Cost Acctg Reviewer PDF

11.
A total variance is best defined as the difference between total

a. actual cost and total cost applied for the standard output of the period.
b. standard cost and total cost applied to production.
c. actual cost and total standard cost of the actual input of the period.
d. actual cost and total cost applied for the actual output of the period.
12. The term standard hours allowed measures
a. budgeted output at actual hours.
b. budgeted output at standard hours.
c. actual output at standard hours.
d. actual output at actual hours.
13. A large labor efficiency variance is prorated to which of the following at year-end?
WIP FG
Cost of Goods Sold Inventory Inventory
a. no no no
b. no yes yes
c. yes no no
d. yes yes yes
14. Which of the following factors should not be considered when deciding whether to investigate a
variance?
a. magnitude of the variance
b. trend of the variances over time
c. likelihood that an investigation will reduce or eliminate future occurrences of the variance
d. whether the variance is favorable or unfavorable
15. At the end of a period, a significant material quantity variance should be
a. closed to Cost of Goods Sold.
b. allocated among Raw Material, Work in Process, Finished Goods, and Cost of Goods
Sold.
c. allocated among Work in Process, Finished Goods, and Cost of Goods Sold.
d. carried forward as a balance sheet account to the next period.
16. When computing variances from standard costs, the difference between actual and standard price
multiplied by actual quantity used yields a
a. combined price-quantity variance.
b. price variance.
c. quantity variance.
d. mix variance.
17. A company wishing to isolate variances at the point closest to the point of responsibility will determine its
material price variance when
a. material is purchased.
b. material is issued to production.
c. material is used in production.
d. production is completed.
18. The material price variance (computed at point of purchase) is
a. the difference between the actual cost of material purchased and the standard cost of
material purchased.
b. the difference between the actual cost of material purchased and the standard cost of
material used.
c. primarily the responsibility of the production manager.
d. both a and c.
20. A company would most likely have an unfavorable labor rate variance and a favorable labor efficiency
variance if
a. the mix of workers used in the production process was more experienced than the normal
mix.
b. the mix of workers used in the production process was less experienced than the normal
mix.
c. workers from another part of the plant were used due to an extra heavy production
schedule.
d. the purchasing agent acquired very high quality material that resulted in less spoilage.
21. If actual direct labor hours (DLHs) are less than standard direct labor hours allowed and overhead is
applied on a DLH basis, a(n)
a. favorable variable overhead spending variance exists.
b. favorable variable overhead efficiency variance exists.
c. favorable volume variance exists.
d. unfavorable volume variance exists.
22. The total labor variance can be subdivided into all of the following except
a. rate variance.
b. yield variance.
c. learning curve variance.
d. mix variance.
23. The standard predominantly used in Western cultures for motivational purposes is a(n) ____ standard.
a. expected annual
b. ideal
c. practical
d. theoretical
24. Which of the following standards can commonly be reached or slightly exceeded by workers in a
motivated work environment?
Ideal Practical Expected annual
a. no no no
b. no yes yes
c. yes yes no
d. no yes no
25. Management would generally expect unfavorable variances if standards were based on which of the
following capacity measures?
Ideal Practical Expected annual
a. yes no no
b. no no no
c. no yes yes
d. yes yes no
26. Which of the following capacity levels has traditionally been used to compute the fixed overhead
application rate?
a. expected annual
b. normal
c. theoretical
d. prior year
29. A variable overhead spending variance is caused by
a. using more or fewer actual hours than the standard hours allowed for the production
achieved.
b. paying a higher/lower average actual overhead price per unit of the activity base than the
standard price allowed per unit of the activity base.
c. larger/smaller waste and shrinkage associated with the resources involved than expected.
d. both b and c are causes.
30. Which of the following are considered controllable variances?
VOH spending Total overhead budget Volume
a. yes yes yes

b. no no yes
c. no yes no
d. yes yes no
33. Fixed overhead costs are
a. best controlled on a unit-by-unit basis of products produced.
b. mostly incurred to provide the capacity to produce and are best controlled on a total basis
at the time they are originally negotiated.
c. constant on a per-unit basis at all different activity levels within the relevant range.
d. best controlled as to spending during the production process.
34. The variance most useful in evaluating plant utilization is the
a. variable overhead spending variance.
b. fixed overhead spending variance.
c. variable overhead efficiency variance.
d. fixed overhead volume variance.
35. A favorable fixed overhead volume variance occurs if
a. there is a favorable labor efficiency variance.
b. there is a favorable labor rate variance.
c. production is less than planned.
d. production is greater than planned.
36. The fixed overhead application rate is a function of a predetermined activity level. If standard hours
allowed for good output equal the predetermined activity level for a given period, the volume variance
will be
a. zero.
b. favorable.
c. unfavorable.
d. either favorable or unfavorable, depending on the budgeted overhead.
37. Actual fixed overhead minus budgeted fixed overhead equals the
a. fixed overhead volume variance.
b. fixed overhead spending variance.
c. noncontrollable variance.
d. controllable variance.
38. Total actual overhead minus total budgeted overhead at the actual input production level equals the
a. variable overhead spending variance.
b. total overhead efficiency variance.
c. total overhead spending variance.
d. total overhead volume variance.
39. A favorable fixed overhead spending variance indicates that
a. budgeted fixed overhead is less than actual fixed overhead.
b. budgeted fixed overhead is greater than applied fixed overhead.
c. applied fixed overhead is greater than budgeted fixed overhead.
d. actual fixed overhead is less than budgeted fixed overhead.
40. An unfavorable fixed overhead volume variance is most often caused by
a. actual fixed overhead incurred exceeding budgeted fixed overhead.
b. an over-application of fixed overhead to production.
c. an increase in the level of the finished inventory.
d. normal capacity exceeding actual production levels.
41. In a standard cost system, when production is greater than the estimated unit or denominator level of
activity, there will be a(n)
a. unfavorable capacity variance.
b. favorable material and labor usage variance.
c. favorable volume variance.
d. unfavorable manufacturing overhead variance.
42. In analyzing manufacturing overhead variances, the volume variance is the difference between the
a. amount shown in the flexible budget and the amount shown in the debit side of the
overhead control account.
b. predetermined overhead application rate and the flexible budget application rate times
actual hours worked.
c. budget allowance based on standard hours allowed for actual production for the period and
the amount budgeted to be applied during the period.
d. actual amount spent for overhead items during the period and the overhead amount
applied to production during the period.
43. Variance analysis for overhead normally focuses on
a. efficiency variances for machinery and indirect production costs.
b. volume variances for fixed overhead costs.
c. the controllable variance as a lump-sum amount.
d. the difference between budgeted and applied variable overhead.
44. The efficiency variance computed on a three-variance approach is
a. equal to the efficiency variance computed on the four-variance approach.
b. equal to the variable overhead spending variance plus the efficiency variance computed on
the four-variance approach.
c. computed as the difference between applied variable overhead and actual variable
overhead.
d. computed as actual variable overhead minus the flexible budget for variable overhead
based on actual hours worked.
45. The use of separate variable and fixed overhead rates is better than a combined rate because such a
system
a. is less expensive to operate and maintain.
b. does not result in underapplied or overapplied overhead.
c. is more effective in assigning overhead costs to products.
d. is easier to develop.
46. Under the two-variance approach, the volume variance is computed by subtracting ____ based on
standard input allowed for the production achieved from budgeted overhead.
a. applied overhead
b. actual overhead
c. budgeted fixed overhead plus actual variable overhead
d. budgeted variable overhead
47. The overhead variance calculated as total budgeted overhead at the actual input production level minus
total budgeted overhead at the standard hours allowed for actual output is the
a. efficiency variance.
b. spending variance.
c. volume variance.
d. budget variance.
Crichton Company
The following information is for Crichton Companys July production:
Standards:
Material 3.0 feet per unit @ $4.20 per foot
Labor 2.5 hours per unit @ $7.50 per hour
Actual:
Production 2,750 units produced during the month
Material 8,700 feet used; 9,000 feet purchased @ $4.50 per foot
Labor 7,000 direct labor hours @ $7.90 per hour
(Round all answers to the nearest dollar.)
50. Refer to Crichton Company. What is the material price variance (calculated at point of purchase)?
Material Price Variance = (AP - SP) * AQ

