Chapter 5Process costing

Question 1. Wages paid to a supervisor in a factory are a part of:

Prime Cost Conversion Cost
A. Yes No
B. Yes Yes
C. No No
D*. No Yes
. not possi!"e to determine.
Question #. W$ic$ of t$e fo""o%ing are components of conversion costs&
A. Direct "a!our and direct materia"s
B. 'ndirect materia"s and manufacturing over$ead
C*. Direct "a!our and manufacturing over$ead
D. Direct materia"s and manufacturing over$ead
. Direct "a!our and indirect "a!our.
Question (. W$ic$ of t$e fo""o%ing is a )ey document in a typica" process costing system&
A*. Departmenta" Production *eport.
B. +aster ,c$edu"e.
C. Production Budget.
D. ,e-uentia" Product *eport.
. +ateria"s *e-uirement *eports.
Question .. W$ic$ of t$e fo""o%ing represents a correct se-uence in preparing a departmenta"
production report&
A. Ana"ysis of p$ysica" f"o% of units/ computation of unit costs/ ca"cu"ation of e-uiva"ent units and
ana"ysis of tota" costs.
B*. Ana"ysis of p$ysica" f"o% of units/ ca"cu"ation of e-uiva"ent units/ computation of unit costs and
ana"ysis of tota" costs.
C. Ca"cu"ation of e-uiva"ent units/ ana"ysis of p$ysica" f"o% of units/ ana"ysis of tota" costs and
computation of unit costs.
D. Ana"ysis of tota" costs/ ca"cu"ation of e-uiva"ent units/ computation of unit costs and ana"ysis of
p$ysica" f"o% of units.
. Ana"ysis of tota" costs/ ana"ysis of p$ysica" f"o% of units/ computation of unit costs/ and ca"cu"ation
of e-uiva"ent units.
Question 0. W$ic$ of t$e fo""o%ing is t$e correct order of ca"cu"ation in process costing&
A. P$ysica" units/ unit costs/ e-uiva"ent units.
B. 1nit costs/ e-uiva"ent units/ p$ysica" units.
C*. P$ysica" units/ e-uiva"ent units/ unit costs.
D. -uiva"ent units/ p$ysica" units/ unit costs.
. -uiva"ent units/ unit costs/ p$ysica" units.
Question 2. 1nder Austra"ian accounting standards/ %$ic$ met$ods can !e used to prepare t$e
departmenta" production report&
A. Weig$ted average/ first in first out and "ast in first out.
B*. Weig$ted average/ first in first out and standard costing.
C. 3ast in first out/ first in first out and standard costing.
D. 3ast in first out/ standard costing/ %eig$ted average.
. 4irst in first out/ "ast in first out/ %eig$ted average and standard costing.
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Question 9. *e: Co. 3td. $ad ./;;; units in %or) in process at Apri" 1/ 1<:". During Apri"/ 11/;;; units
%ere comp"eted. At Apri" (;/ 0/;;; units remained in %or) in process. 8o% many units %ere started
during Apri"&
A. 11/;;;
B. 1;/=;;
C. 0/;;;
D*. 1#/;;;
. 12/;;;
Question =. Assuming t$at t$ere %as no !eginning %or) in process inventory/ and t$e ending %or) in
process inventory is 0;> comp"ete as to conversion costs/ t$e num!er of e-uiva"ent units as to
conversion costs %ou"d !e:
A. 5$e same as t$e units comp"eted.
B. 5$e same as t$e units p"aced in process.
C. 3ess t$an t$e units comp"eted.
D*. 3ess t$an t$e units p"aced in process.
. 8a"f of t$e units comp"eted.
Question <. W$ic$ of t$e fo""o%ing represents a correct se-uence for ca"cu"ating e-uiva"ent units under
t$e %eig$ted average met$od:
A. Wor) to date on ending %or) in process ? units started and comp"eted
B*. A"" units comp"eted ? %or) to date on ending %or) in process
C. Wor) to comp"ete !eginning %or) in process ? %or) to date on ending %or) in process
D. Wor) to comp"ete !eginning %or) in process ? units comp"eted 7 %or) done on ending %or) in
process
. A"" units comp"eted ? %or) to comp"ete !eginning %or) in process
Question 1;. W$ic$ of t$e fo""o%ing represents a correct se-uence for ca"cu"ating e-uiva"ent units
under 4'4@&
A*. Wor) to comp"ete !eginning %or) in process ? units started and comp"eted ? %or) to date on
ending %or) in process.
B. Wor) to date on ending %or) in process ? units started and comp"eted ? %or) to comp"ete !eginning
%or) in process.
C. Wor) to comp"ete !eginning %or) in process ? %or) to date on ending %or) in process
D. Wor) done at t$e start of t$e period on !eginning inventory ? units started and comp"eted ? %or) to
date on ending %or) in process.
. Wor) to comp"ete !eginning %or) in process ? units started and comp"eted ? %or) remaining to !e
done on ending %or) in process.
Question 11. ABC Co. 3td. $ad (/;;; units in %or) in process on Apri" 1 %$ic$ %ere 2;> comp"ete.
