Import Settings:

Base Settings: Brownstone Default

Information Field: Difficulty
Information Field: LO
Highest Answer Letter: E
ultiple !eywords in Same "aragraph: #o
$hapter: $hapter %&: "rocess $osting
'rue(False
)* "rocess cost accounting systems are generally used +y companies that produce a large ,olume
of standardi-ed units on a continuous +asis*
Ans: 'rue
Difficulty: Easy
LO: )
%* 'he managers of process manufacturing systems focus on the series of processes needed to
complete the production of the products*
Ans: 'rue
Difficulty: Easy
LO: )
.* In a process manufacturing system/ only one process is in progress at any particular point in
time*
Ans: False
Difficulty: Easy
LO: )
&* "rocess manufacturing usually occurs when the manufacturer produces large 0uantities of
identical products*
Ans: 'rue
Difficulty: Easy
LO: )
1* Accountants use the term 2process cost accounting system2 +ecause these systems use a
num+er of trained indi,iduals and computers to process the collected information*
Ans: False
Difficulty: Easy
LO: )
3* "rocess costing in,ol,es repetiti,e production and heterogeneous products among its features*
Ans: False
Difficulty: Easy
LO: )
4* anagers of process manufacturing systems are not e,aluated on the +asis of the costs
incurred in their departments*
Ans: False
Difficulty: oderate
LO: )
5* "rocess cost accounting systems are used only +y companies that manufacture physical
products* 'hus/ companies and other organi-ations that pro,ide ser,ices to their customers do
not use process cost accounting*
Ans: False
Difficulty: oderate
LO: )
6* "rocess cost accounting systems are used +y companies that manufacture standardi-ed
products +y passing them through a series of manufacturing steps*
Ans: 'rue
Difficulty: oderate
LO: )
)7* A uni0ue feature of process costing systems is the use of a single 8oods in "rocess control
account*
Ans: False
Difficulty: oderate
LO: )
))* 9nfortunately/ the use of process costing is of little +enefit to a ser,ice type of operation*
Ans: False
Difficulty: oderate
LO: )
)%* 'he ultimate o+:ecti,e of +oth :o+ order costing and process costing is the same;to
determine the cost per unit of output*
Ans: 'rue
Difficulty: oderate
LO: )
).* $ompanies that use a series of manufacturing processes to produce standardi-ed products
should use a process cost accounting system*
Ans: 'rue
Difficulty: Easy
LO: )
)&* A production department is an organi-ational unit of a factory that has the responsi+ility for
partially manufacturing or producing a product or ser,ice*
Ans: 'rue
Difficulty: Easy
LO: )
)1* 'he cost o+:ect in process costing is the process itself*
Ans: 'rue
Difficulty: Easy
LO: )
)3* In defining direct costs and indirect costs/ it is the process that is the cost o+:ect in process
costing*
Ans: 'rue
Difficulty: Easy
LO: )
)4* 'he cost o+:ect in process costing is the same as in :o+ order costing*
Ans: False
Difficulty: oderate
LO: )
)5* A manufacturing company may choose to use either a :o+ order cost accounting system or a
process cost accounting system/ without considering the process it uses to produce its products*
Ans: False
Difficulty: Easy
LO: %
)6* "rocess and :o+ order manufacturing operations are similar +ecause they +oth com+ine
materials/ la+our/ and manufacturing o,erhead items in the process of producing products*
Ans: 'rue
Difficulty: Easy
LO: %
%7* Some firms that primarily use :o+ order costing may use process costing for a portion of
their operations*
Ans: 'rue
Difficulty: Easy
LO: %
%)* <o+ order and process manufacturing systems are similar in that they can only +e used to
apply direct materials/ direct la+our/ and o,erhead to identifia+le product units*
Ans: False
Difficulty: oderate
LO: %
%%* 9sing <I' in process costing can reduce costs*
Ans: 'rue
Difficulty: oderate
LO: %
%.* 'he accounting systems used in process costing are simpler than those used in :o+ order
costing*
Ans: False
Difficulty: oderate
LO: %
%&* =hen a process cost accounting system records the purchase of raw materials/ the >aw
aterials In,entory account is credited instead of the >aw aterials "urchases account*
Ans: False
Difficulty: oderate
LO: .
%1* =hen a process cost accounting system records the purchase of raw materials/ the >aw
aterials In,entory account is de+ited instead of the >aw aterials "urchases account*
Ans: 'rue
Difficulty: oderate
LO: .
%3* =hen a process cost accounting system assigns the cost of materials to the output produced
+y a department/ the :ournal entry de+its the >aw aterials In,entory account and credits the
8oods in "rocess In,entory account for that department*
Ans: False
Difficulty: oderate
LO: .
%4* If Department A uses ?)7/777 of direct materials and Department B uses ?)1/777 of direct
materials/ this :ournal entry would +e recorded +y the process cost accounting system:
8oods in "rocess In,entory/ Department B )7/777
8oods in "rocess In,entory/ Department A )1/777
>aw aterials In,entory %1/777
Ans: False
Difficulty: oderate
LO: .
%5* If Department < uses ?&7/777 of direct materials and Department ! uses ?47/777 of direct
materials/ this :ournal entry would +e recorded +y the process cost accounting system:
>aw aterials In,entory 47/777
8oods in "rocess In,entory/ Department < &7/777
8oods in "rocess In,entory/ Department ! .7/777
Ans: False
Difficulty: oderate
LO: .
%6* If Department @ uses ?37/777 of direct materials and Department ' uses ?)1/777 of direct
materials/ this :ournal entry would +e recorded +y the process cost accounting system:
Finished 8oods In,entory/ Department @ 37/777
Finished 8oods In,entory/ Department ' )1/777
>aw aterials In,entory 47/777
Ans: False
Difficulty: oderate
LO: .
.7* If Department $ uses ?)6/777 of direct materials and Department D uses ?&1/777 of direct
materials/ this :ournal entry would +e recorded +y the process cost accounting system:
8oods in "rocess In,entory/ Department $ )6/777
8oods in "rocess In,entory/ Department D &1/777
>aw aterials In,entory 3&/777
Ans: 'rue
Difficulty: oderate
LO: .
.)* In process cost accounting/ the classification of materials as direct or indirect depends on
whether they are consumed totally within a single department*
Ans: 'rue
Difficulty: oderate
LO: .
.%* In process cost accounting/ materials are always classified as indirect if they are not
physically incorporated into the final product*
Ans: False
Difficulty: oderate
LO: .
..* Direct costs in process cost accounting include those costs that can +e readily identified with
particular product units*
Ans: False
Difficulty: oderate
LO: .
.&* "rocess cost accounting systems consider direct costs to include those costs that can +e
readily identified with a particular process*
Ans: 'rue
Difficulty: oderate
LO: .
.1* All process cost accounting systems use materials re0uisitions to release raw materials from
the storeroom to the factory*
Ans: False
Difficulty: oderate
LO: .
.3* A materials consumption report is a source document that summari-es the materials used
during a reporting period*
Ans: 'rue
Difficulty: oderate
LO: .
.4* A materials consumption report is prepared to identify those managers who inappropriately
eAceeded the planned le,el of materials consumption*
Ans: False
Difficulty: oderate
LO: .
.5* >efer to the following ta+le of cost information:
'his :ournal entry would +e made to record the use of direct materials in the reporting period
co,ered +y the information:
8oods in "rocess In,entory/ "icBling Dept )3/777
8oods in "rocess In,entory/ $anning Dept* ./777
>aw aterials In,entory )6/777
Ans: 'rue
Difficulty: oderate
LO: .
.6* In process cost accounting/ all la+our that is applied eAclusi,ely in a single production
department is considered to +e direct la+our*
Ans: 'rue
Difficulty: Easy
LO: &
&7* After all process cost accounting :ournal entries are recorded and posted for a reporting
period/ the Factory "ayroll account should ha,e a -ero +alance*
Ans: 'rue
Difficulty: Easy
LO: &
&)* If the factory la+our cost for a month was ?)%./777/ this :ournal entry would +e recorded +y
the process cost accounting system:
Factory "ayroll )%./777
$ash )%./777
Ans: 'rue
Difficulty: oderate
LO: &
&%* If Department # incurred direct la+our cost of ?%%/777 and Department O incurred direct
la+our cost of ?&./777/ this :ournal entry would +e recorded +y the process cost accounting
system:
Factory "ayroll 31/777
8oods in "rocess In,entory/ Department # %%/777
8oods in "rocess In,entory/ Department O &./777
Ans: False
Difficulty: oderate
LO: &
&.* If Department ' uses ?56/777 of direct la+our and Department C uses ?))/777 of direct
la+our/ this :ournal entry would +e recorded +y the process cost accounting system:
8oods in "rocess In,entory/ Department C 56/777
8oods in "rocess In,entory/ Department ' ))/777
Factory O,erhead )77/777
Ans: False
Difficulty: oderate
LO: &
&&* If Department 8 uses ?1./777 of direct la+our and Department H uses ?%)/777 of direct
la+our/ this :ournal entry would +e recorded +y the process cost accounting system:
8oods in "rocess In,entory/ Department 8 1./777
8oods in "rocess In,entory/ Department H %)/777
Factory "ayroll 4&/777
Ans: 'rue
Difficulty: oderate
LO: &
&1* In process cost accounting/ direct la+our always includes only the la+our that is applied
directly to the products*
Ans: False
Difficulty: oderate
LO: &
&3* In some circumstances/ a process cost accounting system may classify wages paid to
maintenance worBers as direct la+our costs instead of factory o,erhead*
Ans: 'rue
Difficulty: oderate
LO: &
&4* Some factory la+our costs incurred in a reporting period are presented on the income
statement as Factory La+our EApense*
Ans: False
Difficulty: oderate
LO: &
&5* >efer to the following ta+le of cost information:
'his :ournal entry would +e made to record the use of direct la+our in the reporting period
co,ered +y the information:
Factory "ayroll 3/)77
8oods in "rocess In,entory/ "icBling Dept* &/777
8oods in "rocess In,entory/ $anning Dept* %/)77
Ans: False
Difficulty: oderate
LO: &
&6* >efer to the following ta+le of cost information:
'his :ournal entry would +e made to record the use of direct la+our in the reporting period
co,ered +y the information:
8oods in "rocess In,entory/ "ushing Dept* )%7/777
8oods in "rocess In,entory/ Sho,ing Dept* 47/777
Factory "ayroll )67/777
Ans: 'rue
Difficulty: oderate
LO: &
17* "rocess cost accounting systems consider o,erhead costs to include those costs that cannot
+e readily identified with any specific process*
Ans: 'rue
Difficulty: Easy
LO: 1
1)* Factory o,erhead costs can +e allocated +y a process cost accounting system to the output of
production departments +y using a predetermined o,erhead allocation rate*
Ans: 'rue
Difficulty: Easy
LO: 1
1%* If the indirect materials cost for a reporting period was ?.4/177/ the following :ournal entry
would +e recorded +y the process cost accounting system:
Factory O,erhead .4/177
>aw aterials In,entory .4/177
Ans: 'rue
Difficulty: Easy
LO: 1
1.* A process cost accounting system records all factory o,erhead costs directly in the 8oods in
"rocess In,entory accounts*
Ans: False
Difficulty: Easy
LO: 1
1&* In process costing there is rarely a +alance in Factory O,erhead that needs to +e closed at
periodDend*
Ans: False
Difficulty: Easy
LO: 1
11* In process costing/ indirect materials are charged directly to 8oods in "rocess*
Ans: False
Difficulty: Easy
LO: 1
13* If the predetermined o,erhead allocation rate is .17E of direct la+our cost and the "ainting
DepartmentFs direct la+our cost for the reporting period is ?%7/777/ this entry would record the
allocation of o,erhead to the products processed in this department:
8oods in "rocess In,entory/ "ainting Dept 47/777
Factory O,erhead 47/777
Ans: 'rue
Difficulty: oderate
LO: 1
14* If the predetermined o,erhead allocation rate is 51E of direct la+our cost/ and the "olishing
DepartmentFs direct la+our cost for the reporting period is ?%7/777/ this entry would +e made to
record the allocation of o,erhead to the products processed in this department:
Factory O,erhead )4/777
8oods in "rocess In,entory/
"ainting Dept* )4/777
Ans: False
Difficulty: oderate
LO: 1
15* If the predetermined o,erhead allocation rate is %%1E of direct la+our cost/ and the iAing
DepartmentFs direct la+our cost for the reporting period is ?)7/777/ this entry would +e made to
record the allocation of o,erhead to the products processed in this department:
8oods in "rocess In,entory/ iAing Dept* %%1/777
Factory O,erhead %%1/777
Ans: False
Difficulty: Hard
LO: 1
16* >efer to the following ta+le of cost information:
'he company uses the same predetermined o,erhead allocation rate for the "icBling and $anning
Departments*
Ans: False
Difficulty: Easy
LO: 1
37* >efer to the following ta+le of cost information:
If the allocated o,erhead e0ualled the actual o,erhead/ the total manufacturing costs incurred
during the reporting period were ?.1/.77*
Ans: 'rue
Difficulty: oderate
LO: 1
3)* >efer to the following ta+le of cost information:


