CHAPTER14:PROCESSCOSTINGANDTHECOSTACCOUNTINGCYCLE

MultipleChoice
c1.ABCCompanymadethefollowingjournalentry.
WorkinProcessInventory$200,000
DirectLabor$188,000
DirectLaborRateVariance12,000
FromthisentrywecantellthatABCuses
a.jobordercosting.
b.processcosting.
c.standardcosting.
d.normalcosting.
d2.CDECompanymadethefollowingjournalentry.
FinishedGoodsInventory$250,000
WorkinProcessInventory$250,000
FromthisentrywecantellthatCDEuses
a.jobordercosting.
b.processcosting.
c.standardcosting.
d.anyoftheabove.
b3.WhichofthefollowingisNOTrelevantindeterminingweightedaverageunitcostinprocesscosting?
a.Costofbeginninginventory.
b.Equivalentunitproductioninbeginninginventory.
c.Equivalentunitproductioninendinginventory.
d.Unitscompleted.
d4.StandardprocesscostingdoesNOTrequireinformationabout
a.unitscompletedduringtheperiod.
b.equivalentunitproductioninendinginventory.
c.standardcostperunit.
d.actualunitcostfortheperiod.
d5.Acompanythatusesjobordercosting
a.cannotusestandardcosts.
b.accumulatescostsbydepartment.
c.probablymakesasingleproduct.
d.doesnothavetocalculateequivalentproduction.
c6.Whichcompanyismostlikelytousejobordercosting?
a.Abrewery.
b.Anautomobilemanufacturer.
c.Abridgebuilder.
d.Abuttonmanufacturer.
c7.Whichcompanyismostlikelytouseprocesscosting?
a.Amanufacturerofnuclearreactors.
b.Aconstructioncontractor.
c.Acannery.
d.Atextbookpublisher.
a8.Fixedproductioncostsareinventoriableonlyifacompany
a.usesabsorptioncosting.
b.usesstandardcosting.
c.producesasingleproduct.
d.receivespermissionfromtheInternalRevenueService.
d9.Whichcostaccumulationmethodismostlikelytobeusedbyacompanythatmassproducessimilarproducts?
a.Actualcosting.
b.Normalcosting.
c.Jobordercosting.
d.Standardcosting.
c10.Standardcostingcanbeusedin
a.onlyjobordercostingsystems.
b.onlyprocesscostingsystems.
c.eitherjoborderorprocesssystems.
d.eithermanufacturingorretailingfirms.
a11.Whichofthefollowingisthesamewhetherthecompanyusesstandardprocesscostingoractualprocess
costing?
a.Equivalentproduction.
b.Costofgoodstransferredfromworkinprocesstofinishedgoods.
c.Netincomefortheperiod.
d.Costperunitofendinginventoryofworkinprocess.
c12.Itisusuallynecessarytocalculateequivalentunitproductionfor
a.materials.
b.conversioncosts.
c.materialsandconversioncosts.
d.materials,conversioncosts,andoverhead.
b13.Ifacompanyusesactualprocesscosting,theamounttransferredfromWorkinProcessInventoryto
FinishedGoodsInventoryisthecostof
a.equivalentunitproductionfortheperiod.
b.unitscompletedduringtheperiod.
c.unitscompletedandsoldduringtheperiod.
d.allunitsworkedonduringtheperiod.
b14.Ifacompanyusesstandardprocesscosting,theamounttransferredfromWorkinProcessInventoryto
FinishedGoodsInventoryisthe
a.standardcostofequivalentunitproductionfortheperiod.
b.standardcostofunitscompletedduringtheperiod.

