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Exam 5: Process Costing

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Question 1

Multiple Choice

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What system would a manufacturer of unique special orders or batch processes most likely use to accumulate costs?

A) process costing
B) contract costing
C) variable costing
D) job-order costing

E) B) and C)
F) All of the above

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Question 2

Multiple Choice

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Process costing is complicated by

A) the presence of significant beginning and ending inventories.
B) the treatment of beginning inventory cost.
C) nonuniform application of manufacturing costs.
D) all of the above.

E) A) and C)
F) A) and B)

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Question 3

Multiple Choice

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Lee Company began making lipstick in October 2011 using a single-step process. Lee incurred £42,000 for materials and £48,640 for conversion during the month. There were 21,000 cases of lipstick started in October and 3,000 cases unfinished (40 per cent complete) at the end of the period. All materials were added at the beginning of the production process. What is the unit cost for materials for Lee using the FIFO method?

When computing equivalent units of production, the method that combines partially completed units in beginning inventory with current period production is the

Equivalent units of production are

Conversion costs do NOT include

The following information pertains to Jones Company: Units Work-in-progress inventory, March 1 (30% complete) 20,000 Units transferred in 50,000 Work-in-progress inventory, March 31 (60% complete) 16,000 Materials are added at the start of the progress. How many equivalent units for conversion costs would there be using the FIFO method?

If beginning inventory contained 2,000 units of product that were judged to be 40 per cent complete as to labour, the equivalent units of production for labour during the current period under the FIFO method for these 2,000 units are

Equivalent production expresses all activity of the period in terms of

Beginning inventory consisted of 1,000 units with costs of £21,000. All materials and 60 per cent of labour and overhead were added in the prior period. In addition, another 8,000 units were started and completed. Unit costs are materials, £6.00; labour, £15.00; overhead, £9.00. What is the total cost of goods transferred out using FIFO?

Dedo Company purchased £4,000 of raw materials and used £3,750. The entry to record the requisition of direct materials for the Mixing Department would be

The following amounts were selected from the production report of Chandon Corporation: Actual units in production 42,000 Equivalent units (materials) 42,000 Equivalent units (conversion) 39,000 Cost per equivalent unit (materials) £1) 10 Cost per equivalent unit (conversion) £0) 90 Chandon uses the weighted average method in preparing its production reports. Chandon's total production cost to be accounted for must have been

Burgundy Manufacturing uses a process cost system and computes cost using the weighted average method. During the current period, the beginning work-in-progress inventory cost was £13,525. Manufacturing cost added was £57,000. If Burgundy's ending work-in-progress inventory was valued at £15,100, then cost of goods transferred must have been

Unit cost of materials for a department using the FIFO method of process costing is found by taking the total cost of materials issued to the department during the year divided by

Urban Company manufactures a product through a continuous single-step process. All materials are added at the beginning of processing. Production and cost data for the company for February 2011 are as follows: Production data: In process, beginning of month (20% converted) 1,000 units Started during February 5,000 units Completed and transferred to finished goods 4,500 units In process, end of month (60% converted) 1,500 units Manufacturing costs: Work in progress, beginning £14,730 Materials £45,000 Direct labour cost £102,960 Factory overhead cost £51,480 Required: Prepare a cost of production report for February 2011. Use FIFO process costing.

Conversion costs consist of

The Packing Department receives goods produced in previous departments. The costs transferred into the Packing Department are treated as

Beginning inventory for the month contained 2,000 units that were 45 per cent complete with respect to materials. During the month, 18,000 units were completed and transferred out. Ending inventory contained 2,500 units, 20 per cent complete with respect to materials. The weighted average equivalent units of production for materials for the month would be

In a process used by Kane Company, conversion cost is incurred uniformly throughout the process. Material is added at the end of the process. Which of the following statements is true?

If costs of manufacturing inputs fluctuate from period to period, which of the following methods is more useful for cost control?