Process-Costing-EUP-quiz-1 Accounting 223 is primarily devoted to the understanding of the different elements of production costs, the manner in which they are recognized, measured, recorded, and summarized for inventory valuation and income determination PDF

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Accounting 223 is primarily devoted to the understanding of the different elements of production costs, the manner in which they are recognized, measured, recorded, and summarized for inventory valuation and income determination. At the start of the course the basic concepts of costs as well as its ...

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UNIVERSITY OF CEBU-BANILAD COLLEGE OF ACCOUNTANCY BANILAD, CEBU CITY Accounting 108 (Process Costing – EUP) Name ________________________________ Course & yr. __________ Schedule _______________ Score __________ I – Multiple choice. Encircle the letter of the best answer in each of the given statement/s. 1. Which of the industries listed below is most likely to use process costing in accounting for production costs? a. Road builder b. Electrical contractor c. Newspaper publisher d. Automobile repair shop 2. Which of the following characteristics applies to process costing but not to job-order costing? a. Identifiable batches of production c. Averaging process b. Equivalent units of production d. Use of standard costs 3. An equivalent unit of direct materials or conversion cost is equal to a. The amount of direct materials or conversion cost necessary to complete one unit of production. b. A unit of work-in-process inventory c. The amount of direct materials or conversion cost necessary to start a unit of production in work-in-process. d. Fifty percent of the direct materials or conversion cost of a unit of finished goods inventory (assuming a linear production pattern) 4. In the computation of manufacturing cost per equivalent unit, the weighted-average method of process costing considers a. Current costs only b. Current cost plus cost of beginning work-in-process inventory c. Current costs plus cost of ending work-in-process inventory d. Current costs minus cost of beginning work-in-process inventory 5. An error was made in the computation of the percentage of completion of the current year’s ending work-in-process (EWIP) inventory. The error resulted in assigning a lower percentage of completion to each component of the inventory than actually was the case. Consequently, the following were misstated: 1. The computation of total equivalent units 2. The computation of costs per equivalent unit 3. Costs assigned to cost of goods completed for the period What were the effects of the error? 1 2 3 a. Understate Overstate Overstate b. Understate Understate Overstate c. Overstate Understate Understate d. Overstate Overstate Understate 6. In a process-costing system, the application of factory overhead usually is recorded as an increase a. Cost of goods sold c. Factory overhead control b. Work-in-process inventory control d. Finished goods control 7. The completion of goods is recorded as a decrease in work-in-process control when using Job-order Costing Process Costing a. Yes No b. Yes Yes c. No Yes d. No No 8. Equivalent units of production are used in process accounting to a. Measure the efficiency of the production process. b. Establish standard costs c. Provide a means of allocating cost to partially completed units d. Allocate overhead to production 9. In process 2, material G is added when a batch is 60% complete. Ending work-in-process units, which are 50% complete, would be included in the computation of equivalent units for Conversion costs Material G Conversion costs Material G a. Yes No c. No No b. No Yes d. Yes Yes 10. Assuming no beginning work-in-process inventory, and that the ending work-in-process inventory is 100% complete as to materials costs, the number of equivalent units as to materials costs is a. The same as the units placed in process c. Less than the units placed in process b. The same as the units completed d. Less than the units completed Questions 11 through 14 are related to the following list of nine concepts: 1. EUP to complete BWIP. 2. EUP from last period in BWIP. 3. Units transferred in. 4. Total units transferred out. 5. Units transferred out that were started and completed this period. 6. Units transferred out that were started last period and completed this period. 7. EUP to complete EWIP. 8. EUP completed in EWIP. 9. Total units in BWIP.