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c.actualcostofunitscompletedandsoldduringtheperiod.
d.actualcostofallunitsworkedonduringtheperiod.
a15.Understandardcosting,theamountofdirectlaborcostcharged(debited)toWorkinProcessInventoryis
a.standardlaborhoursatstandardrates.
b.standardlaborhoursatactualrates.
c.actuallaborhoursatactualrates.
d.actualdirectlaborcostincurred.
d16.Acompanythatusesstandardcosting
a.mustmakeonlyoneproduct.
b.alwayshasavolumevarianceunlessnormalcapacityandpracticalcapacityarethesame.
c.showshigherincomesthanitwouldifitusedactualcosting.
d.showsthesameperunitcostofinventoryeachmonth.
c17.Thenumeratorofweightedaverageunitcostcalculationsis
a.currentperiodcost.
b.costofbeginninginventory.
c.currentperiodcostpluscostofbeginninginventory.
d.costofgoodssold.
a18.ThenumeratoroftheFIFOunitcostcalculationis
a.currentperiodcost.
b.costofbeginninginventory.
c.currentperiodcostpluscostofbeginninginventory.
d.costofgoodssold.
b19.FIFOequivalentunitproduction(EUP)is6,200units.EUPinendinginventoryis300,inbeginning
inventoryitis125.WeightedaverageEUPis
a.6,500.
b.6,325.
c.6,025.
d.5,900.
a20.WeightedaverageEUPis4,100units.Costincurredduringtheperiodare$11,250,andthebeginning
inventorywas$2,150.Unitcostis
a.$3.268.
b.$2.744.
c.$2.220
d.$0.524.
a21.WeightedaverageEUPis11,400units.Beginninginventorywas1,000units60%complete,endinginventory
is2,000units20%complete.Thenumberofunitscompletedis
a.11,000.
b.10,800.
c.10,400.
d.9,400.
c22.Algomacompleted10,000units,hadbeginninginventoryof2,500units40%complete,andendinginventory
of1,000units20%complete.WeightedaverageEUPwas
a.9,200.
b.10,000.
c.10,200.
d.11,000.
d23.Whichformulagivesweightedaverageequivalentunitproduction?(UC=unitscompleted,BI=equivalent
unitsinbeginninginventory,EI=equivalentunitsinendinginventory)
a.UC+BI+EI.
b.UC+BIEI.
c.UC+EIBI.
d.UC+EI.
c24.WhichformulagivesFIFOequivalentunitproduction?(UC=unitscompleted,BI=equivalentunitsin
beginninginventory,EI=equivalentunitsinendinginventory)
a.UC+BI+EI.
b.UC+BIEI.
c.UC+EIBI.
d.UC+EI.
c25.Theentrytoapplyoverheadinajobordersystemis
a.debitCostofGoodsSold,creditManufacturingOverhead.
b.debitFinishedGoodsInventory,creditWorkinProcessInventory.
c.debitWorkinProcessInventory,creditManufacturingOverhead.
d.debitWorkinProcessInventory,creditDirectLabor.
a26.Conversioncostsare
a.laborandoverheadcosts.
b.materialsandlaborcosts.
c.allfixedmanufacturingcosts.
d.allmanufacturingcosts.
a27.WhichitemisNOTrelevantindeterminingFIFOunitcost?
a.Costofbeginninginventory.
b.Equivalentunitproductioninbeginninginventory.
c.Equivalentunitproductioninendinginventory.
d.Unitscompleted.
c28.Weightedaverageequivalentproductionisalways
a.lessthanthenumberofunitscompleted.
b.equaltothenumberofunitscompleted.
c.equaltoorgreaterthanthenumberofunitscompleted.
d.anyoftheabove.
d29.FIFOequivalentproductioncanbe
a.lessthanthenumberofunitscompleted.
b.equaltothenumberofunitscompleted.
c.equaltoorgreaterthanthenumberofunitscompleted.