If the predetermined o,erhead allocation rates were +ased on direct la+our costs/ the rates for the
"ushing and Sho,ing Departments were 17E and )17E/ respecti,ely*
Ans: 'rue
Difficulty: oderate
LO: 1
3%* In order to determine unit cost under a process cost accounting system/ e0ui,alent finished
units produced must +e calculated*
Ans: 'rue
Difficulty: Easy
LO: 3
3.* In the same time period/ a production department can produce )/777 e0ui,alent finished
units with respect to direct materials and )/%77 e0ui,alent finished units with respect to direct
la+our*
Ans: 'rue
Difficulty: oderate
LO: 3
3&* If a production department has )77 e0ui,alent units of production with respect to direct
materials in a gi,en reporting period/ the e0ui,alent units of production with respect to direct
la+our also must +e )77*
Ans: False
Difficulty: oderate
LO: 3
31* In a process cost accounting system/ a departmentFs production should +e measured in terms
of e0ui,alent units*
Ans: 'rue
Difficulty: oderate
LO: 3
33* If a department did all the worB on .7 units/ oneDhalf the worB on 17 units/ and oneDfourth of
the worB on )77 units/ you would find the unit cost +y di,iding the incurred costs +y )57
e0ui,alent units*
Ans: False
Difficulty: oderate
LO: 3
34* E0ui,alent units of production are always the same as the total num+er of physical units
finished during the period*
Ans: False
Difficulty: oderate
LO: 3
35* E0ui,alent units of production need to +e determined only if a processing department adds
materials and la+our to its products at different rates*
Ans: False
Difficulty: oderate
LO: 3
36* 2E0ui,alent units of production2 is an engineering term used to descri+e the process +y
which one company attempts to manufacture units of a product that are e0ui,alent to the product
manufactured +y a competitor*
Ans: False
Difficulty: oderate
LO: 3
47* Once e0ui,alent units are calculated for materials/ this num+er may also +e used for direct
la+our and factory o,erhead*
Ans: False
Difficulty: oderate
LO: 3
4)* aterial E9" started and completed is ne,er the same as Direct La+our E9" started and
completed*
Ans: False
Difficulty: oderate
LO: 3
4%* If a processing department starts the reporting period with )77/777 physical units that were
%7E complete with respect to direct la+our/ it must add 57/777 e0ui,alent units of la+our to
complete them*
Ans: 'rue
Difficulty: Easy
LO: 3
4.* 'he num+er of E9"s assigned to ending in,entory should usually +e e0ual to or less than the
num+er of physical units in ending in,entory*
Ans: 'rue
Difficulty: Easy
LO: 3
4&* If a processing department starts the reporting period with 17/777 physical units that were
%1E complete with respect to direct materials and &7E complete with respect to direct la+our/ it
must add )%/177 e0ui,alent units of direct materials and %7/777 e0ui,alent units of direct la+our
to complete them*
Ans: False
Difficulty: Easy
LO: 3
41* Accounting for the acti,ities of a process costing operation in,ol,es fi,e distinct stages of
calculation*
Ans: False
Difficulty: oderate
LO: 4
43* 'he last step in the fourDstep accounting procedure for process costing is the calculation of
E9"s*
Ans: False
Difficulty: oderate
LO: 4
44* 'he process cost summary is a primary managerial accounting report produced +y a process
cost accounting system*
Ans: 'rue
Difficulty: Easy
LO: 5
45* One section of the process cost summary descri+es the e0ui,alent units of production for the
department during the reporting period and presents the calculations of the costs per e0ui,alent
unit*
Ans: 'rue
Difficulty: Easy
LO: 5
46* A process cost summary is a financial report that descri+es the costs charged to a
department/ the e0ui,alent units of production +y the department/ and how the costs were
assigned to the output*
Ans: 'rue
Difficulty: Easy
LO: 5
57* A process cost summary includes the amounts of e0ui,alent finished units of production for
the period*
Ans: 'rue
Difficulty: oderate
LO: 5
5)* A process cost summary for a production department accounts for all costs assigned to that
department during the period plus costs that were in the departmentFs 8oods in "rocess In,entory
account at the +eginning of the period*
Ans: 'rue
Difficulty: oderate
LO: 5
5%* A process cost summary shows the cost of a particular :o+ manufactured in the reporting
period*
Ans: False
Difficulty: oderate
LO: 5
5.* 'he process cost summary presents calculations of the cost of units completed during the
reporting period/ +ut does not present any information a+out the ending goods in process
in,entory*
Ans: False
Difficulty: oderate
LO: 5
5&* A process cost summary +alances costs in opening in,entory and transferred in to costs
transferred out and ending in,entory*
Ans: 'rue
Difficulty: oderate
LO: 5
51* Because the process cost summary descri+es the acti,ities of the production department for
the specified reporting period/ it does not present information a+out any costs incurred in prior
periods*
Ans: False
Difficulty: Hard
LO: 5
53* A company that uses a process cost accounting system maintains separate 8oods in "rocess
In,entory accounts for each of its manufacturing departments*
Ans: 'rue
Difficulty: Easy
LO: 6
54* >efer to the following ta+le of cost information:
'his :ournal entry would +e made to record the transfer of partially completed goods from the
"ushing Department to the Sho,ing Department:
8oods in "rocess In,entory/ "ushing Dept* %17/777
8oods in "rocess In,entory/ Sho,ing Dept %17/777
Ans: False
Difficulty: oderate
LO: 6
55* During a recent month/ the ShaBing Department recei,ed input transferred from the >olling
Department with an assigned cost of ?31/777* 'his transfer should +e recorded with the
following entry:
8oods in "rocess In,entory/ ShaBing Dept* 31/777
8oods in "rocess In,entory/ >olling Dept* 31/777
Ans: 'rue
Difficulty: oderate
LO: 6
56* During a recent month/ the $anning Department recei,ed input transferred from the $ooBing
Department with an assigned cost of ?)77/777* 'his transfer should +e recorded with the
following entry:
8oods in "rocess In,entory/ $ooBing Dept* )77/777
8oods in "rocess In,entory/ $anning Dept* )77/777
Ans: False
Difficulty: oderate
LO: 6
67* =hen goods are transferred from the 8rinding department to the iAing department for
further processing/ the iAing department should de+it its 8oods in "rocess In,entory account
and the 8rinding department should credit its 8oods in "rocess In,entory account*
Ans: 'rue
Difficulty: oderate
LO: 6
6)* 9ltimately all costs of the processes in a "rocess $osting system pass through the $ost of
8oods Sold account*
Ans: 'rue
Difficulty: Easy
LO: )7
6%* During the preceding weeB/ the "acBing Department transferred out completed units with a
cost of ?4&/777* 'his transfer should +e recorded with the following entry:
Finished 8oods In,entory 4&/777
8oods in "rocess In,entory/ "acBing Dept* 4&/777
Ans: 'rue
Difficulty: oderate
LO: )7
6.* >efer to the following ta+le of cost information:
'his :ournal entry would +e made to record the transfer of fully completed goods from Sho,ing
to the finished goods in,entory:
Finished 8oods In,entory 1%1/777
8oods in "rocess In,entory/ Sho,ing Dept 1%1/777
Ans: False
Difficulty: oderate
LO: )7
6&* Super,isory staff associated with a particular department would +e considered indirect
la+our in :o+ costing +ut direct la+our in process costing*
Ans: 'rue
Difficulty: oderate
LO: )7
ultiple $hoice
61* =hich of the following is not a true statement a+out process cost accounting systemsG
AH "rocess cost accounting systems attempt to determine unit costs*
BH "rocess cost accounting systems use predetermined o,erhead application rates*
$H "rocess cost accounting systems in,ol,e a num+er of departments/ each of which produces a
different product*
DH "rocess cost accounting systems accumulate costs in 8oods in "rocess In,entory accounts*
EH "rocess cost systems use e0ui,alent units of production*
Ans: $
Difficulty: oderate
LO: )
63* =hich of the following fi,e Binds of products is unliBely to +e produced in a process
manufacturing systemG
AH $ompact disBs*
BH SlacBs for casual wear*
$H Base+all hats*
DH $alculators*
EH Oil paintings*
Ans: E
Difficulty: oderate
LO: )
64* =hich of the following characteristics does not apply to process manufacturing systemsG
AH Each unit of product is separately identifia+le*
BH "artially completed products are transferred +etween processes*
$H Different managers are responsi+le for the different steps in the whole process*
DH 'he output of all processes IeAcept the final processH is a raw material to the neAt process*
EH All of these are characteristics of process manufacturing systems*
Ans: A
Difficulty: oderate
LO: )
65* "rocess costing is fre0uently characteri-ed +y:
AH Low standardi-ation and high production ,olume*
BH $ustom orders and homogeneous products*
$H >epetiti,e production and heterogeneous products*
DH >epetiti,e production and low production ,olume*
EH Homogeneous product and high production ,olume*
Ans: E
Difficulty: oderate
LO: )
66* A system of accounting in which the costs of each process are accumulated separately and
then assigned to the units of product that passed through the process is a:
AH "roduct cost accounting system*
BH "rocess cost accounting system*
$H <o+ order cost accounting system*
DH anufacturing cost accounting system*
EH 8oods in process accounting system*
Ans: B
Difficulty: Easy
LO: )
)77* An organi-ational unit of a factory that has the responsi+ility for partially manufacturing or
producing a product is called a:
AH "roduction department*
BH Ser,ice department*
$H "rimary department*
DH >esponsi+ility department*
EH $ontrol department*
Ans: A
Difficulty: oderate
LO: )
)7)* In "rocess $ost/ the goal of the system is to:
AH Identify all incoming costs*
BH Identify all outgoing costs*
$H Identify all unit costs*
DH Identify and trace all incoming and outgoing costs*
EH Identify and trace all total costs*
Ans: D
Difficulty: oderate
LO: )
)7%* =hich of the following characteristics applies to process cost accounting +ut not to :o+
order cost accountingG
AH 9se of a predetermined o,erhead rate*
BH Identifia+le lots of production*
$H E0ui,alent finished units*
DH La+our time ticBet for each employee*
EH 9se of a single 8oods in "rocess account*
Ans: $
Difficulty: oderate
LO: %
)7.* A document that shows the raw materials issued to a department during a period and that
su+stitutes for a materials re0uisition is a:
AH aterials purchase order*
BH >ecei,ing report*
$H aterials consumption report*
DH <o+ cost sheet*
EH "roduction order*
Ans: $
Difficulty: oderate
LO: .
)7&* Direct material costs are recorded:
AH Indirectly to 8oods in "rocess account*
BH Indirectly to a Finished 8oods account*
$H Directly to a 8oods in "rocess account*
DH Directly to a Finished 8oods account*
EH Directly to a $ost of 8oods Sold account*
Ans: $
Difficulty: oderate
LO: .
)71* Direct la+our and indirect la+our are recorded respecti,ely to:
AH Factory O,erhead and 8oods in "rocess*
BH 8oods in "rocess and Finished 8oods*
$H Finished 8oods and 8oods in "rocess*
DH 8oods in "rocess and Factory O,erhead*
EH $ost of 8oods Sold and Finished 8oods*
Ans: D
Difficulty: oderate
LO: &
)73* J $ompany uses a process cost accounting system* 'he Sewing DepartmentFs +eginning
