11/9/21, 11:18 AM AE 212 MIDTERM DEPARTMENTAL EXAM 11092021

AE 212 MIDTERM DEPARTMENTAL EXAM

11092021
2213845@slu.edu.ph Switch account

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MULTIPLE CHOICE - THEORIES

Choose the best answer.

The FIFO method provides a major advantage over the weighted-average

method in that:

the calculation of equivalent units is less complex under the FIFO method.

the FIFO method treats units in the beginning inventory as if they were started and
completed during the current period.

the FIFO method provides measurements of work done during the current period.

the weighted-average method ignores units in the beginning and ending work in
process inventories.

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11/9/21, 11:18 AM AE 212 MIDTERM DEPARTMENTAL EXAM 11092021

The weighted-average method of process costing:

can be used under any cost flow assumption.

does not require the use of predetermined overhead rates.

keeps costs in the beginning inventory separate from current period costs.

does not consider the degree of completion of units in the beginning work in process
inventory when computing equivalent units of production.

Which of the following statements about process costing system is incorrect?

In a process costing system, each processing department has a work in process

account.

In a process costing system, equivalent units are separately computed for materials
and for conversion costs.

In a process costing system, overhead can be under- or overapplied just as in job-

order costing.

In a process costing system, materials costs are traced to units of products

When the weighted-average method of process costing is used, a department's

equivalent units are computed by:

subtracting the equivalent units in beginning inventory from the equivalent units in
ending inventory.

subtracting the equivalent units in beginning inventory from the equivalent units for
work performed during the period.

adding the units transferred out to the equivalent units in ending inventory.

subtracting the equivalent units in beginning inventory from the sum of the units
transferred out and the equivalent units in ending inventory.

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11/9/21, 11:18 AM AE 212 MIDTERM DEPARTMENTAL EXAM 11092021

Which of the following is a characteristic of the process costing method?

Work in process inventory is restated in terms of completed units

Costs are accumulated by order

It is used by companies manufacturing custom machineries

Standard cost is not applicable

Which of the following situations involving loss units would most likely not result
to a zero equivalent production?

Loss at the start of the process

Loss before the start of the process

Loss during the process

Loss at the end of the process

Abnormal spoilage is properly classified as

deferred charge

extraordinary item

period cost

product cost

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11/9/21, 11:18 AM AE 212 MIDTERM DEPARTMENTAL EXAM 11092021

Revenue from sales of the by-product can be listed in the income statement as:

additional cost to the product

a deduction from the total manufacturing cost of the by-product

a deduction from the cost of goods sold of the by-product

additional sales revenue

The following are approaches in allocating joint costs incurred up to split off
point, except:

Sales value method

Physical unit method

Fifo method

Weighted average method

A company has several service departments that provide differing amounts of

service to each other and to the company's operating departments. Which of
the following statements is true?

The direct method and the step method will result in the same amount of cost being
allocated to each operating department.

The direct method will result in the same amount of cost being allocated to each
operating department regardless of which service department is allocated first.

The step method will result in the same amount of cost being allocated to each
operating department regardless of which service department is allocated first.

All of the above are true.

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11/9/21, 11:18 AM AE 212 MIDTERM DEPARTMENTAL EXAM 11092021

In a process costing system, how is the unit cost affected in a production cost
report when materials are added in a department subsequent to the first
department and the added materials result in additional units?

the first departments unit cost is increased, which necessitates an adjustment of the
transferred-in unit cost

the first department’s unit cost is decreased, which necessitates an adjustment of the
transferred-in unit cost

the first department’s unit cost is increased, but it does not necessitate an adjustment
of the transferred-in unit cost

the first department’s unit cost is decreased, but it does not necessitate an
adjustment of the transferred-in unit cost

Which of the following statements is true regarding by products?

Process costing is the only method that should result in by-products.

Job order costing systems will never have by-products.

Job order costing systems may have instances where by-products result from the
production process.

Process costing will never have by-products from the production process.

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11/9/21, 11:18 AM AE 212 MIDTERM DEPARTMENTAL EXAM 11092021

S1 - Net income remains the same when revenue is treated as other income,
additional revenue, deduction from cost of goods sold, or as deduction from
production cost of main product. S2 - In the reversal cost method, the
manufacturing cost of the main product is reduced by the actual revenue from
the by products.

Only S1 is true

Only S2 is true

Both S1 & S2 are true

Both S1 & S2 are false

Over-applied FOH will result if:

FOH costs incurred is less than FOH costs charged to production

FOH costs incurred is greater than estimated FOH costs

FOH costs incurred is greater than FOH costs charged to production

The plant is operating at less than expected capacity.

S1 - After service department costs are allocated to other departments, costs

are re-circulated back to that service department, under the step method. S2 -
When using the direct method of allocating service department costs, it is
necessary that the cost of the service department which serves the greatest
number of departments is allocated first.

Only S1 is true

Only S2 is true

Both S1 & S2 are true

Both S1 & S2 are false

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11/9/21, 11:18 AM AE 212 MIDTERM DEPARTMENTAL EXAM 11092021

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