
a
121.
a
122.
a
123.
a
124.
125.
126.
127.

b
c
c
b
b
d
d
c
a
a
c
b
b
b
c

Item

128.
129.
130.
131.
132.
133.
134.
135.
136.

Ans.

d
b
b
c
c
a
b
c
d

BRIEF EXERCISES
BE 137
Tip Top Painting Company has the following production data for January:




Beginning work in process, 0 units
Units transferred out, 35,000
Units in ending work in process, 4,000, which are 30% complete for conversion costs

Materials are added only at the beginning of the process.
Instructions
Compute equivalent units of production for both materials and conversion costs.

Solution 137

(4 min.)

QUANTITIES

Physical Units

Units to be accounted for
Work in process, January 1
Started into production
Total units

0
39,000
39,000

Units accounted for
Transferred out
Work in process, January 31
Total units

35,000
4,000
39,000

Equivalent Units
Materials
Conversion Costs

35,000
4,000
39,000

35,000

1,200 (4,000 × 30%)
36,200


Process Costing

3 - 25

BE 138
Tip Top Painting Company has the following production data for March:




Beginning work in process, 2,000 units
Units transferred out, 42,000
Units in ending work in process, 6,000, which are 80% complete for conversion costs

Materials are added only at the beginning of the process.
Instructions
Compute equivalent units of production for both materials and conversion costs.
Solution 138

(4 min.)

QUANTITIES

Physical Units

Units to be accounted for

Work in process, March 1
Started into production
Total units

2,000
46,000
48,000

Units accounted for
Transferred out
Work in process, March 31
Total units

42,000
6,000
48,000

Equivalent Units
Materials
Conversion Costs

42,000
6,000
48,000

42,000
4,800 (6,000 × 80%)
46,800

BE 139

The Kirkland Department of Delta Manufacturing began the month of December with beginning
work in process of 4,000 units that are 100% complete as to materials and 30% complete as to
conversion costs. Units transferred out are 10,000 units. Ending work in process contains 1,000
units that are 100% complete as to materials and 60% complete as to conversion costs.
Instructions
Compute the equivalent units of production for materials and conversion costs for the month of
December.
Solution 139
QUANTITIES

(4 min.)
Physical Units

Units to be accounted for
Work in process, December 1
Started into production
Total units

Equivalent Units
Materials
Conversion Costs

4,000
7,000
11,000

Units accounted for
Transferred out
10,000
Work in process, December 31 1,000

Total units
11,000

10,000
1,000
11,000

10,000
600 (1,000 × 60%)
10,600