in,entory consisted of 17/777 units/
.
&
complete with respect to direct la+our and o,erhead* 'he
department started and finished )%4/177 units* 'he ending in,entory consists of &7/777 units
that are
)
&
complete with respect to direct la+our and o,erhead* All direct materials are added at
the +eginning of the process* 'he department incurred direct la+our costs of ?%&/777 and
o,erhead costs of ?.%/777* 'he direct la+our cost per e0ui,alent unit is:
AH ?7*)%3*
BH ?7*)37*
$H ?7*)45*
DH ?7*%61*
EH ?7*.4.*
Ans: B
Difficulty: Hard
LO: &
)74* 'he purpose of the process cost summary report is to:
AH Help managers control departments/ factory managers e,aluate department managersF
performance/ and pro,ide cost information for financial statements*
BH Help managers control departments*
$H Help factory managers e,aluate department managersF performance*
DH "ro,ide cost information for financial statements*
EH Help managers control departments and pro,ide cost information for financial statements*
Ans: A
Difficulty: oderate
LO: 1
)75* A measure of the producti,ity of a process with respect to its use of direct materials/ direct
la+our/ or o,erhead/ and an eApression of the acti,ity of a process as the num+er of units that
would ha,e +een processed during a period if all effort had +een applied to units that were started
and finished during the period/ is called:
AH anufacturing o,erhead*
BH 9nits in process*
$H A :o+ cost sheet*
DH E0ui,alent units of production*
EH A :o+ lot*
Ans: D
Difficulty: Easy
LO: 3
)76* E0ui,alent units of production are e0ual to:
AH 'he num+er of units that could ha,e +een produced*
BH 'he num+er of finished units produced*
$H 'he num+er of units introduced into the process*
DH 'he num+er of units still in process*
EH 'he sum of the num+ers of finished units produced and units still in process*
Ans: A
Difficulty: Easy
LO: 3
))7* In order to compute an E9"/ you must Bnow:
AH An estimate of the percentage of completion*
BH An estimate of units completed*
$H An estimate of units started and completed*
DH An estimate of direct la+our cost*
EH An estimate of materials cost*
Ans: A
Difficulty: oderate
LO: 3
)))* =ith respect to direct la+our costs/ a companyFs +eginning worB in process in,entory
consisted of %7/777 units that were )(1 complete* 'hese units were completed and another
67/777 units were started during the period* Of those started/ 37/777 were finished and the
remaining .7/777 were )(. complete at the end of the period* 'he e0ui,alent units of production
were:
AH 37/777*
BH 4&/777*
$H 43/777*
DH 53/777*
EH 63/777*
Ans: D
Difficulty: oderate
LO: 3
))%* Assume the following data:
Beginning goods in process in,entory 1/777 units I.(& completedH
9nits started and completed )1/777
Ending goods in process in,entory 3/777 units I)(% completedH
If materials are added when the production process +egins and direct la+our is applied uniformly
throughout the process/ what are the e0ui,alent units for direct materials and for direct la+our/
respecti,elyG
AH )3/%17K )6/%17*
BH )3/%17K %)/417*
$H %)/777K )6/%17*
DH )6/%17K )5/417*
EH %)/777K %%/%17*
Ans: $
Difficulty: oderate
LO: 3
)).* At the +eginning of a recent period/ there were 677 units of product in a department/ oneD
third processed* 'hese units were finished and an additional 1/777 units were started and
finished during the period* 577 units were still in process at the end of the period/ oneDfourth
processed* 'he e0ui,alent units produced +y the department were:
AH 3/477 units*
BH 1/677 units*
$H 1/577 units*
DH 1/177 units*
EH Some other num+er of units*
Ans: $
Difficulty: Hard
LO: 3
))&* During a period/ Department A finished and transferred 17/777 units to Department B* Of
the 17/777 units/ %7/777 were )(1 complete at the +eginning of the period and .7/777 were
started and completed during the period* During the period/ )7/777 units were started +ut
+rought only to a stage of +eing .(1 completed* 'he num+er of e0ui,alent finished units
produced +y Department A during the period was:
AH &3/777 units*
BH 17/777 units*
$H 1%/777 units*
DH 1&/777 units*
EH 13/777 units*
Ans: $
Difficulty: Hard
LO: 3
))1* J $ompany uses a process cost accounting system* 'he Sewing DepartmentFs +eginning
in,entory consisted of 17/777 units
)
&
complete with respect to direct la+our and o,erhead* 'he
Sewing Department started and finished )%7/777 units* 'he ending in,entory consists of &7/777
units that are also
)
&
complete with respect to direct la+our and o,erhead* All direct materials
are added at the +eginning of the process* =hat are the e0ui,alent units of production of the
Sewing Department for direct materials and for direct la+our and o,erhead/ respecti,elyG
AH )37/777K )%7/777*
BH )%7/777K )14/177*
$H )34/177K )34/177*
DH )37/777K )3%/177*
EH )37/777K )34/177*
Ans: E
Difficulty: Hard
LO: 3
))3* edina $orp* had the following information a,aila+le for the year:
Beginning in,entory of goods in process &7E complete/ ?)/)77 %77 units
Ending in,entory of goods in process 57E complete &77 units
'otal units started during the year ./%77 units
'otal manufacturing costs incurred during the year ?&4/377
E0ui,alent units produced for the year are:
AH ./577 units*
BH ./%77 units*
$H ./%&7 units*
DH ./1%7 units*
EH $annot +e determined from information gi,en*
Ans: $
Difficulty: Hard
LO: 3
))4* =hen considering spoilage in the computation of cost per E9":
AH 'he unit cost is greater*
BH 'he unit cost is lesser*
$H 'he unit cost is the same +ut reported differently*
DH 'he unit cost and reporting method are the same*
EH Spoilage does not affect the cost per E9"*
Ans: B
Difficulty: Hard
LO: 3
))5* edina $orp* had the following information a,aila+le for the year:
Beginning in,entory of goods in process &7E complete/ ?)/)77 %77 units
Ending in,entory of goods in process 57E complete &77 units
'otal units started during the year ./%77 units
'otal manufacturing costs incurred during the year ?&4/377
'he e0ui,alent unit processing cost is e0ual to:
AH ?&4/377(E0ui,alent finished units for the year*
BH ?&5/477(E0ui,alent finished units for the year*
$H ?&3/177(E0ui,alent finished units for the year*
DH ?)&*541 per E9"*
EH #one of these answers is correct*
Ans: A
Difficulty: oderate
LO: 3
))6* A process cost summary is a managerial accounting report that descri+es the:
AH $osts charged to a department*
BH E0ui,alent units of production +y the department*
$H How the costs were assigned to the output*
DH "hysical transfers for a department*
EH All of these answers are correct*
Ans: D
Difficulty: oderate
LO: 5
)%7* 'he following is an account for a production department/ showing its costs for one month:
Assume that materials are added at the +eginning of the production process and that direct la+our
and o,erhead occur uniformly* If the units in the ending goods in process in,entory cost ?&/167
and the started and completed units cost ?&)/517/ what was the cost of completing the units in
the +eginning goods in process in,entoryG
AH ?)%/)17*
BH ? %/)37*
$H ? 4/137*
DH ?1&/777*
EH 9na+le to determine from data gi,en*
Ans: B
Difficulty: Hard
LO: 5
)%)* 'he achining Department started last month with a +eginning goods in process in,entory
of ?)7/777* During the month/ it was assigned the following costs: direct materials;?43/777K
direct la+our;?%&/777K and factory o,erhead;17E of direct la+our cost* Also/ in,entory with
a cost of ?)76/777 was transferred out of the department to the neAt phase in the process* 'he
ending +alance of the 8oods in "rocess In,entory account for the achining Department should
+e:
AH ? )./777*
BH ? 13/777*
$H ? 16/777*
DH ?))7/777*
EH ?)31/777*
Ans: A
Difficulty: oderate
LO: 6
)%%* During a period/ Department A finished and transferred 17/777 units to Department B* Of
the 17/777 units/ %7/777 were )(1 complete at the +eginning of the period and .7/777 were
started and completed during the period* During the period/ )7/777 units were started +ut
+rought only to a stage of +eing .(1 completed* If ?)./777 of o,erhead was charged to
Department A during the period/ how much o,erhead should +e allocated to the ending worB in
process in,entoryG
AH ?&/...*
BH ?./%17*
$H ?%/377*
DH ?%/177*
EH ?)/177*
Ans: E
Difficulty: Hard
LO: 6
)%.* A common recording procedure in process cost accounting is the transfer of costs from:
AH One 8oods in "rocess account to another 8oods in "rocess account*
BH aterials to Finished 8oods*
$H 8oods in "rocess to $ost of 8oods Sold*
DH 8oods in "rocess to O,erhead*
EH Finished 8oods to 8oods in "rocess*
Ans: A
Difficulty: oderate
LO: 6
)%&* edina $orp* had the following information a,aila+le for the year:
Beginning in,entory of goods in process &7E complete/ ?)/)77 %77 units
Ending in,entory of goods in process 57E complete &77 units
'otal units started during the year ./%77 units
'otal manufacturing costs incurred during the year ?&4/377
'he num+er of units transferred to finished goods during the year is:
AH ./%77 units*
BH ./777 units*
$H ./&77 units*
DH ./)37 units*
EH $annot +e determined from information gi,en*
Ans: B
Difficulty: oderate
LO: )7
)%1* @ue $orporation uses a process cost accounting system* 'he company manufactured
goods at a cost of ?577 and sold them on credit to Are $orporation for ?)/741* 'he correct
:ournal entry to +e made +y @ue at the time of the sale is:
AH Accounts >ecei,a+le;Are $orporation )/741
$ost of 8oods Sold 577
Sales )/741
Finished 8oods In,entory 577
BH Accounts >ecei,a+le;Are $orporation )/741
Finished 8oods In,entory 577
Sales %41
$H $ost of 8oods Sold )/741
Sales )/741
DH Finished 8oods In,entory 577
Sales )/741
Accounts >ecei,a+le;Are $orporation )/741
$ost of 8oods Sold 577
EH #one of these answers is correct*
Ans: A
Difficulty: oderate
LO: )7
Short Answer
)%3* atch the following definition with the appropriate terms:
IaH Estimate of efforts attained*
I+H 9ni0ue product design*
IcH 'racea+le costs*
IdH 'otal cost eApensed*
IeH Allocated costs*
IfH $ost from a goods in process to another*
IgH ass production in a se0uence*
IhH =orB completed entirely in one period*
LLLLLLLLLL I)H $ost transfer
LLLLLLLLLL I%H "rocess cost
LLLLLLLLLL I.H "ercent of completion
LLLLLLLLLL I&H Indirect costs
LLLLLLLLLL I1H 9nits started and completed
LLLLLLLLLL I3H <o+ order cost
LLLLLLLLLL I4H Direct costs
LLLLLLLLLL I5H $ost of goods sold
Ans: I)H f I%H g I.H a I&H e I1H h I3H + I4H c I5H d
Difficulty: Hard
LO: )
)%4* atch the following definition with the appropriate terms:
IaH 'he num+er of units if all efforts are counted*
I+H Imperfectly produced units*
IcH An a,erage unit cost*
IdH A period report of a departmentFs costs*
IeH 9nits transferred to the neAt department*
IfH 'he most common method of calculating unit costs*
IgH Assigning costs to Finished 8oods and 8oods in "rocess*
IhH An alternati,e method for calculating unit cost*
LLLLLLLLLL I)H =eighted A,erage
LLLLLLLLLL I%H $ost >econciliation
LLLLLLLLLL I.H "hysical Flow
LLLLLLLLLL I&H FIFO
LLLLLLLLLL I1H Spoiled 9nits
LLLLLLLLLL I3H E0ui,alent 9nits
LLLLLLLLLL I4H "rocess $ost Summary
LLLLLLLLLL I5H $ost per E9"
Ans: I)H h I%H g I.H e I&H f I1H + I3H a I4H d I5H c
Difficulty: oderate
LO: )/ 1/ 3
)%5* A companyFs <anuary ) worB in process in,entory contained .7/777 units that were
)
&

