Chapter 05 Testbank: Wages Paid To A Supervisor in A Factory Are A Part of

Chapter 05 Testbank
Student: ___________________________________________________________________________
1.
Wages paid to a supervisor in a factory are a part of:
Prime cost Conversion cost
A.
Yes No
B.
Yes Yes
C.
No No
D.
No Yes
2. Which of the following are components of conversion costs?

A. Direct labour and direct materials
B. Indirect materials and manufacturing overhead
C. Direct labour and manufacturing overhead
D. Direct labour and indirect labour
3. Which of the following represents a correct sequence in preparing a departmental production report?
A. Analysis of physical flow of units, computation of unit costs, calculation of equivalent units and analysis of total costs
B. Analysis of physical flow of units, calculation of equivalent units, computation of unit costs and analysis of total costs
C. Analysis of total costs, calculation of equivalent units, computation of unit costs and analysis of physical flow of units
D. Analysis of total costs, analysis of physical flow of units, computation of unit costs and calculation of equivalent units
4. Under Australian accounting standards, which methods can be used to prepare the departmental production report?
A. Weighted average, first in first out and standard costing
B. Last in first out, first in first out and standard costing
C. Last in first out, standard costing, weighted average
D. First in first out, last in first out, weighted average and standard costing
5. Rex Company Ltd had 4000 units in work in process at 1 April. During April, 11 000 units were completed. At 30 April,
5000 units remained in work in process. How many units were started during April?
A. 11 000
B. 5000
C. 12 000
D. 16 000
6. Assuming that there was no beginning work in process inventory and the ending work in process inventory is 50 per
cent complete as to conversion costs, the number of equivalent units as to conversion costs would be
A. the same as the units completed.
B. the same as the units placed in process.
C. less than the units completed.
D. less than the units placed in process.
7. Which of the following represents the production units used to calculate equivalent units under the weighted average
method?
A. Work to date on ending work in process + units started and completed.
B. All units completed + work to date on ending work in process.
C. Work to complete beginning work in process + work to date on ending work in process.
D. Work to complete beginning work in process + units completed – work done on ending work in process.
8. Rebex Chemical Company manufactures Compound 2 in two sequential departments. On June 1, Department 2 had
3000 units, which were 50 per cent complete as to conversion cost. During June, 15 000 units were completed and
transferred from Department 1. On June 30, Department 2 had 4000 units, which were 20 per cent complete as to
conversion costs. How many units were completed and transferred from Department 2 during the month of June?
A. 11 000
B. 12 500
C. 14 000
D. 15 700
9. Softcloth Textile Pty Ltd manufactures a variety of fabrics. The Weaving Department had 1000 units in work in process
on April 1, which were 20 per cent complete as to conversion costs. During April, 8000 units were completed and
transferred. On April 30, 4000 units remained in work in process 50 per cent complete as to conversion costs. Using the
weighted average method process costing, calculate the equivalent units of conversion for the month of April.
A. 12 000
B. 9000
C. 9800
D. 10 000
FIFO method of process costing, calculate the equivalent units of conversion for the month of April.
A. 9000
B. 9800
C. 10 000
D. 12 000
11. What is the inventory formula that shows the physical flow of production units during a given month, under the
weighted average method?
A. Physical units in beginning work in process + units started – units completed and transferred out = units in ending work
in process.
B. Units in beginning work in process + units completed and transferred out + units started = units in ending work in
process.
C. Units started + units completed and transferred out + units in ending work in process = units in beginning work in
process.
D. Units in beginning work in process – units started + units completed and transferred out = units in ending work in
process.
12. The major difference between weighted average and FIFO is

A. how completed and transferred units are treated.
B. how ending inventory is treated.
C. how beginning inventory is treated.
D. how current period costs are treated.
13. A company starts work on 1000 physical units and completes 75 per cent of conversion activity. The costs are $1500
for conversion and $5000 for direct material. What is the cost per equivalent unit for conversion?
A. $1.00 per unit
B. $1.50 per unit
C. $2.50 per unit
D. $2.00 per unit
for conversion and $5000 for direct material. What is the cost per equivalent unit for direct material?
A. $10.00 per unit
B. $5.00 per unit
C. $6.00 per unit
D. $6.67 per unit
15.
If the FIFO method is used, the cost of beginning work in process should be included in:
Unit Cost Cost of units transferred out
A.
No Yes
B.
No No
C.
Yes No
D.
Yes Yes
16.
Which of the following are needed to calculate ending work in process under process cosing?
Unit cost Equivalent units Cost in beginning work in process
A.
No No Yes
B.
Yes Yes No
C.
Yes Yes Yes
D.
Yes No No
17.
Given the following information, use the weighted average method to calculate cost per equivalent unit for the following materials.
A. $0.427
B. $0.4235
C. $0.55
D. $0.327
18. Equivalent unit calculations are necessary to allocate manufacturing costs between:
A. cost of goods manufactured and ending work in process.
B. beginning work in process and units completed.
C. cost of goods manufactured and beginning work in process.
D. cost of goods manufactured and cost of goods sold.
19. The FIFO method is a more accurate method than weighted average because:
A. it does not require the calculation of equivalent units.
B. the costs of current period are not combined with the costs of the prior period.
C. it considers prior period costs during the current period.
D. it must be computerised in order to obtain accurate calculations.
20.
Costs are accumulated by a responsibility centre for control purposes when using:
Job order costing Process costing
A.
Yes Yes
B.
Yes No
C.
No Yes
D.
Costs are irrelevant for control purposes
21. In both job and process costing, the journal entry to record predetermined overhead is.
A. debit work in process and credit raw materials inventory, salaries payable and manufacturing overhead.
B. debit work in process and credit manufacturing overhead applied.
C. debit manufacturing overhead and credit work in process and raw materials inventory.
D. debit manufacturing overhead and credit work in process inventory.
22. In both job and process costing, the journal entry to record completed goods is.
A. debit work in process and credit manufacturing overhead.
B. credit finished goods inventory and debit cost of goods sold.
C. debit finished goods inventory and credit work in process.
D. debit work in process inventory and credit finished goods inventory.
23. In both job and process costing, the journal entry to record cost of goods sold is.
A. debit finished goods inventory and credit cost of goods sold.
B. debit finished goods inventory and credit work in process.
C. debit cost of goods sold and credit work in process.
D. debit cost of goods sold and credit finished goods inventory.
24. Which of the following statements about operation costing is true?

