1. Which of the following types of companies would most likely use process costing?

A. Aircraft manufacturers D. Custom-machining firms

B. Textile manufacturers E. Shipbuilders
C. Textbook publishers

2. Process costing is used to account for:

A. large numbers of identical products that are produced in a continuous manufacturing environment
B. small numbers of products that are produced in batches
C. raw materials that are converted directly to finished goods
D. finished goods that are refined and processed further
E. large numbers of products that are produced in a non-repetitive process

3. Which of the following manufacturers would most likely not use a process-cost accounting system?
A. A producer of computer monitors D. A builder of customized yachts
B. A paint manufacturer E. A lumber mill
C. A producer of frozen orange juice

4. Process costing would be used in all of the following industries except:

A. petroleum refining D. wood pulp production
B. chemicals E. automobile repair
C. truck tire manufacturing

5. Which of the following companies would likely use a process-costing system?

Custom Furniture Chemical Soft Drink
Manufacturer Producer Bottler
A. Yes Yes Yes
B. Yes Yes No
C. No Yes No
D. No Yes Yes
E. No No Yes

REVIEW MATERIALS IN COST ACCOUNTING

[Type text] Page 1
 6. Which of the following statements regarding similarities between process costing and job-order costing are true?
I. Both systems assign production costs to units of output.
II. Both systems require extensive knowledge of financial accounting.
III. The flow of costs through the manufacturing accounts is essentially the same.

A. I only B. I and III C. II and III D. I, II, and III

7. Companies that use a process-cost accounting system would:

A. establish a separate Work-in-Process Inventory account for each manufacturing department
B. establish a separate Finished-Goods Inventory account for each manufacturing department
C. pass completed production directly to Cost of Goods Sold
D. charge goods produced with actual overhead amounts rather than applied overhead amounts
E. eliminate the need for the Finished-Goods Inventory account

8. Which of the following statements is false?

A. In job-order costing, costs are accumulated by job order.
B. In process costing, costs are accumulated by department.
C. In process costing, the cost per unit in a department is found by spreading the period's manufacturing costs over the production
activity.
D. In process costing, the total cost of each unit is found by dividing the total factory costs by the number of units completed.
E. In job-order costing, the unit cost is found by dividing the job's total cost by the job's total units.

9. In a process-costing system, manufacturing costs are accumulated by:

A. batch D. department and time period
B. batch and time period E. department or process, and time period
C. department

10. Which of the following choices correctly shows how costs are accumulated in a process-costing system? By Batch
By Time Period By Process or Department
A. Yes Yes Yes
B. Yes Yes No
C. No Yes No
D. No Yes Yes
11. Morrison, Inc., which uses a process-cost accounting system, passes completed production from Department A to Department B for
further manufacturing. The journal entry to record completed production in Department A requires:
A. a debit to Work-in-Process Inventory and a credit to Finished-Goods Inventory
B. a debit to Finished-Goods Inventory and a credit to Work-in-Process Inventory
C. a debit to Finished-Goods Inventory and a credit to Work-in-Process Inventory: Department A
D. a debit to Work-in-Process Inventory: Department A and a credit to Work-in-Process Inventory: Department B
E. a debit to Work-in-Process Inventory: Department B and a credit to Work-in-Process Inventory: Department A

12. Greene, Inc., which uses a process-costing system, transfers completed production from Department no. 1 to Department no. 2 for further
work. Which of the following best describes the account that would be debited to record this transfer?
A. Cost of Goods Transferred D. Work-in-Process Inventory: Department no. 1
B. Finished-Goods Inventory: Department no. 1 E. Work-in-Process Inventory: Department no. 2
C. Finished-Goods Inventory: Department no. 2

13. Barnes, Inc., which uses a process-costing system, transfers completed production from Department no. 1 to Department no. 2 for further
work. Which of the following best describes the account that would be credited to record this transfer?
A. Cost of Goods Transferred D. Work-in-Process Inventory: Department no. 1
B. Finished-Goods Inventory: Department no. 1 E. Work-in-Process Inventory: Department no. 2
C. Finished-Goods Inventory: Department no. 2