complete with respect to direct la+our* "roduction for the year included completing these units
and another )%7/777 units were started* Of those started/ 57/777 were finished and the remaining
&7/777 were left )(1 complete* $alculate the e0ui,alent units of production for the year*
Ans: I.(& .7/777H M 57/777 M I)(1 &7/777H N ))7/177
Difficulty: oderate
LO: 3
)%6* Briefly eAplain the conditions under which :o+ order cost accounting systems and process
cost accounting systems are used*
Ans: <o+ order cost accounting systems are used when each product or :o+ has a uni0ue design
so that the manufacturing process focuses on the production of that specific :o+*
"rocess cost accounting systems are used when manufacturing operations produce a large
,olume of standardi-ed units that generally pass from one manufacturing process to another*
Difficulty: oderate
LO: )
).7* EAperts in production management ha,e claimed that multiple products demand the use of
multiple production methods* From your reading of $hapter %./ comment on how this might +e
accomplished*
Ans: $ite eAamples of how a mass product manufacturer can tailor specific lines*
Difficulty: Hard
LO: )
).)* Briefly descri+e how <I' may +e used in a modern manufacturing en,ironment*
Ans: In a system using <I'/ the manufacturer may +e a+le to eliminate in,entories at se,eral
steps in the process* 'his would allow for cost sa,ings and possi+ly e,en direct transfers to
customers*
Difficulty: Hard
LO: )
).%* <o+ order costing and process costing are the two ma:or alternati,es used in manufacturing*
Briefly contrast the characteristics of these two systems*
Ans: <o+ Order $ost "rocess $ost
$ustom orders >epetiti,e production
Heterogeneous product Homogeneous product
Low ,olume High ,olume
High fleAi+ility Iprod*H Low fleAi+ility Iprod*H
Low to medium standard High standardi-ation
Difficulty: oderate
LO: %
)..* >efer to the following incomplete ta+le of cost information:
=hat was the cost of the direct materials used in the 8rating DepartmentG
Ans: 'he calculation can +e made after setting the costs transferred out of the 8rating
Department e0ual to the costs transferred into the Bagging Department* =ith this su+stitution/
the column of the ta+le appears as follows:
'hus/ the missing amount is found to +e ?%7/777*
Difficulty: oderate
LO: .
).&* >efer to the following incomplete ta+le of cost information:
=hat was the cost of the direct la+our used in the Bagging DepartmentG
Ans: 'he calculation can +e made after setting the cost transferred out of the Bagging
Department e0ual to the costs transferred into Finished 8oods*
8oods in "rocess;Bagging
Beginning in,entory ? )./777
$osts incurred:
Direct materials )%/777
Direct la+our G
O,erhead applied %%/177
$osts transferred out I)17/777H
$osts transferred in 65/777
Ending in,entory ? )7/177
'hus/ the missing amount is found to +e ?)1/777*
Difficulty: oderate
LO: &
).1* Iolaus $ompany pro,ides the following data for %77.:
Factory O,erhead Incurred ?))/&77
Factory O,erhead Applied G
Estimated Direct La+our $ost ?)%/777
Direct La+our $ost Incurred ?))/577
Estimated Factory O,erhead ?5/777
>e0uired:
Based on the data a+o,e:
$alculate the O,erhead application rate*
Determine the amount of o,erhead applied to production*
"repare a :ournal entry to apply Factory O,erhead*
Ans:
?5/777(?)%/777
N 33*4E of Direct La+our $ost
?))/577 *334 N ?4/54) O,erhead applied
8oods in "rocess 4/54)
Factory O,erhead 4/54)
Difficulty: oderate
LO: 1
).3* =hat is meant +y e0ui,alent units of production/ and why are they important when a
process cost accounting system is usedG
Ans: E0ui,alent units of production measure production with respect to direct materials/ direct
la+our and o,erhead/ eApressed as the num+er of units that could ha,e +een manufactured from
start to finish during a period gi,en the amount of direct materials/ direct la+our/ and o,erhead
used during the period* Determining e0ui,alent finished units produced is important for the
calculation of the cost per unit and thus for calculating the costs of in,entories and the cost of
goods sold*
Difficulty: oderate
LO: 3
).4* Osman $orp* is a manufacturing firm* 'he following data is a,aila+le for the year:
Beginning in,entory of goods in process/
)%/777 units/ 37E completed
Ending in,entory of goods in process/
)5/777 units/ .7E completed
9nits completed and transferred to finished goods
during the year/ )&&/777 units
$alculate the e0ui,alent units of production for the year*
Ans: E of =orB E0ui,alent
9nits "erformed 9nits
Beginning in,entory of goods in process )%/777 &7E &/577
9nits completed during )665 I)&&/777 O
)%/777H
).%/777 )77E ).%/777
Ending in,entory of goods in process )5/777 .7E 1/&77
'otal )3%/777 )&%/%77
Difficulty: oderate
LO: 3
).5* >efer to the following information a+out the "ainting Department in the >ichardson
Factory for the month of <une:
Beginning goods in process in,entory:
"hysical units 1/777
E complete for materials 47E
E complete for la+our and o,erhead %1E
aterials cost from ay ?4/.17
La+our and o,erhead cost from ay ?./)%1
"roduct started and completed:
"hysical units &7/777
Ending goods in process in,entory:
"hysical units &/777
E complete for materials &7E
E complete for la+our and o,erhead )7E
anufacturing costs for <une:
aterials ?63/641
La+our and o,erhead ?46/&47
How many e0ui,alent units of materials were added to the +eginning in,entory in finishing those
units during <uneG How many e0ui,alent units of la+our and o,erhead were added to the
+eginning in,entory in finishing those units during <uneG
Ans: E0ui,alent units of materials
added to the +eginning in,entory N I)77E D 47EH 1/777 physical units
N )/177 e0ui,alent units of materials
E0ui,alent units of la+our and o,erhead
added to the +eginning in,entory N I)77E D %1EH 1/777 physical units
N ./417 e0ui,alent units of la+our and o,erhead
Difficulty: Easy
LO: 3
).6* >efer to the following information a+out the "ainting Department in the >ichardson
Factory for the month of <une:
Beginning goods in process in,entory:
"hysical units 1/777
E complete for materials 47E
E complete for la+our and o,erhead %1E
aterials cost from ay ?4/.17
La+our and o,erhead cost from ay ?./)%1
"roduct started and completed:
"hysical units &7/777
Ending goods in process in,entory:
"hysical units &/777
E complete for materials &7E
E complete for la+our and o,erhead )7E
anufacturing costs for <une:
aterials ?63/641
La+our and o,erhead ?46/&47
How many e0ui,alent units of materials were added to the ending in,entory in getting those
units to their state of partial completionG How many e0ui,alent units of la+our and o,erhead
were added to the ending in,entory in getting those units to their state of partial completionG
Ans: E0ui,alent units of materials
added to the ending in,entory N &7E &/777 physical units
N )/377 e0ui,alent units of materials
E0ui,alent units of la+our and o,erhead
added to the ending in,entory N )7E &/777 physical units
N &77 e0ui,alent units of la+our and o,erhead
Difficulty: oderate
LO: 3
)&7* >efer to the following information a+out the "ainting Department in the >ichardson
Factory for the month of <une:
Beginning goods in process in,entory:
"hysical units 1/777
E complete for materials 47E
E complete for la+our and o,erhead %1E
aterials cost from ay ?4/.17
La+our and o,erhead cost from ay ?./)%1
"roduct started and completed:
"hysical units &7/777
Ending goods in process in,entory:
"hysical units &/777
E complete for materials &7E
E complete for la+our and o,erhead )7E
anufacturing costs for <une:
aterials ?63/641
La+our and o,erhead ?46/&47
How many e0ui,alent units of materials were added to all units processed during <uneG How
many e0ui,alent units of la+our and o,erhead were added to all units processed during <uneG
Ans: E0ui,alent units of materials:
"hysical "ercent E0ui,alent
9nits Added 9nits
Beginning goods in process 1/777 .7E )/177
8oods started and completed &7/777 )77E &7/777
Ending goods in process &/777 &7E )/377
'otal units &6/777 &./)77