i. Conversion costs are accumulated by department.
ii. Direct material costs are accumulated by batch.
iii. It is a hybrid product costing system.
A. i, ii and iii
B. ii and iii
C. i and iii
D. i and ii
25.
South River Chemicals Pty Ltd manufactures a product called Zybek. Direct materials are added at the beginning of the process and
conversion activity occurs uniformly throughout the process. The following data pertains to the month of May.
Using the weighted average method of process costing, calculate the equivalent units of direct materials and conversion costs for the
month of May.
A. DM 75 000; CC 69 400
B. DM 75 000; CC 60 400
C. DM 60 000; CC 60 400
D. DM 68 000; CC 69 400
26.
conversion activity occurs uniformly throughout the process. The following data pertain to the month of May.
Using the FIFO method of process costing, calculate the equivalent units of direct materials and conversion activity for the month of
May.
A. DM 75 000; CC 69 400
B. DM 75 000; CC 60 400
C. DM 60 000; CC 60 400
D. DM 68 000; CC 69 400
27.
South River Chemicals Pty Ltd manufactures a product called Zybek. Direct materials are added at the end of the process and
month of May.
A. DM 75 000; CC 69 400
B. DM 75 000; CC 60 400
C. DM 60 000; CC 60 400
D. DM 68 000; CC 69 400
28.
May.
A. DM 75 000; CC 69 400
B. DM 60 000; CC 60 400
C. DM 68 000; CC 69 400
D. None of the given answers
29.
Healthy Flavour is a food processing company that makes a product called Health Nut soup in two processes—blending and
condensing. The output of the blending department is transferred to the condensing department. All materials are added at the
beginning of the blending process, and conversion activity occurs uniformly throughout both processes. The following data pertain to
the month of April in the blending department.
Using the FIFO method of process costing, calculate the equivalent units of direct materials for the month of April.
A. 60 000
B. 58 000
C. 55 000
D. 50 000
30.
Using the FIFO method of process costing, calculate the cost per equivalent unit of conversion activity for the month of April.
A. $0.5048
B. $0.4169
C. $0.4381
31. In which of the following ways is normal spoilage accounted for?

A. Expensed in the period in which it occurred
B. Included as part of the unit cost of output
C. Written off to cost of goods sold
D. Included in inventory valuation until year-end and then written off
32. In which of the following ways is abnormal spoilage accounted for?

33.
The following data apply to Zilch Ltd in its mixing department for the month of April. All material is introduced at the start of the process
and conversion occurs evenly through the process. Spoilage occurred at the midpoint in the process.
Using the weighted average method, what are the equivalent units for conversion?
A. 85 000
B. 75 000
C. 77 000
D. 82 000
34. Abnormal spoilage costs assist management to

A. control costs.
B. control quality.
C. hold supervisors responsible.
D. All of the given answers
35. Operational costing is appropriate where

i. there are different material inputs.
ii. there are common material inputs.
iii. processes are identical.
iv. different combinations of specific processes apply to different products.
A. i and ii
B. ii and iii
C. ii and iv
D. i and iv
36. Operation costing is appropriate for products with the following characteristics.
i. Repetitive mass production
ii. Individual products
iii. Large batches with repetitive processes
iv. Some unique features, some common features
A. i and iii
B. i and iv
C. ii and iii
D. iii and iv
37. Which of the following firms are more likely to use operational costing techniques?
i. Oil refineries
ii. Food processors
iii. Large scale clothing manufacturers
iv. Tourist operators
A. i and ii
B. ii and iii
C. i and iii
D. ii and iv
38. Inventory valuation in operation costing requires

A. direct materials and conversion costs being traced to processes.
B. direct material and conversion costs being traced to batches.
C. direct materials traced to batches and conversion costs traced to processes.
D. direct materials traced to processes and conversion costs traced to batches.
39. Which of the following statement/s is/are true?

A. Weighted average costs provide a better basis for cost control than FIFO costs.
B. Weighted average costs provide a better basis for performance evaluation than standard costs.
C. Cost per equivalent unit provides a measure of production efficiency.
D. Weighted average costs provide a better basis for cost control than FIFO costs AND cost per equivalent unit provides a
measure of production efficiency.
40. The technical term for costs moving between one department and the next in a multidepartment process is
A. transferred costs.
B. transferred out costs.
C. transferred in costs.
D. prior costs.
41. Which of the following inventory valuation method/s is/are less suited to cost control?
A. Weighted average costs
B. First in first out cost
C. Standard costs
D. Weighted average costs AND standard costs
42.
Process costing systems are suitable for firms that produce