14. Hamilton, which uses a process-costing system, had a balance in its Work-in-Process account of P68,000 on January 1. The account was
charged with direct materials, direct labor, and manufacturing overhead of P450,000 throughout the year. If a review of the accounting
records determined that P86,000 of goods were still in production at year-end, Hamilton should make a journal entry on December 31 that
includes:
A. a debit to Cost of Goods Sold for P432,000
B. a credit to Finished-Goods Inventory for P432,000
C. a credit to Work-in-Process Inventory for P432,000
D. a debit to Finished-Goods Inventory for P86,000
E. a credit to Work-in-Process Inventory for P86,000

15. Unit costs in a process-costing system are derived by using:

A. in-process units B. completed units C. physical units D. equivalent units

REVIEW MATERIALS IN COST ACCOUNTING

[Type text] Page 2
 UNITS PRODUCED
EUP
WORK DONE IN IP,

END

16. Barnett Corporation had 6,500 units of work in process on April 1. During April, 19,100 units were completed and as of April 30,
5,100 units remained in production. How many units were started during April?
A. 11,600 B. 17,700 C. 20,500 D. 30,700

QUANTITY SCHEDULE:

UNITS TO BE ACCOUNTED FOR

IP, BEG. 6,500
STARTED 17,700
TOTAL 24,200

UNITS AS ACCOUNTED FOR

C&T 19,100
IP, END 5,100
TOTAL UNITS AS ACCTD… 24,200

17. XYZ Co., had 3,000 units of work in process on April 1 that were 60% complete. During April, 10,000 units were completed and as of
April 30, 4,000 units that were 40% complete remained in production. How many units were started during April?
A. 8,600 B. 9,800 C. 11,000 D. 12,200

18. Ohio, Inc., which uses a process-cost accounting system, began operations on January 1 of the current year. The company incurs
conversion cost evenly throughout manufacturing. If Ohio started work on 3,000 units during the period and these units were 70% of the
way through manufacturing, it would be correct to say that the company has:
A. 3,000 physical units in production D. 900 equivalent units of production
B. 2,100 completed units E. 3,000 equivalent units of production
C. 900 in-process units

19. Which of the following data are needed to calculate total equivalent units under the weighted-average method?
A. Work-to-date on ending work in process, units started during the period.
B. Units completed during the period, work-to-date on ending work in process.
C. Work to complete beginning work in process, work-to-date on ending work in process.
D. Work to complete beginning work in process, units completed, work done on ending work in process.
E. Units completed, work to complete beginning work in process.

20. Kentucky Corporation uses a process-cost accounting system. The company adds direct materials at the start of its production process;
conversion cost, on the other hand, is incurred evenly throughout manufacturing. The firm has no beginning work-in-process inventory;
its ending work in process is 40% complete. Which of the following sets of percentages would be used to calculate the correct number of
equivalent units in the ending work-in-process inventory?
A. Materials, 40%; conversion cost, 40% D. Materials, 100%; conversion cost, 60%
B. Materials, 40%; conversion cost, 100% E. Materials, 100%; conversion cost, 100%
C. Materials, 100%; conversion cost, 40%

21. Agora Company uses a process-cost system for its single product. Material A is added at the beginning of the process; in contrast,
material B is added when the units are 75% complete. The firm's ending work-in-process inventory consists of 6,000 units that are 80%
complete. Which of the following correctly expresses the equivalent units of production with respect to materials A and B in the ending
work-in-process inventory?
A. A, 4,800; B, 0 B. A, 4,800; B, 4,800 C. A, 6,000; B, 0 D. A, 6,000; B, 6,000
22. Willingham uses a process-costing system for its single product, which is manufactured from Material X and Material Y. X and Y are
introduced to the product as follows:
Material X: Added at the beginning of manufacturing Material
Y: Added at the 75% stage of completion

The company started and completed 40,000 units during the period, and had an ending work-in-process inventory amounting to 8,000
units, 20% complete. Which of the following choices correctly expresses the total equivalent units of production with respect to Material
X and Material Y?
Material X Material Y
A. 46,000 41,600
B. 48,000 40,000
C. 48,000 41,600

REVIEW MATERIALS IN COST ACCOUNTING

[Type text] Page 3
 D. 48,000 46,000

REVIEW MATERIALS IN COST ACCOUNTING

[Type text] Page 4
 Use the following to answer questions 23 to 24:

Hampton Textile Co., manufactures a variety of fabrics. All materials are introduced at the beginning of production; conversion cost is
incurred evenly through manufacturing. The Weaving Department had 2,000 units of work in process on April 1 that were 30% complete
as to conversion costs. During April, 9,000 units were completed and on April 30, 4,000 units remained in production, 40% complete with
respect to conversion costs.

