Quiz: Process Costing

For questions 1 to 2:

The following data for the month of September were taken from the records of Department A of NLP
which uses average costing:

Opening inventory of work in process units (all materials and 50% converted) 500
Cost:
Materials P 2,400
Labor 1,500
FOH 760
Put into production:
Units 5,500
Cost:
Materials P 25,100
Labor 19,380
FOH 14,900
Completed and transferred: 4,800 units
Ending inventory of work in process:
Units (all materials and 60% converted) 700

1. The equivalent production for labor is:

a. 5,000
b. 4,970
c. 5,220
d. Answer is not given.

2. The unit cost of material for the month is:

a. P 5.00
b. P 4.00
c. P 5.50
d. Answer is not given.

For questions 3 to 4:

Cost and statistics for Dept. B of a company manufacturing a single product in three departments follow:

Work in process, Oct. 1

Cost in Dept. A P 11,380
Cost in Dept. B
Materials None
Labor P 500
FOH 50
Cost added in Dept. B in October:
Labor P 13,000
FOH 450
Units in process, Oct. 1 (60% converted) 500
Units received from Dept. A at P 2.60/ unit 6,700

Unit completed and transferred 6,800

Units in process, Oct. 31 (50% converted) 400

The company uses average costing method.

3. The equivalent production for labor was:

a. 7,200
b. 6,800
c. 7,000
d. Answer is not given.

4. The conversion cost per unit in Dept. B was:

a. P 2.00
b. P 5.00
c. P 6.00
d. Answer is not given.

Materials are added at the start of the process in Cedar Company’s blending department, the first stage
of the production cycle. The following information is available for the month of July:

Work in process, July 1 (60% converted), 60,000 units

Started in July 150,000
Transferred to the next department 110,000
Lost at the end of the process 30,000
Work in process, July 31 (50% converted), 70,000

Under Cedar Company’s cost accounting system, the costs incurred on the lost units are absorbed by the
completed units only.

5. Using the weighted average method, what are the equivalent units for the materials?
a. 120,000
b. 180,000
c. 145,000
d. 210,000

SSS Corporation production cycle starts in the Mixing Department. The following information is available
for the month of April:

Work in process, April (50% converted) 40,000 units

Started in April 240,000
Work in process, April 30 (60% converted), 25,000

Materials are added at the beginning of the process in the Mixing Department.
 6. Using the weighted average method, what are the equivalent units of production for the month
of April?

Materials Conversion
a. 240,000 250,000
b. 255,000 255,000
c. 270,000 280,000
d. 280,000 270,000

Roy Company manufactures product X in a two-stage production cycle in Dept. A, and B. Materials are
added at the beginning of the process in Dept. B. Roy uses the weighted average method. Conversion
costs for Dept. B were 50% complete as to the 6,000 units in the beginning WIP and 75% compete as to
the 8,000 units in the ending work in process. 12,000 units were completed and transferred out of Dept.
B during February. An analysis of the costs relating to work in process and production activity in Dept. B
for February as follows:

Trans-in Materials Conversion

WP, 2-1 P 12,000 P 2,500 P 1,000
Feb – cost added 29,000 5,500 5,000

7. The total cost per equivalent unit transferred out for February of Product X, rounded to the
nearest centavo.
a. P 2.75
b. P 2.82
c. P 2.78
d. P 2.85

The Wiring Dept. is the second stage of Fern Company’s production cycle. On May 1, the beginning work
in process contained 25,000 units which were 60% complete as to conversion costs. During May,
100,000 units were transferred in from the first stage of Fern’s production cycle. On May 31, the ending
work in process contained 20,000 units which were 80% complete as to conversion costs. Material costs
are added at the end of the process.

