BUSINESS

11. Process costing is used to account for:

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

12. Michaella, Inc. uses a process-costing system. A newly-hired accountant 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?

1, 2, 3, 4.

1, 2, 4, 3.

1, 4, 3, 2.

2, 1, 4, 3.

2, 1, 3, 4.

13. 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, $60,000; conversion cost, $150,000
Current costs: Materials, $180,000; conversion cost, $480,000
Universal’s equivalent-unit cost for conversion cost is:
$13.71.
$18.00.
$21.00.
$25.20.
some other amount.

14. Fiero Corporation adds all materials at the beginning of production and incurs conversion cost evenly throughout manufacturing. The company completed 70,000 units during the year and had 12,000 units in process at year end, 20% complete with respect to conversion cost. Equivalent units for the year total:

materials, 70,000; conversion, 70,000.
materials, 70,000; conversion, 2,400.
materials, 72,400; conversion, 72,400.
materials, 82,000; conversion, 72,400.
materials, 82,000; conversion, 82,000.

15. Barrett 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?

11,600.
17,700.
20,500.
30,700.
None of these.

16. Which of the following statements is false?

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

17. Which of the following statements about 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.

I only.

I and III.

II and III.

III only.

I, II, and III.

18. 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, $60,000; conversion cost, $150,000

Current costs: Materials, $180,000; conversion cost, $480,000

Universal’s equivalent-unit cost for materials is:

$4.50.

$6.00.

$8.00.

$9.60.

some other amount.

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

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

1. Aglow 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 50% complete. The firm’s ending work-in-process inventory consists of 4,000 units that are 75% 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, 3,000; B, 0.
A, 3,000; B, 3,000.
A, 4,000; B, 0.

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