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d.anyoftheabove.
a30.WhichitemisNOTrelevantindeterminingFIFOequivalentunitproduction?
a.Costofbeginninginventory.
b.Equivalentunitproductioninbeginninginventory.
c.Equivalentunitproductioninendinginventory.
d.Unitscompleted.
b31.TheFIFOmethodofcalculatingequivalentproductionandunitcosts
a.islesslikelytobeaccuratethantheweightedaveragemethod.
b.ismoreusefulforcontrolpurposesthantheweightedaveragemethod.
c.cannotbeusedunlessacompanyalsousesstandardcosting.
d.eliminatestheneedtocalculateseparateequivalentproductionnumbersforeachelementof
manufacturingcost.
a32.Backflushing,orbackflushcosting
a.requiressignificantlylessrecordkeepingthanothermethods.
b.canbeusedbyanycompany.
c.ignoresinventories.
d.doesnotdistinguishbetweenmaterialsandconversioncosts.
c33.ScooterCorphadnobeginninginventories,finished40,000units,andsold36,000units.Therewereno
endinginventoriesofmaterialsorworkinprocess.Materialspurchasedandusedwere$225,000;direct
laborandoverheadwere$170,000.Endinginventorywouldbevaluedat
a.$17,000.
b.$22,500.
c.$39,500.
d.someothernumber.
b34.ScooterCorphadnobeginninginventories,finished40,000units,andsold36,000units.Therewereno
endinginventoriesofmaterialsorworkinprocess.Materialspurchasedandusedwere$225,000;direct
laborandoverheadwere$170,000.Costofgoodssoldwouldbevaluedat
a.$39,500.
b.$355,500.
c.$395,000.
d.someothernumber.
b35.DeweyCompanyhadabeginninginventoryof3,000units35%complete,andanendinginventoryof2,500
units20%complete.If17,500unitswerecompleted,weightedaverageEUPis
a.17,500.
b.18,000.
c.18,550.
d.20,000.
b36.DeweyCompanyhadabeginninginventoryof3,000units35%complete,andanendinginventoryof2,500
units20%complete.If17,500unitswerecompleted,FIFOEUPis
a.17,500.
b.16,950.
c.16,050.
d.15,050.
a37.CheatemhasaweightedaverageEUPof30,000units.Beginninginventorywas4,000units40%complete;
endinginventorywas5,000units60%complete.Thenumberofunitscompletedis
a.27,000.
b.29,000.
c.30,000.
d.31,000.
b38.CheatemhasaweightedaverageEUPof30,000units.Beginninginventorywas4,000units40%complete;
endinginventorywas5,000units60%complete.FIFOEUPis
a.25,400.
b.28,400.
c.30,000.
d.31,000.
d39.HowehasaFIFOEUPof46,580units.Beginninginventoryof6,500unitswas80%complete;theending
inventoryof2,800unitswas60%complete.Howmanyunitswerecompletedduringtheperiod?
a.39,700
b.44,900
c.46,200
d.50,100
c40.HowehasaFIFOEUPof46,580units.Beginninginventoryof6,500unitswas80%complete;theending
inventoryof2,800unitswas60%complete.WeightedaverageEUPis
a.46,580.
b.47,880.
c.51,780.
d.someothernumber.
b41.SosaInc.had$3,000inbeginningworkinprocessandincurredanadditional$28,500duringtheperiod.If
weightedaverageEUPwas10,000units,unitcostwouldbe
a.$2.85.
b.$3.15.
c.$9.50.
d.someothernumber.
a42.GrangerCo.had$3,000inbeginningworkinprocessandincurredanadditional$28,500duringtheperiod.
IfFIFOEUPwas10,000units,unitcostwouldbe
a.$2.85.
b.$3.15.
c.$9.50.
d.someothernumber.
b43.FieldCompanyhadabeginninginventoryof2,000units40%complete,endinginventoryof1,500units70%
complete,andtransferredout23,500units.Weightedaverageunitcostswere$1.15formaterials,$0.75