i. homogeneous products.
ii. heterogeneous products.
iii. individual products.
iv. repetitive products.
A. i and iii
B. i and iv
C. ii and iv
D. i and ii
43. The establishment of predetermined conversion costs for operation costing requires which of the following.
i. Budgeted level of the cost driver
ii. Budgeted direct labour costs
iii. Budgeted manufacturing overhead costs
A. i
B. i and ii
C. i, ii and iii
D. i and iii
44. Assume material is added at the beginning of a process, and the beginning WIP inventory is 30 per cent complete as
to conversion costs. Using the FIFO method of costing, the total equivalent units for material for this process during this
period is equal to
A. units started this period in this process.
B. units started this period in this process plus 70 per cent of beginning inventory.
C. beginning inventory this period for the process.
D. units started this period in this process plus the beginning inventory.
to conversion costs. Using the weighted average method of costing, the total equivalent units for material for this process
during this period is equal to
46. In a process costing system the cost of abnormal spoilage should be:
A. prorated between units transferred out and ending inventory.
B. included in the cost of units transferred out.
C. treated as a loss in the period incurred.
D. ignored.
47. For a firm, which produces its product through two processes, the costs in opening work in process for Process 2 are
best described as
A. prior process costs.
B. transferred in costs.
C. prior period costs.
D. conversion costs.
48. For a firm, which produces its product through two processes, the costs transferred into Process 2 from Process 1 can
be described as
D. prior process costs AND transferred in costs.
49. Raphael's Refining uses a weighted average process costing system. For a particular period, its opening inventory
consisted of 100 items (60 per cent complete as to conversion costs) whose costs were $1600 made up of material $300
and conversion cost $1300. During the month, 1000 items were started and 950 were completed. Ending inventory of WIP
was one-third complete. There was no spoilage. Costs placed in process during the month were materials $1600 and
conversion costs $13 700. Materials are added at the halfway point. What is the amount of cost that would be allocated to
goods completed in the period?
A. $14 615
B. $16 513
C. $16 900
D. $16 150
50.
Raphael's Refining uses a FIFO process costing system. For a particular period, its opening inventory consisted of 100 items (60 per
cent complete as to conversion costs) whose costs were $1600 made up of material $300 and conversion cost $1300. During the
month, 1000 items were started and 950 were completed. Ending inventory of WIP was one-third complete. There was no spoilage.
Costs placed in process during the month were materials $1785 and conversion costs $13 865. Materials are added at the halfway
point. What is the amount of cost that would be allocated to goods completed in the period?
A. $16 513
B. $16 900
C. $16 150
D. $14 913
51.
conversion activity occurs uniformly throughout the process. The following selected data pertain to the month of May.
What are the unit costs for the period (rounded to two decimal places) assuming weighted average costing?
A. DM $7.38; CC $17.03
B. DM $6; CC $14.78
C. DM $7.38; CC $14.78
D. DM $6; CC $17.03
52.
What are the unit costs for the period (rounded to two decimal places) assuming FIFO costing?
A. DM $7.25; CC $15.62
B. DM $5.90; CC $13.55
C. DM $5.90; CC $15.62
53. Collins Chemicals produces a compound through two processes. For its second process for a particular period,
Collins had an opening WIP inventory of 100 units halfway through the process; 2300 units completed in the period; and a
closing WIP inventory of 400 units three-quarters of the way through the process. Materials are added at the beginning of
the process and conversion costs are incurred uniformly. Calculate the equivalent units for transferred in costs for the
period if the firm used weighted average costing.
A. 2300
B. 2500
C. 2600
D. 2700
period if the firm used FIFO costing.
A. 2300
B. 2400
C. 2500
D. 2600
55. Heara Ltd manufactures metal sheets and uses the weighted average method process costing. On 1 May the Rolling
Department had 2000 units work in progress, which were 20 per cent completed as to conversion costs. During May 10
000 units were completed and transferred out. The remaining work in progress on 30 May was 50 per cent complete in
terms of conversion rate. If the equivalent unit is 12 000 units, what is the 30 May work in progress?
A. 4000 units
B. 2000 units
C. 8000 units
D. 5000 units
56. Heara Ltd manufactures metal sheets, and uses the weighted average method process costing. On 1 May the Rolling
units were completed and transferred out. The remaining work in progress on 30 May was 2000 units, at 50 per cent
complete in terms of conversion rate. What is the equivalent unit of conversion?
A. 1000 units
B. 2000 units
C. 7500 units
D. 9000 units
57. Heara Ltd manufactures metal sheets, and uses the FIFO process costing. On 1 May the Rolling Department had
3000 units work in progress, which were 50 per cent completed as to conversion costs. During May 8000 units were
completed and transferred out. The remaining work in progress on 30 May was 2000 units at 50 per cent complete in
terms of conversion rate. What is the equivalent unit of conversion?
A. 2000 units
B. 7500 units
C. 9000 units
D. 10 500 units
58. The difference in cost per equivalent units between the weighted average method and the FIFO method
A. will be higher if there is no beginning work in process.
B. will be higher if there is no ending work in process.
C. will disappear if there is no beginning work in process.
D. will be lower if there is no ending work in process.
59. Latta Coffee Ltd has two main processes: roasting and packaging. Roasted coffee beans are transferred to the
packaging department before the final product is shipped to customers. The following information for the month of April for
the Roasting department is available: total cost of goods completed and transferred from Roasting department to
Packaging department is $25 000; ending work in progress in April is $1000; number of equivalent units of conversion is
5000 units.
Which of the following journal entries is appropriate at the end of April?
A. Debit Packaging Department $26 000, Credit Roasting Department $26 000
B. Debit Packaging Department $25 000, Credit Roasting Department $25 000
C. Debit Roasting Department $26 000, Credit Packaging Department $26 000
D. Debit Roasting Department $25 000, Credit Packaging Department $25 000
60. Eldervale Winery produces premium wine in the Hunter Valley. Jasmine Droll, the vineyard manager who is
responsible for overseeing the grape harvest, ignores company guidelines and decides to hire some inexperienced
harvest workers. As a result a lot of good grapes are wasted. For the purpose of product costing, the losses associated
with this grape wastage should be treated as
A. unethical spoilage.
B. abnormal spoilage.
C. normal spoilage.
D. overhead labour costs.
61. Eldervale Winery produces premium wine in the Hunter Valley. During the bottling process, small amount of spillage is
often unavoidable. How should the costs associated with the spillage be treated?
A. It should be included in the work in progress.
B. It should be expensed in the period the cost is incurred.
C. It should be ignored in the work in progress account and reported only in the internal production reports.
D. It should be expensed immediately under the FIFO method, but included in the work in progress in the weighted
average method.
62. Owl's Hours produces herbal tea and prides itself in having one of the largest ranges of herbal teas in Australia. It sells
more than 50 varieties of tea leaves with a wide range of prices (depending on where the tea leaves are grown). The
production processes of its products is simple, but vary depending on whether the tea is sold as loose leaves (which
requires packing tea leaves in various sized boxes) or tea bags (which requires additional process in packaging tea in
specially designed tea bags). Owl's Hours decides to use an operation costing system. This decision is
A. correct, because the company uses a large variety of tea leaves as direct materials and yet has simple production
processes.
B. correct, because the company uses a large variety of tea leaves as direct materials and the different products require
different sequences of processes.
C. incorrect, because the different production lines require the tea leaves to be packaged in very distinctive methods.
D. incorrect, because the company has a very homogenous product – it produces and sells only tea.
63. Banana Shirts produces t-shirts in large batches. Most of its t-shirts are made of regular cotton, although some are
made from ethically produced cotton. The manufacturing process is relatively simple; most t-shirts go through similar
processes; the main difference is whether the t-shirt requires embroidery or printing. The most appropriate costing system
for Banana Shirts is
A. process costing system.
B. job costing system.
C. operation costing systems.
D. both job costing system and operation costing system are appropriate.
64. Which of the following is not required when calculating the equivalent units for conversion?
i Percentage of conversion for ending work in progress
ii Percentage of conversion for physical units that have been completed and transferred out of the department
iii. Cost of direct materials
A. i only
B. i and ii
C. i, ii and iii
D. i and iii
65. Management uses predetermined overhead costs when costs and cost drivers are
A. reliable.
B. predictable.
C. unstable.
D. stable.
66. Process costing is only suitable for products that are