= ($4.50 - $4.20) * 9,000 feet purchased
= $2,700 U
51. Refer to Crichton Company. What is the material quantity variance?

Material Quantity Variance = (AQ - SQ) * SP
= (8,700 - (2,750 * 3)) * $4.20
= $1,890 U
52. Refer to Crichton Company. What is the labor rate variance?

Labor Rate Variance = (AP - SP) * AQ
= ($7.90 - $7.50) * 7,000 hr used
= $2,800 U
53. Refer to Crichton Company. What is the labor efficiency variance?

Labor Efficiency Variance = (AQ - SQ) * SP
= (7,000 hr - (2.5 hr/unit * 2,750 units)) * $7.50
= $938 U (rounded)
Reichs Company
The following information is for Reichs Companys September production:
Standards:
Actual:
Production 3,500 units produced during the month
Material 14,200 feet used; 14,700 feet purchased @ $3.70 per foot
Labor 10,400 direct labor hours @ $8.35 per hour
(Round all answers to the nearest dollar.)
54. Refer to Reichs Company. What is the material price variance (calculated at point of purchase)?
Material Price Variance = (AP - SP) * AQ

= ($3.70 - $3.75) * 14,700 feet purchased
= $735 F
55. Refer to Reichs Company. What is the material quantity variance?

Material Quantity Variance = (AQ - SQ) * SP
= (14,200 - (3,500 * 4)) * $3.75
= $750 U
56. Refer to Reichs Company. What is the labor rate variance?

= ($8.35 - $8.25) *10,400 hr used
= $1,040 U
57. Refer to Reichs Company. What is the labor efficiency variance?
Labor Efficiency Variance = (AQ - SQ) * SP

= (10,400 hr - (3 hr/unit * 3,500 units)) * $8.25
= $825 F
Hazelton Company
Hazelton Company has the following information available for December when 3,500 units were
produced (round answers to the nearest dollar).
Standards:
Material 3.5 pounds per unit @ $4.50 per pound
Actual:
Material purchased 12,300 pounds @ $4.25
Material used 11,750 pounds
17,300 direct labor hours @ $10.20 per hour
58. Refer to Hazelton Company. What is the labor rate variance?
= ($10.20 - $10.25) * 17,300 hrs.
= $865 F
59. Refer to Hazelton Company. What is the labor efficiency variance?
Labor efficiency variance = (AQ - SQ)* SP

=(17,300 hrs -(3,500 units * 5.0 hr/unit)) * $10.25/hr
= $2,050 F
60. Refer to Hazelton Company. What is the material price variance (based on quantity purchased)?
Material price variance = (AP - SP) * AQ
= ($4.25 - $4.50) * 12,300
= $3,075 F
61. Refer to Hazelton Company. What is the material quantity variance?

Material quantity variance = (AQ - SQ) * SP
= (11,750 - (3,500 units * 3.5 hr/unit)) * $4.25
= $2,250 F
62. Refer to Hazleton Company. Assume that the company computes the material price variance on the basis
of material issued to production. What is the total material variance?
Total Variance = (11,750 * $4.25) - (3,500 * 3.5 * $4.50)
= $49,937.00 - $55,125.00
= $5188 F
Wimberly Company
Wimberly Company has the following information available for March when 4,200 units were produced
(round answers to the nearest dollar).
Standards:
Material 4.0 pounds per unit @ $5.25 per pound
Actual:
Material purchased 17,500 pounds @ $5.10
Material used 16,700 pounds
25,500 direct labor hours @ $9.85 per hour
63. Refer to Wimberly Company. What is the labor rate variance?

= ($9.85 - $10.00) * 25,500 hrs.
= $3,825 F
64. Refer to Wimberly Company. What is the labor efficiency variance?
Labor efficiency variance = (AQ - SQ)* SP

=(25,500 hrs -(4,200 units * 6.0 hr/unit)) * $10.00/hr
= $3,000 U
65. Refer to Wimberly Company. What is the material price variance (based on quantity purchased)?
= ($5.10 - $5.25) * 17,500
= $2,625 F
66. Refer to Wimberly Company. What is the material quantity variance?