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forconversioncosts.Allmaterialsareaddedatthestartoftheprocess.Thecostoffinishedunits
transferredtofinishedgoodsis
a.$28,750.
b.$44,650.
c.$47,500.
d.$52,250.
b44.FieldCompanyhadabeginninginventoryof4,000units40%complete,endinginventoryof3,000units70%
complete,andtransferredout47,000units.Weightedaverageunitcostswere$1.15formaterials,$0.75
forconversioncosts.Allmaterialsareaddedatthestartoftheprocess.Thecostofendinginventory
is
a.$5,700.
b.$5,025
c.$3,990.
d.someothernumber.
b45.GardenCo.hadabeginninginventoryof3,000units60%complete,endinginventoryof3,000units80%
complete,andtransferredout27,500units.FIFOunitcostswere$2.15formaterials,$1.25for
conversioncosts.Allmaterialsareaddedatthestartoftheprocess.Beginninginventorycost$9,400.
Thecostoffinishedunitstransferredoutis
a.$69,875.
b.$92,900.
c.$93,500.
d.$103,700.
b46.GardenCo.hadabeginninginventoryof3,000units60%complete,endinginventoryof3,000units80%
complete,andtransferredout27,500units.FIFOunitcostswere$2.15formaterials,$1.25for
conversioncosts.Allmaterialsareaddedatthestartoftheprocess.Beginninginventorycost$9,400.
Thecostofendinginventoryis
a.$8,160.
b.$9,450.
c.$10,200.
d.$17,000.
d47.WoodsRunhasaweightedaverageEUPof49,750units.Beginninginventoryof4,500unitswas60%complete;
theendinginventoryof4,800unitswas60%complete.Theunitscompletedduringtheperiodis
a.49,750.
b.44,950.
c.47,050.
d.46,870.
b48.WoodsRunhasaweightedaverageEUPof49,750units.Beginninginventoryof4,500unitswas60%complete;
theendinginventoryof4,800unitswas60%complete.Conversioncostsinbeginninginventorywere
$1,960;conversioncostsaddedduringtheperiodwere$40,825.Conversioncostsperunitare
a.$0.82.
b.$0.86.
c.$0.70.
d.cannotbedeterminedwiththeinformationgiven.
a49.GroverCo.hadabeginninginventoryof1,750units70%complete,endinginventoryof3,000units20%
complete,andtransferredout24,500units.Weightedaverageunitcostswere$2.15formaterials,$1.75
forconversioncosts.Allmaterialsareaddedatthestartoftheprocess.Thecostoffinishedunits
transferredtofinishedgoodsis
a.$95,550.
b.$102,375.
c.$107,250.
d.$114,075.
c50.GroverCo.hadabeginninginventoryof1,750units70%complete,endinginventoryof3,000units20%
complete,andtransferredout24,500units.Weightedaverageunitcostswere$2.15formaterials,$1.75
forconversioncosts.Allmaterialsareaddedatthestartoftheprocess.Thecostofendinginventory
is
a.$2,340.
b.$6,450.
c.$7,500.
d.$11,700.
TrueFalse
T1.Tocalculateweightedaverageequivalentproductionyoudonotneedtoknowthenumberofunitsinthe
beginninginventory.
F2.EquivalentproductioncalculatedusingFIFOishigherthanequivalentproductioncalculatedusingweighted
average.
T3.Departmentaloverheadratescanbeusedbybothjoborderandprocesscostingfirms.
F4.Amultiproductcompanycannotusestandardcosting.
T5.CostofGoodsSoldandinventoryaccountshavedebitbalances.
F6.Varianceaccountshaveonlycreditbalances.
F7.Backflushcostingeliminatestheneedforjournalentries.
F8.Backflushcostingusestwoinventoryaccounts:rawmaterialsandacombinedworkinprocess/finished
goods.
T9.Ifacompanyhasnoinventories,theweightedaverageapproachandtheFIFOapproachwillresultinthe
sameincome.
F.10.AlthoughweightedaverageandFIFOmaygivedifferentvaluesforinventory,theresultingincomewill
alwaysbethesame.
Problems

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1.

Claterusesweightedaverageprocesscosting.IthadthefollowingresultsinJuly.

Beginninginventory,60%complete2,000units
Unitscompleted10,000units
Unitsinendinginventory,40%complete1,000units
Costofbeginninginventory$21,000
Currentperiodproductioncosts$166,200

a.
ComputetheequivalentunitproductionforJuly.
b.

ComputetheunitcostforJuly.

c.

Computetheendinginventoryofworkinprocess.

d.

Computethecosttransferredtofinishedgoods.

SOLUTION:
a.

10,400[10,000+(1,000x40%)]

b.

$18[($21,000+$166,200)/10,400]

c.

$7,200(1,000x40%x$18)

d.

$180,000(10,000x$18)

2. NikelCompanyusesFIFOprocesscosting.Dataareasfollows:

Beginninginventory40%complete5,000units
Unitscompletedduringperiod100,000units
Endinginventory70%complete9,000units

Thecostofthebeginninginventorywas$2,900andcurrentperiodproductioncostswere$166,880.
a.

Computeequivalentproduction.

b.

Computetheunitcost.

c.

Computethecostoftheendinginventoryofworkinprocess.

d.

Computethecostofgoodscompletedandtransferredtofinishedgoodsinventory.

SOLUTION:
a.

