CHAPTER 14: PROCESS COSTING AND THE COST ACCOUNTING CYCLE b. standard labor hours at actual rates. d.

b. standard labor hours at actual rates. d. actual direct labor cost incurred.

16. A company that uses standard costing

THEORY a. must make only one product.
Costing Methods b. always has a volume variance unless normal capacity and practical capacity are the
2. CDE Company made the following journal entry. same.
Finished Goods Inventory $250,000 c. shows higher incomes than it would if it used actual costing.
Work in Process Inventory $250,000 d. shows the same per-unit cost of inventory each month.
From this entry we can tell that CDE uses
a. job-order costing. c. standard costing. Process Costing
b. process costing. d. any of the above. 7. Which company is most likely to use process costing?
a. A manufacturer of nuclear reactors. c. A cannery.
Standard costing b. A construction contractor. d. A textbook publisher.
1. ABC Company made the following journal entry.
Work in Process Inventory $200,000 11. Which of the following is the same whether the company uses standard process costing or
Direct Labor $188,000 actual process costing?
Direct Labor Rate Variance 12,000 a. Equivalent production.
From this entry we can tell that ABC uses b. Cost of goods transferred from work in process to finished goods.
a. job-order costing. c. standard costing. c. Net income for the period.
b. process costing. d. normal costing. d. Cost per unit of ending inventory of work in process.

4. Standard process costing does NOT require information about 12. It is usually necessary to calculate equivalent unit production for
a. units completed during the period. a. materials.
b. equivalent unit production in ending inventory. b. conversion costs.
c. standard cost per unit. c. materials and conversion costs.
d. actual unit cost for the period. d. materials, conversion costs, and overhead.

9. Which cost accumulation method is most likely to be used by a company that mass produces 13. If a company uses actual process costing, the amount transferred from Work in Process
similar products? Inventory to Finished Goods Inventory is the cost of
a. Actual costing. c. Job-order costing. a. equivalent unit production for the period.
b. Normal costing. d. Standard costing. b. units completed during the period.
c. units completed and sold during the period.
10. Standard costing can be used in d. all units worked on during the period.
a. only job-order costing systems. c. either job-order or process systems.
b. only process costing systems. d. either manufacturing or retailing firms. 14. If a company uses standard process costing, the amount transferred from Work in Process
Inventory to Finished Goods Inventory is the
15. Under standard costing, the amount of direct labor cost charged (debited) to Work in Process a. standard cost of equivalent unit production for the period.
Inventory is b. standard cost of units completed during the period.
a. standard labor hours at standard rates. c. actual labor hours at actual rates. c. actual cost of units completed and sold during the period.

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 d. actual cost of all units worked on during the period. 6. Which company is most likely to use job-order costing?
a. A brewery. c. A bridge builder.
17. The numerator of weighted-average unit cost calculations is b. An automobile manufacturer. d. A button manufacturer.
a. current period cost.
b. cost of beginning inventory. 25. The entry to apply overhead in a job-order system is
c. current period cost plus cost of beginning inventory. a. debit Cost of Goods Sold, credit Manufacturing Overhead.
d. cost of goods sold. b. debit Finished Goods Inventory, credit Work-in-Process Inventory.
c. debit Work-in-Process Inventory, credit Manufacturing Overhead.
18. The numerator of the FIFO unit cost calculation is d. debit Work-in-Process Inventory, credit Direct Labor.
a. current period cost.
b. cost of beginning inventory. Absorption costing
c. current period cost plus cost of beginning inventory. 8. Fixed production costs are inventoriable only if a company
d. cost of goods sold. a. uses absorption costing.
b. uses standard costing.
23. Which formula gives weighted-average equivalent unit production? (UC = units completed, BI = c. produces a single product.
equivalent units in beginning inventory, EI = equivalent units in ending inventory) d. receives permission from the Internal Revenue Service.
a. UC + BI + EI. c. UC + EI - BI.
b. UC + BI - EI. d. UC + EI.
26. Conversion costs are
24. Which formula gives FIFO equivalent unit production? (UC = units completed, BI = equivalent a. labor and overhead costs.
units in beginning inventory, EI = equivalent units in ending inventory) b. materials and labor costs.
a. UC + BI + EI. c. UC + EI - BI. c. all fixed manufacturing costs.
b. UC + BI - EI. d. UC + EI. d. all manufacturing costs.

