ACCOUNTING

Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 1. The two categories of cost comprising conversion costs are:
a. direct labor and indirect labor
b. direct labor and factory overhead
c. factory overhead and direct materials
d. direct labor and direct materials
____ 2. The four steps necessary to determine the cost of goods completed and the ending inventory valuation in a
process cost system are:
1. allocate costs to transferred and partially completed units
2. determine the units to be assigned costs
3. determine the cost per equivalent unit
4. calculate equivalent units of production
The correct ordering of the steps is:
a. 2, 4, 3, 1
b. 4, 2, 3, 1
c. 2, 3, 4, 1
d. 2, 3, 1, 4
____ 3. Which of the following costs incurred by a paper manufacturer would be included in the group of costs
referred to as conversion costs?
a. Advertising costs
b. Raw lumber (direct materials)
c. Machine operator’s wages (direct labor)
d. Sales salaries
____ 4. If Department K had 2,000 units, 45% completed, in process at the beginning of the period, 12,000 units
were completed during the period, and 1,200 units were 40% completed at the end of the period, what was
the number of equivalent units of production for the period if the first-in, first-out method is used to cost
inventories?
a. 11,580
b. 11,280
c. 13,680
d. 10,000
Name: ________________________ ID: A
2
____ 5. Department G had 3,600 units, one-third completed at the beginning of the period, 12,000 units were
completed during the period, 2,000 units were one-fifth completed at the end of the period, and the following
manufacturing costs were debited to the departmental work in process account during the period:
Work in process, beginning of period $30,000
Costs added during period:
Direct materials (10,400 at $8) 83,200
Direct labor 62,000
Factory overhead 24,800
Assuming that all direct materials are placed in process at the beginning of production and that the first-in,
first-out method of inventory costing is used, what is the total cost of the departmental work in process
inventory at the end of the period?
a. $19,100
b. $26,000
c. $23,200
d. $12,000
____ 6. Department G had 3,600 units, one-third completed at the beginning of the period, 12,000 units were
completed during the period, 2,000 units were one-fifth completed at the end of the period, and the following
manufacturing costs were debited to the departmental work in process account during the period:
Work in process, beginning of period $30,000
Costs added during period:
Direct materials (10,400 at $8) 83,200
Direct labor 62,000
Factory overhead 24,800
Assuming that all direct materials are placed in process at the beginning of production and that the first-in,
first-out method of inventory costing is used, what is the total cost of 3,600 units of beginning inventory
which were completed during the period?
a. $61,200
b. $48,600
c. $38,400
d. $45,600
____ 7. Department S had no work in process at the beginning of the period. 12,000 units of direct materials were
added during the period at a cost of $84,000, 9,000 units were completed during the period, and 3,000 units
were 30% completed as to labor and overhead at the end of the period. All materials are added at the
beginning of the process. Direct labor was $49,500 and factory overhead was $9,900. The total cost of units
completed during the period were:
a. $117,000
b. $143,400
c. $121,000
d. $127,450
Name: ________________________ ID: A
3
____ 8. The following production data were taken from the records of the Finishing Department for June:
Inventory in process, 6-1,
1/3 completed 1,500 units
Transferred to finished goods
during June 5,000 units
Equivalent units of production
during June 5,200 units
Determine the number of equivalent units of production in the June 30 Finishing Department inventory,
assuming that the first-in, first-out method is used to cost inventories.
a. 700 units
b. 200 units
c. 1,000 units
d. 300 units
____ 9. Department A had 1,000 units in Work in Process that were 70% completed at the beginning of the period at
a cost of $7,000. 4,000 units of direct materials were added during the period at a cost of $8,200. 4,500 units
were completed during the period, and 500 units were 60% completed at the end of the period. All materials
are added at the beginning of the process. Direct labor was $28,700 and factory overhead was $4,510. The
cost of the 500 units in process at the end of the period if the first-in, first-out method is used to cost
inventories was:
a. $1,025
b. $5,000
c. $5,075
d. $3,455
____ 10. A form prepared periodically for each processing department summarizing (1) the units for which the
department is accountable and the units to be assigned costs and (2) the costs charged to the department and
the allocation of these costs is termed a:
a. factory overhead production report
b. manufacturing cost report
c. process cost report
d. cost of production report
____ 11. Department W had 2,400 units, one-third completed at the beginning of the period, 12,000 units were
transferred to Department X from Department W during the period, and 1,800 units were one-half completed
at the end of the period. What is the equivalent units of production used to compute unit conversion cost on
the cost of production report for Department W (Assuming the company uses FIFO)?