During Apri"/ 1;/;;; units %ere comp"eted. @n Apri" (;/ ./;;; units remained in %or) in process
%$ic$ %ere .;> comp"ete as to conversion cost. 8o% many units %ere started during Apri"&
A. </;;;
B. </=;;
C. 1;/;;;
D*. 11/;;;
. 1(/;;;
Question 1#. *e!e: C$emica" Co. manufactures Compound # in t%o se-uentia" departments. @n Aune
1/ Department # $ad (/;;; units %$ic$ %ere 0;> comp"ete as to conversion cost. During Aune/ 10/;;;
units %ere comp"eted and transferred from Department 1. @n Aune (;/ Department # $ad ./;;; units
%$ic$ %ere #;> comp"ete as to conversion costs. 8o% many units %ere comp"eted and transferred
from Department # during t$e mont$ of Aune&
A. 11/;;;
B. 1#/0;;
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C*. 1./;;;
D. 10/9;;
. 19/#;;
Question 1(. ,oftc"ot$ 5e:ti"e Pty. 3td. manufactures a variety of fa!rics. 5$e Weaving Dept. $ad 1/;;;
units in %or) in process on Apri" 1 %$ic$ %ere #;> comp"ete as to conversion costs. During Apri"/
=/;;; units %ere comp"eted and transferred. @n Apri" (;/ ./;;; units remained in %or) in process 0;>
comp"ete as to conversion costs. 1sing t$e %eig$ted average met$od process costing/ ca"cu"ate t$e
e-uiva"ent units of conversion for t$e mont$ of Apri".
A. =/=;;
B. </;;;
C. </=;;
D*. 1;/;;;
. 1#/;;;
Question 1.. ,oftc"ot$ 5e:ti"e Pty. 3td. manufactures a variety of fa!rics. 5$e Weaving Dept. $ad 1/;;;
units in %or) in process on Apri" 1 %$ic$ %ere #;> comp"ete as to conversion costs. During Apri"/
=/;;; units %ere comp"eted and transferred. @n Apri" (;/ ./;;; units remained in %or) in process 0;>
comp"ete as to conversion costs. 1sing t$e 4'4@ met$od of process costing/ ca"cu"ate t$e e-uiva"ent
units of conversion for t$e mont$ of Apri".
A. =/=;;
B. </;;;
C*. </=;;
D. 1;/;;;
. 1#/;;;
Question 10. W$at is t$e inventory formu"a t$at s$o%s t$e p$ysica" f"o% of production units during a
given mont$/ under t$e %eig$ted average met$od&
A*. P$ysica" units in !eginning %or) in process ? units started 7 units comp"eted and transferred out B
units in ending %or) in process.
B. 1nits in !eginning %or) in process ? units comp"eted and transferred out ? units started B units in
ending %or) in process.
C. 1nits in ending %or) in process ? units in !eginning %or) in process B units started ? units
comp"eted and transferred out.
D. 1nits started ? units comp"eted and transferred out ? units in ending %or) in process B units in
!eginning %or) in process.
. 1nits in !eginning %or) in process 7 units started ? units comp"eted and transferred out B units in
ending %or) in process.
Question 12. 5$e maCor difference !et%een %eig$ted average and 4'4@ is:
A. 8o% comp"eted and transferred units are treated.
B. 8o% ending inventory is treated.
C*. 8o% !eginning inventory is treated.
D. 8o% current period costs are treated.
. 5$ere is no maCor difference.
Question 19. A company starts %or) on 1/;;; p$ysica" units and comp"etes 90> of conversion activity.
5$e costs are D1/0;; for conversion and D0/;;; for direct materia". W$at is t$e cost per e-uiva"ent unit
for conversion&
A. D1.;; per unit.
B. D1.0; per unit.
C. D#.0; per unit.
D*. D#.;; per unit.
. D;.0; per unit.
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Question 1=. A company starts %or) on 1/;;; p$ysica" units and comp"etes 90> of conversion activity.
5$e costs are D1/0;; for conversion and D0/;;; for direct materia" W$at is t$e cost per e-uiva"ent unit
for direct materia".
A. D#.;; per unit.
B. D1;.;; per unit.
C*. D0.;; per unit.
D. D2.;; per unit.
. D2.29 per unit.
Question 1<. 'f t$e 4'4@ met$od is used/ t$e cost of !eginning %or) in process s$ou"d !e inc"uded in:
1nit Cost Cost of units transferred out
A*. No Yes
B. No No
C. Yes No
D. Yes Yes
. None of t$e a!ove.
Question #;. W$ic$ of t$e fo""o%ing are needed to ca"cu"ate ending %or) in process under process
costing&
1nit Cost -uiva"ent 1nits Cost in Beg. Wor) in Process
A. No No Yes
B*. Yes Yes No
C. Yes Yes Yes
D. Yes No Yes
. Yes No No
Question #1. W$ic$ of t$e fo""o%ing are needed to ca"cu"ate !eginning %or) in process under t$e 4'4@
met$od&
1nit Cost -uiva"ent 1nits Cost in Beg. Wor) in Process
A. No No Yes
B. Yes Yes No
C*. Yes Yes Yes
D. Yes No Yes
. Yes No No
Question ##. 'n t$e ca"cu"ation of manufacturing cost per e-uiva"ent unit/ t$e %eig$ted average met$od
of process costing considers:
A. Current costs on"y.
B. Current costs ? cost of ending %or) in process.
C*. current costs ? cost of !eginning %or) in process.
D. current costs 7 cost of !eginning %or) in process.
. cost of !eginning %or) in process ? cost of ending %or) in process.