= (16,700 - (4,200 units * 4.0 lb/unit)) * $5.25
= $525 F
67. Refer to Wimberly Company. Assume that the company computes the material price variance on the basis
of material issued to production. What is the total material variance?
Total Variance = (16,700 * $5.10) - (4,200 * 4.0 * $5.25)

= $85,170.00 - $88,200.00
= $3,030 F
Strong Manufacturing
The following information is available for Strong Manufacturing Company for the month of June when
the company produced 2,100 units:
Standard:
Material 2 pounds per unit @ $5.80 per pound
Labor 3 direct labor hours per unit @ $10.00 per hour
Actual:
Material 4,250 pounds purchased and used @ $5.65 per pound
Labor 6,300 direct labor hours at $9.75 per hour
68. Refer to Strong Manufacturing Company. What is the material price variance?
= ($5.65 - $5.80) * 4,250 lbs
= $637.50 F
69. Refer to Strong Manufacturing Company. What is the material quantity variance?
= (4,250 - (2 lbs/unit * 2,100 units))* $5.80/unit
= $290 U
70. Refer to Strong Manufacturing Company. What is the labor rate variance?
=($9.75 - $10.00) * 6,300 hrs
= $1,575 F
71. Refer to Strong Manufacturing Company. What is the labor efficiency variance?
Labor efficiency variance = (AQ - SQ) * SP
= (6,300 - (2,100 units * 3 hrs/unit) * $10.00
= $0
Fleetwood Company
Fleetwood Company uses a standard cost system for its production process and applies overhead based on
direct labor hours. The following information is available for May when Fleetwood produced 4,500 units:
Standard:
DLH per unit 2.50
Variable overhead per DLH $1.75
Fixed overhead per DLH $3.10
Budgeted variable overhead $21,875
Budgeted fixed overhead $38,750
Actual:
Direct labor hours 10,000
Variable overhead $26,250
Fixed overhead $38,000
72. Refer to Fleetwood Company. Using the one-variance approach, what is the total overhead variance?
Total Variance = Actual Overhead - Applied Overhead
= $(26,250 + 38,000) - ($(1.75 + 3.10) * 2.50 hrs/unit * 4,500 units)
= $64,250.00 - $54,462.50
= $9,687.50U
73. Refer to Fleetwood Company. Using the two-variance approach, what is the controllable variance?
Controllable Variance = Actual Overhead - Budgeted Overhead Based on Standard Quantity
= $64,250.00 - $((4,500 units * 2.5 DLH/unit * $1.75) + 38,750)
= $(64,250 - $58,437.50)
= $5,812.50 U
74. Refer to Fleetwood Company. Using the two-variance approach, what is the noncontrollable variance?
Uncontrollable Variance = Budgeted Overhead Based on SQ - Applied Overhead

= $(58,437.50 - 54,562.50)
= $3,875.00 U
75. Refer to Fleetwood Company. Using the three-variance approach, what is the spending variance?
OH Spending Variance = Actual OH - Budgeted OH based upon Inputs Used
= $64,250 - ((10,000 hrs * $1.75) + $38,750)
= $(64,250 - 56,250)
= $8,000.00 U
76. Refer to Fleetwood Company. Using the three-variance approach, what is the efficiency variance?
OH Efficiency Variance = Budgeted OH based on Actual - Budgeted OH based on Standard
= ((10,000 * $1.75)+ $38,750) - ((4,500 * 2.50 * $1.75) + $38,750)
= $(56,250.00 - 58,437.50)
= $2,187.50 F
77. Refer to Fleetwood Company. Using the three-variance approach, what is the volume variance?
Volume Variance = Budget Based on Standard Quantity - Overhead Applied

= $(58,437.50 - 54,562.00)
= $3,875.00 U
78. Refer to Fleetwood Company. Using the four-variance approach, what is the variable overhead spending
variance?
Variable Overhead Spending Variance = Actual VOH - Budgeted VOH/Actual Quantity
= $26,250.00 - (10,000 * $1.75/VOH hr)
= $(26,250.00 - 17,500.00)
= $8,750.00 U
79. Refer to Fleetwood Company. Using the four-variance approach, what is the variable overhead efficiency
variance?
VOH Efficiency Variance = Budgeted VOH based on Actual - Budgeted VOH/Standard Qty
= ((10,000 * $1.75/hr) - ((4,500 * 2.50hrs/unit * $1.75/hr))
= $(17,500.00 - 19,687.50)
= $2,187.50 F
80. Refer to Fleetwood Company. Using the four-variance approach, what is the fixed overhead spending
variance?
Fixed OH Spending Variance = Actual Fixed OH - Applied Fixed OH
= $(38,000 - 38,750)
= $750.00 F
81. Refer to Fleetwood Company. Using the four-variance approach, what is the volume variance?
= $(58,437.50 - 54,562.00)
= $3,875.00 U
Genesis Company
Genesis Company uses a standard cost system for its production process and applies overhead based on
direct labor hours. The following information is available for September when Genesis produced 5,000
units:
Standard:
DLH per unit 3.00
Variable overhead per DLH $1.80
Fixed overhead per DLH $3.25
Budgeted variable overhead $27,250
Budgeted fixed overhead $49,500
Actual:
82. Refer to Genesis Company. Using the one-variance approach, what is the total overhead variance?
= $(31,325 + 49,750) - ($(1.80 + 3.25) * 3.00 hrs/unit * 5,000 units)
= $81,075.00 - $75,750.00
= $5,325.00 U
83. Refer to Genesis Company. Using the two-variance approach, what is the controllable variance?
= $81,075 - $((5,000 units * 3.0 DLH/unit * $1.80) + 49,500)
= $(81,075 - $76,500)
= $4,575 U
84. Refer to Genesis Company. Using the two-variance approach, what is the noncontrollable variance?
Uncontrollable Variance = Budgeted Overhead Based on SQ - Applied Overhead
= $(76,500 - 75,750)
= $750 U
85. Refer to Genesis Company. Using the three-variance approach, what is the spending variance?
OH Spending Variance = Actual OH - Budgeted OH based upon Inputs Used
= $81,075 - ((16,000 hrs * $1.80) + $49,500)
= $(81,075 - 78,300)
= $2,775 U
86. Refer to Genesis Company. Using the three-variance approach, what is the efficiency variance?
OH Efficiency Variance = Budgeted OH based on Actual - Budgeted OH based on Standard
= ((16,000 * $1.80)+ $49,500) - ((5,000 * 3.00 * $1.80) + $49,500)
= $(78,300.00 - 76,500.00)
= $1,800.00 U
87. Refer to Genesis Company. Using the three-variance approach, what is the volume variance?
= $(76,500.00 - 75,750.00)
= $750 U
88. Refer to Genesis Company. Using the four-variance approach, what is the variable overhead spending
variance?
Variable Overhead Spending Variance = Actual VOH - Budgeted VOH/Actual Quantity
= $31,325 - (16,000 * $1.80/VOH hr)
= $(31,325 - 28,800)
= $2,525 U
89. Refer to Genesis Company. Using the four-variance approach, what is the variable overhead efficiency
variance?
VOH Efficiency Variance = Budgeted VOH based on Actual - Budgeted VOH/Standard Qty
= ((16,000 * $1.80/hr) - ((5,000 * 3 hrs/unit * $1.80/hr))
= $(28,800 - 27,000)
= $1,800 U
90. Refer to Genesis Company. Using the four-variance approach, what is the fixed overhead spending
variance?
Fixed OH Spending Variance = Actual Fixed OH - Applied Fixed OH
= $(49,750 - 49,500)
= $250 U
91. Refer to Genesis Company. Using the four-variance approach, what is the volume variance?
= $(49,500 - (5,000 x 3 x 3.25))
= $49,500 - $48,750
= $750 U
Ritchie Company
Ritchie Company uses a standard cost system for its production process. Ritchie Company applies
overhead based on direct labor hours. The following information is available for July:
Standard:
Direct labor hours per unit 2.20
Variable overhead per hour $2.50
Fixed overhead per hour
(based on 11,990 DLHs) $3.00
Actual:
Units produced 4,400
92. Refer to Ritchie Company Using the four-variance approach, what is the variable overhead spending
variance?
Variable OH Spending Variance = Actual VOH - Budgeted VOH/Actual