E0ui,alent units of la+our and o,erhead:
"hysical "ercent E0ui,alent
9nits Added 9nits
Beginning goods in process 1/777 41E ./417
8oods started and completed &7/777 )77E &7/777
Ending goods in process &/777 )7E &77
'otal units &6/777 &&/)17
Difficulty: oderate
LO: 3
)&)* >efer to the following information a+out the "ainting Department in the >ichardson
Factory for the month of <une:
Beginning goods in process in,entory:
"hysical units 1/777
E complete for materials 47E
E complete for la+our and o,erhead %1E
aterials cost from ay ?4/.17
La+our and o,erhead cost from ay ?./)%1
"roduct started and completed:
"hysical units &7/777
Ending goods in process in,entory:
"hysical units &/777
E complete for materials &7E
E complete for la+our and o,erhead )7E
anufacturing costs for <une:
aterials ?63/641
La+our and o,erhead ?46/&47
=hat was the materials cost per e0ui,alent unit produced during <uneG =hat was the la+our and
o,erhead cost per e0ui,alent unit produced during <uneG
Ans: E0ui,alent units of materials:
"hysical "ercent E0ui,alent
9nits Added 9nits
Beginning goods in process 1/777 .7E )/177
8oods started and completed &7/777 )77E &7/777
Ending goods in process &/777 &7E )/377
'otal units &6/777 &./)77