Weighted-average unit cost 27. Which item is NOT relevant in determining FIFO unit cost?
3. Which of the following is NOT relevant in determining weighted-average unit cost in process a. Cost of beginning inventory.
costing? b. Equivalent unit production in beginning inventory.
a. Cost of beginning inventory. c. Equivalent unit production in ending inventory.
b. Equivalent unit production in beginning inventory. d. Units completed.
c. Equivalent unit production in ending inventory.
d. Units completed. 28. Weighted-average equivalent production is always
a. less than the number of units completed.
Job-order costing b. equal to the number of units completed.
5. A company that uses job-order costing c. equal to or greater than the number of units completed.
a. cannot use standard costs. d. a ny of the above.
b. accumulates costs by department.
c. probably makes a single product. 29. FIFO equivalent production can be
d. does not have to calculate equivalent production. a. less than the number of units completed.
b. equal to the number of units completed.

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 c. equal to or greater than the number of units completed.
d. any of the above. Process Costing
Weighted-average Method
30. Which item is NOT relevant in determining FIFO equivalent unit production? EUP
a. Cost of beginning inventory. 19. FIFO equivalent unit production (EUP) is 6,200 units. EUP in ending inventory is 300, in
b. Equivalent unit production in beginning inventory. beginning inventory it is 125. Weighted-average EUP is
c. Equivalent unit production in ending inventory. a. 6,500. c. 6,025.
d. Units completed. b. 6,325. d. 5,900.

31. The FIFO method of calculating equivalent production and unit costs 22. Algoma completed 10,000 units, had beginning inventory of 2,500 units 40% complete, and
a. is less likely to be accurate than the weighted-average method. ending inventory of 1,000 units 20% complete. Weighted-average EUP was
b. is more useful for control purposes than the weighted-average method. a. 9,200. c. 10,200.
c. cannot be used unless a company also uses standard costing. b. 10,000. d. 11,000.
d. eliminates the need to calculate separate equivalent-production numbers for each element
of manufacturing cost. 35. Dewey Company had a beginning inventory of 3,000 units 35% complete, and an ending
inventory of 2,500 units 20% complete. If 17,500 units were completed, weighted-average
32. Backflushing, or backflush costing EUP is
a. requires significantly less recordkeeping than other methods. a. 17,500. c. 18,550.
b. can be used by any company. b. 18,000. d. 20,000.
c. ignores inventories.
d. does not distinguish between materials and conversion costs. 40. Howe has a FIFO EUP of 46,580 units. Beginning inventory of 6,500 units was 80% complete;
the ending inventory of 2,800 units was 60% complete. Weighted-average EUP is
PROBLEM a. 46,580. c. 51,780.
Absorption costing b. 47,880. d. some other number.
Ending inventory
33. Scooter Corp had no beginning inventories, finished 40,000 units, and sold 36,000 units. There Units completed
were no ending inventories of materials or work in process. Materials purchased and used 21. Weighted-average EUP is 11,400 units. Beginning inventory was 1,000 units 60% complete,
were $225,000; direct labor and overhead were $170,000. Ending inventory would be valued ending inventory is 2,000 units 20% complete. The number of units completed is
at a. 11,000. c. 10,400.
a. $17,000. c. $39,500. b. 10,800. d. 9,400.
b. $22,500. d. some other number.
37. Cheatem has a weighted-average EUP of 30,000 units. Beginning inventory was 4,000 units
Cost of goods sold 40% complete; ending inventory was 5,000 units 60% complete. The number of units
34. Scooter Corp had no beginning inventories, finished 40,000 units, and sold 36,000 units. There completed is
were no ending inventories of materials or work in process. Materials purchased and used a. 27,000. c. 30,000.
were $225,000; direct labor and overhead were $170,000. Cost of goods sold would be valued b. 29,000. d. 31,000.
at
a. $39,500. c. $395,000. 47. Woods Run has a weighted-average EUP of 49,750 units. Beginning inventory of 4,500 units
b. $355,500. d. some other number. was 60% complete; the ending inventory of 4,800 units was 60% complete. The units

