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FEU DILIMAN

BSA 21
ADVANCED COST ACCOUNTING

Name: ________________________________________ Date: ____________________

MIDTERM EXAMINATION

1. When materials are added in the subsequent department and the volume of
units increased, the transferred in unit costs are:
a. Increased
b. Unchanged
c. Decreased
d. Not applicable

2. When FIFO costing method is used, the costs of the beginning work in process
are:
a. Added to current costs
b. Subtracted from the current month
c. Averaged with other costs to arrive at total cost
d. None of the above

3. Ping Products transferred 15,000 units to the department. An additional 5,000


units were in beginning inventory in the department. At the end of the month,
12,000 units were transferred to the next department, 6,000 units remained
in work in process, 40% complete as to conversion costs and the remaining
units spoiled at the 75% stage of conversion. Beginning inventory was 60%
complete as to conversion costs and spoiled units were considered normal.

What is the equivalent unit for conversion costs using the FIFO costing
method?
a. 14,400
b. 12,900
c. 13,900
d. 13,400

4. Using the above data, what is the equivalent unit for conversion costs under
the average method?
a. 15,900
b. 14,400
c. 16,400
d. 20,000

5. If the spoilage is normal using the FIFO costing method, the number of
equivalent unit that production costs should be charged to would be based
upon:
a. Spoiled units
b. Units transferred out and spoiled units
c. Units transferred out, beginning work in process, and units in ending work
in process
d. Units transferred out, beginning work in process, spoiled units, and units
in ending work in process

Questions through 6 to 11 are based on the following data:


The cost data and production data for King Company for the month of May are as
follows:

Cost Data:
Work in Process Beginning
Materials P10,400
Conversion costs 13,800
Cost added this month:
Materials P120,000
Conversion costs 320,400
Production Data:
Work in process beginning (40% 7,500
complete) units
Started in production current month 80,000
units
Transferred out 72,500
units
Work in process ending (70% 13,000
complete) units
Normal lost units 1,100
units
Abnormal lost units 900 units
All materials are added at the start of the process and the inspection point is at 75%
completion.
6. Under the FIFO method, what are the equivalent units for materials and
conversion costs?
Materials Conversion costs
a. 80,000 80,100
b. 78,000 78,600
c. 80,000 78,600
d. 78,000 80,100

7. Under the FIFO method, what is the cost assigned to units transferred out and
units in ending work in process inventory?
Transferred out Work in Process Ending
a. P403,825 P56,725
b. P404,650 P55,900
c. P403,825 P55,900
d. P404,650 P55,725

8. Under the FIFO method, what is the cost assigned to abnormal lost units?
a. P4,050
b. P2,700
c. P1,350
d. P5,050

9. Under the average method, what are the equivalent units for materials and
conversion costs?
Materials Conversion costs
a. 87,500 83,100
b. 85,500 83,100
c. 87,500 81,600
d. 85,500 81,600

10.Under the average method, what is the cost assigned to units transferred out
and units in ending work in process inventory?
Transferred out Work in Process Ending
e. P403,819 P56,725
f. P399,616 P56,725
g. P404,573 P55,971
h. P399,616 P19,374

11.Under the average method, what is the cost of abnormal lost units?
a. P2,715
b. P4,056
c. P5,500
d. P4,560

Items 12 to 16 are based on the following data:


Toy King Manufacturing Company produces a plastic toy in a two-stage molding and
finishing operation. The company uses the weighted average method of process
costing. During June, the following data were recorded for the Finishing Department.

Units of beginning work in process inventory 10,000


Percentage of completion of beginning inventory 25%
Cost of direct materials in beginning work in 0
process
Units started 70,000
Units completed 50,000
Units in ending work in process inventory 20,000
Percentage of completion of ending units 95%
Spoiled units 10,000
Cost added during current period:
Direct materials P655,200
Direct labor P635,600
Manufacturing overhead P616,000
Work in process, beginning:
Transferred In costs P82,900
Conversion costs P42,000
Costs of units transferred In during current period P647,500

Conversion costs are incurred evenly during the process. Direct materials costs are
incurred when production is 90% complete. The inspection point is at 80% stage of
production. Normal spoilage is 10% of all good units that pass inspection.
12.What are the equivalent units of production for direct materials and
conversion costs?
Direct Materials Conversion costs
a. 70,000 77,000
b. 50,000 69,000
c. 60,000 77,000
d. 70,000 75,000

13.What is the cost of normal lost units?


a. P157,990
b. P150,950
c. P155,990
d. P145,500

14.What is the cost of units completed and transferred out?


a. P1,877,350
b. P1,864,500
c. P1,787,350
d. P1,770,500

15.What is the cost assigned to units in ending work in process?


a. P734,140
b. P750,150
c. P835,140
d. P689,000

16.What is the cost assigned to abnormal lost units?


a. P67,710
b. P77,600
c. P87,610
d. P97,710

17.The FIFO method will produce the same cost of goods manufactured amount
as the average cost method when:
a. Beginning and ending inventory are each 50% complete
b. Beginning and ending inventory are each 100% complete
c. There is no beginning inventory
d. There is no ending inventory