104,300[100,000+(9,000x70%)(5,000x40%)]

b.

$1.60($166,880/104,300)

c.

$10,080,(9,000x70%x$1.60)

d. $159,700

Beginninginventory$2,900
Finishbeginninginventory(5,000x60%x$1.60)4,800
Unitsstartedandcompletedduringperiod(95,000x$1.60)152,000

Total$159,700
========
3. Thefollowingdataareavailablefor20X4forScottso,whichusesweightedaverageprocesscosting.

Beginninginventory(40%complete)3,000units
Unitsstartedduring20X452,000units
Unitscompletedduring20X450,000units
Endinginventory(70%complete)5,000units
Costsofinventoryatbeginningof20X4$2,750
Productioncostsincurredduring20X4$83,920
a.
b.

Computeequivalentproductionfor20X4.
Computetheunitcostfor20X4tothenearestcent.

c.

Computethecostoftheendinginventoryofworkinprocess.

d.

Computethecostofgoodscompletedandtransferredtofinishedgoods.

e.

ScottsonowusesFIFO.Computeendinginventoryofworkinprocess.

SOLUTION
a. 53,500[50,000+(5,000x70%)]
b.

$1.62[($2,750+$83,920)/53,500]

c.

$5,670[(5,000x70%)x$1.62]

d.

$81,000(50,000x$1.62)

e.

$5,616($1.6046x5,000x70%)

$83,920
=$1.6046
50,000+(5,000x70%)(3,000x40%)
4.

Debra'sPotteryStudiosusesweightedaverageprocesscosting.IthadthefollowingresultsinJune.

Beginninginventory,30%complete12,000units

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Unitscompleted30,000units
Unitsinendinginventory,60%complete9,000units
Costofbeginninginventory$45,000
Currentperiodproductioncosts$379,800

a.
ComputeequivalentunitproductionforJune.
b.

ComputetheunitcostforJune.

c.

Computetheendinginventoryofworkinprocess.

d.

Computethecosttransferredtofinishedgoods.

SOLUTION:
a.

35,400[30,000+(9,000x60%)]

b.

$12[($45,000+$379,800)/35,400]

c.

$64,800(9,000x60%x$12)

d.

$360,000(30,000x$12)

5.

DuboisCorp.hasajustintimemanufacturingsystemandmaintainsnoendingmaterialsorworkinprocess
inventorybalances.DuboisusesbackflushcostingandhadthefollowingdataforMarch.
Beginninginventoriesnone
Unitsfinished90,000
Unitssold88,000
Materialspurchasedandused$375,000
Directlaborandmanufacturingoverhead$525,000

a.

PreparejournalentriestoreflecttheMarchactivity.

b.

Computetheendingfinishedgoodsinventorybalance.

c.

Computethecostofgoodssold.

SOLUTION:
a.

MaterialsandInProcessInventory$375,000
AccountsPayable$375,000
ConversionCosts$525,000
Assortedaccounts$525,000
CostofGoodsSold$880,000
FinishedGoods$20,000
MaterialsandInProcessInventory$375,000
ConversionCosts$525,000

b.

$20,000[($375,000+$525,000)/90,000x2,000]

c.

$880,000[($375,000+$525,000)/90,000x88,000]

6.

WheelerInc.sold125,000unitsofproductduringtheyear.Variablecostperunitwas$5,standardfixed
manufacturingcostperunitwas$8,andsellingandadministrativecostswere$425,000.Allcostswere
incurredasbudgeted.Incomewas$175,000afterafavorablevolumevarianceof$100,000.Therewereno
changesininventoryduringtheyear.

a.

Determinethesellingpriceofaunitofproduct.

b.

Determinethevolumeusedtosetthestandardfixedmanufacturingcostperunit.

c.

Determinethebudgetedamountoffixedmanufacturingcost.

SOLUTION:
a.

$17{[($8+$5)x125,000+$425,000+$175,000$100,000]/125,000}

b.

112,500units[125,000($100,000/$8)]

c.

$900,000[(125,000x$8)$100,000]

7. DJHCompanyusesFIFOprocesscosting.Dataareasfollows:

Beginninginventory20%complete15,000units
Unitscompletedduringperiod200,000units
Endinginventory30%complete19,000units

Thecostofthebeginninginventorywas$3,180andcurrentperiodproductioncostswere$222,970.
a.