aterials cost per e0ui,* unit N ?63/641(&./)77 e0ui,* units
N ?%*%1 per e0ui,alent unit
E0ui,alent units of la+our and o,erhead:
"hysical "ercent E0ui,alent
9nits Added 9nits
Beginning goods in process 1/777 41E ./417
8oods started and completed &7/777 )77E &7/777
Ending goods in process &/777 )7E &77
'otal units &6/777 &&/)17

La+our and o,erhead cost per e0ui,* unit N ?46/&47(&&/)17 e0ui,* units
N ?)*57 per e0ui,alent unit
Difficulty: oderate
LO: 3
)&%* >efer to the following information a+out the "ainting Department in the >ichardson
Factory for the month of <une:
Beginning goods in process in,entory:
"hysical units 1/777
E complete for materials 47E
E complete for la+our and o,erhead %1E
aterials cost from ay ?4/.17
La+our and o,erhead cost from ay ?./)%1
"roduct started and completed:
"hysical units &7/777
Ending goods in process in,entory:
"hysical units &/777
E complete for materials &7E
E complete for la+our and o,erhead )7E
anufacturing costs for <une:
aterials ?63/641
La+our and o,erhead ?46/&47
=hat is the total cost of all units that were completed during <uneG =hat is the total cost of the
ending goods in process in,entoryG
Ans: E0ui,alent units of materials:
"hysical "ercent E0ui,alent
9nits Added 9nits
Beginning goods in process 1/777 .7E )/177
8oods started and completed &7/777 )77E &7/777
Ending goods in process &/777 &7E )/377
'otal units &6/777 &./)77

aterials cost per e0ui,* unit N ?63/641(&./)77 e0ui,* units
N ?%*%1 per e0ui,alent unit
E0ui,alent units of la+our and o,erhead:
"hysical "ercent E0ui,alent
9nits Added 9nits
Beginning goods in process 1/777 41E ./417
8oods started and completed &7/777 )77E &7/777
Ending goods in process &/777 )7E &77
'otal units &6/777 &&/)17

La+our and o,erhead cost per e0ui,* unit N ?46/&47(&&/)17 e0ui,* units
N ?)*57 per e0ui,alent unit
E0ui,alent $ost 'otal
9nits per 9nit $ost
$OS' OF FI#ISHED 8OODS:
Beginning goods in process:
Beginning materials cost ? 4/.17
aterials costs added )/177 ?%*%1 ./.41
Beginning la+our and o,erhead cost ./)%1
La+our and o,erhead cost added ./417 ?)*57 3/417
'otal ? %7/377
Started and completed goods:
aterials costs added &7/777 ?%*%1 ? 67/777
La+our and o,erhead cost added &7/777 ?)*57 4%/777
'otal ?)3%/777
'otal cost of finished goods ?)5%/377

$OS' OF E#DI#8 8OODS I# ">O$ESS:
aterials costs added )/377 ?%*%1 ? ./377
La+our and o,erhead cost added &77 ?)*57 4%7
'otal ? &/.%7
Difficulty: Hard
LO: 3
)&.* A company uses a process cost accounting system* 'he following information is a,aila+le
for the year:
8oods in process/ <anuary )/ 1/177 units/ 57E complete*
8oods in process/ Decem+er .)/ 5/577 units/ &7E complete*
9nits completed and transferred to finished goods during the year/ &3/677*
anufacturing costs during the year/ ?%33/.77*
IaH $alculate e0ui,alent finished units produced during the year*
I+H $alculate the a,erage cost per e0ui,alent unit Iround to the nearest centH*
Ans: E0ui,alent
Finished
"hysical E of =orB 9nits
9nits $ompleted "roduced
IaH
Beginning in,entory of goods in process 1/177 %7E )/)77
9nits completed during the year I&3/677D
1/177H
&)/&77 )77E &)/&77
Ending in,entory of goods in process 5/577 &7E ./1%7
'otal 11/477 &3/7%7
I+H A,erage cost per e0ui,alent finished unit N ?%33/.77(&3/7%7 N ?1*46
Difficulty: oderate
LO: 3/ 5
)&&* Bimrose anufacturing uses process cost accounting for its threeDdepartment operation*
Direct materials are added at the +eginning of the Department ) process/ at the halfway point of
the Department % process/ and at the +eginning of the Department . process* Direct la+our and
o,erhead are incurred e,enly throughout all departmentsF processes* 'he following data are
Bnown for Septem+er:
Department
) % .
Beginning in process in,entories:
9nits %/177 1/177 )/177
"ercent complete 37E &7E 57E
Ending in process in,entories:
9nits ./177 &/%77 3/177
"ercent complete .7E 37E 47E
9nits completed )&/177 )1/577 )7/577
Determine the num+er of units started and completed in Department )/ and the num+er of units
transferred into and completed in Departments % and .* Also/ determine the e0ui,alent units of
production for direct materials/ direct la+our and o,erhead for each department*
Ans: Dept* ) Dept* % Dept* .
9nits completed )&/177 )1/577 )7/577
Less: +eginning in process units I%/177H I1/177H I)/177H
9nits started and
completed
)%/777
9nits transferred in and completed )7/.77 6/.77

E0ui,alent units for materials:
Department )
aterials are added at +eginning*
"hysical "ercent E0ui,alent
9nits Added 9nits
Beginning goods in process %/177 7E D7D
8oods started and completed )%/777 )77E )%/777
Ending goods in process ./177 )77E ./177
'otal units )5/777 )1/177

Department %
aterials are added halfway*
"hysical "ercent E0ui,alent
9nits Added 9nits
Beginning
goods in
process
1/177 )77E 1/177
8oods started
and completed
)7/.77 )77E )7/.77
Ending goods
in process
&/%77 )77E &/%77
'otal units %7/777 %7/777

Department .
aterials are added at +eginning*
"hysical "ercent E0ui,alent
9nits Added 9nits
Beginning
goods in
process
)/177 7E D7D
8oods started
and completed
6/.77 )77E 6/.77
Ending goods
in process
3/177 )77E 3/177
'otal units )4/.77 )1/577

E0ui,alent units for la+our and o,erhead:
La+our and o,erhead are applied e,enly throughout the process*
Department )
"hysical "ercent E0ui,alent
9nits Added 9nits
Beginning goods in process %/177 &7E )/777
8oods started and completed )%/777 )77E )%/777
Ending goods in process ./177 .7E )/717
'otal units )5/777 )&/717

Department %
"hysical "ercent E0ui,alent
9nits Added 9nits
Beginning goods in process 1/177 37E ./.77
8oods started and completed )7/.77 )77E )7/.77
Ending goods in process &/%77 37E %/1%7
'otal units %7/777 )3/)%7

Department .
"hysical "ercent E0ui,alent
9nits Added 9nits
Beginning goods in process )/177 %7E .77
8oods started and completed 6/.77 )77E 6/.77
Ending goods in process 3/177 47E &/117
'otal units )4/.77 )&/)17
Difficulty: Hard
LO: 3/ 5
)&1* =hy is the "rocess $ost Summary important to managementG How does the "rocess $ost
Summary accomplish its purposeG
Ans: 'he "rocess $ost Summary depicts a fourDstep process detailing physical flows and cost
flows allowing management to ,erify inputs and outputs as part of a control system* It also lets
management logically perform unit costing Ia necessary acti,ity to allow for appropriate product
pricingH*
By detailing physical flow/ it measures accounta+ility and responsi+ility* By detailing cost flow/
it allows management to determine and deri,e appropriate cost allocations in a logical format*
Difficulty: oderate
LO: 5
)&3* #ano $ompany uses a process cost system* 'he #ano Assem+ly DepartmentFs +eginning
in,entory consisted of &7/777 units that were .(1 complete with respect to direct la+our and
o,erhead* 'he department started and finished )&6/777 units with respect to direct la+our and
o,erhead* 'he ending in,entory consists of 37/777 units that are .(& complete with respect to
direct la+our and o,erhead* All direct materials are added at the +eginning of the process* 'he
department incurred direct la+our costs of ?%3%/177 and o,erhead costs of ?)%7/777* =hat is the
direct la+our cost per e0ui,alent unitG
Ans: "hysical "ercent E0ui,alent
9nits Added 9nits
Beginning goods
in process
&7/777 &7E )3/777
8oods started and
completed
)&6/777 )77E )&6/777
Ending goods in
process
37/777 41E &1/777
'otal units %&6/777 %)7/777

Direct la+our cost per e0ui,* unit N ?%3%/177(%)7/777 e0ui,* units
N ?)*%1 per e0ui,alent unit
Difficulty: oderate
LO: 5
)&4* HeesacBer/ Inc*/ uses a process cost accounting system* 'he following operating and cost
data occurred during Octo+er:
Octo+er )/ In,entory: .7/777 units/ )77E complete for materials I?37/777H
and 17E complete for direct la+our I?4/177H and
o,erhead I?4/177H*
Octo+er .)/ In,entory: %7/777 units/ )77E complete for materials and .7E
complete for direct la+our and o,erhead*
9nits completed during Oct*: 17/777
Octo+er production costs: Direct materials ?))7/777
Direct la+our %5/477
O,erhead %5/477
aterials are added at the +eginning of the process* Direct la+our and o,erhead are incurred
e,enly throughout the process*
"repare the Octo+er process cost summary*
Ans: HEESA$!E>/ I#$*
"rocess $ost Summary
For onth Ended Octo+er .)
$OS'S $HA>8ED 'O 'HE DE"A>'E#'
Direct materials re0uisitioned ?))7/777
Direct la+our charged %5/477
O,erhead costs allocated %5/477
'otal processing costs for the month ?)34/&77
8oods in process at the +eginning of the month 41/777
'otal costs to +e accounted for ?%&%/&77

