Which of the following statements comparing the weighted-average method with the FIFO method of accounting for cost flows is incorrect? a)Using the FIFO method, the equivalent units are calculated differently from the weighted-average method because the equivalent work done on the opening work-in-progress last period is excluded from the computation. b)The weighted-average method averages the costs associated with the work done in the previous period with the costs incurred in the current period. c)The fact that there are two different methods suggests that it is not possible to state which method provides more accurate results. d) When there are no beginning inventories or ending inventories, both methods will provide identical results.
Questions MCQ
1. Which of the following statements comparing the weighted-average method with the FIFO method of accounting for cost flows is incorrect?
a)Using the FIFO method, the equivalent units are calculated differently from the weighted-average method because the equivalent work done on the opening work-in-progress last period is excluded from the computation.
b)The weighted-average method averages the costs associated with the work done in the previous period with the costs incurred in the current period.
c)The fact that there are two different methods suggests that it is not possible to state which method provides more accurate results.
d) When there are no beginning inventories or ending inventories, both methods will provide identical results.
2. Which of the following statements about a
a) In a process costing system, there is a work-in-progress account for each processing department.
b) In a process costing system, equivalent units are separately computed for materials and for conversion costs.
c) In a process costing system, overhead can be under or overapplied, just as in job-order costing.
d) In a process costing system, materials costs are traced to units of products.
3.In which production setting is operation costing most appropriate?
a) Custom automobile repair shop
b) Landscaping business
c) Oil refinery
d) Clothing manufacturer
4.Colby Company has a process costing system in which the weighted-average method is used. The company adds all materials at the beginning of the process in the moulding department, which is the first of two stages of its production process. Information concerning the materials used in the moulding department during March is as follows:
Units Materials costs
Work in progress at March 1 22,000 € 15,480
Units started during March 90,000 € 46,120
Units completed and transferred to
next department during March 100,000
What was the materials cost of the work-in-progress inventory at March 31?
a) € 1,100
b) € 5,500
c) € 6,600
d) €12,100
5.Merckley Company has a process costing system and uses the FIFO method. For May, the company's beginning work-in-progress inventory was 80% complete with respect to conversion, and the ending inventory was 50% complete with respect to conversion. Information on units processed and conversion costs incurred during May follow:
Units Conversion cost
Work-in-progress inventory on May 1 25,000 € 22,000
Units started into production, and
costs incurred during the month 135,000 € 161,000
Units completed and transferred to
finished goods during the month 110,000
Work-in-progress inventory on May 31 50,000
What was the amount of conversion cost in the ending work-in-progress inventory?
a) €28,750
b) €35,000
c) €57,500
d) €70,000
6.Steven Company uses the FIFO method in its process costing system. The following data were taken from the accounting records of a particular department for March:
Beginning work-in-progress inventory: € 27,500
(10,000 units; 100% complete like to materials,40% complete like to conversion)
Units completed and transferred out
during the month: 50,000 units
Cost per equivalent unit of production for March:
Material € 2.25
Conversion € 2.10
What was the total cost of units transferred out of the department during March?
a) €186,600
b) €214,100
c) €217,500
d) €245,000
Note: Answer Questions (7) and (8) using the following information about Anderson Plastics
Anderson Plastics makes plastic rear lamps for cars. Spoiled units are detected upon inspection at the end of the process and are disposed of at zero net disposal price. Assume normal spoilage is 10% of the good output produced.
The following information about actual conversion costs for April is available:
Actual units Equivalent units Total costs
Work in progress, April 1 15,000 14,000 €145,600
Work done during April 29,000 28,000 308,000
To account for 44,000 42,000 €453,600
Good units completed and transferred 20,000 20,000 ?
out during April
Normal and abnormal spoilage 4,000 4,000 ?
Work in progress, April 30 20,000 18,000 ?
7.Assume that Anderson uses the weighted-average method. What is the cost of normal spoilage for conversion costs for the month of April?
a) €21,600
b) €22,000
c) €43,200
d) €44,000
8.Assume that Anderson uses the FIFO method. What is the cost of abnormal spoilage for conversion costs for the month of April?
a) €21,600
b) €22,000
c) €43,200
d) €44,000
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