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 completed during the period is
a. 49,750. c. 47,050. Cost of finished units transferred to finished goods
b. 44,950. d. 46,870. 43. Field Company had a beginning inventory of 2,000 units 40% complete, ending inventory of
1,500 units 70% complete, and transferred out 23,500 units. Weighted-average unit costs were
Conversion cost per unit $1.15 for materials, $0.75 for conversion costs. All materials are added at the start of the
48. Woods Run has a weighted-average EUP of 49,750 units. Beginning inventory of 4,500 units process. The cost of finished units transferred to finished goods is
was 60% complete; the ending inventory of 4,800 units was 60% complete. Conversion costs a. $28,750. c. $47,500.
in beginning inventory were $1,960; conversion costs added during the period were $40,825. b. $44,650. d. $52,250.
Conversion costs per unit are
a. $0.82. 49. Grover Co. had a beginning inventory of 1,750 units 70% complete, ending inventory of 3,000
b. $0.86. units 20% complete, and transferred out 24,500 units. Weighted-average unit costs were $2.15
c. $0.70. for materials, $1.75 for conversion costs. All materials are added at the start of the process.
d. cannot be determined with the information given. The cost of finished units transferred to finished goods is
a. $95,550. c. $107,250.
Unit cost b. $102,375. d. $114,075.
20. Weighted-average EUP is 4,100 units. Cost incurred during the period are $11,250, and the
beginning inventory was $2,150. Unit cost is FIFO
a. $3.268. c. $2.220 EUP
b. $2.744. d. $0.524. 36. Dewey Company had a beginning inventory of 3,000 units 35% complete, and an ending
inventory of 2,500 units 20% complete. If 17,500 units were completed, FIFO EUP is
41. Sosa Inc. had $3,000 in beginning work in process and incurred an additional $28,500 during a. 17,500. c. 16,050.
the period. If weighted-average EUP was 10,000 units, unit cost would be b. 16,950. d. 15,050.
a. $2.85. c. $9.50.
b. $3.15. d. some other number. 38. Cheatem has a weighted-average EUP of 30,000 units. Beginning inventory was 4,000 units
40% complete; ending inventory was 5,000 units 60% complete. FIFO EUP is
Cost of ending inventory a. 25,400. c. 30,000.
44. Field Company had a beginning inventory of 4,000 units 40% complete, ending inventory of b. 28,400. d. 31,000.
3,000 units 70% complete, and transferred out 47,000 units. Weighted-average unit costs were
$1.15 for materials, $0.75 for conversion costs. All materials are added at the start of the Units completed
process. The cost of ending inventory is 39. Howe has a FIFO EUP of 46,580 units. Beginning inventory of 6,500 units was 80% complete;
a. $5,700. c. $3,990. the ending inventory of 2,800 units was 60% complete. How many units were completed
b. $5,025 d. some other number. during the period?
a. 39,700 c. 46,200
50. Grover Co. had a beginning inventory of 1,750 units 70% complete, ending inventory of 3,000 b. 44,900 d. 50,100
units 20% complete, and transferred out 24,500 units. Weighted-average unit costs were $2.15
for materials, $1.75 for conversion costs. All materials are added at the start of the process. Unit cost
The cost of ending inventory is 42. Granger Co. had $3,000 in beginning work in process and incurred an additional $28,500
a. $2,340. c. $7,500. during the period. If FIFO EUP was 10,000 units, unit cost would be
b. $6,450. d. $11,700. a. $2.85. c. $9.50.

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 b. $3.15. d. some other number.
T 9. If a company has no inventories, the weighted-average approach and the FIFO approach
Cost of ending inventory will result in the same income.
46. Garden Co. had a beginning inventory of 3,000 units 60% complete, ending inventory of 3,000
units 80% complete, and transferred out 27,500 units. FIFO unit costs were $2.15 for F. 10. Although weighted average and FIFO may give different values for inventory, the resulting
materials, $1.25 for conversion costs. All materials are added at the start of the process. income will always be the same.
Beginning inventory cost $9,400. The cost of ending inventory is
a. $8,160. c. $10,200.
b. $9,450. d. $17,000.

Cost of finished units transferred out

45. Garden Co. had a beginning inventory of 3,000 units 60% complete, ending inventory of 3,000
units 80% complete, and transferred out 27,500 units. FIFO unit costs were $2.15 for
materials, $1.25 for conversion costs. All materials are added at the start of the process.
Beginning inventory cost $9,400. The cost of finished units transferred out is
a. $69,875. c. $93,500.
b. $92,900. d. $103,700.

True-False

T 1. To calculate weighted-average equivalent production you do not need to know the number
of units in the beginning inventory.

F 2. Equivalent production calculated using FIFO is higher than equivalent production

calculated using weighted average.

T 3. Departmental overhead rates can be used by both job-order and process costing firms.

F 4. A multiproduct company cannot use standard costing.

T 5. Cost of Goods Sold and inventory accounts have debit balances.

F 6. Variance accounts have only credit balances.

F 7. Backflush costing eliminates the need for journal entries.

F 8. Backflush costing uses two inventory accounts: raw materials and a combined work in
process/finished goods.

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