= $(29,950 - 22,000)
= $7,950
93. Refer to Ritchie Company Using the four-variance approach, what is the variable overhead efficiency
variance?
VOH Efficiency Variance = Budgeted OH/Actual - Budgeted OH/Standard
= (8,800 DLH * $2.50/DLH) - (4400 units*2.20 DLH/unit * $2.50)
= $(22,000 - 24,200)
= $2,200 F
94. Refer to Ritchie Company Using the four-variance approach, what is the fixed overhead spending
variance?
Fixed OH Spending Variance = Actual OH - Standard Fixed OH
= $42,300 - (11,990 DLHs * $3.00/DLH)
= $(42,300 - 35,970)
= $6,330 U
95. Refer to Ritchie Company Using the four-variance approach, what is the volume variance?
Volume Variance = Budgeted OH/Standard Quantity - Standard Overhead Applied
=( 4,400 units * $2.50/hr*2.20 hrs/unit + $35,970)- (4,400 units*$5.50/hr*2.20 DLH/unit)
= $60,170 - $53,240
= $6,930 U
96. Refer to Ritchie Company Using the three-variance approach, what is the spending variance?
Spending Variance = Actual Overhead - Budget OH/Actual Use
= $72,250 - ((8,800 hrs * $2.50/hr) + $35,970)
= $(72,250 - 57,970)
= $14,280 U
97. Refer to Ritchie Company Using the three-variance approach, what is the efficiency variance?
Efficiency Variance = Budget OH/Actual Use - Budgeted OH/Standard Quantity - Standard
Overhead Applied
= ((8,800 hrs * $2.50/hr) + $35,970)-( 4,400 units * $2.50/hr*2.20 hrs/unit + $35,970)
= $(57,970 - 60,170)
= $2,200 F
98. Refer to Ritchie Company Using the three-variance approach, what is the volume variance?
Volume Variance = Budgeted OH/Standard Quantity - Standard Overhead Applied
= $60,170 - $53,240
= $6,930 U
99. Refer to Ritchie Company Using the two-variance approach, what is the controllable variance?
= $72,250.00 - ( 4,400 units * $2.50/hr*2.20 hrs/unit + $35,970)
= $(72,250- 60,170)
= $12,080 U
100. Refer to Ritchie Company Using the two-variance approach, what is the noncontrollable variance?
Noncontrollable Variance = Budgeted OH/Standard Quantity - Standard Overhead Applied
= $60,170 - $53,240
= $6,930 U
101. Refer to Ritchie Company Using the one-variance approach, what is the total variance?

=$72,250 - (4,400 * 2.20 *($2.50 + $3.00))
=$72,250 - $53,240
=$19,010 U
102. Actual fixed overhead is $33,300 (12,000 machine hours) and fixed overhead was estimated at $34,000
when the predetermined rate of $3.00 per machine hour was set. If 11,500 standard hours were allowed
for actual production, applied fixed overhead is
11,500 hrs. * $3.00/hr. = $34,500
103. One unit requires 2 direct labor hours to produce. Standard variable overhead per unit is $1.25 and
standard fixed overhead per unit is $1.75. If 330 units were produced this month, what total amount of
overhead is applied to the units produced?
330 units * ($1.25 + $1.75) = $990
104. Ponca City Company uses a standard cost accounting system. The following overhead costs and
production data are available for September:
Standard fixed OH rate per DLH $1

Standard variable OH rate per DLH $4
Budgeted monthly DLHs 40,000
Actual DLHs worked 39,500
Standard DLHs allowed for actual production 39,000
Overall OH variance-favorable $2,000
The total applied manufacturing overhead for September should be

39,000 DL hrs * $5.00/hr = $195,000
105. Luther Manufacturing Company uses a standard cost system and prepared the following budget at normal
capacity for October:

Variable OH $48,000
Fixed OH $108,000
Total OH per DLH $6.50
Actual data for October were as follows:

Direct labor hours worked 22,000
Total OH $147,000
Standard DLHs allowed for capacity attained 21,000
Using the two-way analysis of overhead variances, what is the controllable variance for October?
ANS: A
Controllable Variance = Actual Overhead - Budget Based on SQ for Actual Output
= $147,000 - ((21,000 * $2.00/hr) + $108,000)
= $(147,000 - 150,000)
= $3,000 F
106. The following information is available from the Fitzgerald Company:
Actual OH $15,000
Fixed OH expenses, actual $7,200
Fixed OH expenses, budgeted $7,000
Actual hours 3,500
Standard hours 3,800
Variable OH rate per DLH $2.50
Assuming that Fitzgerald uses a three-way analysis of overhead variances, what is the overhead spending
variance?
Spending Variance = Actual Overhead - Budgeted Overhead/Actual Hours
= $15,000 - ((3,500 * $2.50) + $7,000)
= $(15,000 - 15,750)
= $750 F
107. Norris Company uses a two-way analysis of overhead variances. Selected data for the March production
activity are as follows:
Actual variable OH incurred $196,000

Variable OH rate per MH $6
Standard MHs allowed 33,000
Actual MHs 32,000
Assuming that budgeted fixed overhead costs are equal to actual fixed costs, the controllable variance for
March is
ANS: A
Controllable Variance = Actual OH - Budgeted OH based on Standard Qty
= $196,000 - (33,000 * $6/hr)
= $2,000 F
PTS: 1 DIF: Moderate OBJ: 7-3 NAT: AACSB: Analytical Skills

LOC: AICPA Functional Competencies: Measurement, Reporting
108. Superior Fuel Company uses a standard cost system. Overhead cost information for January is as follows:
Total actual overhead incurred $12,600

Fixed overhead budgeted $3,300
Total standard overhead rate per MH $4
Variable overhead rate per MH $3
Standard MHs allowed for actual production 3,500
What is the total overhead variance?

a. $1,200 F
b. $1,200 U
c. $1,400 F
d. $1,400 U
ANS: C
Total Overhead Variance = Actual Overhead - Standard Overhead
= $(12,600 - (3,500 MH * $4/MH))
= $(12,600 - 14,000)
= $1,400 F
PTS: 1 DIF: Easy OBJ: 7-3 NAT: AACSB: Analytical Skills

National Toy Company
National Toy Company has developed standard overhead costs based on a capacity of 180,000 machine
hours as follows:
Standard costs per unit:

Variable portion 2 hours @ $3 = $ 6
Fixed portion 2 hours @ $5 = 10
$16
During November, 85,000 units were scheduled for production, but only 80,000 units were actually
produced. The following data relate to November:
Actual machine hours used were 165,000.

