COST ACCOUNTING
starts in the Compoundng Department. The
Process Costing: FIFO and AVERAGE
Theories: TRUE or FALSE
1. Process costing is used when identical
units are produces through an ongoing
series of uniform steps. TRUE
2. Parallel l Product flow is when all items
purchased go through the same
sequence. FALSE - sequential
3. Selective product flow is when certain
portions are done at the same time and
the brought together for final process.
False-parallel
4. Sequential product flow is usually when
produced products are from the same
initial raw materials. False - selective
5. The equivalent production and unit cost
will be the same to normal lost units as
when the lost units are classified as
abnormal discovered at the end. True
6. FIFO method is when WIP beginning
will require separate computations for
its equivalent production. True
7. Average method is when WIP
beginning’s stage of completion is
ignored. True
8. Since costs are accumulated by
department, there is no need for a
Finished Goods inventory account in
process costing. False
9. In process costing, job cost sheet
replaces cost production report. False -
job order
10. Labor and overhead often added
together and called primary cost.
False-conversion cost
Problem Solving:
Marvin Company’s Production process
following information for the month is
provided:
Work in Process, beginning (40% complete)
40 000 units
Started during the month 240 000 units
Work in Process, ending (60% complete)
25 000 units
Direct Materials are added at the beginning
of the process in the Compounding
Department.
11. Using the FIFO, the equivalent units
of production (direct materials and
conversion costs) for the month is
a. 280,000 and 270,000
b. 200,000 and 280,000
c. 240,000 and 254,000
d. 255,000 and 255,000
12. Using the Average Method, the
equivalent units of production (direct
materials and conversion costs) for
the month is
a. 280,000 and 270,000
b. 20,000 and 280,000
c. 240,000 and 250,000
d. 255,000 and 255,000
13. If direct materials are added at the
ending of the process, using the
average method, the equivalent units
of production for direct materials is
a. 267, 000
b. 270, 000
c. 272, 000
d. 255, 000
14. If direct materials are added at the
ending of the process, using the
 average method, the equivalent units The following information for the month
of production for conversion cost is is provided:
a. 267, 000
b. 270, 000
c. 272, 000
d. 255, 000 Received during the month 280 000 units
WIP, end (60% completed) 25 000 units
Marvin Company’s Production process starts Direct Materials are added at the
in the Compounding Department. The beginning.
following information for the month is Additional information for the main
provided: problem:
Costs:fg
Received during the month 280 000 units Materials 840 000
Completed and Transferred 255 000 units Labor 810 000
WIP, end (60% completed) 20 000 units Overhead 540 000
Lost during the month 5 000 units 17. What is the unit cost for materials?
Direct Materials are added at the beginning a. 1
of the process in the Compounding b. 2
Department. c. 3
15. Lost units discovered at the d. 4
beginning of the process were 18. What is the unit cost for labor?
classified as normal. Compute the a. 1
equivalent units of production (direct b. 2
materials and conversion costs) for c. 3
the month d. 4
a. 275 000 and 250 000
b. 260 000 and 272 000
c. 280 000 and 272 000 18. What is the unit cost for overhead?
d. 275 000 and 267 000
16. Lost units discovered at the end of the a. 1
process were classified as normal. b. 2
Compute the equivalent units of c. 3
production (direct materials and d. 4
conversion costs) for the month 19. What is the total cost completed and
a. 275 000 and 250 000 in process end?
b. 260 000 and 272 000 a. 2 040 000 and 130 000
c. 280 000 and 272 000 b. 2 040 000 and 150 000
d. 275 000 and 267 000 c. 2050 000 and 150 000
Marvin Company’s Production process d. 2 050 000 and 130 000
starts in the Compounding Department. 8