18.In process 2, material G is added when a batch is 60% complete. Ending work
in process unit, which are 50% complete, would be included in the
computation of equivalent units for:
Conversion costs Material G
a. Yes No
b. No Yes
c. No No
d. Yes Yes

Items 19 through 23 are based on the following:


Four Seasons Company is a contract manufacturer for the Mayon Dressing
Company. Four Seasons uses a FIFO method to account for its production of its salad
dressing. All materials are added at the start of the process. Mayon provides
reusable vats to Four Seasons for the completed product to be shipped to Mayon for
bottling so Four Seasons incurs no packaging costs. April 2014 production and cost
data for Four Seasons Company is as follows:

Gallons of dressings in beginning inventory 36,000


Gallons transferred out during April 242,000
Gallons of dressing in ending inventory 23,500
Costs of beginning inventory
Direct materials P180,000
Direct labor 26,100
Overhead 70,300
Costs incurred in April
Direct materials P1,131,4
35
Direct labor 451,728
Overhead 773,330
The beginning and ending inventories had the following stages of completion for
labor and overhead:
Beginning Inventory Ending Inventory
Direct labor 35% 25%
Overhead 60% 30%

19.How many gallons of dressing ingredients were started in April?


a. 220,500
b. 229,000
c. 229,500
d. 230,500

20.What is the total cost of the completed beginning inventory?


a. P419,410
b. P409,410
c. P375,280
d. P370,288

21.What is the total cost of units completed during April?


a. P2,481,788
b. P2,814,800
c. P2,482,788
d. P2,841,780

22.What is the average unit cost per gallon of all goods completed during April?
a. P10.25
b. P10.26
c. P10.36
d. P10.64

23.What is the cost of Aprils ending work in process inventory?


a. P150,100
b. P151,105
c. P153,155
d. P151,200
Questions 24 through 29 are based on the following information:
Bokai, Inc. manufactures cell phones. It has two departments: Assembly
Department and Testing Department. Direct materials are added evenly
during the Testing Departments process. As work in Assembly is completed,
each unit is immediately transferred to Testing Department. As each unit is
completed in Testing Department, it is immediately transferred to Finished
Goods.
Bokai, Inc. uses the FIFO method of process costing. Data for the Testing
Department for June 2014 are:
Production Data:

Quantity:
Work in Process, June 1 150 units
Transferred in during June 450 units
Completed during June 525 units
Work in process, June 30 75 units
Stage of completion
Beginning WIP Ending WIP
Transferred in costs 100% 100%
Direct materials 0% 0%
Conversion costs 70% 60%

Cost Data:
Work in process
June 1 June 30
Transferred in costs P245,015 P796,500
Direct materials 0 971,250
Conversion costs 82,950 395,250

24.What is the cost per equivalent unit of materials and conversion cost?
Materials Conversion cost
a. P525 P525
b. P500 P465
c. P600 P500
d. P525 P465

25.What is the cost per equivalent unit of materials?


a. P1,770
b. P1,850
c. P1,970
d. P1,990

26.What is the cost per equivalent unit of conversion costs?


a. P750
b. P850
c. P900
d. P950

27.What is the total cost of completed units from beginning work in process?
a. P643,715
b. P640,715
c. P743,000
d. P643,000

28.What is the total cost of the units transferred out to finished goods?
a. P2,319,965
b. P2,319,000
c. P2,300,000
d. P2,450,000

29.What is the cost of the units in ending work in process inventory?


a. P132,750
b. P171,000
c. P180,000
d. P190,000

30.If a company reports two different unit costs for goods transferred to the next
department, it is reasonable to assume that:
a. A FIFO method is used
b. An average method is used
c. Errors must have occurred in the recording costs
d. A LIFO method is used

31.You have been hired as the cost accountant for Marikina Micro, manufacturer
of leather cases for cell phones. This position has been vacant for one month.
The manager of the company made some incomplete computations. Your
examination reveals that materials are added at the beginning of production
and overhead is applied to each product at the rate of 70 percent of direct
labor cost. There was no finished goods inventory at the beginning of June. A
further review of the companys inventory cost records provides you with the
following data:

Quantities
Work in process, June 1, 2016
(70% complete as to labor and overhead) 5,000
Units started during June 65,000
Work in process, June 30, 2016
(40% complete as to labor and overhead) 20,000
Cost Data Direct materials Direct
labor
Work in process, June 1 P 187,500 P53,750
Costs added in June 1,212,500 816,250

What is the total units of production costs using the average costing?
a. P45.00
b. P54.50
c. P45.50
d. P54.00

32.Using the above data, what is the cost of goods sold?


a. P2,200,500
b. P2,502,500
c. P2,202,500
d. P2,275,000

33.Assuming that there was no beginning work in process inventory and the
ending work in process inventory is 50% complete as to conversion costs, the
number of equivalent units as to conversion costs would be:
a. Less than the units completed
b. More than the units completed
c. Less than the units placed in process
d. The same as the units placed in process

34.In determining the cost of goods transferred in from preceding department


under the average costing method:
a. a simple average unit costs is used
b. beginning inventory costs are separated from costs transferred in during
the period
c. a weighted average unit cost is used
d. a first in, first out approach is used

35.A company uses a process costing system in which all materials are added at
the beginning of the process. Conversion costs are added evenly throughout
the process. During the past month, 10,000 units were started in production
and 8,000 were completed and transferred to the next department. There
were no beginning inventories. The ending inventories were 70% complete at
the end of the month. The company uses the average costing method for
inventory valuation.