Computeequivalentproduction.

b.

Computetheunitcost.

c.

Computethecostoftheendinginventoryofworkinprocess.

d.

Computethecostofgoodscompletedandtransferredtofinishedgoodsinventory.

SOLUTION:
a.

202,700[200,000+(19,000x30%)(15,000x20%)]

b.

$1.10($222,970/202,700)c.

d.

$219,880

$6,270(19,000x30%x$1.10)

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Beginninginventory$3,180
Finishbeginninginventory(15,000x80%x$1.10)13,200
Unitsstartedandcompleted(185,000x$1.10)203,500

Total$219,880
========
8. Thefollowingdataareavailablefor20X2forHunter,Inc.,whichusesweightedaverageprocesscosting.

Beginninginventory(30%complete)3,000units
Unitsstartedduring20X256,600units
Unitscompletedduring20X255,000units
Endinginventory(60%complete)4,500units
Costsofinventoryatbeginningof20X2$1,458
Productioncostsincurredduring20X2$71,244
a.

Computeequivalentproductionfor20X2.

b.
c.

Computetheunitcostfor20X2tothenearestcent.
Computethecostoftheendinginventoryofworkinprocess.

d.

Computethecostofgoodscompletedandtransferredtofinishedgoods.

SOLUTION:
a.

57,700[55,000+(4,500x60%)]

b.

$1.26[($1,458+$71,244)/57,700]

c.

$3,402[(4,500x60%)x$1.26]

d.

$69,300(55,000x$1.26)

9.

MolitorInc.hasthefollowingdataforJuly:
Gallonsinbeginninginventory13,000gallons
GallonscompletedinJuly52,500gallons
Gallonsinendinginventory7,500gallons
Percentagecomplete:
Materials100%
Conversioncosts45%
CostsMaterialsConversionCosts
BeginningInventory$56,300$33,600
IncurredduringJuly$321,700$256,950
Molitorusestheweightedaveragemethodofcosting.

a.

ComputetheequivalentunitsofproductionformaterialsandforconversioncostsforthemonthofJuly.

b.

Computetheunitcostsforeachcostfactor.

c.

ComputethecostoffinishedgallonsforJuly.

d.

Computethecostofendingworkinprocess.

SOLUTION:
a.

Materials:60,000[52,500+(7,500x100%)]
Conversion:55,875[52,500+(7,500x45%)]

b.

Materials:$6.30[($56,300+$321,700)/60,000]
Conversion:$5.20[($33,600+$256,950)/55,875]

c.

$603,750[($6.30+5.20)x52,500]

d. $64,800Materials:7,500x100%x$6.30=$47,250
Conversion:7,500x45%x$5.20=17,550

$64,800
=======
10.YountInc.hasthefollowingdataforSeptember:
Gallonsinbeginninginventory8,000gallons
Percentagecomplete:
Materials100%
Conversioncosts60%
GallonscompletedinSeptember72,500gallons
Gallonsinendinginventory10,000gallons
Percentagecomplete:
Materials100%
Conversioncosts75%
CostsMaterialsConversionCosts
BeginningInventory$109,730$38,950
IncurredduringSeptember$968,500$661,760
YountusestheFIFOmethodofcosting.
a.
b.

Computetheequivalentunitsofproductionformaterialsandforconversioncostsforthemonthof
September.
Computetheunitcostsforeachcostfactor.

c.

ComputethecostoffinishedgallonsforSeptember.

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d.

Computethecostofendingworkinprocess.

SOLUTION:
a.

Materials:74,500[72,500+(10,000x100%)(8,000x100%)]
Conversion:75,200[72,500+(10,000x75%)(8,000x60%)]

b.

Materials:$13.00($968,500/74,500)
Conversion:$8.80($661,760/75,200)

c.

$1,582,940
Beginninginventory($109,730+38,950)$148,680
Finishbeginninginventory(8,000x40%x$8.80)28,160
Unitsstartedandcompleted(64,500x$21.80)1,406,100

Total$1,582,940
==========
d. $196,000Materials:10,000x100%x$13.00=
$130,000
Conversion:10,000x75%x$8.80=
66,000

$196,000
========

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