Actual overhead incurred totaled $1,378,000 ($518,000 variable plus $860,000 fixed).
All inventories are carried at standard cost.
109. Refer to National Toy Company. The variable overhead spending variance for November was
a. $15,000 U.
b. $23,000 U.
c. $38,000 F.
d. $38,000 U.
ANS: B
Variable OH Spending Variance = Actual VOH - Budgeted FOH/Actual Input
= $518,000 - (165,000 DLH * $3/hr)
= $(518,000 - 495,000)
= $23,000 U

110. Refer to National Toy Company. The variable overhead efficiency variance for November was
a. $15,000 U.
b. $23,000 U.
c. $38,000 F.
d. $38,000 U.
ANS: A
Variable OH Efficiency Variance = Budgeted VOH/Actual - Budgeted VOH/Standard
= $495,000 - (80,000 units * 2 hrs/unit * $3)
= $(495,000 - 480,000)
= $15,000 U

111. Refer to National Toy Company. The fixed overhead spending variance for November was
a. $40,000 U.
b. $40,000 F.
c. $60,000 F.
d. $60,000 U.
ANS: B
Fixed Overhead Spending Variance = Actual Fixed OH - Budgeted Fixed OH
= $(860,000 - (180,000 MH * $5/hr)
= $(860,000 - $900,000)
= $40,000 F

112. Refer to National Toy Company. The fixed overhead volume variance for November was
a. $60,000 U.
b. $60,000 F.
c. $100,000 F.
d. $100,000 U.
ANS: D
Fixed FOH Volume Variance = Budgeted Fixed FOH - Applied FOH
= $(900,000 - 800,000)
= $100,000 U

Classic Cleaning Company
Classic Cleaning Company manufactures a cleaning solvent. The company employs both skilled and
unskilled workers. To produce one 55-gallon drum of solvent requires Materials A and B as well as
skilled labor and unskilled labor. The standard and actual material and labor information is presented
below:
Standard:
Material A: 30.25 gallons @ $1.25 per gallon
Material B: 24.75 gallons @ $2.00 per gallon
Skilled Labor: 4 hours @ $12 per hour

Unskilled Labor: 2 hours @ $ 7 per hour
Actual:
Material A: 10,716 gallons purchased and used @ $1.50 per gallon
Material B: 17,484 gallons purchased and used @ $1.90 per gallon
Skilled labor hours: 1,950 @ $11.90 per hour

Unskilled labor hours: 1,300 @ $7.15 per hour
During the current month Classic Cleaning Company manufactured 500 55-gallon drums.
Round all answers to the nearest whole dollar.
113. Refer to Classic Cleaning Company. What is the total material price variance?
a. $877 F
b. $877 U
c. $931 U
d. $931 F
ANS: C
Total Material Price Variance = Actual Mix,Qty,Price - Actual Mix,Quantity,Std Price
= $(49,294 - 48,363)
= $931 U

114. Refer to Classic Cleaning Company. What is the total material mix variance?
a. $3,596 F
b. $3,596 U
c. $4,864 F
d. $4,864 U
ANS: B
Total Material Mix Variance = Actual Mix,Qty, Std Price - Std Mix, Price,Actual Qty
= $(48,363 - 44,767)
= $3,596 U
PTS: 1 DIF: Difficult OBJ: 7-7 NAT: AACSB: Analytical Skills

115. Refer to Classic Cleaning Company. What is the total material yield variance?
a. $1,111 U
b. $1,111 F
c. $2,670 U
d. $2,670 F
ANS: A
Material Yield Variance = Std Mix, Std Price,Actual Qty - Std Mix, Qty, Price
= $(44,767 - $43,656)
= $1,111 U

116. Refer to Classic Cleaning Company. What is the labor rate variance?
a. $0
b. $1,083 U
c. $2,583 U
d. $1,083 F
ANS: A
Labor Rate Variance = Actual Mix, Qty,Price - Actual Mix,Qty,Std Price
= $(32,500 - 32,500)
= $0

117. Refer to Classic Cleaning Company. What is the labor mix variance?
a. $1,083 U
b. $2,588 U
c. $1,083 F
d. $2,588 F
ANS: C
Labor Mix Variance = Actual Mix,Qty, Std Price - Std Mix, Actual Qty, Std Price
= $(32,500 - 33,583)
= $1,083 F

118. Refer to Classic Cleaning Company. What is the labor yield variance?
a. $2,583 U
b. $2,583 F
c. $1,138 F
d. $1,138 U
ANS: A
Labor Yield Variance = Std Mix, Act Qty, Std Price - Std Mix, Qty, Price
= $(33,583 - $31,000)
= $2,583 U

119. The sum of the material mix and material yield variances equals
a. the material purchase price variance.
b. the material quantity variance.
c. the total material variance.
d. none of the above.
ANS: B PTS: 1 DIF: Easy OBJ: 7-7
NAT: AACSB: Analytical Skills
120. The sum of the labor mix and labor yield variances equals
a. the labor efficiency variance.
b. the total labor variance.
c. the labor rate variance.
d. nothing because these two variances cannot be added since they use different costs.
ANS: A PTS: 1 DIF: Easy OBJ: 7-7
NAT: AACSB: Analytical Skills
PROBLEM
Moore Company
Moore Company has the following information available for the current year:
Standard:
Labor 5 direct labor hours @ $8.50 per unit
Actual:
Material 95,625 feet used (100,000 feet purchased @ $2.50 per foot)
Labor 122,400 direct labor hours incurred per unit @ $8.35 per hour
25,500 units were produced
1. Refer to Moore Company. Compute the material purchase price and quantity variances.
ANS:
Material price variance:
100,000 $2.50 = $250,000
100,000 $2.60 = 260,000
$ 10,000 F
Material quantity variance:

