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B 1. An Equivalent Unit of Material or Conversion Cost Is Equal To

The document contains 10 multiple choice questions about process costing concepts. Key points addressed include: 1) An equivalent unit is the amount of material or conversion cost necessary to complete one unit of production. 2) A parallel production process involves certain portions of work being done simultaneously and then brought together for completion. 3) A cost of production report would not include work in process beginning inventory. 4) With a 60% complete inventory, the unit cost would be $3. 5) When additional materials added in subsequent departments increase units produced, the transferred in costs will be allocated over more units.

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2K views

B 1. An Equivalent Unit of Material or Conversion Cost Is Equal To

The document contains 10 multiple choice questions about process costing concepts. Key points addressed include: 1) An equivalent unit is the amount of material or conversion cost necessary to complete one unit of production. 2) A parallel production process involves certain portions of work being done simultaneously and then brought together for completion. 3) A cost of production report would not include work in process beginning inventory. 4) With a 60% complete inventory, the unit cost would be $3. 5) When additional materials added in subsequent departments increase units produced, the transferred in costs will be allocated over more units.

Uploaded by

KATHRYN CLAUDETTE RESENTE
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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B 1.

An equivalent unit of material or conversion cost is equal to:

A. the prime cost

B. the amount of material or conversion cost necessary to complete one unit of production

C. a unit of work in process inventory

D. the amount of material or conversion cost necessary to start a unit of production into work in process

E. 50% of the material or conversion cost of a unit of finished goods inventory, assuming a linear production
pattern

B 2. The product flow format where certain portions of the work are done simultaneously and then brought
together for completion is called:

A. applied

B. parallel

C. standard

D. selective

E. sequential

C 3. An item that does not appear on a cost of production report is:

A. work in processCbeginning inventory

B. cumulative costs through the end of departmental production

C. finished goodsCending inventory

D. materials used in the department

E. unit costs added by the department


C 4. Goode Manufacturing has three producing departments in its factory. The ending inventory in the Milling
Department consisted of 3,000 units. These units were 60% complete with respect to labor and
factory overhead. Materials are applied at the end of the milling process. Unit costs for the complete
process in the Milling Department are: materials, $1; labor, $2; and factory overhead, $3. The
appropriate unit cost for each unit in the ending inventory is:

A. $2

B. $5

C. $3

D. $6

E. $4

SUPPORTING CALCULATION: 60% ($2 + $3) = $3

D 5. When added materials in subsequent departments result in an increase of the units produced, the unit
transferred-in costs will:

A. be reclassified as new materials

B. be increased to provide for the additional units

C. be accounted for under the fifo costing method

D. be decreased as they are spread over more units

E. remain unchanged

E 6. Gyro Products transferred 10,000 units to one department. An additional 3,000 units of materials were added
in the department. At the end of the month, 7,000 units were transferred to the next department.
There was no beginning inventory. The costs for units transferred in would be effectively allocated
over:

A. 17,000 units

B. 3,000 units

C. 10,000 units

D. 7,000 units

E. 13,000 units

SUPPORTING CALCULATION: 7,000 units transferred out + 6,000 units in ending inventory = 13,000 units

E 7. A characteristic of a process costing system is that:

A. costs are accumulated by order

B. it is used by a company manufacturing custom machinery

C. standard costs are not applicable

D. it requires a lot more detailed accounting than does a job order system

E. work in process inventory is restated in terms of completed units

D 8. Transferred-in costs as used in a process cost accounting system are:

A. supervisory salaries that are transferred from an overhead cost center to a production cost center

B. ending work in process inventory of a previous process that will be used in a succeeding process

C. labor that is transferred from another department within the same plant instead of hiring temporary workers from
the outside

D. costs of the product of a previous internal process that is subsequently used in a succeeding internal process

E. none of the above


E 9. In a process costing system, how is the unit cost affected in a production cost report when materials are
added in a department subsequent to the first department and the added materials result in additional
units?

A. The first department's unit cost is increased, but it does not necessitate an adjustment of the transferred-in unit
cost.

B. The first department's unit cost is decreased, but it does not necessitate an adjustment of the transferred-in unit
cost.

C. The first department's unit cost is not affected.

D. The first department's unit cost is increased, which necessitates an adjustment of the transferred-in unit cost.

E. The first department's unit cost is decreased, which necessitates an adjustment of the transferred-in unit cost.

E 10. Assuming that there was no beginning work in process inventory and the ending work in process inventory
is 50% complete as to conversion costs, the number of equivalent units as to conversion costs would
be:

A. less than the units completed

B. more than the units completed

C. the same as the units placed in process

D. the same as the units completed

E. less than the units placed in process

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