23. The equivalent units of direct materials for April total:

A. 9,000 B. 13,000 C. 13,600 D. 14,400

24. The equivalent units of conversion for April total:

A. 9,000 B. 10,600 C. 11,200 D. 12,000

FIFO:
WHOLE DM CC
WD EUP WD EUP
C&T
IP, BEG. 2,000 - - 70% 1,400
STARTED 7,000 100% 7,000 100% 7,000
IP, END 4,000 100% 4,000 40% 1,600
13,000 11,000 10,000

AVERAGE:

WHOLE DM CC
WD EUP WD EUP
C&T 9,000 100% 9,000 100% 9,000
IP, END 4,000 100% 4,000 40% 1,600
13,000 13,000 10,600

25. Columbia Corporation adds all materials at the beginning of production and incurs conversion cost evenly throughout manufacturing.
The company completed 50,000 units during the year and had 15,000 units in process at December 31, 30% complete with respect to
conversion cost. Equivalent units for the year total:
A. materials, 50,000; conversion, 50,000 D. materials, 65,000; conversion, 54,500
B. materials, 50,000; conversion, 4,500 E. materials, 65,000; conversion, 65,000
C. materials, 54,500; conversion, 54,500

26. Gregory, which uses a process-costing system, adds all material at the beginning of production and incurs conversion cost evenly
throughout manufacturing. The information that follows relates to the period just ended:
Units started and completed: 75,000
Units in ending work-in-process inventory: 15,000, 60% complete

Which of the following choices correctly expresses the total equivalent units of production with respect to material and conversion cost?
Material Conversion
A. 75,000 75,000
B. 84,000 84,000
C. 90,000 81,000
D. 90,000 84,000

27. Gorski began operations on January 1 of the current year. The company uses a process-costing system, and conversion cost is incurred
evenly throughout manufacturing. By January 31, the firm had completed 56,000 units. Which of the following statements could be true
about the ending work-in-process inventory if equivalent units for conversion cost totaled 59,000 units?
A. There is no ending work-in-process inventory.
B. The ending work-in-process inventory totaled 3,000 physical units.
C. The ending work-in-process inventory of 10,000 physical units was 30% complete.
D. The ending work-in-process inventory of 20,000 physical units was 85% complete.
E. More than one of the above could be true.

28. Majestic, which uses a process-costing system, adds material at the beginning of production and incurs conversion cost evenly
throughout manufacturing. The following selected information was taken from the company's accounting records:
Total equivalent units of materials: 5,000 Total
equivalent units of conversion: 4,400
Units started and completed during the period: 3,500

REVIEW MATERIALS IN COST ACCOUNTING

[Type text] Page 5
 On the basis of this information, the ending work-in-process inventory's stage of completion is:
A. 40% B. 60% C. 70% D. 80%

29. Corruption, Inc., overstated the percentage of work completed with respect to conversion cost on the ending work-in-process inventory.
What is the effect of this overstatement on conversion-cost equivalent units and physical units manufactured, respectively?
A. Overstated, overstated C. Overstated, none
B. Overstated, understated D. None, overstated

30. Michael, Inc., uses a process-costing system. A newly hired accountant has identified the following procedures that must be performed
by the close of business on Friday:
1 – Calculation of equivalent units
2 – Analysis of physical flows of units
3 – Assignment of costs to completed units and units still in process
4 – Calculation of unit costs

Which of the following choices correctly expresses the proper order of the preceding tasks?
A. 1, 2, 3, 4 B. 1, 2, 4, 3 C. 1, 4, 3, 2 D. 2, 1, 4, 3

31. When calculating unit costs under the weighted-average process-costing method, the unit cost is based on:
A. only the current period's manufacturing costs.
B. only costs in the period's beginning work-in-process inventory
C. a summation of the costs in the beginning work-in-process inventory plus costs incurred in the current period
D. only costs incurred in previous accounting periods
E. a summation of the costs in the beginning work-in-process inventory plus costs to be incurred in the upcoming period

32. When computing the conversion cost per equivalent unit under the weighted-average method of process costing, all of the following
information would be needed except:
A. the number of units completed during the current accounting period
B. the conversion work performed during the current period on the ending work-in-process inventory
C. the conversion work performed during the current period on the beginning work-in-process inventory
D. the conversion cost in the beginning work-in-process inventory
E. the conversion cost incurred during the current accounting period