E@9ICALE#' 9#I'S OF ">OD9$'IO#
E0ui,alent 9nits
"hysical La+our P
9nits aterials O,erhead
$ategories of 9nits in "rocess:
Beginning goods in process .7/777 D7D )1/777
9nits started and completed %7/777 %7/777 %7/777
Ending goods in process %7/777 %7/777 3/777
'otal 47/777 &7/777 &)/777

'otal materials cost for Octo+er ?))7/777
aterial cost per e0ui,alent unit I?))7/777(&7/777 unitsH ?%*41

'otal la+our cost for Octo+er ?%5/477
La+our cost per e0ui,alent unit I?%5/477(&)/777H ?7*47

'otal o,erhead cost for Octo+er ?%5/477
O,erhead cost per e0ui,alent unit I?%5/477(&)/777H ?7*47

ASSI8#E#' OF $OS'S 'O 'HE =O>! OF 'HE DE"A>'E#'
E0ui,alent $ost 'otal
9nits per 9nit $ost
8oods in process/ Octo+er ) and completed during Octo+er:
$osts from prior month ?41/777
Direct
materials
added
D7D D7D
Direct la+our added )1/777 ?7*47 )7/177
O,erhead applied )1/777 ?7*47 )7/177
'otal costs to process ? 63/777
8oods started and completed during Octo+er:
Direct materials added %7/777 ?%*41 ? 11/777
Direct la+our added %7/777 ?7*47 )&/777
O,erhead applied %7/777 ?7*47 )&/777
'otal costs to process ? 5./777
8oods in process/ Octo+er .7:
Direct materials added %7/777 ?%*41 ? 11/777
Direct la+our added 3/777 ?7*47 &/%77
O,erhead applied 3/777 ?7*47 &/%77
'otal costs to process ? 3./&77
'otal costs accounted for ?%&%/&77
Difficulty: oderate
LO: 5
)&5* 9se the following information to determine the cost of the finished goods completed during
the reporting period:
E0ui,alent $ost 'otal
9nits per 9nit $ost
Beginning goods in process:
$osts from prior month ?)7%/777
aterials costs
added
3/777 ?%1*77
La+our and
o,erhead cost
added
%/777 ?37*77
Started and completed goods
aterials costs added 67/777 ?%1*77
La+our and o,erhead cost added 67/777 ?37*77
Ans: E0ui,alent $ost 'otal
9nits per 9nit $ost
$OS' OF FI#ISHED 8OODS
Beginning goods in process:
$osts from prior month ? )7%/777
aterials costs added 3/777 ?%1*77 )17/777
La+our and o,erhead cost added %/777 ?37*77 )%7/777
'otal ? .4%/777
Started and completed goods:
aterials costs added 67/777 ?%1*77 ?%/%17/777
La+our and o,erhead cost added 67/777 ?37*77 1/&77/777
'otal ?4/317/777
'otal cost of finished goods ?5/7%%/777
Difficulty: oderate
LO: 5
)&6* 9se the following information to determine the cost of the finished goods completed
during the reporting period:
E0ui,alent $ost 'otal
9nits per 9nit $ost
Beginning goods in process:
$osts from prior month ?4.1
aterials costs
added
37 ? 1*77
La+our and
o,erhead cost
added
%7 ?)%*77
Started and completed goods:
aterials costs added )/777 ? 1*77
La+our and o,erhead cost added )/777 ?)%*77
Ans: E0ui,alent $ost 'otal
9nits per 9nit $ost
$OS' OF FI#ISHED 8OODS
Beginning goods in process:
$osts from prior month ? 4.1
aterials costs added 37 ? 1*77 .77
La+our and o,erhead cost added %7 ?)%*77 %&7
'otal ? )/%41
Started and completed goods:
aterials costs added )/777 ? 1*77 ? 1/777
La+our and o,erhead cost added )/777 ?)%*77 )%/777
'otal ?)4/777
'otal cost of finished goods ?)5/%41
Difficulty: oderate
LO: 5
)17* >efer to the following information a+out the Dipping Department of the HalifaA Factory
for the month of August:
E0ui,alent 'otal
9nits $ost
$OS' OF FI#ISHED 8OODS
Beginning goods in process:
$osts from prior month ? 4/777
aterials costs added .77
La+our and
o,erhead cost
added
.41
Started and completed goods:
aterials costs added %/777
La+our and o,erhead cost added %/777
'otal cost of finished goods
$OS' OF E#DI#8 8OODS I# ">O$ESS
aterials costs added .%7
La+our and o,erhead cost added .37
'he cost per e0ui,alent unit of materials is ?)7/ and the cost per e0ui,alent unit of la+our and
o,erhead is ?%%*
=hat total cost should +e assigned to the units that were in the +eginning goods in process
in,entory and completed during AugustG
Ans: E0ui,alent $ost 'otal
9nits per 9nit $ost
Beginning goods in process:
$osts from prior month ? 4/777
aterials costs added .77 ?)7*77 ./777
La+our and o,erhead cost added .41 ?%%*77 5/%17
'otal ?)5/%17
Difficulty: oderate
LO: 5
)1)* >efer to the following information a+out the Dipping Department of the HalifaA Factory
for the month of August:
E0ui,alent 'otal
9nits $ost
$OS' OF FI#ISHED 8OODS
Beginning goods in process:
$osts from prior month ? 4/777
aterials costs added .77
La+our and
o,erhead cost
added
.41
Started and completed goods:
aterials costs added %/777
La+our and o,erhead cost added %/777
'otal cost of finished goods
$OS' OF E#DI#8 8OODS I# ">O$ESS
aterials costs added .%7
La+our and o,erhead cost added .37
'he cost per e0ui,alent unit of materials is ?)7/ and the cost per e0ui,alent unit of la+our and
o,erhead is ?%%*
=hat total cost should +e assigned to the units that were started and completed during AugustG
Ans: E0ui,alent $ost 'otal
9nits per 9nit $ost
Started and completed goods:
aterials costs added %/777 ?)7*77 ?%7/777
La+our and o,erhead cost added %/777 ?%%*77 &&/777
'otal ?3&/777
Difficulty: oderate
LO: 5
)1%* >efer to the following information a+out the Dipping Department of the HalifaA Factory
for the month of August:
E0ui,alent 'otal
9nits $ost
$OS' OF FI#ISHED 8OODS
Beginning goods in process:
$osts from prior month ? 4/777
aterials costs added .77
La+our and
o,erhead cost
added
.41
Started and completed goods:
aterials costs added %/777
La+our and o,erhead cost added %/777
'otal cost of finished goods
$OS' OF E#DI#8 8OODS I# ">O$ESS
aterials costs added .%7
La+our and o,erhead cost added .37
'he cost per e0ui,alent unit of materials is ?)7/ and the cost per e0ui,alent unit of la+our and
o,erhead is ?%%*
=hat total cost should +e assigned to all units that were completed during AugustG
Ans: E0ui,alent $ost 'otal
9nits per 9nit $ost
$OS' OF FI#ISHED 8OODS
Beginning goods in process:
$osts from prior month ? 4/777
aterials costs added .77 ?)7*77 ./777
La+our and o,erhead cost added .41 ?%%*77 5/%17
'otal ?)5/%17
Started and completed goods:
aterials costs added %/777 ?)7*77 ?%7/777
La+our and o,erhead cost added %/777 ?%%*77 &&/777
'otal ?3&/777
'otal cost of finished goods ?5%/%17
Difficulty: oderate
LO: 5
)1.* >efer to the following information a+out the Dipping Department of the HalifaA Factory
for the month of August:
E0ui,alent 'otal
9nits $ost
$OS' OF FI#ISHED 8OODS
Beginning goods in process:
$osts from prior month ? 4/777
aterials costs added .77
La+our and
o,erhead cost
added
.41
Started and completed goods:
aterials costs added %/777
La+our and o,erhead cost added %/777
'otal cost of finished goods
$OS' OF E#DI#8 8OODS I# ">O$ESS
aterials costs added .%7
La+our and o,erhead cost added .37
'he cost per e0ui,alent unit of materials is ?)7/ and the cost per e0ui,alent unit of la+our and
o,erhead is ?%%*
=hat total cost should +e assigned to the units that were in process at the end of AugustG
Ans: E0ui,alent $ost 'otal
9nits per 9nit $ost
$OS' OF E#DI#8 8OODS I# ">O$ESS
aterials costs added .%7 ?)7*77 ? ./%77
La+our and o,erhead cost added .37 ?%%*77 4/6%7
'otal ?))/)%7
Difficulty: oderate
LO: 5
)1&* >efer to the following information a+out the Dipping Department of the HalifaA Factory
for the month of August:
E0ui,alent 'otal
9nits $ost
$OS' OF FI#ISHED 8OODS
Beginning goods in process:
$osts from prior month ? 4/777
aterials costs added .77
La+our and
o,erhead cost
added
.41
Started and completed goods:
aterials costs added %/777
La+our and o,erhead cost added %/777
'otal cost of finished goods
$OS' OF E#DI#8 8OODS I# ">O$ESS
aterials costs added .%7
La+our and o,erhead cost added .37
'he cost per e0ui,alent unit of materials is ?)7/ and the cost per e0ui,alent unit of la+our and
o,erhead is ?%%*
=hat is the total cost to +e accounted for during AugustG
Ans: E0ui,alent $ost 'otal
9nits per 9nit $ost
$OS' OF FI#ISHED 8OODS
Beginning goods in process:
$osts from prior month ? 4/777
aterials costs added .77 ?)7*77 ./777
La+our and o,erhead cost added .41 ?%%*77 5/%17
'otal ?)5/%17
Started and completed goods:
aterials costs added %/777 ?)7*77 ?%7/777
La+our and o,erhead cost added %/777 ?%%*77 &&/777
'otal ?3&/777
'otal cost of finished goods ?5%/%17
$OS' OF E#DI#8 8OODS I# ">O$ESS
aterials costs added .%7 ?)7*77 ? ./%77
La+our and o,erhead cost added .37 ?%%*77 4/6%7
'otal ?))/)%7