A. heterogeneous.
B. homogeneous.
C. harmonious.
67. Standard costs are based on estimates of cost of materials, labour and overheads. Standard costs are also known as
A. actual costs.
B. forecasted costs.
C. expected costs.
D. budgeted costs.
68. At Hilltop Dairy Producers Pty Ltd, an employee ignored the standard sterilising procedures before beginning the new
batch of low fat milk causing the batch to curdle. This would be regarded as
A. spoilage.
B. normal spoilage.
C. expected spoilage.
D. abnormal spoilage.
69. When accounting for the costs of abnormal spoilage at the end of the period, the costs of abnormal spoilage are
A. included as part of the cost of unit completed.
B. expensed as loss on abnormal spoilage in the current period.
C. included in the cost of finished goods.
D. expensed as closing work in process in the current period.
70. Which of the following product features would best suit a hybrid costing system?
A. Identical and unique features
B. Identical and very similar features
C. Some unique and common features
D. Some unique and individual features
71. Briefly explain the four steps in process costing with work in process inventories.
72. Describe the weighted average method used in process costing and explain how the unit costs are calculated.
73.
Explain the term 'normal spoilage' and why management is unable to eliminate this production cost.
74. For a manufacturer that produces large batches of automotive parts, which type of costing system would you
recommend? Justify your answer.
75. Discuss why management would elect to use predetermined overhead and conversion costs.
76. In process costing, equivalent units are the same under both the weighted average method and the FIFO method.
True False
77. Operation costing is just another name for process costing as both systems trace all production costs to processes or
departments.
True False
78. Abnormal spoilage is identified to assist managers in tracking the costs of wasted resources.
True False
79. A standard cost is a budgeted cost per unit.

True False
80. To calculate equivalent units, multiply the partially completed physical units in the process by the percentage of
completion.
True False
81. Process costing can be used in service businesses if the service is routine and repetitive.
True False
82. Where a process has two departments [A and B], the first new debit entry in the work in process inventory account for
Department B in any period will be transferred-in costs.
True False
83. Conversion costs are generally added at specific points throughout a process.
True False
84. Normal spoilage can always be avoided by a more efficient approach to production.
True False
85. The departmental production report replaces the job cost sheet used by production departments.
True False
86. The departmental production report summarises the flow of production quantities through the department plus the
amount of production costs transferred in from the department's work in process inventory account during the period.
True False
87. Process costing and operation costing are consistent with the concepts of responsibility accounting.
True False
Chapter 05 Testbank Key
1.
Wages paid to a supervisor in a factory are a part of:
Prime cost Conversion cost
A.
Yes No
B.
Yes Yes
C.
No No
D.
No Yes
AACSB: Reflective
Difficulty: Easy
Learning Objective: 5.01 Describe the principles of process costing where work in process (WIP) inventories are involved
2. Which of the following are components of conversion costs?

A. Direct labour and direct materials
B. Indirect materials and manufacturing overhead
C. Direct labour and manufacturing overhead
D. Direct labour and indirect labour
AACSB: Reflective
Difficulty: Medium
3. Which of the following represents a correct sequence in preparing a departmental production report?
A. Analysis of physical flow of units, computation of unit costs, calculation of equivalent units and analysis of total costs
B. Analysis of physical flow of units, calculation of equivalent units, computation of unit costs and analysis of total costs
C. Analysis of total costs, calculation of equivalent units, computation of unit costs and analysis of physical flow of units
D. Analysis of total costs, analysis of physical flow of units, computation of unit costs and calculation of equivalent units
AACSB: Reflective
Difficulty: Easy
4. Under Australian accounting standards, which methods can be used to prepare the departmental production report?
A. Weighted average, first in first out and standard costing
B. Last in first out, first in first out and standard costing
C. Last in first out, standard costing, weighted average
D. First in first out, last in first out, weighted average and standard costing
AACSB: Analytical
Difficulty: Medium
Learning Objective: 5.02 Assign total production costs for a department to completed units and WIP inventory using the weighted average method of
process costing
5. Rex Company Ltd had 4000 units in work in process at 1 April. During April, 11 000 units were completed. At 30 April,
5000 units remained in work in process. How many units were started during April?
A. 11 000
B. 5000
C. 12 000
D. 16 000
AACSB: Analytical
Difficulty: Medium
process costing
6. Assuming that there was no beginning work in process inventory and the ending work in process inventory is 50 per
cent complete as to conversion costs, the number of equivalent units as to conversion costs would be
A. the same as the units completed.
B. the same as the units placed in process.
C. less than the units completed.
D. less than the units placed in process.
AACSB: Analytical
Difficulty: Medium
process costing
7. Which of the following represents the production units used to calculate equivalent units under the weighted average
method?
A. Work to date on ending work in process + units started and completed.
B. All units completed + work to date on ending work in process.
C. Work to complete beginning work in process + work to date on ending work in process.
D. Work to complete beginning work in process + units completed – work done on ending work in process.
AACSB: Reflective
Difficulty: Easy
process costing
8. Rebex Chemical Company manufactures Compound 2 in two sequential departments. On June 1, Department 2 had
3000 units, which were 50 per cent complete as to conversion cost. During June, 15 000 units were completed and
transferred from Department 1. On June 30, Department 2 had 4000 units, which were 20 per cent complete as to
conversion costs. How many units were completed and transferred from Department 2 during the month of June?
A. 11 000
B. 12 500
C. 14 000
D. 15 700
AACSB: Analytical
Difficulty: Medium
process costing
weighted average method process costing, calculate the equivalent units of conversion for the month of April.
A. 12 000
B. 9000
C. 9800
D. 10 000
AACSB: Analytical
Difficulty: Medium
process costing
FIFO method of process costing, calculate the equivalent units of conversion for the month of April.
A. 9000
B. 9800
C. 10 000
D. 12 000
AACSB: Analytical
Difficulty: Medium
Learning Objective: 5.03 Assign total production costs for a department to completed units and WIP inventory using the FIFO method of process costing
11. What is the inventory formula that shows the physical flow of production units during a given month, under the
weighted average method?
A. Physical units in beginning work in process + units started – units completed and transferred out = units in ending work
in process.
B. Units in beginning work in process + units completed and transferred out + units started = units in ending work in
process.
C. Units started + units completed and transferred out + units in ending work in process = units in beginning work in
process.
D. Units in beginning work in process – units started + units completed and transferred out = units in ending work in
process.
AACSB: Reflective
Difficulty: Easy
process costing
12. The major difference between weighted average and FIFO is