a. 12,100 units
b. 12,000 units
c. 15,000 units
d. 11,400 units
Name: ________________________ ID: A
4
____ 12. Lombardi Company manufactures a single product by a continuous process, involving three production
departments. The records indicate that direct materials, direct labor, and applied factory overhead for
Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct
materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000,
respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000,
and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs
into Department 1 during the period for direct materials is:
a. Work in Process–Department 1 100,000
Materials 100,000
b. Work in Process–Department 1 50,000
Materials 50,000
c. Materials 100,000
Work in Process–Department 1 100,000
d. Materials 50,000
Work in Process–Department 1 50,000
____ 13. Lombardi Company manufactures a single product by a continuous process, involving three production
departments. The records indicate that direct materials, direct labor, and applied factory overhead for
Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct
materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000,
respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000,
and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs
from Department 1 into Department 2 during the period is:
a. Work in Process–Department 2 390,000
Work in Process–Department 1 390,000
b. Work in Process–Department 2 330,000
Work in Process–Department 1 330,000
c. Work in Process–Department 2 255,000
Work in Process–Department 1 255,000
d. Work in Process–Department 2 375,000
Work in Process–Department 1 375,000
____ 14. Lombardi Company manufactures a single product by a continuous process, involving three production
departments. The records indicate that direct materials, direct labor, and applied factory overhead for
Department 1 were $100,000, $125,000, and $150,000, respectively. Work in process at the beginning of the
period for Department 1 was $75,000, and work in process at the end of the period totaled $60,000. The
records indicate that direct materials, direct labor, and applied factory overhead for Department 2 were
$50,000, $60,000, and $70,000, respectively. In addition, work in process at the beginning of the period for
Department 2 totaled $75,000, and work in process at the end of the period totaled $60,000. The journal entry
to record the flow of costs into Department 3 during the period is:
a. Work in Process–Department 3 585,000
Work in Process–Department 2 585,000
b. Work in Process–Department 3 570,000
Work in Process–Department 2 570,000
c. Work in Process–Department 3 555,000
Work in Process–Department 2 555,000
d. Work in Process–Department 3 165,000
Work in Process–Department 2 165,000
Name: ________________________ ID: A
5
____ 15. Lombardi Company manufactures a single product by a continuous process, involving three production
departments. The records indicate that direct materials, direct labor, and applied factory overhead for
Department 2 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct
materials, direct labor, and applied factory overhead for Department 3 were $50,000, $60,000, and $70,000,
respectively. In addition, work in process at the beginning of the period for Department 3 totaled $75,000,
and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs
into Department 3 during the period for direct materials is:
a. Work in Process–Department 3 100,000
Materials 100,000
b. Work in Process–Department 3 125,000
Materials 125,000
c. Work in Process–Department 3 50,000
Materials 50,000
d. Work in Process–Department 3 70,000
Materials 70,000
____ 16. Just-in-time processing is a business philosophy that focuses on reducing time and cost and eliminating poor
quality. This is accomplished in manufacturing and nonmanufacturing processes by:
a. moving a product from process to process as each function is completed
b. combining processing functions into work centers and cross-training workers to perform
more than one function
c. having production supervisors attempt to enter enough materials into manufacturing to
keep all manufacturing departments operating
d. having workers typically perform one function on a continuous basis
____ 17. The debits to Work in Process–Assembly Department for April, together with data concerning production,
are as follows:
April 1, work in process:
Materials cost, 3,000 units $ 7,500
Conversion costs, 3,000 units,
2/3 completed 6,000
Materials added during April, 10,000 units 26,000
Conversion costs during April 31,000
Goods finished during April, 11,500 units —
April 30 work in process, 1,500 units,
1/2 completed —
All direct materials are placed in process at the beginning of the process and the average cost method is used
to cost inventories. The conversion cost per equivalent unit (to the nearest cent) for April is:
a. $2.70
b. $2.53
c. $3.02
d. $5.60
____ 18. Cost behavior refers to the manner in which:
a. a cost changes as the related activity changes
b. a cost is allocated to products
c. a cost is used in setting selling prices
d. a cost is estimated
Name: ________________________ ID: A
6
____ 19. Which of the following costs is an example of a cost that remains the same in total as the number of units
produced changes?
a. Direct labor
b. Salary of a factory supervisor
c. Units of production depreciation on factory equipment
d. Direct materials
____ 20. Which of the following activity bases would be the most appropriate for gasoline costs of a delivery service,
such as United Postal Service?
a. Number of trucks employed
b. Number of miles driven
c. Number of trucks in service
d. Number of packages delivered
____ 21. Most operating decisions of management focus on a narrow range of activity called the:
a. relevant range of production
b. strategic level of production
c. optimal level of production
d. tactical operating level of production
____ 22. Which of the graphs in Figure 18(3)-1 illustrates the behavior of a total variable cost?
Figure 18(3)-1
a. Graph 2
b. Graph 3
c. Graph 4
d. Graph 1

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