Question #(. 5$e units transferred in from t$e first department to t$e second department s$ou"d !e used
to ca"cu"ate e-uiva"ent units for %$ic$ met$od&
4'4@ Weig$ted Average
A. Yes Yes
B. Yes No
C. No Yes
D*. No No
. None of t$e a!ove
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Question #.. Eiven t$e fo""o%ing information/ use t$e %eig$ted average met$od to ca"cu"ate cost per
e-uiva"ent unit for materia"s:
No. of units Cost of materia"s
Beginning %or) in process (;/;;; D11/;;;
,tarted in +ay =;/;;; D(2/;;;
1nits comp"eted =0/;;;
nding %or) in process #0/;;;
A*. D;..(
B. D;..0
C. D;.00
D. D;.0<
. D;.20
Question #0. -uiva"ent unit ca"cu"ations are necessary to a""ocate manufacturing costs !et%een:
A*. Cost of goods manufactured and ending %or) in process.
B. Beginning %or) in process and units comp"eted.
C. Cost of goods so"d and ending %or) in process.
D. Cost of goods manufactured and !eginning %or) in process.
. Cost of goods manufactured and cost of goods so"d.
Question #2. 5$e 4'4@ met$od is superior to t$e %eig$ted average !ecause:
A. 't does not invo"ve cum!ersome ca"cu"ations.
B. 't does not re-uire t$e ca"cu"ation of e-uiva"ent units.
C*. Current period costs are not comming"ed %it$ prior period costs.
D. 't considers prior period costs during t$e current period.
. 't must !e computerised in order to o!tain accurate ca"cu"ations.
Question #9. 'n a norma" costing system:
A. Direct materia"s are app"ied to %or) in process using a predetermined rate.
B. Direct materia" and direct "a!our are app"ied to %or) in process at a predetermined rate.
C*. Direct materia" and "a!our are app"ied to %or) in process at t$eir actua" amounts.
D. +anufacturing over$ead is app"ied to %or) in process at t$e actua" amount.
. Direct materia"s and manufacturing over$ead are app"ied to %or) in process at a predetermined rate.
Question #=. Costs are accumu"ated !y a responsi!i"ity centre for contro" purposes %$en using:
Ao! @rder Costing Process Costing
A*. Yes Yes
B. Yes No
C. No No
D. No Yes
. costs are irre"evant for contro" purposes
Question #<. W$ic$ of t$e fo""o%ing is not usua""y an e:amp"e of a cost driver under process costing&
A. Direct "a!our $ours.
B. Direct "a!our cost.
C. +ac$ine $ours.
D*. 'ndirect materia"s cost.
. Num!er of units produced.
Question (;. 5$e Courna" entry to record predetermined over$ead is as fo""o%s:
A. De!it %or) in process and credit ra% materia"s inventory/ sa"aries paya!"e and manufacturing
over$ead.
B*. De!it %or) in process and credit manufacturing over$ead app"ied de!it manufacturing over$ead
and credit %or) in process and ra% materia"s inventory.
5est!an) t6a Management Accounting: An Australian Perspective (6e !y 3angfie"d7,mit$/ 5$orne and 8i"ton
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D. De!it manufacturing over$ead and credit %or) in process inventory.
. De!it %or) in process inventory and finis$ed goods inventory and credit manufacturing over$ead.
Question (1. 5$e Courna" entry to record comp"eted goods is as fo""o%s:
A. De!it %or) in process and credit manufacturing over$ead.
B. Credit finis$ed goods inventory and de!it cost of goods so"d.
C*. De!it finis$ed goods inventory and credit %or) in process.
D. De!it cost of goods so"d and credit %or) in process.
. De!it %or) in process inventory and credit finis$ed goods inventory.
Question (#. 5$e Courna" entry to record cost of goods so"d is:
A. De!it finis$ed goods inventory and credit cost of goods so"d.
B. De!it finis$ed goods inventory and credit %or) in process.
C. De!it cost of goods so"d and credit %or) in process.
D*. De!it cost of goods so"d and credit finis$ed goods inventory.
. De!it %or) in process inventory and credit cost of goods so"d.
Question ((. W$ic$ of t$e fo""o%ing statements a!out operation costing is true&
1F Conversion costs are accumu"ated !y department.
#F Direct materia" costs are accumu"ated !y !atc$.
(F 't is a $y!rid product costing system.
A*. 1/ # and (
B. # and (
C. 1 and (
D. 1 and #
. 1 on"y.
Question (.. ,out$ *iver C$emica"s Pty. 3td. manufactures a product ca""ed Gy!e). Direct materia"s
are added at t$e !eginning of t$e process and conversion activity occurs uniform"y t$roug$out t$e
process. 5$e fo""o%ing data pertain to t$e mont$ of +ay.
Direct Conversion
5ota" +ateria"s Cost
1nits
Wor) in process/ +ay 1 H 2;> 10/;;;
1nits started during +ay 2;/;;;
1nits comp"eted and transferred out 2=/;;;
Wor) in process/ +ay (1 H #;> 9/;;;
Costs
Wor) in process/ +ay 1 D.1/#0; D12/0;; D#./90;
Costs incurred during +ay #(./2(; 9#/;;; 12#/2(;
5ota" D#90/==; D==/0;; D1=9/(=;
1sing t$e %eig$ted average met$od of process costing/ ca"cu"ate t$e e-uiva"ent units of direct materia"s
for t$e mont$ of +ay.
A. 2=/;;;
B. 2</.;;
C. 9./;;;
D*. 90/;;;
. 90/.;;
Question (0. ,out$ *iver C$emica"s Pty. 3td. manufactures a product ca""ed Gy!e). Direct materia"s
are added at t$e !eginning of t$e process and conversion activity occurs uniform"y t$roug$out t$e
process. 5$e fo""o%ing data pertain to t$e mont$ of +ay.
