Process costing - FIFO & Weighted
TRUE OR FALSE: In a process costing system, the journal entry to record the transfer of goods from Department #2 to Finished Goods Inventory is a debit Finished Goods Inventory, credit Work in Process Inventory Department #2.
TRUE. Debit FG; Credit WIP - Department 2
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)Added to overhead.
C)Treated as a loss in the period incurred.
The point at which individual products are first identifiable in a joint process is referred to as the _____________________________.
splitoff point.
A standard cost:
A. is the "true" cost of a unit of production.
B. is a budget for the production of one unit of a product or service.
C. can be useful in calculating equivalent units.
D. is normally the average cost within an industry.
B. is a budget for the production of one unit of a product or service.
The difference between EUP calculated using FIFO and EUP calculated using weighted average is the equivalent units
a.started and completed during the period.
b.residing in beginning Work in Process Inventory.
c.residing in ending Work in Process Inventory.
d.uncompleted in Work in Process Inventory.
b.residing in beginning Work in Process Inventory.
Which of the following statements are false about Spoilage?
A. A company whose goal is zero defects would usually treat all spoilage as abnormal.
B. Spoilage can be considered either normal or abnormal.
C. Normal spoilage is spoilage that is not considered to be inherent in a production process.
D. When determining the normal spoilage rate, it is calculated based on the number of good units competed, rather than using the number of units started.
C. Normal spoilage is spoilage that is not considered to be inherent in a production process.
Joint costs are useful for
a. setting the selling price of a product.
b. determining whether to continue producing an item.
c. evaluating management by means of a responsibility reporting system.
d. determining inventory cost for accounting purposes.
D. determining inventory cost for accounting purposes.
A static budget:
A. is preferred over a flexible budget in the evaluation of performance.
B. is based totally on prior year's costs.
C. is based on a range of activity.
D. is based on one anticipated activity level.
D. is based on one anticipated activity level.
ABC Corporation had 8,500 units of work in process on April 1. During April, 18,100 units were completed and as of April 30, 5,100 units remained in production. How many units were started during April?
Answer: 14,700
The cost per good unit in the weighted-average method is equal to the:
A. total cost of direct materials and conversion costs per equivalent unit, plus a share of normal spoilage
B. sum of the costs per equivalent unit of direct materials, and conversion costs
C. total costs divided by total equivalent units
D. None of these answers is correct.
A. total cost of direct materials and conversion costs per equivalent unit, plus a share of normal spoilage
By-products are
a. allocated a portion of joint production cost.
b. not sufficient alone, in terms of sales value, for management to justify undertaking the joint process.
c. also known as scrap.
d. the primary reason management undertook the production process.
B. not sufficient alone, in terms of sales value, for management to justify undertaking the joint process.
The manufacturing overhead applied to Work-in-Process Inventory by a company that uses standard costing would be computed as:
A. actual hours x a predetermined (standard) overhead rate.
B. standard hours x a predetermined (standard) overhead rate.
C. actual hours x an actual overhead rate.
D. standard hours x an actual overhead rate.
B. standard hours x a predetermined (standard) overhead rate.
MJE Corporation, which adds materials at the beginning of production, uses a weighted-average process-costing system. Consider the data that follow.
Beginning work in process 30,000 units
Started in June 50,000 units
Production completed 55,000 units
Ending work in process 25,000 units
Cost Data: BWIP - P80,500; Cost added this month: P199,500
The company's cost per equivalent unit for materials is _______.
Total costs (80,500 + 199,500)/80,000 = P3.50
JBL Products started 35,000 units to one department. At the end of the month, 25,000 units were transferred to the next department, 5,000 units remained in work in process, 40% complete as to conversion costs and the remaining units were lost units. 8% of completed units were expected during the month and the inspection point is at the end of process. How many units were charged to abnormal spoilage?
Answer: 3,000 units (Total spoiled units = 5,000 = 2,000 considered normal; 3,000 abnormal)
MJE Corporation manufactures two products out of a joint process—A and B. The joint (common) costs incurred are P500,000 for a standard production run that generates 120,000 gallons of A and 180,000 gallons of B. A sells for P2.00 per gallon, while B sells for P3.25 per gallon. If there are no additional processing costs incurred after the split-off point, the amount of joint cost of each production run allocated to B by the physical unit method is: _______.
P300,000
The Quezon Company uses standard costing. The following data are available for October:
Actual quantity of direct materials used 23,500 pounds
Standard price of direct materials P2 per pound
Material quantity variance P1,000 Unfavorable
The standard quantity(lbs) of materials allowed for October production is:
Answer:
Flexible = 23,500 X 2 = 47,000 - 1,000 Unfavorable = 46,000/2 = 23,000 pounds
Jerome uses a weighted-average process-costing system. All materials are added at the beginning of the process; conversion costs are incurred evenly throughout production. The company finished 80,000 units during the period and had 20,000 units in progress at year-end, the latter at the 40% stage of completion. Total material costs amounted to P150,000; conversion costs were P220,000. The cost of goods completed is _________.
Answer: 320,000
Primo Products started 25,000 units to one department. Materials are added at the beg of the period. At the end of the month, 22,000 units were transferred to the next department, 1,500 units remained in work in process, 40% complete as to conversion costs and the remaining units were lost units. 5% of completed units were expected during the month and the inspection point is at the end of process. How many equivalent units are for materials?
Answer: 25,000 units
Sour Company manufactures products A and B from a joint process. The market value at split-off was P180,000 for 6,000 units of Product A and P300,000 for 2,000 units of Product B. Assuming that the portion of the total joint cost properly allocated to Product B using the market value method was P62,500, the total joint cost was _____.
100,000
The standard hourly rate was P4.10. Standard hours for the level of production are 4,000. The actual rate was P4.27. The labor rate variance was P654.50, unfavorable. What were the actual labor hours?
3,850 hours