33. Tulsa Corporation, which adds materials at the beginning of production, uses a weighted-average process-costing system. Consider the
data that follow.
Number of Units Cost of Materials
Beginning work in process 40,000 P 80,600
Started in June 60,000 124,400
Production completed 75,000
Ending work in process 25,000

The company's cost per equivalent unit for materials is:

A. P1.24 B. P1.66 C. P1.67 D. P2.05

34. Garrison Company uses a weighted-average process-costing system. Company records disclosed that the firm completed 50,000 units
during the month and had 10,000 units in process at month-end, 25% complete. Conversion costs associated with the beginning work-
in-process inventory amounted to P105,000, and amounts that relate to the current month totaled P840,000. If conversion is incurred
uniformly throughout manufacturing, Garrison's equivalent-unit cost is:
A. P15.75 B. P16.43 C. P18.00 D. P18.90

REVIEW MATERIALS IN COST ACCOUNTING

[Type text] Page 6
 Use the following to answer questions 35 to 36:

Universal Manufacturing uses a weighted-average process-costing system. All materials are introduced at the start of manufacturing, and
conversion costs are incurred evenly throughout the process. The company's beginning and ending work-in-process inventories totaled
10,000 units and 15,000 units, respectively, with the latter units being 2/3 complete at the end of the period. Universal started 30,000
units into production and completed 25,000 units. Manufacturing costs follow.

Beginning work in process: Materials, P60,000; conversion cost, P150,000 Current costs:
Materials, P180,000; conversion cost, P480,000

35. Universal's equivalent-unit cost for materials is:

A. P4.50 B. P6.00 C. P8.00 D. P9.60

36. Universal's equivalent-unit cost for conversion cost is:

A. P13.71 B. P18.00 C. P21.00 D. P25.20

EUP: DM CC
WHOLE WD EUP WD EUP
C&T 25,000 25,000 25,000
IP, END 15,000 100% 15,000 2/3 10,000
TOTAL 40,000 40,000 35,000

UNIT COSTS: (TC / EUP)

TOTAL COSTS
IP, BEG CURRENT / EUP = UNIT COST
DM 60,000 + 180,000 40,000 P 6.00
CC 150,000 + 480,000 35,000 P18.00
P 24.00
COSTS SCHEDULE:

COSTS TO BE ACCOUNTED FOR:

DM CC
COSTS, LAST MONTH 60,000 150,000 210,000
COSTS, THIS MONTH 180,000 480,000 660,000
870,000

COSTS AS ACCOUNTED FOR:

C&T (25,000 X P24) P 600,000

IP, END:
DM (15,000 X P6) P 90,000
CC (10,000 X P18) 180,000 270,000
TOTAL COSTS AS ACCOUNTED FOR P 870,000

37. Gilbert adds materials at the beginning of production and incurs conversion cost uniformly throughout manufacturing. Consider
the data that follow.

Units
Beginning work in process 20,000
Started in August 60,000
Production completed 55,000
Ending work in process, 40% complete 25,000

Conversion cost in the beginning work-in-process inventory totaled P120,000, and August conversion cost totaled P270,000. Assuming use
of the weighted-average method, which of the following choices correctly depicts the number of equivalent units for materials and the
conversion cost per equivalent unit?
Equivalent Units: Conversion Cost
Materials Per Equivalent Unit
A. 55,000 P4.91

REVIEW MATERIALS IN COST ACCOUNTING

[Type text] Page 7
 B. 65,000 P4.88

REVIEW MATERIALS IN COST ACCOUNTING

[Type text] Page 8
 C. 65,000 P6.00
D. 80,000 P4.88
E. 80,000 P6.00

38. Which of the following are needed to calculate the total cost of the ending work-in-process inventory under the
weighted-average process-costing method?
Unit Cost Equivalent Units
A. Yes Yes
B. Yes No
C. No Yes
D. No No
E. Yes Yes, but only in specialized cases

39. Which of the following are needed under weighted-average process costing to calculate the cost of goods completed during the period?
Unit Cost Equivalent Units
A. Yes Yes
B. Yes No
C. No Yes
D. No No
E. Yes Yes, but only in specialized cases

40. Equivalent-unit calculations are necessary to allocate manufacturing costs between:

A. units completed and ending work in process D. cost of goods manufactured and beginning work in process
B. beginning work in process and units completed E. cost of goods manufactured and cost of goods sold
C. units sold and ending work in process