'otal costs accounted for ?6./.47
Difficulty: oderate
LO: 5
)11* During the year/ >B $orp* introduced ).%/777 units into production* During the year/
)&&/777 units were completed and transferred to finished goods* At the end of the year/ the
company had )./377 units still in process that were 57E complete* If e0ui,alent units produced
were ).3/637/ how many units did the company ha,e in goods in process at the +eginning of the
year/ and what was their le,el of completionG
Ans:
Difficulty: Hard
LO: 5
)13* 9se the following information to determine the cost of the finished goods completed during
the reporting period and the ending goods in process in,entory:
E0ui,alent $ost 'otal
9nits per 9nit $ost
Beginning goods in process:
$osts from prior month ? 4.1
aterials costs
added
37 ? 1*77
La+our and
o,erhead cost
added
%7 ?)%*77
Started and completed goods:
aterials costs added )/777 ? 1*77
La+our and o,erhead cost added )/777 ?)%*77
Ending goods in process:
aterials costs added 57 ? 1*77
La+our and o,erhead cost added .7 ?)%*77
Ans: E0ui,alent $ost 'otal
9nits per 9nit $ost
Beginning goods in process:
$osts from prior month ? 4.1
aterials costs added 37 ? 1*77 .77
La+our and o,erhead cost added %7 ?)%*77 %&7
'otal ? )/%41
Started and completed goods:
aterials costs added )/777 ? 1*77 ? 1/777
La+our and o,erhead cost added )/777 ?)%*77 )%/777
'otal ?)4/777
'otal cost of finished goods ?)5/%41

Ending goods in process:
aterials costs added 57 ? 1*77 ? &77
La+our and o,erhead cost added .7 ?)%*77 .37
'otal ? 437
Difficulty: Hard
LO: 5
)14* 'omm $orporation pro,ides the following information:
Beginning in,entory ?7
aterials added ?)&/777
$on,ersion costs added ?%)/777
E9"s;materials 477
E9"s;con,ersion costs )/&77
>e0uired: $alculate the cost of 177 units produced*
Ans: aterials costs ?)&/777(477 N ?%7 per unit
$on,ersion cost ?%)/777()/&77 N ?)1 per unit
'otal unit costs ?%7 M ?)1 N ?.1 per unit
'otal cost I177 unitsH 177 ?.1 N ?)4/177
Difficulty: Hard
LO: 5
)15* <ay $ompany pro,ides the following data:
8oods in process/ <an* ) I57 unitsH ?4/%77
$urrent costs added I17 unitsH ?&/177
$ost of goods sold I)77 unitsH G
8oods sold at sales price of ?)%7*
9nits completed I)%7 unitsH
Finished goods/ <an* ) I7 unitsH
>e0uired: "repared the :ournal entries to record:
IaH $ost of production completed in <anuary*
I+H Sales and cost of goods sold Iassume FIFOH*
Ans: IaH Finished 8oods )7/577
8oods in "rocess )7/577
I)%7 units Q ?67H
I+H $ost of 8oods Sold 6/777
Finished 8oods 6/777
I)77 Q ?67H
Accounts >ecei,a+le Ior $ashH )%/777
Sales )%/777
I)77 Q ?)%7H
Difficulty: Hard
LO: 5/ 6
)16* >efer to the following incomplete ta+le of cost information:
8oods in 8oods in
"rocess; "rocess; Finished
8rating Bagging 8oods
Beginning in,entory ?)7/777 ?)./777 ? G
$osts incurred:
Direct materials G )%/777
Direct la+our .7/777 G
O,erhead applied &1/777 %%/177
$osts transferred
out
IGH IG H
$osts transferred in 65/777 )17/777
$ost of goods sold I)&4/777H
Ending in,entory 4/777 )7/177 %1/777
=hat was the cost of goods transferred out of the 8rating Department into the Bagging
DepartmentG
Ans: 'he cost of goods transferred out of the 8rating Department e0uals the ?65/777 cost
transferred into the Bagging Department*
Difficulty: Easy
LO: )7
)37* >efer to the following incomplete ta+le of cost information:
8oods in 8oods in
"rocess; "rocess; Finished
8rating Bagging 8oods
Beginning in,entory ?)7/777 ?)./777 ? G
$osts incurred:
Direct materials G )%/777
Direct la+our .7/777 G
O,erhead applied &1/777 %%/177
$osts transferred
out
IGH IG H
$osts transferred in 65/777 )17/777
$ost of goods sold I)&4/777H
Ending in,entory 4/777 )7/177 %1/777
=hat was the cost of the goods transferred out of the Bagging Department into the finished
goods in,entoryG
Ans: 'he cost of goods transferred out of the Bagging Department e0uals the ?)17/777 cost
transferred into the Finished 8oods in,entory*
Difficulty: Easy
LO: )7
)3)* >efer to the following incomplete ta+le of cost information:
8oods in 8oods in
"rocess; "rocess; Finished
8rating Bagging 8oods
Beginning in,entory ?)7/777 ?)./777 ? G
$osts incurred:
Direct materials G )%/777
Direct la+our .7/777 G
O,erhead applied &1/777 %%/177
$osts transferred
out
IGH IG H
$osts transferred in 65/777 )17/777
$ost of goods sold I)&4/777H
Ending in,entory 4/777 )7/177 %1/777
=hat was the cost of the +eginning in,entory of finished goodsG
Ans: 'he cost of the +eginning in,entory of finished goods can +e found +y sol,ing for the
unBnown factor in the third column of the ta+le:
Finished
8oods
Beginning in,entory ? G
$osts transferred in )17/777
$ost of goods sold I)&4/777H
Ending in,entory ? %1/777
'hus/ the missing amount is found to +e ?%%/777*
Difficulty: Easy
LO: )7
FillDInD'heDBlanB
)3%* aterials and la+our costs that are clearly associated with a specific process are Bnown as
LLLLLLLLLLLLLLL* 'hose costs that are not clearly associated with a specific process are called
LLLLLLLLLLLLLL*
Ans: Direct costs/ indirect costs
Difficulty: Easy
LO: .
)3.* In process cost/ factory o,erhead is usually either LLLLLLLLLLLLLLLL or
LLLLLLLLLLLLLLL*
Ans: O,erapplied or underapplied
Difficulty: oderate
LO: 1
)3&* 'he num+er of units that would +e completed if all effort during a period had +een applied
to units that were started and finished is called LLLLLLLLLLLLLLLLLLLLLL*
Ans: E0ui,alent units of production
Difficulty: Easy
LO: 3
)31* An E9" is an estimate of efforts used to calculate the LLLLLLLLLLLLLL of each production
component*
Ans: 9nit cost
Difficulty: Easy
LO: 3
)33* A process cost summary in,ol,es four se0uential steps* 'hese are I)HLLLLLLLLL I%H
LLLLLLLLLLL/ I.H LLLLLLLLLLLLLLL/ and I&H LLLLLLLLLLLLLL*
Ans: "hysical flow/ e0ui,alent units/ cost per E9"/ cost reconciliation
Difficulty: oderate
LO: 4
)34* "artially completed production is measured in two locations each accounting period* 'hese
measurement points are LLLLLLLLLLLLLLLL and LLLLLLLLLLLL*
Ans: Beginning 8oods in "rocess/ Ending 8oods in "rocess*
Difficulty: oderate
LO: 5
)35* In a manufacturing operation with two process departments/ the flow of costs would
proceed from 8oods in "rocess/ Dept* R) to LLLLLLLLLLLLLLLL to LLLLLLLLLLLLLLL to
LLLLLLLLLLLLLL*
Ans: 8oods in "rocess/ Dept* R%/ Finished 8oods/ $ost of 8oods Sold
Difficulty: oderate
LO: 6
)36* $ost per e0ui,alent unit may +e calculated for +oth LLLLLLLLLLLLLLL and
LLLLLLLLLLLLLLLL*
Ans: 28ood units2 and spoiled units IspoilageH
Difficulty: Hard
LO: 6