8. Using the weighted average method, equivalent units were:

Trans-in Materials Conversion Cost

a. 100,000 125,000 100,000
b. 125,000 105,000 105,000
c. 125,000 105,000 121,000
d. 125,000 125,000 121,000

For questions 9 to 10:

Information concerning Dept. B of the Abbey Co. is as follows:

Units Costs Trans-in Materials CC
Beg. WP 5,000 P 6,300 P 2,900 P- P 3,400
Units transferred in 35,000 58,000 17,500 25,500 15,000
 Units completed 37,000
Ending work in process 3,000

Conversion costs were 20% complete as to the beginning work in process and 40% complete as to the
ending work in process. All materials are added at the end of the process. Abbey uses the average
method.

9. The unit cost for conversion costs and for transferred-in cost rounded to the nearest centavo
are-
a. P .44 and P .48
b. P .48 and P .51
c. P .46 and P .51
d. P .50 and P .53

10. The portion of the total cost of ending work in process attributable to transferred-in cost is:
a. P 0
b. P 1,500
c. P 1,530
d. P 1,650

Ten Ten Company produce a small standard component in a process operation. There is a quality control
check at the end of the processing. Items which fail this check are sold off as scrap for P 1.80 per unit.
The expected rate of rejection is 10%. Normal loss is not given a cost except that whatever scrap value it
has is credited to the process account. The cost/value of the abnormal loss or gain, net of scrap, is
written off to the profit and loss account.

Data for July are as follows:

Materials input 1,000 units P 5,100
Conversion cost P 3,000
Output to finished goods 800 units

11. What was the full cost of finished output that passed the quality control check?
a. P 7,040
b. P 7,920
c. P 7,200
d. P 8,100

For questions 12 to 14:

Opening inventory 4,000 units

% Of completion Value
Materials 100% P 1,992
Labor 50% 1,074
Overhead 50% 846

Put in process 20,000 units

 Materials value P 12,000
Labor 9,984
Overhead is 100% of labor cost
Units completed and transferred, 21,000 units
Units in process end
Materials 100%
Labor and overhead 60%

12. The equivalent production for material under average method and FIFO method respectively:
a. 24,000, 20,000
b. 20,000, 21,000
c. 20,000, 24,000
d. 21,000, 20,000

13. The equivalent production for labor and overhead under average method and FIFO method
respectively is:
a. 21,000, 20,000
b. 24,000, 22,000
c. 22,800, 20,800
d. 21,000, 21,000

14. The total cost of the work in process at the end under average method and FIFO method
respectively is:
a. 3,577; 3,500
b. 3,477; 3,528
c. 3,528; 3,477
d. 3,500; 3,577

Information for the month of May concerning Department A, the first stage of Pinay Corporation’s
production cycle is as follows:
Materials Conversion Cost
Work in process beginning P 4,000 P 3,000
Current costs 20,000 16,000
Total costs P 24,000 P 19,000

Equivalent units based on weighted

Average method 100,000 95,000

Average unit costs P .24 P .20

Goods completed 90,000 units
Work in process end 10,000 units

Material costs are added at the beginning of the process. The ending work in process is 50% complete as
to conversion costs.

15. How would total costs accounted for be distributed, using the weighted average method?
Goods completed Work in process end
 a. P 39,600 P 3,400
b. P 39,600 P 4,400
c. P 43,000 P0
d. P 44,000 P 3,400

Samahan, Inc., manufactures a highly sensitive smoke alarm and uses FIFO method for process costing
and finished goods costing. In costing finished goods, the unit cost for units completed from the work in
process at the beginning of the period is kept separate from the unit cost of those started and
completed during the period.

The total manufacturing costs for the month of June is P 264,000 and 2,750 units are completed during
the month.