5est!an) t6a Management Accounting: An Australian Perspective (6e !y 3angfie"d7,mit$/ 5$orne and 8i"ton
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Direct Conversion
5ota" +ateria"s Cost
1nits
Wor) in process/ +ay 1 H 2;> 10/;;;
1nits started during may 2;/;;;
1nits comp"eted and transferred out 2=/;;;
Wor) in process/ +ay (1 H #;> 9/;;;
Costs
Wor) in process/ +ay 1 D.1/#0; D12/0;; D#./90;
Costs incurred during +ay #(./2(; 9#/;;; 12#/2(;
5ota" D#90/==; D==/0;; D1=9/(=;
1sing t$e %eig$ted average met$od of process costing/ ca"cu"ate t$e e-uiva"ent units of conversion
activity for t$e mont$ of +ay.
A. 2;/.;;
B. 2=/;;;
C*. 2</.;;
D. 9./;;;
. 90/;;;
Question (2. ,out$ *iver C$emica"s Pty. 3td. manufactures a product ca""ed Gy!e). Direct materia"s
are added at t$e !eginning of t$e process and conversion activity occurs uniform"y t$roug$out t$e
process. 5$e fo""o%ing data pertain to t$e mont$ of +ay.
Direct Conversion
5ota" +ateria"s Cost
1nits
Wor) in process/ +ay 1 H 2;> 10/;;;
1nits started during may 2;/;;;
1nits comp"eted and transferred out 2=/;;;
Wor) in process/ +ay (1 H #;> 9/;;;
Costs
Wor) in process/ +ay 1 D.1/#0; D12/0;; D#./90;
Costs incurred during +ay #(./2(; 9#/;;; 12#/2(;
5ota" D#90/==; D==/0;; D1=9/(=;
1sing t$e %eig$ted average met$od of processing costing/ ca"cu"ate t$e cost of goods comp"eted and
transferred during +ay.
A. D#.</02;
B. D#0;/#.;
C. D#0=/.;;
D*. D#2(/=.;
. D#90/==;
Question (9. 8ea"t$y 4"avour is a food processing company t$at ma)es a product ca""ed 8ea"t$ Nut
soup in t%o processesI!"ending and condensing. 5$e output of t$e !"ending department is transferred
to t$e condensing department. A"" materia"s are added at t$e !eginning of t$e !"ending process/ and
conversion activity occurs uniform"y t$roug$out !ot$ processes. 5$e fo""o%ing data pertain to t$e
mont$ of Apri" in t$e !"ending department.
5ota" Direct +ateria"s Conversion Costs
1nits
Wor) in process/ Apri" 1 J(;>F 1;/;;;
1nits started during Apri" 0;/;;;
1nits comp"eted and transferred out 00/;;;
Wor) in process/ Apri" (; J<;>F 0/;;;
Costs
Wor) in process/ Apri" (; D ./0;; D(/;;; D 1/0;;
Costs incurred during Apri" .#/#0; 19/0;; #./90;
5est!an) t6a Management Accounting: An Australian Perspective (6e !y 3angfie"d7,mit$/ 5$orne and 8i"ton
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5ota" D.2/90; D#;/0;; D#2/#0;
1sing t$e 4'4@ met$od of process costing/ ca"cu"ate t$e e-uiva"ent units of direct materia"s for t$e
mont$ of Apri".
A. 2;/;;;
B. 0=/;;;
C. 09/;;;
D. 00/;;;
*. 0;/;;;
Question (=. 8ea"t$y 4"avour is a food processing company t$at ma)es a product ca""ed 8ea"t$ Nut
soup in t%o processesI!"ending and condensing. 5$e output of t$e !"ending department is transferred
to t$e condensing department. A"" materia"s are added at t$e !eginning of t$e !"ending process/ and
conversion activity occurs uniform"y t$roug$out !ot$ processes. 5$e fo""o%ing data pertain to t$e
mont$ of Apri" in t$e !"ending department.
5ota" Direct +ateria"s Conversion Costs
1nits
Wor) in process/ Apri" 1 J(;>F 1;/;;;
1nits started during Apri" 0;/;;;
1nits comp"eted and transferred out 00/;;;
Wor) in process/ Apri" (; J<;>F 0/;;;
Costs
Wor) in process/ Apri" (; D ./0;; D(/;;; D 1/0;;
Costs incurred during Apri" .#/#0; 19/0;; #./90;
5ota" D.2/90; D#;/0;; D#2/#0;
1sing t$e 4'4@ met$od of process costing/ ca"cu"ate t$e cost per e-uiva"ent unit of conversion activity
for t$e mont$ of Apri".
A*. D;..1#0
B. D;..12<
C. D;..(=1
D. D;..2;0
. D;.0;.=
Question (<. Norma" spoi"age is accounted for in %$ic$ of t$e fo""o%ing %ays
A. :pensed in t$e period in %$ic$ it occurred.
B*. 'nc"uded as part of t$e unit cost of output.
C. Written off to cost of goods so"d.
D. 'nc"uded in inventory va"uation unti" year end and t$en %ritten off.
. None of t$e a!ove.
Question .;. A!norma" spoi"age is accounted for in %$ic$ of t$e fo""o%ing %ays
A*. :pensed in t$e period in %$ic$ it occurred.
B. 'nc"uded as part of t$e unit cost of output.
C. Written off to cost of goods so"d.
D. 'nc"uded in inventory va"uation unti" year end and t$en %ritten off.
. None of t$e a!ove.