95,625 $2.60 = $248,625
89,250 $2.60 = 232,050
$ 16,575 U

2. Refer to Moore Company. Compute the labor rate and efficiency variances.
ANS:
Labor rate variance:
122,400 $8.35 = $1,022,040
122,400 $8.50 = 1,040,400
$ 18,360 F
Labor efficiency variance:

122,400 $8.50 = $1,040,400
127,500 $8.50 = 1,083,750
$ 43,350 F

Hoover Company
Hoover Company applies overhead based on direct labor hours and has the following available for the
current month:
Standard:
Direct labor hours per unit 5
Variable overhead per DLH $.75
Fixed overhead per DLH
(based on 8,900 DLHs) $1.90
Actual:
3. Refer to Hoover Company. Compute all the appropriate variances using the two-variance approach.
ANS:
Actual ($6,400 + $17,500) $23,900
Budget Variance: $240 U
BFOH (8,900 $1.90) $16,910
VOH (1,800 5 $.75) 6,750 $23,660
Volume Variance: $190 F
Applied OH:
(1,800 5 $2.65) $23,850

4. Refer to Hoover Company. Compute all the appropriate variances using the three-variance approach.
ANS:
Actual $23,900
Spending Variance: $315 U
Flexible Budget Based on Actual Input
BFOH $16,910
VOH (8,900 $.75) 6,675 $23,585
Efficiency Variance: $75 F
Flexible Budget Based on Standard DLHs
BFOH $16,910
VOH (1,800 5 $.75) 6,750 $23,660
Applied OH:
(1,800 5 $2.65) $23,850

5. Refer to Hoover Company. Compute all the appropriate variances using the four-variance approach.
ANS:
Actual VOH $6,400
Variable Spending Variance: $275 F
Flex. Bud. Based on Actual
Input Hours (8,900 $.75) $6,675
Variable Efficiency Variance: $75 F
Applied VOH
(1,800 5 $.75) $6,750
Actual FOH $17,500

FOH Spending Variance: $590 U
BUDGETED FOH $16,910
FOH Volume Variance: $190 F
Applied FOH
(1,800 5 $1.90) $17,100

Truman Company
Truman Company applies overhead based on direct labor hours and has the following available for the
current month:
Standard:
Direct labor hours per unit 6
Variable overhead per DLH $.80
Fixed overhead per DLH
(based on 11,900 DLHs) $2.10
Actual:
6. Refer to Truman Company. Compute all the appropriate variances using the two-variance approach.
ANS:
Actual ($9,900 + $25,500) $35,400
Budget Variance: $810 U
BFOH (11,900 $2.10) $24,990
VOH (2000 6 $.80) 9,600 $34,590
Applied OH:
(2,000 6 $2.90) $34,800

7. Refer to Truman Company. Compute all the appropriate variances using the three-variance approach.
ANS:
Actual $35,400
Spending Variance: $890 U
Flexible Budget Based on Actual Input
BFOH $24,990
VOH (11,900 $.80) 9,520 $34,510
Efficiency Variance: $80 F
Flexible Budget Based on Standard DLHs
BFOH $24,990
VOH (2,000 6 $.80) 9,600 $34,590
Applied OH:
(2,000 6 $2.90) $34,800

8. Refer to Truman Company. Compute all the appropriate variances using the four-variance approach.
ANS:
Actual VOH $9,900
Variable Spending Variance: $380 U
Flex. Bud. Based on Actual
Input Hours (11,900 $.80) $9,520
Variable Efficiency Variance: $80 F
Applied VOH
(2,000 6 $.80) $9,600
Actual FOH $25,500
FOH Spending Variance: $510 U
BUDGETED FOH (11,900 x $2.10) $24,990
FOH Volume Variance: $210 F
Applied FOH
(2,000 6 $2.10) $25,200

4.A process costing system is used by a company that

a. produces heterogeneous products.
b. produces items by special request of customers.
c. produces homogeneous products.
d. accumulates costs by job.
ANS: C PTS: 1 DIF: Easy OBJ: 6-1
NAT: AACSB: Reflective Thinking
5. Which is the best cost accumulation procedure to use for continuous mass production of like units?
a. actual
b. standard
c. job order
d. process
6. Equivalent units of production are equal to the

a. units completed by a production department in the period.
b. number of units worked on during the period by a production department.
c. number of whole units that could have been completed if all work of the period had been
used to produce whole units.
d. identifiable units existing at the end of the period in a production department.
7. In a process costing system using the weighted average method, cost per equivalent unit for a given cost
component is found by dividing which of the following by EUP?
a. only current period cost
b. current period cost plus the cost of beginning inventory
c. current period cost less the cost of beginning inventory
d. current period cost plus the cost of ending inventory
8. The weighted average method is thought by some accountants to be inferior to the FIFO method because
it
a. is more difficult to apply.
b. only considers the last units worked on.
c. ignores work performed in subsequent periods.
d. commingles costs of two periods.
9. The first step in determining the cost per EUP per cost component under the weighted average method is
to
a. add the beginning Work in Process Inventory cost to the current period's production cost.
b. divide the current period's production cost by the equivalent units.
c. subtract the beginning Work in Process Inventory cost from the current period's
production cost.
d. divide the current period's production cost into the EUP.
10. 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.
ANS: B PTS: 1 DIF: Moderate OBJ: 6-3
11. EUP calculations for standard process costing are the same as
a. the EUP calculations for weighted average process costing.
b. the EUP calculations for FIFO process costing.
c. LIFO inventory costing for merchandise.
d. the EUP calculations for LIFO process costing.
12. In a FIFO process costing system, which of the following are assumed to be completed first in the current
period?
a. units started this period
b. units started last period
c. units transferred out
d. units still in process
13. To compute equivalent units of production using the FIFO method of process costing, work for the
current period must be stated in units
a. completed during the period and units in ending inventory.
b. completed from beginning inventory, units started and completed during the period, and
units partially completed in ending inventory.
c. started during the period and units transferred out during the period.
d. processed during the period and units completed during the period.
14. The FIFO method of process costing will produce the same cost of goods transferred out amount as the
weighted average method when
a. the goods produced are homogeneous.
b. there is no beginning Work in Process Inventory.
c. there is no ending Work in Process Inventory.
d. beginning and ending Work in Process Inventories are each 50 percent complete.
15. The primary difference between the FIFO and weighted average methods of process costing is
a. in the treatment of beginning Work in Process Inventory.
b. in the treatment of current period production costs.
c. in the treatment of spoiled units.
d. none of the above.
16. Material is added at the beginning of a process in a process costing system. The beginning Work in
Process Inventory for the process was 30 percent complete as to conversion costs. Using the FIFO method
of costing, the number of equivalent units of material for the process during this period is equal to the
a. beginning inventory this period for the process.
b. units started and completed this period in the process.
c. units started this period in the process plus the beginning Work in Process Inventory.
d. units started and completed this period plus the units in ending Work in Process Inventory.
ANS: D PTS: 1 DIF: Moderate OBJ: 6-4
17. In a cost of production report using process costing, transferred-in costs are similar to the
a. cost of material added at the beginning of production.
b. conversion cost added during the period.
c. cost transferred out to the next department.
d. cost included in beginning inventory.
18. In a process costing system, the journal entry to record the transfer of goods from Department #2 to
Finished Goods Inventory is a
a. debit Work in Process Inventory #2, credit Finished Goods Inventory.
b. debit Finished Goods Inventory, credit Work in Process Inventory #1.
c. debit Finished Goods Inventory, credit Work in Process Inventory #2.
d. debit Cost of Goods Sold, credit Work in Process Inventory #2.
19. Transferred-in cost represents the cost from
a. the last department only.
b. the last production cycle.
c. all prior departments.
d. the current period only.
20. Which of the following is(are) the same between the weighted average and FIFO methods of calculating
EUPs?
Units to EUP Total cost to

