BSA

MANAGERIAL ACCOUNTING

CHAPTER 4

MULTIPLE CHOICE

1. 5. 9.

2. 6. 10.

3. 7. 11.

4. 8.

SHORT ANSWERS

1. When a firm manufactures a single product repetitively, why is a process costing system more
appropriate than a job-order costing system?

2. Explain why the cost per equivalent unit of production in multiple choice question 7 is greater than in
multiple choice question 5.

3. A materials requisition form is needed in both a job order and a process costing system. In comparing
the two systems, what can generally be said about the number of forms filed annually?

DEFINE THE FOLLOWING

1. Transferred out cost -

2. Equivalent production -

3. Production Report -

4. Average cost method -

5. Sequential Production Process -

6. FIFO Cost Method

TRUE OR FALSE
1. 5.

2. 6.

3. 7.

4. 8.

EXERCISES

Use the following information to prepare the necessary production report and answer questions 1-9.

Ridgely manufacturing company uses the moving average method of process costing. They incurred the
following activity during July 1992:

July 1 15,000 units, 100% complete as to materials ($18,000) and 30% complete as to
conversion costs ($7,500).

During July Material cost incurred were $100,000 and conversion costs $148,500; 85,000 units were
transferred out.

July 31 10,000 units, 100% complete as to materials and 20% complete as to conversion costs.

1. Determine the number of units that were started during July.

2. Calculate the equivalent production for July.

3. Calculate the equivalent unit costs for materials and conversion costs.

4. Determine the cost assigned to the units completed and transferred out.

5. Determine the cost of the ending work in process.

Production Report

Quantity of Production

Cost of Production

Cost Recapitulation

6. Suppose Ridgely’s records indicated that 500 units were lost and that 500 units were normal spoilage.
Would your answer to questions 1 through 5 change, and if so, how?

Assume the remaining questions are based on the FIFO cost method of process costing.

7. Calculate the equivalent production for July.

8. Calculate the equivalent unit cots for material and conversion costs.

9. Determine the cost assigned to the units completed and transferred out.

10. Determine the cost assigned to the ending work in process.