Multiple Choice: Chapter Twenty
1. Which cost accumulation procedure is best suited to a continuous mass production process of similar units?
a. Job order
b. Process
c. Standard
d. Actual
2. Which of the following statements about process cost accounting systems is false?
a. Beginning units of work in process plus the units put into production should equal ending work in process units plus units completed.
b. The cost flows in journal entries for process cost accounting systems and job order cost accounting systems are similar.
c. Process cost accounting is well suited for those production processes where similar units are produced in a continuous flow.
d. The equivalent units of production for materials and conversion costs are the same.
3. An equivalent unit of material is equal to:
a. The amount of material necessary to complete one unit of production.
b. The amount of material necessary to start a unit of production into work in process.
c. Half of the material necessary to complete one unit of finished goods.
d. An equivalent unit of conversion cost.
4. Beginning work in process was 1,200 units, 2,800 additional units were put into production, and ending work in process was 500 units. How many units were completed?
a. 500
b. 3,000
c. 3,300
d. 3,500
5. Wright Company had, at the beginning of 20X1, a work in process of 10,000 units. During 20X1, 57,500 additional units were started into production. Ending work in process on December 31, 20X1, was 7,500 units. The beginning work in process was 100% complete as to direct materials and 75% complete as to conversion costs. The ending work in process was 100% complete as to direct materials and 50% complete as to conversion costs. Total direct material put into process cost $57,500. Total conversion cost put into process cost $84,375. Beginning work in process cost $21,250; $13,250 for materials and $8,000 for conversion. All materials are added at the start of the production process, and conversion costs are incurred uniformly throughout manufacturing. Wright Company uses a weighted-average process cost system. The cost per equivalent unit (rounded to the nearest cent) for conversion cost for 20X1 was:
a. $1.00
b. $1.23
c. $1.33
d. $1.45
6. Wright Company had, at the beginning of 20X1, a work in process of 10,000 units. During 20X1, 57,500 additional units were started into production. Ending work in process on December 31, 20X1, was 7,500 units. The beginning work in process was 100% complete as to direct materials and 75% complete as to conversion costs. The ending work in process was 100% complete as to direct materials and 50% complete as to conversion costs. Total direct material put into process cost $57,500. Total conversion cost put into process cost $84,375. Beginning work in process cost $21,250; $13,250 for materials and $8,000 for conversion. All materials are added at the start of the production process, and conversion costs are incurred uniformly throughout manufacturing. Wright Company uses a weighted-average process cost system. The dollar value assigned to Wright's ending work in process inventory at the end of 20X1 is:
a. $13,294
b. $18,750
c. $31,875
d. $56,875
7. Wright Company had, at the beginning of 20X1, a work in process of 10,000 units. During 20X1, 57,500 additional units were started into production. Ending work in process on December 31, 20X1, was 7,500 units. The beginning work in process was 100% complete as to direct materials and 75% complete as to conversion costs. The ending work in process was 100% complete as to direct materials and 50% complete as to conversion costs. Total direct material put into process cost $57,500. Total conversion cost put into process cost $84,375. Beginning work in process cost $21,250, of which $10,000 was allocated to material and $11,250 to conversion. All materials are added at the start of the production process, and conversion costs are incurred uniformly throughout manufacturing. Wright Company uses a weighted-average process cost system. How much is the cost per equivalent unit for conversion costs during 20X1?
a. $1.38
b. $1.47
c. $1.50
d. $2.12
8. Mills Manufacturing computed the physical flow of completed units for the month of January 1, 20X1, as follows:
Units completed:
| From work in process on January 1, 20X1 | 15,000 | ||
| From January production | 45,000 | ||
| 60,000 |
In addition to the above, units in ending work in process at January 31, 20X1, were 12,000. Materials are added at the beginning of the process. The work in process at January 1, 20X1, was 80% complete as to conversion costs and the work in process at January 31, 20X1, was 60% complete as to conversion costs. What are the equivalent units of materials and conversion for the month of January 20X1, assuming a weighted-average application of the process costing method?
a. 57,000 55,200
b. 57,000 57,000
c. 72,000 67,200
d. 72,000 72,000
9. The appropriate journal entry to transfer the cost of completed units from the Work in Process account would involve a credit to Work in Process and a debit to which of the following accounts?
a. Income Summary
b. Raw Materials Inventory
c. Finished Goods
d. Manufacturing Summary
10. Which of the following comments regarding activity-based costing is not a correct observation?
a. The per unit cost of an end product under ABC will necessarily be less than the per unit cost under traditional costing methods.
b. ABC may produce results that are not suitable for external reporting under GAAP.
c. Activities are said to be resource drivers because they consume resources necessary for the activities to happen.
d. Batch-level activities produce costs that may not be in proportion to the number of units produced.