If materials used in production cost of P15,000 and conversion costs incurred


were P24,440, what amount was transferred to the next department?
a. P32,000
b. P33,280
c. P36,280
d. P32,800

36.Using the data in number 35, what is the cost of the ending work in process
inventory in the first department?
a. P6,720
b. P8,000
c. P3,720
d. P6,640

Question 37 through 40 are based on the following data:


The Mongol Company uses the average costing method in its three
processing departments. Direct materials are added in the Department 1 and
2. Direct materials in Department 2 are placed immediately on each unit as it
is transferred in.

Below is a portion of Octobers cost of production report for Department 2:

Work in process inventory, ending:


Cost from prior department (8,900 x P23) P2,047.00
Direct materials (8,900 x 200% x P.03) 267.00
Direct labor (8,900 x 60% x P.28 1,495.20
Manufacturing overhead (8,900 x 60% x P10) 534.00

During November the following activity occurred in Department 2:

Units transferred in 30,100


Costs transferred in P8,483.00
Costs added:
Direct materials P1,683.00
Direct labor P7,994.80
Manufacturing overhead (applied) P2,021.00
Units transferred out 29,000
Ending work in process inventory 75%
complete

37.What is the transferred in unit cost?


a. P0.27
b. P0.25
c. P0.30
d. P0.20

38.What is the material unit cost?


a. P0.05
b. P0.10
c. P0.08
d. P0.15

39.What is the direct labor unit cost?


a. P0.25
b. P0.26
c. P0.27
d. P0.28

40.What is the manufacturing overhead unit cost?


a. P0.07
b. P0.08
c. P0.09
d. P0.10
Items 41 through 43 are based on the following data:
On January 2, 2016 beginning work in process inventory for the Machining
Department of Jack Company was 3,000 units with transferred in costs from prior
department of P90,000. During the month, 15,000 units were transferred into the
Machining Department with transferred in costs from prior department of P450,000.
A total of P17,250 units transferred out to the next department and 450 units were
in the ending work in process inventory. Some units were lost at the end of the
process as a normal part of the manufacturing process.
Assuming the company uses the average method of process costing and lost units
are included in the equivalent production computations.
41.How many units were lost?
a. 400
b. 350
c. 450
d. 300

42.What is the equivalent unit of production for transferred in costs from prior
department for the month?
a. 17,350
b. 18,250
c. 17,500
d. 18,000

43.What is the cost per equivalent unit for transferred in costs from prior
department?
a. P31.00
b. P30.50
c. P30.00
d. P34.00
Questions 44 through 46 are based on the following data:
On March 1, 2016, the beginning work in process inventory for the Laminating
Department of the Best Company was 100 units. The transferred in costs from prior
department for these units were P19,350. During the month, 4,800 units with
transferred in costs from prior department of P124,800 were transferred into the
Laminating Department and 4,600 units were completed and transferred to the next
department. The ending work in process was 205 units, and 95 units were lost in the
production.
The company uses the average method of process costing. Lost units are ignored by
the company in equivalent production computations.
44.What is the equivalent unit of production for transferred in costs from prior
department?
a. 4,905
b. 4,800
c. 4,807
d. 4,805

45.What is the cost per equivalent unit for transferred in costs from prior
department?
a. P29.50
b. P31.50
c. P30.00
d. P27.50

46.What is the transferred in cost from prior department to be included in the


ending inventory of work in process in the Laminating Department?
a. P6,500
b. P6,150
c. P6,450
d. P7,150

47.Transferred in costs as used in a process cost accounting system are:


a. Salaries that are transferred from an overhead cost center to a production
cost center
b. Ending work in process inventory of a previous process that will be used in
a succeeding process
c. Labor that is transferred from another department within the same plant.
d. Costs of the product of a previous process that is subsequently used in a
succeeding process.

48.The average and FIFO process costing methods differ in that the average
method:
a. Can be used under any cost flow assumption
b. Does not consider the degree of completion of beginning work in process
inventory when computing equivalent units of production.
c. Is much more difficult to apply than the FIFO method
d. Considers the ending work in process inventory only partially complete

49.The analysis of the activity in department or cost center for a period is called
a:
a. Quantity report
b. Cost of production report
c. Cost of goods manufactured
d. Equivalent production
50.Purchased materials are added in the second department of a three-
department process; this does not increase the number of units produced in
the second department and would:
a. Not changed the peso amount transferred to the next department
b. Decrease total work in process inventory
c. Increase the factory overhead portion of the ending work in process
inventory
d. Increase total unit cost

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