account for calculations account for
a. no yes no
b. yes yes yes
c. yes no no
d. yes no yes
ANS: D PTS: 1 DIF: Easy OBJ: 6-4

21. Process costing techniques should be used in assigning costs to products

a. if a product is manufactured on the basis of each order received.
b. when production is only partially completed during the accounting period.
c. if a product is composed of mass-produced homogeneous units.
d. whenever standard-costing techniques should not be used.
22. Averaging the total cost of completed beginning work-in-process inventory and units started and
completed over all units transferred out is known as
a. strict FIFO.
b. modified FIFO.
c. weighted average costing.
d. normal costing.
23. A process costing system
a. cannot use standard costs.
b. restates Work in Process Inventory in terms of completed units.
c. accumulates costs by job rather than by department.
d. assigns direct labor and manufacturing overhead costs separately to units of production.
24. A process costing system does which of the following?
Calculates EUPs Assigns costs to inventories
a. no no
b. no yes
c. yes yes
d. yes no

25. A process costing system
Calculates average cost Determines total units to

per whole unit account for
a. yes yes
b. no no
c. yes no
d. no yes

26. A hybrid costing system combines characteristics of

a. job order and standard costing systems.
b. job order and process costing systems.
c. process and standard costing systems.
d. job order and normal costing systems.
27. When standard costs are used in process costing,
a. variances can be measured during the production period.
b. total costs rather than current production and current costs are used.
c. process costing calculations are made simpler.
d. the weighted average method of calculating EUPs makes computing transferred-out costs
easier.
28. Which of the following is subtracted from weighted average EUP to derive FIFO EUP?
a. beginning WIP EUP completed in current period
b. beginning WIP EUP produced in prior period
c. ending WIP EUP not completed
d. ending WIP EUP completed
29. The cost of abnormal continuous losses is

a. considered a product cost.
b. absorbed by all units in ending inventory and transferred out on an equivalent unit basis.
c. written off as a loss on an equivalent unit basis.
d. absorbed by all units past the inspection point.
30. Abnormal spoilage can be
continuous discrete
a. yes no
b. no no
c. yes yes
d. no yes
31. When the cost of lost units must be assigned, and those same units must be included in an equivalent unit
schedule, these units are considered
a. normal and discrete.
b. normal and continuous.
c. abnormal and discrete.
d. abnormal and continuous.
32. A continuous loss

a. occurs unevenly throughout a process.
b. never occurs during the production process.
c. always occurs at the same place in a production process.
d. occurs evenly throughout the production process.
33. Which of the following would be considered a discrete loss in a production process?
a. adding the correct ingredients to make a bottle of ketchup
b. putting the appropriate components together for a stereo
c. adding the wrong components when assembling a stereo
d. putting the appropriate pieces for a bike in the box
34. The method of neglect handles spoilage that is

a. discrete and abnormal.
b. discrete and normal.
c. continuous and abnormal.
d. continuous and normal.
35. The cost of normal discrete losses is

a. absorbed by all units past the inspection point on an equivalent unit basis.
b. absorbed by all units in ending inventory.
c. considered a period cost.
d. written off as a loss on an equivalent unit basis.
36. The cost of abnormal continuous losses is

a. considered a product cost.
b. absorbed by all units in ending inventory and transferred out on an equivalent unit basis.
c. written off as a loss on an equivalent unit basis.
d. absorbed by all units past the inspection point.
37. Normal spoilage units resulting from a continuous process
a. are extended to the EUP schedule.
b. result in a higher unit cost for the good units produced.
c. result in a loss being incurred.
d. cause estimated overhead to increase.
38. When the cost of lost units must be assigned, and those same units must be included in an equivalent unit
schedule, these units are considered
a. normal and discrete.
b. normal and continuous.
c. abnormal and discrete.
d. abnormal and continuous.
39. Which of the following accounts is credited when abnormal spoilage is written off in an actual cost
system?
a. Miscellaneous Revenue
b. Loss from Spoilage
c. Finished Goods
d. Work in Process
40. The cost of abnormal discrete units must be assigned to
good units lost units
a. yes yes
b. no no
c. yes no
d. no yes
41. Which of the following statements is false? The cost of rework on defective units, if
a. abnormal, should be assigned to a loss account.
b. normal and if actual costs are used, should be assigned to material, labor and overhead
costs of the good production.
c. normal and if standard costs are used, should be considered when developing the overhead
application rate.
d. abnormal, should be prorated among Work In Process, Finished Goods, and Cost of Goods
Sold.
42. If normal spoilage is detected at an inspection point within the process (rather than at the end), the cost of
that spoilage should be
a. included with the cost of the units sold during the period.
b. included with the cost of the units completed in that department during the period.
c. allocated to ending work in process units and units transferred out based on their relative
values.
d. allocated to the good units that have passed the inspection point.
43. Dallas Co. has a production process in which the inspection point is at 65 percent of conversion. The
beginning inventory for July was 35 percent complete and ending inventory was 80 percent complete.
Normal spoilage costs would be assigned to which of the following groups of units, using FIFO costing?
Beginning Ending Units Started

Inventory Inventory & Completed
a. no yes yes
b. yes yes yes
c. no no yes
d. yes no no