Use the following to answer questions 41 to 46:

South River Chemical manufactures a product called Zbek. Direct materials are added at the beginning of the process, and conversion
activity occurs uniformly throughout production. The beginning work-in-process inventory is 60% complete with respect to conversion; the
ending work-in-process inventory is 20% complete. The following data pertain to May:
Units
Work in process, May 1 15,000
Units started during May 60,000
Units completed and transferred out 68,000
Work in process, May 31 7,000

Total Direct Materials Conversion Costs

Costs:
Work in process, May 1 P 41,250 P16,500 P 24,750
Costs incurred during May 234,630 72,000 162,630
Totals P275,880 P88,500 P187,380

41. Using the weighted-average method of process costing, the equivalent units of direct materials total:
A. 68,000 B. 69,400 C. 74,000 D. 75,000

42. Using the weighted-average method of process costing, the equivalent units of conversion activity total:
A. 60,400 B. 68,000 C. 69,400 D. 74,000

43. Using the weighted-average method of process costing, the cost per unit of direct materials is:
A. P1.17 B. P1.18 C. P1.20 D. P1.28

44. Using the weighted-average method of process costing, the cost per unit of conversion activity is:
A. P2.50 B. P2.53 C. P2.70 D. P2.76

45. Using the weighted-average method of process costing, the cost of goods completed and transferred during May is:
A. P249,560 B. P250,240 C. P258,400 D. P263,840

46. Using the weighted-average method of process costing, the total costs remaining in work in process on May 31 are:
A. P -0- B. P12,040 C. P17,480 D. P25,640

Use the following to answer questions 47 to 48:

Chen Corporation, a new company, adds material at the beginning of its production process; conversion cost, in contrast, is

REVIEW MATERIALS IN COST ACCOUNTING

[Type text] Page 9
 incurred evenly throughout manufacturing. During May, the firm completed 15,000 units and had ending work in process of 2,000 units,
60% complete. Equivalent-unit costs were: materials, P15; conversion, P22.

47. The cost of Chen's completed production is:

A. P225,000 B. P330,000 C. P333,000 D. P555,000

48. The cost of the company's ending work-in-process inventory is:

A. P26,640 B. P44,400 C. P56,400 D. P74,000

Use the following to answer questions 49 to 50:

Copley uses a weighted-average process-costing system. All materials are added at the beginning of the process; conversion costs are
incurred evenly throughout production. The company finished 40,000 units during the period and had 15,000 units in progress at year-end,
the latter at the 40% stage of completion. Total material costs amounted to P220,000; conversion costs were P414,000.

49. The cost of goods completed is:

A. P312,000 B. P414,000 C. P520,000 D. P634,000

50. The cost of the ending work in process is:

A. P54,000 B. P78,000 C. P114,000 D. P195,000

51. Which of the following is a key document in a typical process-costing system?

A. Departmental production report D. Sequential product report
B. Master schedule E. Materials requirement report
C. Production budget

52. The first processing department in a sequence of three production departments must account for which of the following costs?
A. Direct material and transferred-in costs D. Direct material and conversion costs
B. Direct material costs only E. Direct material, conversion, and transferred-in costs
C. Conversion and transferred-in costs

53. The second processing department in a sequence of three production departments would typically account for which of the following
costs?
A. Direct material and transferred-in costs D. Direct material and conversion costs
B. Direct material costs only E. Direct material, conversion, and transferred-in costs
C. Transferred-in costs only

54. Department no. 2 receives goods from Department no. 1, adds material, completes the units, and transfers the units to Department
no. 3 for final processing. The cost of goods completed by Department no. 2 would include charges for:
A. direct materials D. transferred-in costs
B. conversion cost E. transferred-in costs, direct materials, and conversion cost
C. direct materials and conversion cost

55. Roberts uses process costing and has two manufacturing departments. Goods are started in Department no. 1, passed along to Department
no. 2 where additional parts are attached and processing occurs, and then transferred out to the finished-goods warehouse. The following
equivalent-unit costs relate to Department no. 2 for the current period:
Transferred-in P 19
Parts 11
Conversion cost 6

Production that is completed and transferred to the finished-goods warehouse should be assigned a unit cost of:
A. P6 B. P11 C. P17 D. P36

REVIEW MATERIALS IN COST ACCOUNTING

[Type text] Page 10