The inventories at the beginning of June are:

Smoke alarms in process (80% complete) 1,250 units P 128,000
Smoke alarm on hand (complete) 600 units 76,800

The inventories at the end of June are:

Smoke alarms in process (50% complete) 500 units
Smoke alarms on hand (complete) 700 units

16. How would the total cost accounted for be distributed?

Work in process end Finished goods
a. P 33,000 P 92,400
b. P 33,000 P 79,200
c. P 32,200 P 92,400
d. P 66,000 P 52,800

For the month of May, the Cutting Department of Damit Co., had 80% complete as to the beginning
work in process and 50% complete as to the ending work in process. Related data follow:
Units Conversion cost
Work in process, May 1 50,000 P 88,000
Unit started and costs incurred in May 270,000 572,000
Units completed and transferred to
The next department in May 200,000

17. If the company were using FIFO method, the conversion costs of the work in process in the
Cutting Department at the end of May would amount to
a. P 156,000
b. P 254,000
c. P 132,000
d. P 176,000

Matalino, Inc. instituted a new process in October 2021. During October, 10,000 units were started in
Department A. Of the units started, 1,000 were lost in the process, 7,000 were transferred to
Department B and 2,000 remained work in process at October 31, 2021. The work in process at October
31, 2021 was 100% complete as to material costs and 50% complete as to conversion costs. Material
costs of P 27,000 and conversion costs of P 40,000 were charged to Department A in October.

18. What were the total costs transferred to Department B?

a. P 49,600
b. P 53,600
c. P 56,000
d. P 57,120

The Forming Department is the first of a two stage production process. Spoilage is identified when the
units have completed the forming process. Cost of spoiled units are assigned to units completed and
transferred to the second department in the period spoilage is identified. The following information
concerns Forming’s conversion costs in May 2021.

Units Conversion cost

Beginning work in process (50% complete) 2,000 P 10,000
Units started in May 8,000 75,000
Spoilage normal 500
Units completed and transferred 7,000
Ending work in process (80% complete) 2,500

19. Using the weighted average method, what was Forming’s conversion costs transferred to the
second production department?
a. P 59,850
b. P 64,125
c. P 67,500
d. P 71,250

Datu Chemical Industries, Inc. produces a product through a continuous process in different
departments. Each department has an independent cost accountant who prepares cost of production
report. You have been assigned as cost accountant for Department A.

Production data of Department for the month of July 2021 were as follows:

Work in process, July 1 (70% completed) 14,000 units

Started in process 70,000 units
Work in process, July 31 (60% completed) 12,000 units
Lost units (normal) at the end of process 2,000 units

In this department, costs are applied as follows:

Materials – added the start.
Conversion costs – evenly applied.
Department costs incurred in July were:
Materials P 56,500
Labor 17,350
Overhead 13,880
Work in process, July 1 8,000
20. What is the cost of?
Units transferred Work in process July 31
a. P 82,390 P 9,600
b. P 81,890 P 9,600
c. P 72,000 P 12,840
d. P 82,390 P 12,480

21. When should process costing technique be used in assigning cost to products?
a. If the product is manufactured on the basis of each order received.
b. When production is only partially completed during the accounting period.
c. If the product is composed of mas-produced homogenous units.
d. Whenever standard costing technique should not be used.

22. Which of the following is a characteristic of a process costing system?

a. Work in process inventory is restated in terms of completed units.
b. Costs are accumulated by order.
c. It is used by a company manufacturing custom machinery.
d. Standard costs are not applicable.

23. Which one is most likely to use process costing?

a. Road builder
b. Electrical contractor
c. Newspaper publisher
d. Automobile repair shop

24. The percentage of completion of the beginning work in process inventory should be considered
in the computation of the equivalent units of production for which of the following methods of
process costing?
FIFO Weighted Average
a. Yes No
b. Yes Yes
c. No Yes
d. No No

25. 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?
a. The first department unit cost is increased, which necessitates an adjustment of the
transferred-in unit cost.
b. The first department’s unit cost is decreased, which necessitates an adjustment of the
transferred-in unit cost.
c. The first department’s unit cost is increased, but it does not necessitate an adjustment
of the transferred-in unit cost.
d. The first department’s unit cost is decreased, but it does not necessitate an adjustment
of the transferred-in unit cost.