A. how completed and transferred units are treated.
B. how ending inventory is treated.
C. how beginning inventory is treated.
D. how current period costs are treated.
AACSB: Reflective
Difficulty: Easy
for conversion and $5000 for direct material. What is the cost per equivalent unit for conversion?
A. $1.00 per unit
B. $1.50 per unit
C. $2.50 per unit
D. $2.00 per unit
AACSB: Analytical
Difficulty: Easy
process costing
for conversion and $5000 for direct material. What is the cost per equivalent unit for direct material?
A. $10.00 per unit
B. $5.00 per unit
C. $6.00 per unit
D. $6.67 per unit
AACSB: Analytical
Difficulty: Easy
process costing
15.
If the FIFO method is used, the cost of beginning work in process should be included in:
Unit Cost Cost of units transferred out
A.
No Yes
B.
No No
C.
Yes No
D.
Yes Yes
AACSB: Reflective
Difficulty: Easy
16.
Which of the following are needed to calculate ending work in process under process cosing?
Unit cost Equivalent units Cost in beginning work in process
A.
No No Yes
B.
Yes Yes No
C.
Yes Yes Yes
D.
Yes No No
AACSB: Reflective
Difficulty: Easy
process costing
17.
Given the following information, use the weighted average method to calculate cost per equivalent unit for the following materials.
A. $0.427
B. $0.4235
C. $0.55
D. $0.327
AACSB: Analytical
Difficulty: Easy
process costing
18. Equivalent unit calculations are necessary to allocate manufacturing costs between:
A. cost of goods manufactured and ending work in process.
B. beginning work in process and units completed.
C. cost of goods manufactured and beginning work in process.
D. cost of goods manufactured and cost of goods sold.
AACSB: Reflective
Difficulty: Easy
process costing
19. The FIFO method is a more accurate method than weighted average because:
A. it does not require the calculation of equivalent units.
B. the costs of current period are not combined with the costs of the prior period.
C. it considers prior period costs during the current period.
D. it must be computerised in order to obtain accurate calculations.
AACSB: Reflective
Difficulty: Easy
20.
Costs are accumulated by a responsibility centre for control purposes when using:
Job order costing Process costing
A.
Yes Yes
B.
Yes No
C.
No Yes
D.
Costs are irrelevant for control purposes
AACSB: Reflective
Difficulty: Medium
Learning Objective: 5.06 Recognise and explain important issues that influence the design of process costing and operation costing, including the use of
predetermined overhead and conversion costs and standard costs; determining the degree of completion; and the relevance of process costing for
responsibility accounting and for service firms
21. In both job and process costing, the journal entry to record predetermined overhead is.
A. debit work in process and credit raw materials inventory, salaries payable and manufacturing overhead.
B. debit work in process and credit manufacturing overhead applied.
C. debit manufacturing overhead and credit work in process and raw materials inventory.
D. debit manufacturing overhead and credit work in process inventory.
AACSB: Reflective
Difficulty: Easy
22. In both job and process costing, the journal entry to record completed goods is.
A. debit work in process and credit manufacturing overhead.
B. credit finished goods inventory and debit cost of goods sold.
C. debit finished goods inventory and credit work in process.
D. debit work in process inventory and credit finished goods inventory.
AACSB: Reflective
Difficulty: Easy
23. In both job and process costing, the journal entry to record cost of goods sold is.
A. debit finished goods inventory and credit cost of goods sold.
B. debit finished goods inventory and credit work in process.
C. debit cost of goods sold and credit work in process.
D. debit cost of goods sold and credit finished goods inventory.
AACSB: Reflective
Difficulty: Easy
24. Which of the following statements about operation costing is true?

i. Conversion costs are accumulated by department.
ii. Direct material costs are accumulated by batch.
iii. It is a hybrid product costing system.
A. i, ii and iii
B. ii and iii
C. i and iii
D. i and ii
AACSB: Reflective
Difficulty: Easy
Learning Objective: 5.05 Assign total production costs for a department to completed units and WIP inventory under a common hybrid costing system
called ‘operation costing'
25.
conversion activity occurs uniformly throughout the process. The following data pertains to the month of May.
month of May.
A. DM 75 000; CC 69 400
B. DM 75 000; CC 60 400
C. DM 60 000; CC 60 400
D. DM 68 000; CC 69 400
AACSB: Analytical
Difficulty: Medium
process costing
26.
May.
A. DM 75 000; CC 69 400
B. DM 75 000; CC 60 400
C. DM 60 000; CC 60 400
D. DM 68 000; CC 69 400
AACSB: Analytical
Difficulty: Medium
27.
month of May.
A. DM 75 000; CC 69 400
B. DM 75 000; CC 60 400
C. DM 60 000; CC 60 400
D. DM 68 000; CC 69 400
AACSB: Analytical
Difficulty: Medium
process costing
28.
May.
A. DM 75 000; CC 69 400
B. DM 60 000; CC 60 400
C. DM 68 000; CC 69 400
AACSB: Analytical
Difficulty: Medium
29.
Using the FIFO method of process costing, calculate the equivalent units of direct materials for the month of April.
A. 60 000
B. 58 000
C. 55 000
D. 50 000
AACSB: Analytical
Difficulty: Easy
Learning Objective: 5.07 Calculate product costs and prepare journal entries to record the flow of costs in a process costing system with sequential
production departments
30.
Using the FIFO method of process costing, calculate the cost per equivalent unit of conversion activity for the month of April.
A. $0.5048
B. $0.4169
C. $0.4381
AACSB: Analytical
Difficulty: Medium
31. In which of the following ways is normal spoilage accounted for?