Question .1. 5$e fo""o%ing data app"y to Gi"c$ 3td in its mi:ing department for t$e mont$ of Apri"
A"" materia" is introduced at t$e start of t$e process and conversion occurs even"y t$roug$ t$e process.
,poi"age occurred at t$e mid point in t$e process.
1nits
Wor) in process 1 Apri" 1;/;;; #;>
1nits commenced =;/;;;
1nits comp"eted 20/;;;
1nits spoi"t 1;/;;;
Wor) in process (; Apri" 10/;;; ((.( >
1sing %eig$ted average met$od/ %$at are t$e e-uiva"ent units for conversion
A. 9(/;;;
5est!an) t6a Management Accounting: An Australian Perspective (6e !y 3angfie"d7,mit$/ 5$orne and 8i"ton
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B*. 90/;;;
C. 99/;;;
D. =#/;;;
. =0/;;;
Question .#. Norma" spoi"age is part of t$e cost comp"eted units/ %$ic$ of t$e fo""o%ing reasons mig$t
Custify t$e separate ca"cu"ate of spoi"age costs.
A. 't provides usefu" information for cost contro".
B. 't provides usefu" information for -ua"ity contro".
C. 't avoids t$e pro!"em of accepting spoi"age as unavoida!"e.
D. B and C.
*. A/ B and C.
Question .(. ,poi"age costs under a 4irst in 4irst out system re-uire ca"cu"ations for:
A. ,poi"age in opening %or) in process p"us units commenced during t$e period.
B. ,poi"age in opening %or) in process.
C. ,poi"age inc"uded in units commenced during t$e period.
D. ,poi"age in c"osing %or) in process.
*. B and C.
Question ... . 5$e fo""o%ing data app"y to 4i"c$ 3td in its mi:ing department for t$e mont$ of Apri"
A"" materia" is introduced at t$e start of t$e process and conversion occurs even"y t$roug$ t$e process.
,poi"age occurred at t$e mid point in t$e process.
Costs direct materia" conversion
Wor) in process 1 Apri" D#2/;;; D10/2;;
Costs for Apri" #(0/;;; 1#9/.;;
-uiva"ent units (;;/;;; #9;/;;;
W$at is t$e tota" unit cost&
A. D;.=9
B. D;.<;
C. D;.==0
D*. D1.99
. D1. =0
Question .0. A!norma" spoi"age costs assist management to:
A. Contro" costs.
B. Contro" -ua"ity.
C. 8o"d supervisors responsi!"e.
D. 'dentify out of contro" processes.
*. A"" of t$e a!ove.
Question .2. @perationa" costing is appropriate %$ere:
1. 5$ere are different materia" inputs.
#. 5$ere are common materia" inputs.
(. Processes are identica".
.. Different com!inations of specific processes app"y to different products.
A. 1 and #
B. # and (
C. 1 and (
D. # and .
*. 1 and .
Question .9. @perationa" costing is appropriate for products %it$ t$e fo""o%ing c$aracteristics:
1. *epetitive mass production.
#. 'ndividua" products.
(. 3arge !atc$es %it$ repetitive processes.
.. ,ome uni-ue features/ some common features.
A. 1 and #
5est!an) t6a Management Accounting: An Australian Perspective (6e !y 3angfie"d7,mit$/ 5$orne and 8i"ton
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B. 1 and (
C. 1 and .
D. # and (
*. ( and .
Question .=. %$ic$ of t$e fo""o%ing firms are more "i)e"y to use operationa" costing tec$ni-ues:
1. @i" refineries.
#. 4ood processors.
(. 3arge sca"e c"ot$ing manufacturers.
.. 5ourist operators.
A. 1 and #
B* # and (
C. 1 and (
D. # and .
. ( and .
Question .<. t$e distinguis$ing c$aracteristics of operationa" costing are:
1. Direct materia" is assigned to departments.
#. Direct materia" is assigned to !atc$es.
(. Direct "a!our and over$ead is assigned to !atc$es.
.. Direct "a!our and over$ead is assigned to departments.
A. 1 and .
B. # and (
C. 1 and (
D*. # and .
. None of t$e a!ove.
Question 0;. 'nventory va"uation in operation costing re-uires:
A. Direct materia"s and conversion costs !eing traced to processes.
B. Direct materia" and conversion costs !eing traced to !atc$es.
C*. Direct materia"s traced to !atc$es and conversion costs traced to processes.
D. Direct materia"s traced to process and conversion costs traced to !atc$es.
. @peration costing does not inc"ude inventories.
Question 01. W$ic$ of t$e fo""o%ing statements JisFare true&
1. Weig$ted average costs provide a !etter !asis for cost contro" t$an 4'4@ costs.
#. Weig$ted average costs provide a !etter !asis for performance eva"uation t$an standard costs.
(. Cost per e-uiva"ent unit provides a measure of production efficiency.
A. 1
B. #
C*. (
D. 1 and #
. 1 and (
Question 0#. %$ic$ of t$e fo""o%ing statements isJareF fa"se&
1. 't is easier to estimate t$e percentage of comp"etion for conversion costs t$an for direct "a!our.
#. Conversion costs are a"%ays app"ied uniform"y during t$e production process.
(. Direct "a!our and over$ead are com!ined as conversion costs !ecause it si assumed t$at direct
3a!our drives over$eads.
A. 1
B. #
C. (
D*. 1 and #
. 1/ # and (
Question 0(. 'n industries %$ic$ process products in more t$an one department/ t$e cost centres are
)no%n as:
A. 4o""o%ing departments.
B*. ,e-uentia" departments.