11. What is a correct formula for weighted-average EUP? a. 1 + 2 + 3 + 7 b. 2 + 4 – 8 c. 1 + 2 + 3 – 7 d. 4 + 5 + 6 + 8 12. What is another correct formula for weighted-average EUP? a. 8 + 6 + 5 b. 8 + 4 + 2 + 1 c. 8 + 7 + 4 + 2 d. 8 + 6 + 5 – 2 13. What is the correct formula for FIFO EUP? a. 1 + 3 – 7 b. 1 + 2 + 3 – 8 c. 1 + 4 – 7 d. 9 – 5 – 6 14. What is another correct formula for FIFO EUP? a. 8 + 4 b. 8 + 4 – 2 c. 8 + 7 + 6 + 5 d. 7 + 4 + 2 + 1 15. Assuming no beginning work in process inventory, and that the ending work in process inventory is 100% complete as to materials costs, the number of equivalent units as to material costs is a. The same as the units placed in process c. Less than the units placed in process b. The same as the units completed d. Less than the units completed 16. One approach to calculating EUP is to begin with the total work that could be done, i.e., the units in BWIP and those transferred in. Is there another approach? a. Yes, begin with the total work that could not be done, e.g., work already completed in BWIP. b. Yes, begin with the total work that has been done (units transferred out and the completed EUP in EWIP). c. Yes, begin with the total work that has been done (units transferred out and the EUP required to complete EWIP). d. No, EUP may be calculated in only one way. 17. The units transferred in from the first department to the second department should be included in the computation of the equivalent units for the second department under which of the following methods of process costing? FIFO Weighted-Average FIFO Weighted-Average a. Yes Yes c. No Yes b. Yes No d. No No 18. Materials are added at the beginning of a process in a process-costing system. The BWIP for the process this period was 30% complete as to conversion costs. Using the FIFO method of costing, the number of equivalent units of materials for the process during this period is equal to the a. Beginning Inventory this period for the process b. Units started this period in the process c. Units started this period in the process plus beginning inventory d. Units started this period in the process plus 70% of the beginning inventory this period 19. An equivalent unit of direct materials or conversion cost is equal to a. The amount of direct materials or conversion cost necessary to complete one unit of production. b. A unit of work-in-process inventory. c. The amount of direct materials or conversion cost necessary to complete one unit of production in work in process. d. Fifty percent of the direct materials or conversion cost of a unit of finished goods inventory (assuming a linear production pattern). 20. Equivalent units of production are used in process accounting to a. Measure the efficiency of the production process c. Provide a means of allocating cost to partially completed units b. Establish standard costs d. Allocate overhead to production II – Problem Solving. Give the requirements accordingly with supporting computation/s. A. Crew Co. Had 3,000 units in work-in-process at April 1 that were 60% complete as to conversion costs. During April, 10,000 units were completed. At April 30, the 4,000 units in work-in-process were 40% complete as to conversion cost. Direct materials are added at beginning of the process. How many units were started during April? ______________ B. On November 1, Yankee Company had 20,000 units of WIP in Department No. 1 which were 100% complete as to material costs and 20% completed as to conversion costs. During November, 160,000 units were started in Department No. 1 and 170,000 units were completed and transferred to Department No. 2. WIP on November 30 was 100% complete as to materials costs and 40% complete as to conversion costs. By what amount would be equivalent units for conversion costs for the month of November decrease if the FIFO method were used instead of the weighted-average method? __________________ C. The following data pertain to a company’s cracking department operations in December: Units Completion WIP, Dec. 1 20,000 50% Units started 170,000 Completed & transferred 180,000 WIP, December 31 10,000 50% Materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Assuming the use of FIFO method of process costing, compute the equivalent units of conversion _____________ and in materials ______________. D. With a beginning inventory of 20,000 units in work in process that were 30% complete, a hard goods manufacturer completed 190,000 units in 2008 and finished the year with 15,000 units in work in process that were only 20% complete. Using the FIFO method, what is the number of equivalent unit of production? ___________________ E. A company produces plastic drinking cups and uses a process cost system. Cups go through three departments: mixing, molding, and packaging. During the month of June, the following information is known about the mixing department: WIP, June 1 (75%) 10,000 units

Completed during June 140,000 units WIP, June 30 (25%) 20,000 units Materials are added at two points in the process. Material A is added at the beginning of the process and Material B at the midpoint of the mixing process. Conversion costs are incurred uniformly throughout the mixing process. Required: Assuming a FIFO costing flow, compute the equivalent units for Material A ___________ Material B _______________

Conversion cost ______________

F. Direct materials are added at the start of a manufacturing process, and conversion costs are incurred evenly throughout. Work in process inventory on May 1 consisted of 10,000 units 40% complete. These units were completed in May. In addition, 100,000 units were started in May and 80,000 were completed. The remaining 20,000 units were 70% on May 31. Required: EUP for conversion during May under FIFO ___________________ G. Kew Co. Had 3,000 units in work in process at April 1 that were 60% complete as to conversion cost. During April, 10,000 units were completed. At April 30, the 4,000 units in work in process were 40% complete as to conversion cost. Direct materials are added at the beginning of the process. Required: How many units were started during April? _________________ H. Walden Company has a process-cost system using the FIFO cost method. All materials are introduced at the beginning of the process in Department One. The following information is available for the month of January: WIP, January 1 (40% complete as to conversion costs) Started Transferred to Department two WIP, January 31 (25% complete as to conversion costs) Required: Compute the EUP under 1. Weighted average Materials ______________ Conversion ______________ 2. FIFO Materials ________________

500 2,000 2,100 400

I. The Wilson Company manufactures the famous Ticktock watch on an assembly-line basis. January 1 work in process consisted of 5,000 units partially completed. During the month an additional 110,000 units were started and 105,000 units were completed. The ending work in process was 60% complete as to conversion costs. Conversion costs are added evenly throughout the process. The following conversion costs were incurred: Beginning costs for work in process P1,500 Total current conversion costs 273,920 The conversion costs assigned to ending work in process totalled P15,360 using the FIFO method of process costing. Required: What was the percentage of completion as to conversion costs of the units in BWIP? _______________ J. Compute the equivalent units of production from 1 to 4 under FIFO and Weighted Average Method. 1.

In process, beginning: 1/8 completed ¾ incomplete Started in process Finished and transferred In process, ending 1/6 completed FIFO _________________

2.

4.

Weighted Average _____________

In process, beginning 2/5 completed 3/5 completed 2/5 completed Started in process Finished and transferred In process end, ½ is 4/5 completed and the balance is ½ completed FIFO _________________

3.

4,000 units 6,000 units 25,000 units 20,000 units ?

40,000 units 40,000 units 20,000 units 160,000 units 180,000 units

Weighted Average _____________

Started in process In process, ending ¾ incomplete (Of the finished and transferred units 3/5 represent work in process beg. which were 2/3 completed during the current period).

48,000 units 32,000 units

FIFO _________________ Weighted Average _____________ In process, beginning 5/8 completed ?...