AACSB: Reflective
Difficulty: Medium
Learning Objective: 5.04 Account for the costs of normal and abnormal spoilage under the weighted average method of process costing
32. In which of the following ways is abnormal spoilage accounted for?
AACSB: Reflective
Difficulty: Easy
33.
The following data apply to Zilch Ltd in its mixing department for the month of April. All material is introduced at the start of the process
and conversion occurs evenly through the process. Spoilage occurred at the midpoint in the process.
Using the weighted average method, what are the equivalent units for conversion?
A. 85 000
B. 75 000
C. 77 000
D. 82 000
AACSB: Analytical
Difficulty: Medium
34. Abnormal spoilage costs assist management to

A. control costs.
B. control quality.
C. hold supervisors responsible.
D. All of the given answers
AACSB: Reflective
Difficulty: Medium
35. Operational costing is appropriate where
i. there are different material inputs.
ii. there are common material inputs.
iii. processes are identical.
iv. different combinations of specific processes apply to different products.
A. i and ii
B. ii and iii
C. ii and iv
D. i and iv
AACSB: Reflective
Difficulty: Medium
36. Operation costing is appropriate for products with the following characteristics.
i. Repetitive mass production
ii. Individual products
iii. Large batches with repetitive processes
iv. Some unique features, some common features
A. i and iii
B. i and iv
C. ii and iii
D. iii and iv
AACSB: Reflective
Difficulty: Easy
37. Which of the following firms are more likely to use operational costing techniques?
i. Oil refineries
ii. Food processors
iii. Large scale clothing manufacturers
iv. Tourist operators
A. i and ii
B. ii and iii
C. i and iii
D. ii and iv
AACSB: Reflective
Difficulty: Medium
38. Inventory valuation in operation costing requires
A. direct materials and conversion costs being traced to processes.
B. direct material and conversion costs being traced to batches.
C. direct materials traced to batches and conversion costs traced to processes.
D. direct materials traced to processes and conversion costs traced to batches.
AACSB: Reflective
Difficulty: Easy
39. Which of the following statement/s is/are true?

A. Weighted average costs provide a better basis for cost control than FIFO costs.
B. Weighted average costs provide a better basis for performance evaluation than standard costs.
C. Cost per equivalent unit provides a measure of production efficiency.
D. Weighted average costs provide a better basis for cost control than FIFO costs AND cost per equivalent unit provides a
measure of production efficiency.
AACSB: Reflective
Difficulty: Easy
40. The technical term for costs moving between one department and the next in a multidepartment process is
A. transferred costs.
B. transferred out costs.
C. transferred in costs.
D. prior costs.
AACSB: Reflective
Difficulty: Easy
41. Which of the following inventory valuation method/s is/are less suited to cost control?
A. Weighted average costs
B. First in first out cost
C. Standard costs
D. Weighted average costs AND standard costs
AACSB: Reflective
Difficulty: Medium
42.
Process costing systems are suitable for firms that produce

i. homogeneous products.
ii. heterogeneous products.
iii. individual products.
iv. repetitive products.
A. i and iii
B. i and iv
C. ii and iv
D. i and ii
AACSB: Reflective
Difficulty: Easy
43. The establishment of predetermined conversion costs for operation costing requires which of the following.
i. Budgeted level of the cost driver
ii. Budgeted direct labour costs
iii. Budgeted manufacturing overhead costs
A. i
B. i and ii
C. i, ii and iii
D. i and iii
AACSB: Reflective
Difficulty: Easy
to conversion costs. Using the FIFO method of costing, the total equivalent units for material for this process during this
period is equal to
AACSB: Reflective
Difficulty: Medium
to conversion costs. Using the weighted average method of costing, the total equivalent units for material for this process
during this period is equal to
AACSB: Reflective
Difficulty: Medium
46. In a process costing system the cost of abnormal spoilage should be:
A. prorated between units transferred out and ending inventory.
B. included in the cost of units transferred out.
C. treated as a loss in the period incurred.
D. ignored.
AACSB: Reflective
Difficulty: Easy
47. For a firm, which produces its product through two processes, the costs in opening work in process for Process 2 are
best described as
D. conversion costs.
AACSB: Reflective
Difficulty: Easy
48. For a firm, which produces its product through two processes, the costs transferred into Process 2 from Process 1 can
be described as
D. prior process costs AND transferred in costs.
AACSB: Reflective
Difficulty: Easy
49. Raphael's Refining uses a weighted average process costing system. For a particular period, its opening inventory
consisted of 100 items (60 per cent complete as to conversion costs) whose costs were $1600 made up of material $300
and conversion cost $1300. During the month, 1000 items were started and 950 were completed. Ending inventory of WIP
was one-third complete. There was no spoilage. Costs placed in process during the month were materials $1600 and
conversion costs $13 700. Materials are added at the halfway point. What is the amount of cost that would be allocated to
goods completed in the period?
A. $14 615
B. $16 513
C. $16 900
D. $16 150
AACSB: Analytical
Difficulty: Hard
process costing
50.
Raphael's Refining uses a FIFO process costing system. For a particular period, its opening inventory consisted of 100 items (60 per
cent complete as to conversion costs) whose costs were $1600 made up of material $300 and conversion cost $1300. During the
month, 1000 items were started and 950 were completed. Ending inventory of WIP was one-third complete. There was no spoilage.
Costs placed in process during the month were materials $1785 and conversion costs $13 865. Materials are added at the halfway
point. What is the amount of cost that would be allocated to goods completed in the period?
A. $16 513
B. $16 900
C. $16 150
D. $14 913
AACSB: Analytical
Difficulty: Hard
51.
conversion activity occurs uniformly throughout the process. The following selected data pertain to the month of May.
What are the unit costs for the period (rounded to two decimal places) assuming weighted average costing?
A. DM $7.38; CC $17.03
B. DM $6; CC $14.78
C. DM $7.38; CC $14.78
D. DM $6; CC $17.03
AACSB: Analytical
Difficulty: Medium
52.
What are the unit costs for the period (rounded to two decimal places) assuming FIFO costing?
A. DM $7.25; CC $15.62
B. DM $5.90; CC $13.55
C. DM $5.90; CC $15.62
AACSB: Analytical
Difficulty: Medium
period if the firm used weighted average costing.
A. 2300
B. 2500
C. 2600
D. 2700
AACSB: Reflective
Difficulty: Medium
period if the firm used FIFO costing.
A. 2300
B. 2400
C. 2500
D. 2600
AACSB: Reflective
Difficulty: Medium
55. Heara Ltd manufactures metal sheets and uses the weighted average method process costing. On 1 May the Rolling
000 units were completed and transferred out. The remaining work in progress on 30 May was 50 per cent complete in
terms of conversion rate. If the equivalent unit is 12 000 units, what is the 30 May work in progress?
A. 4000 units
B. 2000 units
C. 8000 units
D. 5000 units
AACSB: Analytical
Difficulty: Hard
process costing
56. Heara Ltd manufactures metal sheets, and uses the weighted average method process costing. On 1 May the Rolling
units were completed and transferred out. The remaining work in progress on 30 May was 2000 units, at 50 per cent
complete in terms of conversion rate. What is the equivalent unit of conversion?
A. 1000 units
B. 2000 units
C. 7500 units
D. 9000 units
AACSB: Analytical
Difficulty: Medium
process costing
57. Heara Ltd manufactures metal sheets, and uses the FIFO process costing. On 1 May the Rolling Department had
3000 units work in progress, which were 50 per cent completed as to conversion costs. During May 8000 units were
completed and transferred out. The remaining work in progress on 30 May was 2000 units at 50 per cent complete in
terms of conversion rate. What is the equivalent unit of conversion?
A. 2000 units
B. 7500 units
C. 9000 units
D. 10 500 units
AACSB: Analytical
Difficulty: Medium
process costing
58. The difference in cost per equivalent units between the weighted average method and the FIFO method
A. will be higher if there is no beginning work in process.
B. will be higher if there is no ending work in process.
C. will disappear if there is no beginning work in process.
D. will be lower if there is no ending work in process.
AACSB: Reflective
Difficulty: Easy
59. Latta Coffee Ltd has two main processes: roasting and packaging. Roasted coffee beans are transferred to the
packaging department before the final product is shipped to customers. The following information for the month of April for
the Roasting department is available: total cost of goods completed and transferred from Roasting department to
Packaging department is $25 000; ending work in progress in April is $1000; number of equivalent units of conversion is
5000 units.
Which of the following journal entries is appropriate at the end of April?
A. Debit Packaging Department $26 000, Credit Roasting Department $26 000
B. Debit Packaging Department $25 000, Credit Roasting Department $25 000
C. Debit Roasting Department $26 000, Credit Packaging Department $26 000
D. Debit Roasting Department $25 000, Credit Packaging Department $25 000
AACSB: Reflective
Difficulty: Easy
process costing
60. Eldervale Winery produces premium wine in the Hunter Valley. Jasmine Droll, the vineyard manager who is
responsible for overseeing the grape harvest, ignores company guidelines and decides to hire some inexperienced
harvest workers. As a result a lot of good grapes are wasted. For the purpose of product costing, the losses associated
with this grape wastage should be treated as
A. unethical spoilage.
B. abnormal spoilage.
C. normal spoilage.
D. overhead labour costs.
AACSB: Reflective
Difficulty: Medium
61. Eldervale Winery produces premium wine in the Hunter Valley. During the bottling process, small amount of spillage is
often unavoidable. How should the costs associated with the spillage be treated?
A. It should be included in the work in progress.
B. It should be expensed in the period the cost is incurred.
C. It should be ignored in the work in progress account and reported only in the internal production reports.
D. It should be expensed immediately under the FIFO method, but included in the work in progress in the weighted
average method.
AACSB: Reflective
Difficulty: Medium
62. Owl's Hours produces herbal tea and prides itself in having one of the largest ranges of herbal teas in Australia. It sells
more than 50 varieties of tea leaves with a wide range of prices (depending on where the tea leaves are grown). The
production processes of its products is simple, but vary depending on whether the tea is sold as loose leaves (which
requires packing tea leaves in various sized boxes) or tea bags (which requires additional process in packaging tea in
specially designed tea bags). Owl's Hours decides to use an operation costing system. This decision is
A. correct, because the company uses a large variety of tea leaves as direct materials and yet has simple production
processes.
B. correct, because the company uses a large variety of tea leaves as direct materials and the different products require
different sequences of processes.
C. incorrect, because the different production lines require the tea leaves to be packaged in very distinctive methods.
D. incorrect, because the company has a very homogenous product – it produces and sells only tea.
AACSB: Reflective
Difficulty: Medium
63. Banana Shirts produces t-shirts in large batches. Most of its t-shirts are made of regular cotton, although some are
made from ethically produced cotton. The manufacturing process is relatively simple; most t-shirts go through similar
processes; the main difference is whether the t-shirt requires embroidery or printing. The most appropriate costing system
for Banana Shirts is
A. process costing system.
B. job costing system.
C. operation costing systems.
D. both job costing system and operation costing system are appropriate.
AACSB: Reflective
Difficulty: Medium
64. Which of the following is not required when calculating the equivalent units for conversion?
i Percentage of conversion for ending work in progress
ii Percentage of conversion for physical units that have been completed and transferred out of the department
iii. Cost of direct materials
A. i only
B. i and ii
C. i, ii and iii
D. i and iii
AACSB: Reflective
Difficulty: Medium
65. Management uses predetermined overhead costs when costs and cost drivers are
A. reliable.
B. predictable.
C. unstable.
D. stable.
AACSB: Reflective
Difficulty: Easy
66. Process costing is only suitable for products that are