C. Previous departments.
5est!an) t6a Management Accounting: An Australian Perspective (6e !y 3angfie"d7,mit$/ 5$orne and 8i"ton
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D. ,eparate departments.
. A"ternate departments.
Question 0.. Costs !et%een one department and t$e ne:t in a mu"ti department process are )no%n as:
A. 5ransferred costs.
B. 5ransferred out costs.
C*. 5ransferred in costs.
D. Prior costs.
. Previous department costs.
Question 00. W$ic$ of t$e fo""o%ing inventory va"uation met$ods may !e used in process costing to
eva"uate performance&
1. Weig$ted average.
#. 4irst in first out.
(. ,tandard costs.
A. 1 and #
B. # and (
C. 1 and (
D*. 1/ # and (
. None of t$e a!ove are use to eva"uate performance.
Question 02. W$ic$ of t$e fo""o%ing inventory va"uation met$ods isJareF "ess suited to cost contro"&
1. Weig$ted average costs.
#. 4irst in first out cost.
(. ,tandard costs.
A*. 1
B. #
C. (
D. 1 and #
. 1 and (
Question 09. Process costing systems are suita!"e for firms t$at produce:
1. 8omogeneous products.
#. 8eterogeneous products.
(. 'ndividua" products.
.. *epetitive products.
A. 1 and (
B*. 1 and .
C. # and (
D. # and .
. 1 and #
Question 0=. W$ic$ of t$e fo""o%ing statements is JareF true&
1. Ao! costing traces a"" costs to !atc$es.
#. Process costing traces a"" costs to production processes.
(. @peration costing traces a"" costs to production processes.
A. 1 and (
B. # and (
C*. 1 and #
D. 1/ # and (
. #
Question 0<. 5$e 4'4@ met$od of inventory va"uation provides more usefu" information !ecause:
1. 't inc"udes costs over severa" periods.
#. 't inc"udes costs over current period on"y.
(. 't inc"udes !ot$ direct materia" and conversion costs.
A. 1
B. #
C. (
D. 1 and (
5est!an) t6a Management Accounting: An Australian Perspective (6e !y 3angfie"d7,mit$/ 5$orne and 8i"ton
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*. # and (
Question 2;. 5$e esta!"is$ment of a predetermined conversion costs for operation costing re-uires
%$ic$ of t$e fo""o%ing:
1. Budgeted "eve" of t$e cost driver.
#. Budgeted direct "a!our costs.
(. Budgeted manufacturing over$ead costs.
A. 1
B. 1 and #
C*. 1/ # and (
D. # and (
. 1 and (
Question 21. P$ysica" f"o% of units
'n eac$ case !e"o%/ fi"" in t$e missing amount.
1.
Wor) in process/ Aanuary 1 KKKKKKKKKKK. 0/;;; units
1nits started during Aanuary KKKKKKKKKKK 1/;;; units
1nits comp"eted during Aanuary KKKKKKKKK. ./0;; units
Wor) in process/ Aanuary (1 KKKKKKKKKK.. &
#.
Wor) in process/ ,eptem!er 1 KKKKKKKKK.. ./0;; tons
1nits started during ,eptem!er KKKKKKKKK &
1nits comp"eted during ,eptem!er KKKKKKK.. </0;; tons
Wor) in process/ ,eptem!er (; KKKKKKKKK 1/;;; tons
(.
Wor) in process/ Aanuary 1 KKKKKKKKKK. 0;/;;; ga""ons
1nits started during t$e year KKKKKKKKK... .#0/;;; ga""ons
1nits comp"eted during t$e year KKKKKKKK.. &
Wor) in process/ Decem!er (1 KKKKKKKKK 1;;/;;; ga""ons
5$e missing amounts are:
1. 1/0;; units
#. 2/;;; tons
(. (90/;;; ga""ons
Question 2#. -uiva"ent unitsL %eig$ted average and 4'4@.
5$e ,uperior C$emica" Company 3td. refines a variety of petroc$emica" products. 5$e fo""o%ing data
is from t$e firmMs A"tona p"ant.
Wor) in process/ August 1 1/;;;/;;; "itres
Direct materia" 1;;> comp"ete
Conversion #0> comp"ete
1nits started in process during August .90/;;; "itres
Wor) in process/ August (1 1#;/;;; "itres
Direct materia" 1;;> comp"ete
Conversion =;> comp"ete
*Q1'*D:
1. Ca"cu"ate t$e e-uiva"ent units of direct materia" and conversion for t$e mont$ of August. 1se t$e
%eig$ted average met$od of process costing.
#. *epeat re-uirement J1F using t$e 4 4'4@ met$od.
1. Weig$ted average:
5est!an) t6a Management Accounting: An Australian Perspective (6e !y 3angfie"d7,mit$/ 5$orne and 8i"ton
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Direct materia": 1/.90/;;;
Conversion: 1/.01/;;;
,ee t$e tota" e-uiva"ent units ro% in t$e fo""o%ing sc$edu"e.
#. 4'4@:
Direct materia": .90/;;;
Conversion: 1/#;1/;;;
,ee t$e ne% e-uiva"ent units ro% in t$e fo""o%ing sc$edu"e.
