TRUE/FALSE

1. Process costing is most appropriate when manufacturing large batches of homogenous products.
2. Conversion costs include all manufacturing costs other than direct materials
3. Equivalent units are computed to assign costs to partially completed units
4. The weighted average method combines beginning inventory and current production to compute cost per
unit of production.
5. The FIFO method combines beginning inventory and current production to compute cost per unit of
production.
6. The weighted average method separates beginning inventory and current production to compute cost per
unit of production.
7. The FIFO method separates beginning inventory and current production to compute cost per unit of
production.
8. The numerator in the formula for equivalent units includes all beginning inventory costs when using the
weighted average costing assumption.
9. The numerator in the formula for equivalent units includes all beginning inventory costs when using the
FIFO costing assumption.
10. The weighted average costing method assumes that units in beginning inventory are the first units
transferred.
11. The FIFO costing method assumes that units in beginning inventory are the first units transferred.
12. Standard costing is compatible with both FIFO and weighted average methods of costing
13. A hybrid costing system would be appropriate for a company that manufactures cake flour.
14. A hybrid costing system would be appropriate for a company that manufactures several varieties of jam.
15. Using FIFO costing, equivalent units of production (EUP) can be determined by subtracting EUPs in
Beginning work in process from weighted average EUP.
16. Weighted average equivalent units of production (EUP) can be determined by adding EUPs in ending
work in process to units transferred out.
17. Continuous production losses are assumed to occur uniformly throughout the process.
18. Discrete production losses are assumed to occur throughout the process.
19. Discrete production losses are assumed to occur at the end of a process.
20. Continuous production losses are assumed to occur at the end of a process
21. Abnormal continuous losses are absorbed by all units in ending inventory and transferred out on a EUP
basis.
22. Normal continuous losses are absorbed by all units in ending inventory and transferred out on a EUP
basis.
23. Costs of normal shrinkage and normal continuous losses in a process costing environment are handled by
the method of neglect.
24. Costs of normal shrinkage and normal continuous losses in a process costing environment are handled by
the method of accretion

25. A continuous loss is assumed to occur at a specific point in the production process.

MULTIPLE CHOICE
Use the following information for questions 8182.
Becker Company developed the following data for the current year:
Beginning work in process inventory
Direct materials used
Actual overhead
Overhead applied
Cost of goods manufactured
Total manufacturing costs
.

$ 60,000
36,000
72,000
54,000
66,000
180,000

26. Becker Company's direct labor cost for the year is

a. $18,000.
b. $90,000.
c. $54,000.
d. $72,000.
27. Becker Company's ending work in process inventory is
a. $174,000.
b. $120,000.
c. $114,000.
d. $54,000.
Reich Manufacturing Company developed the following data:
Beginning work in process inventory
Direct materials used
Actual overhead
Overhead applied
Cost of goods manufactured
Ending work in process

$ 90,000
70,000
110,000
80,000
120,000
200,000

28. Reich Manufacturing Company's total manufacturing costs for the period are
a. $240,000.
b. $230,000.
c. $180,000.
d. cannot be determined from the data provided.
29. Which of the following is not used in assigning manufacturing costs to work in
process inventory?
a. Actual manufacturing overhead
b. Time tickets
c. Materials requisitions
d. Predetermined overhead rate
30. On the cost of goods manufactured schedule, the cost of goods manufactured agrees
with the
a. balance of Finished Goods Inventory at the end of the period.
b. total debits to Work in Process Inventory during the period.
c. amount transferred from Work in Process Inventory to Finished Goods during the
period.
d. debits to Cost of Goods Sold during the period.

Reference: 4-5
Activities in the Challenger Companys Assembly Department for the month of
follow:
Number
Percent Complete
Units
Materials Conversion
Work in process inventory, March 1
5,000
65%
30%
Started into production during March
65,000
Work in process inventory, March 3
3,000
35%
25%

March

31. The equivalent units of production for materials for March, using
the weighted-average method, would be:
a. 65,000.
b. 67,000.
c. 68,050.
d. 70,000.
32. (Appendix) The equivalent units of production for conversion for
March using the FIFO method, would be:
a. 66,250.
b. 67,000.
c. 64,250.
d. 67,750.
Reference: 4-6
The following data relate to the Blending Department of Tru-Color Paint Company for a
recent month:

Beginning work in process inventory .....

Units started into production ...........
Units completed and transferred out .....
Ending work in process inventory ........

Number
of Units
9,000
45,000
46,000
8,000

Percent Complete
Conversion Costs
60%
25%

All materials are added prior to the beginning of work in the Blending Department.
33. (Appendix) Assuming that Tru-Color Paint Company uses the FIFO
method, the equivalent units of production for materials would be:
a. 42,600.
b. 45,000.
c. 53,000.
d. 46,000.
34. (Appendix) Assuming Tru-Color Paint Company uses the FIFO method, the equivalent
units of production for conversion costs would be:
a. 42,600.
b. 44,400.
c. 46,000.
d. 54,000.
35. Assuming that Tru-Color Paint Company uses the weighted-average method, the
equivalent units of production for materials would be:
a. 48,000.
b. 46,000.
c. 54,000.
d. 45,000.
3
36. Assuming that Tru-Color Paint Company uses the weighted-average
method, the equivalent units of production for conversion costs would
be:
a. 44,400.
b. 42,600.
c. 46,000.
d. 48,000.