A. heterogeneous.
B. homogeneous.
C. harmonious.
AACSB: Reflective
Difficulty: Medium
67. Standard costs are based on estimates of cost of materials, labour and overheads. Standard costs are also known as
A. actual costs.
B. forecasted costs.
C. expected costs.
D. budgeted costs.
AACSB: Reflective
Difficulty: Easy
68. At Hilltop Dairy Producers Pty Ltd, an employee ignored the standard sterilising procedures before beginning the new
batch of low fat milk causing the batch to curdle. This would be regarded as
A. spoilage.
B. normal spoilage.
C. expected spoilage.
D. abnormal spoilage.
AACSB: Reflective
Difficulty: Easy
69. When accounting for the costs of abnormal spoilage at the end of the period, the costs of abnormal spoilage are
A. included as part of the cost of unit completed.
B. expensed as loss on abnormal spoilage in the current period.
C. included in the cost of finished goods.
D. expensed as closing work in process in the current period.
AACSB: Reflective
Difficulty: Medium
70. Which of the following product features would best suit a hybrid costing system?
A. Identical and unique features
B. Identical and very similar features
C. Some unique and common features
D. Some unique and individual features
AACSB: Reflective
Difficulty: Medium
71. Briefly explain the four steps in process costing with work in process inventories.
Step one Analyse the physical flow of units.
Step two Calculate the equivalent units (for direct material and conversion).
Step three Calculate the unit costs (that is, the cost per equivalent unit for direct material and conversion).
Step four Analyse the total costs (to determine the cost to be removed from work in process and transferred either to the next
production department or to finished goods).
AACSB: Communication
Difficulty: Easy
72. Describe the weighted average method used in process costing and explain how the unit costs are calculated.
The weighted average method is a process costing method that averages the cost of opening WIP inventory and current
production costs to determine the cost of completed production and closing WIP.
The cost per equivalent unit for both direct material and conversion is calculated by dividing the total direct material cost
by the total equivalent units
Difficulty: Medium
process costing
73.
Explain the term 'normal spoilage' and why management is unable to eliminate this production cost.
In almost all businesses, mistakes are made, defective outputs are produced and resources are wasted. The cost of these
defective products and wasted resources that cannot be recovered by rework or recycling is called spoilage.
Normal spoilage is the spoilage that is considered to be inherent in the production process and that occurs even under
efficient operating conditions. This spoilage is a necessary part of the production process. It is unavoidable and therefore
its cost is treated as part of the cost of the good units completed and transferred out.
Difficulty: Medium
74. For a manufacturer that produces large batches of automotive parts, which type of costing system would you
recommend? Justify your answer.
Operation costing
Some businesses produce a range of related products where the conversion activities may be very similar or identical across the firm's
product lines, even though the direct materials may differ significantly. This type of production is described as batch manufacturing
processes, as individual product lines are produced in large batches, each requiring a specific combination of direct materials and a
specific sequence of production processes.
The repetitive processes used by these large-scale batch manufacturers are well suited to process costing, even where product lines
require different sequences of processes. However, process costing is not appropriate, as each batch uses different materials, which
have different costs. Businesses that use batch manufacturing processes could use a job costing system and carefully assign costs to
each production batch, but, as the production processes are repetitive, this level of detail is not required. The conversion costs of each
process—that is, the direct labour and manufacturing overhead costs of each process—will be the same for each unit processed, but
the combination of processes required to produce each product may differ. The materials costs of each product may also differ.
A better solution is to use a hybrid costing system known as operation costing, which:
assigns direct material costs to individual batches—a job costing approach
accumulates conversion costs by department (or operation or process), which are allocated to all units passing through the department
—a process costing approach.
AACSB: Analytic
Difficulty: Hard
75. Discuss why management would elect to use predetermined overhead and conversion costs.
Predetermined rates smooth out the effects of fluctuations in actual costs and cost driver volumes from one month to the
next. Process costing and operation costing environments involve stable, repetitive production processes. Labour and
overhead costs and cost driver volumes may not fluctuate much over time and, under these circumstances, actual costs
may be used instead of predetermined costs. However, where costs and cost driver volumes are unstable, predetermined
overhead (and sometimes conversion) costs are preferred.
Difficulty: Medium
76. In process costing, equivalent units are the same under both the weighted average method and the FIFO method.
FALSE
AACSB: Reflective
Difficulty: Easy
77. Operation costing is just another name for process costing as both systems trace all production costs to processes or
departments.
FALSE
AACSB: Reflective
Difficulty: Easy
78. Abnormal spoilage is identified to assist managers in tracking the costs of wasted resources.
TRUE
AACSB: Reflective
Difficulty: Easy
79. A standard cost is a budgeted cost per unit.