Calculation of Equivalent Units: Altona Plant
Percentage Comp"etion
1nits +ateria" Conversion
Wor) in process/ August 1 1/;;;/;;; #0>
1nits started during August .90/;;;
5ota" units to account for 1/.90/;;;
1nits comp"eted and transferred out during
August
1/(00/;;; 1;;> 1/(00/;;; 1/(00/;;;
Wor) in process/ August (1 1#;/;;; =;> 1#;/;;; <2/;;;
5ota" units accounted for 1/.90/;;; NNNNN NNNNNNNNN
J1F
5ota" e-uiva"ent units 1/.90/;;; 1/.01/;;;
3ess: e-uiva"ent units represented in August 1 %or) in process 1/;;;/;;; #0;/;;;
J#F
Ne% e-uiva"ent units accomp"is$ed in August on"y .90/;;; 1/#;1/;;;
Question 2(. -uiva"ent unitsL 4'4@ and %eig$ted average.
Crysta" 'deas Pty 3td manufactures a variety of decorative g"ass products. 5$e firm emp"oys a process
costing system for its manufacturing operations. A"" direct materia"s are added at t$e !eginning of t$e
process/ and conversion costs are incurred uniform"y t$roug$out t$e process. 5$e companyMs
production -uantity sc$edu"e for Novem!er is reproduced !e"o%.
1nits
Wor) in process on Novem!er 1
J2;> comp"ete as to conversionF 0;;
1nits started during Novem!er #/0;;
5ota" units to account for (/;;;
1nits comp"eted and transferred out
during Novem!er
0;;
1nits started and comp"eted during
Novem!er
1/0;;
Wor) in process on Novem!er (;
J#;> comp"ete as to conversionF 1/;;;
5ota" units accounted for (/;;;
*Q1'*D:
Ca"cu"ate eac$ of t$e fo""o%ing amounts.
1. -uiva"ent units of direct materia" during Novem!er. 1se t$e 4'4@ met$od.
#. -uiva"ent units of conversion activity during Novem!er. 1se t$e 4'4@ met$od.
(. -uiva"ent units of direct materia" during Novem!er. 1se t$e %eig$ted average met$od.
.. -uiva"ent units of conversion activity during Novem!er. 1se t$e %eig$ted average met$od.
5est!an) t6a Management Accounting: An Australian Perspective (6e !y 3angfie"d7,mit$/ 5$orne and 8i"ton
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1. #/0;; e-uiva"ent units.
#. 1/<;; e-uiva"ent units.
(. (/;;; e-uiva"ent units.
.. #/#;; e-uiva"ent units.
Percentage
Comp"etion
1nits +ateria" Conversion Cost
Wor) in process/ Novem!er 1 0;; 2;>
1nits started during Novem!er #/0;;
5ota" units to account for (/;;;
1nits comp"eted and transferred out
during Novem!er
#/;;; 1;;> #/;;; #/;;;
Wor) in process/ Novem!er (; 1/;;; #;> 1/;;; #;;
5ota" units accounted for (/;;;
5ota" e-uiva"ent units (/;;; #/#;;
*3ess: e-uiva"ent units represented in
Novem!er 1 %or) in process
0;; (;;
*Ne% e-uiva"ent units accomp"is$ed
in Novem!er on"y
#/0;; 1/<;;
*5$ese t%o "ines in t$e ta!"e are used on"y for t$e 4'4@ met$od Jre-uirements 1 and # in t$e e:erciseF.
Question 2.. Cost per e-uiva"ent unit
5$e Burnie 5im!er Company gro%s/ $arvests/ and processes tim!er for use as !ui"ding tim!er. 5$e
fo""o%ing data pertains to t$e companyMs sa% mi"".
Wor) in process/ Aune 1
Direct materia"s D 1=/0;;
Conversion (2/90;
Cost incurred during Aune
Direct materia" D(;;/;;;
Conversion #(;/;;;
5$e e-uiva"ent units of activity for Aune %ere as fo""o%s:
Weig$ted Average 4'4@
Direct materia" 12/;;; 10/;;;
Conversion .=/0;; ../;;;
*Q1'*D:
1. Ca"cu"ate t$e cost per e-uiva"ent unit/ for !ot$ direct materia" and conversion/ during t$e mont$ of
Aune. 1se %eig$ted average process costing.
#. *epeat re-uirement J1F using t$e 4'4@ met$od.
1.Weig$ted average met$od:
Direct
+ateria" Conversion 5ota"
Wor) in process/ Aune 1 D 1=/0;; D (2/90; D 00/#0;
Costs incurred during Aune (;;/;;; #(;/;;; 0(;/;;;
5ota" costs to account for D(1=/0;; D#22/90; D0=0/#0;
5est!an) t6a Management Accounting: An Australian Perspective (6e !y 3angfie"d7,mit$/ 5$orne and 8i"ton
2=
-uiva"ent units 12/;;; .=/0;;
Cost per e-uiva"ent unit D1<.<;* D0.0;** D#0..;
*D1<.<; B D(1=/0;;612/;;;
**D0.0; B D#22/90;6.=/0;;
#. 4'4@ met$od:
Direct materia" conversion tota"
Wor) in process/ Aune 1 5$ese costs of D00/#0; are not inc"uded in t$e unit
cost ca"cu"ation.
Cost incurred during Aune D(;;/;;; D#(;/;;; D0(;/;;;
5ota" costs to account for D0=0/#0;
-uiva"ent units 10/;;; ../;;;
Costs per e-uiva"ent unit D#;. ;;* D0.#(** D#0.#(
*D#;.;; B D(;;/;;;610/;;;
**D0.#( B D#(;/;;;6../;;;
Question 20. Ca"cu"ation of e-uiva"ent units/ unit costs/ transfer and inventory.
5$e Dandy Company on +ay 1/ 1<O#/ $ad a %or) in process inventory of 1;/;;; units. 5$e units %ere
1;;> comp"ete for materia" va"ued at D#;/;;;. 5$e units %ere a"so (;> comp"ete for "a!our and
manufacturing over$ead va"ued at D9/;;;.
During t$e mont$ 10;/;;; units %ere comp"eted and transferred to finis$ed goods. 5$e ending %or) in
process inventory on +ay (1/ 1<O# consisted of 1;/;;; units. 5$ese units %ere 1;;> comp"ete for
materia"s and =;> comp"ete for "a!our and manufacturing/ and over$ead.
Cost added during t$e mont$ %ere D(.;/;;; for materia"s and D0;;/;;; for "a!our and over$ead.
*Q1'*D:
A. Ca"cu"ate under %eig$ted average cost:
1F -uiva"ent units.
#F 1nit cost for materia"s.
(F 1nit cost for "a!our and over$ead.
.F 5$e do""ar va"ue of goods transferred to finis$ed goods.
0F 5$e do""ar va"ue of ending %or) in process.
B. *epeat t$e a!ove ca"cu"ations under 4'4@.
A. Average cost met$od:
1F
-uiva"ent 1nits +ateria" 3a!our P over$ead
5ransferred to finis$ed goods 10;/;;; 10;/;;;
? nding %or) in process 1;/;;; =/;;;
B -uiva"ent units 12;/;;; units 10=/;;; units
#F P (F
5ota" Cost +ateria" 3a!our P @ver$ead
Beginning %or) in process D #;/;;; D 9/;;;
Cost added during t$e mont$ (.;/;;; 0;;/;;;
5ota" D(2;/;;; D0;9/;;;
1nit Cost +ateria" 3a!our P @ver$ead
aF 5ota" cost D(2;/;;; D0;9/;;;
!F -uiva"ent units 12;/ ;;; 10=/;;;
1nit cost D#.#0 per unit D(.#1 per unit
5est!an) t6a Management Accounting: An Australian Perspective (6e !y 3angfie"d7,mit$/ 5$orne and 8i"ton
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.F Qa"ue of transfers to finis$ed goods
+ateria"s J10;/;;;F JD#.#0F D((9/0;;
3a!our P over$ead J10;/;;;F JD(.#1F D.=1/0;;
5ota" va"ue of transfers D=1</;;;
0F Qa"ue of ending %or) in process
nding %or) in process
+ateria"s D ##/0;;
3a!our P manufacturing over$ead #0/2=;
5ota" D .=/1=;
B. 4'4@ +et$od
1.
-uiva"ent 1nits +ateria" 3a!our P @ver$ead
5ransferred to finis$ed goods 10;/;;; 10;/;;;
? nding %or) in process 1;/;;; =/;;;
B 5ota" possi!"e 12;/;;; 10=/;;;
7 Beginning %or) in process 1;/;;; (/;;;
B -uiva"ent units 10;/;;; units 100/;;; units
#F
1nit CostR +ateria"s (F 3a!our P @ver$ead
Cost added during mont$ D(.;/;;; D0;;/;;;
1nit cost D#.#9 per unit D(.#( per unit
.F Qa"ue of transfers to finis$ed goods
Beginning %or) in process D #9/;;;
Cost to comp"ete !eginning %or) in process ##/21;
*emainder 99;/;;;
5ota" D=1</21;
0F Qa"ue of ending %or) in process
nding %or) in process
+ateria"s D##/9;;
3a!our P over$ead #0/=.;
5ota" D.=/0.;
Question 22. Cost f"o%s in process costingL Courna" entries
5$e Ade"aide E"ass Company manufactures %indo% g"ass in t%o se-uentia" departments. 5$e
fo""o%ing cost data pertains to t$e mont$ of @cto!er.
Department 1 Department #
Direct materia" entered into production D 12;/;;; D.;/;;;
Direct "a!our 2=;/;;; 02;/;;;
App"ied manufacturing over$ead 1/(2;/;;; =.;/;;;
Cost of goods comp"eted and transferred out 1/=;;/;;;* =;;/;;;**
*Cost of goods transferred to Department #.
**Cost of goods transferred to finis$ed goods.
*Q1'*D:
Prepare Courna" entries to record t$e fo""o%ing events:
1. Costs incurred for direct materia" and direct "a!our and app"ication of manufacturing over$ead in
Department 1.
#. 5ransfer of goods from Department 1 to Department #.
(. Costs incurred for direct materia" and direct "a!our and app"ication of manufacturing over$ead in
Department #.
5est!an) t6a Management Accounting: An Australian Perspective (6e !y 3angfie"d7,mit$/ 5$orne and 8i"ton
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.. 5ransfer of goods from Department # to finis$ed goods inventory.
1. Wor) in Process 'nventory: Department 1 #/#;;/;;;
*a% +ateria" 'nventory 12;/;;;
Wages Paya!"e 2=;/;;;
+anufacturing @ver$ead 1/(2;/;;;
#. Wor) in Process 'nventory: Department # 1/=;;/;;;
Wor) in Process 'nventory: Department 1 1/=;;/;;;
(. Wor) in Process 'nventory: Department # 1/..;/;;;
*a% +ateria" 'nventory .;/;;;
Wages Paya!"e 02;/;;;
+anufacturing @ver$ead =.;/;;;
..
4inis$ed Eoods 'nventory =;;/;;;
Wor) in Process 'nventory: Department # =;;/;;;
5est!an) t6a Management Accounting: An Australian Perspective (6e !y 3angfie"d7,mit$/ 5$orne and 8i"ton
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