TRUE
AACSB: Reflective
Difficulty: Easy
80. To calculate equivalent units, multiply the partially completed physical units in the process by the percentage of
completion.
TRUE
AACSB: Reflective
Difficulty: Easy
81. Process costing can be used in service businesses if the service is routine and repetitive.
TRUE
AACSB: Reflective
Difficulty: Easy
82. Where a process has two departments [A and B], the first new debit entry in the work in process inventory account for
Department B in any period will be transferred-in costs.
TRUE
AACSB: Reflective
Difficulty: Easy
83. Conversion costs are generally added at specific points throughout a process.
FALSE
AACSB: Reflective
Difficulty: Easy
84. Normal spoilage can always be avoided by a more efficient approach to production.
FALSE
AACSB: Reflective
Difficulty: Easy
85. The departmental production report replaces the job cost sheet used by production departments.
TRUE
AACSB: Reflective
Difficulty: Easy
process costing
86. The departmental production report summarises the flow of production quantities through the department plus the
amount of production costs transferred in from the department's work in process inventory account during the period.
FALSE
AACSB: Reflective
Difficulty: Medium
process costing
87. Process costing and operation costing are consistent with the concepts of responsibility accounting.
TRUE
AACSB: Reflective
Difficulty: Easy
Chapter 05 Testbank Summary
Category # of
Que
stion
s
AACSB: Analytic 1
AACSB: Analytical 23
AACSB: Communication 5
AACSB: Reflective 59
Difficulty: Easy 44
Difficulty: Hard 4
Difficulty: Medium 39
Learning Objective: 5.01 Describe the principles of process costing where work in process (WIP) inventories are involved 15
Learning Objective: 5.02 Assign total production costs for a department to completed units and WIP inventory using the weig 22
hted average method of process costing
Learning Objective: 5.03 Assign total production costs for a department to completed units and WIP inventory using the FIFO 11
method of process costing
Learning Objective: 5.04 Account for the costs of normal and abnormal spoilage under the weighted average method of proc 15
ess costing
Learning Objective: 5.05 Assign total production costs for a department to completed units and WIP inventory under a comm 10
on hybrid costing system called ‘operation costing'
Learning Objective: 5.06 Recognise and explain important issues that influence the design of process costing and operation 7
costing, including the use of predetermined overhead and conversion costs and standard costs; determining the degree of co
mpletion; and the relevance of process costing for responsibility accounting and for service firms
Learning Objective: 5.07 Calculate product costs and prepare journal entries to record the flow of costs in a process costing s 8
ystem with sequential production departments

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Chapter 05 Testbank

Wages paid to a supervisor in a factory are a part of:

Prime cost Conversion cost

2. Which of the following are components of conversion costs?

12. The major difference between weighted average and FIFO is

Unit Cost Cost of units transferred out

Unit cost Equivalent units Cost in beginning work in process

Job order costing Process costing

24. Which of the following statements about operation costing is true?

31. In which of the following ways is normal spoilage accounted for?

32. In which of the following ways is abnormal spoilage accounted for?

34. Abnormal spoilage costs assist management to

35. Operational costing is appropriate where

38. Inventory valuation in operation costing requires

39. Which of the following statement/s is/are true?

Process costing systems are suitable for firms that produce

66. Process costing is only suitable for products that are

79. A standard cost is a budgeted cost per unit.

Wages paid to a supervisor in a factory are a part of:

Prime cost Conversion cost

2. Which of the following are components of conversion costs?

12. The major difference between weighted average and FIFO is

Unit Cost Cost of units transferred out

Unit cost Equivalent units Cost in beginning work in process

Job order costing Process costing

24. Which of the following statements about operation costing is true?

31. In which of the following ways is normal spoilage accounted for?

34. Abnormal spoilage costs assist management to

39. Which of the following statement/s is/are true?

Process costing systems are suitable for firms that produce

66. Process costing is only suitable for products that are

Step one Analyse the physical flow of units.

79. A standard cost is a budgeted cost per unit.

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