44. Which of the following is not a question that needs to be answered with regard to quality control?
a. What happens to the spoiled units?
b. What is the actual cost of spoilage?
c. How can spoilage be controlled?
d. Why does spoilage happen?
ANS: A PTS: 1 DIF: Moderate OBJ: 6-8
45. Normal spoilage units resulting from a continuous process
a. are extended to the EUP schedule.
b. result in a higher unit cost for the good units produced.
c. result in a loss being incurred.
d. cause estimated overhead to increase.
46. The addition of material in a successor department that causes an increase in volume is called
a. accretion.
b. reworked units.
c. complex procedure.
d. undetected spoilage.
47. Wood Company transferred 5,500 units to Finished Goods Inventory during October. On October 1, the
company had 300 units on hand (40 percent complete as to both material and conversion costs). On
October 31, the company had 800 units (10 percent complete as to material and 20 percent complete as to
conversion costs). The number of units started and completed during October was:
a. 5,200.
b. 5,380.
c. 5,500.
d. 6,300.
ANS: A
Units Transferred Out 5,500
Less: Units in Beginning Inventory (300)
Units Started and Completed 5,200

48. Cole Company transferred 6,000 units to Finished Goods Inventory during August. On August 1, the
company had 400 units on hand (35 percent complete as to both material and conversion costs). On
August 31, the company had 750 units (20 percent complete as to material and 30 percent complete as to
conversion costs). The number of units started and completed during August was:
a. 5,600
b. 5,860
c. 6,000
d. 6,750
ANS: A
Units Transferred Out 6,000
Less: Units in Beginning Inventory (400)
49. Boggs Company started 9,000 units in March. The company transferred out 7,000 finished units and
ended the period with 3,500 units that were 40 percent complete as to both material and conversion costs.
Beginning Work in Process Inventory units were
a. 500.
b. 600.
c. 1,500.
d. 2,000.
ANS: C
Beginning Work in Process 1,500
Add: Units Started 9,000
Deduct: Units Transferred Out (7,000)
Ending Work in Process 3,500

50. Williams Company started 8,600 units in April. The company transferred out 6,400 finished units and
ended the period with 3,200 units that were 40 percent complete as to both material and conversion costs.
Beginning Work in Process Inventory units were
a. 400.
b. 1,000.
c. 1,280.
d. 2,200.
ANS: B

51. Lincoln Company had beginning Work in Process Inventory of 5,000 units that were 40 percent complete
as to conversion costs. Lincoln Company started and completed 42,000 units this period and had ending
Work in Process Inventory of 12,000 units. How many units were started this period?
a. 42,000
b. 47,000
c. 54,000
d. 59,000
ANS: C
Deduct: Units Transferred Out ( 47,000)
52. Douglas Company had beginning Work in Process Inventory of 6,000 units that were 45 percent complete
as to conversion costs. Douglas Company started and completed 46,000 units this period and had ending
Work in Process Inventory of 11,000 units. How many units were started this period?
a. 46,000
b. 52,000
c. 57,000
d. 63,000
ANS: C

53. Streete Company uses a weighted average process costing system. Material is added at the start of
production. Streete Company started 13,000 units into production and had 4,500 units in process at the
start of the period that were 60 percent complete as to conversion costs. If Streete Company transferred
out 11,750 units, how many units were in ending Work in Process Inventory?
a. 1,250
b. 3,000
c. 3,500
d. 5,750
ANS: D

54. Roache Company uses a weighted average process costing system. Material is added at the start of
production. Roache Company started 14,000 units into production and had 5,000 units in process at the
start of the period that were 75 percent complete as to conversion costs. If Roache Company transferred
out 12,250 units, how many units were in ending Work in Process Inventory?
a. 1,750
b. 3,000
c. 5,500
d. 6,750
ANS: D

55. Jones Company uses a weighted average process costing system and started 30,000 units this month.
Jones had 12,000 units that were 20 percent complete as to conversion costs in beginning Work in
Process Inventory and 3,000 units that were 40 percent complete as to conversion costs in ending Work in
Process Inventory. What are equivalent units for conversion costs?
a. 37,800
b. 40,200
c. 40,800
d. 42,000
ANS: B
Beginning Work in Process 12,000 20% 2,400
+ Completion of Units in Process 12,000 80% 9,600
+ Units Started and Completed 27,000 100% 27,000
+ Ending Work in Process 3,000 40% 1,200
Equivalent Units of Production 40,200

56. Summers Company uses a weighted average process costing system and started 36,000 units this month.
Jones had 15,000 units that were 25 percent complete as to conversion costs in beginning Work in
Process Inventory and 6,000 units that were 35 percent complete as to conversion costs in ending Work in
Process Inventory. What are equivalent units for conversion costs?
a. 43,350
b. 47,100
c. 48,900
d. 51,000
ANS: B

57. Weston Company makes small metal containers. The company began April with 250 containers in
process that were 30 percent complete as to material and 40 percent complete as to conversion costs.
During the month, 5,000 containers were started. At month end, 1,700 containers were still in process (45
percent complete as to material and 80 percent complete as to conversion costs). Using the weighted
average method, what are the equivalent units for conversion costs?
a. 3,450
b. 4,560
c. 4,610
d. 4,910
ANS: D
Beginning Work in Process 250 40% 100
+ Completion of Units in Process 250 60% 150

58. Meade Company makes small metal containers. The company began October with 300 containers in
process that were 35 percent complete as to material and 45 percent complete as to conversion costs.
During the month, 6,000 containers were started. At month end, 1,900 containers were still in process (40
percent complete as to material and 75 percent complete as to conversion costs). Using the weighted
average method, what are the equivalent units for conversion costs?
a. 4,265
b. 5,590
c. 5,825
d. 6,300
ANS: C

59. Ormandy Company uses a FIFO process costing system. The company had 5,000 units that were 60
percent complete as to conversion costs at the beginning of the month. The company started 22,000 units
this period and had 7,000 units in ending Work in Process Inventory that were 35 percent complete as to
conversion costs. What are equivalent units for material, if material is added at the beginning of the
process?
a. 18,000
b. 22,000
c. 25,000
d. 27,000
ANS: B
The material is added at the beginning of the process; therefore there are 22,000 equivalent units of
material.

60. Bernstein Company uses a FIFO process costing system. The company had 6,000 units that were 75
percent complete as to conversion costs at the beginning of the month. The company started 25,000 units
this period and had 8,000 units in ending Work in Process Inventory that were 40 percent complete as to
conversion costs. What are equivalent units for material, if material is added at the beginning of the
process?
a. 18,500
b. 25,000
c. 26,500
d. 31,000
ANS: B
The material is added at the beginning of the process; therefore there are 25,000 equivalent units of
material.

61. Montgomery Company makes fabric-covered hatboxes. The company began July with 500 boxes in
process that were 100 percent complete as to cardboard, 80 percent complete as to cloth, and 60 percent
complete as to conversion costs. During the month, 3,300 boxes were started. On April 30, 350 boxes
were in process (100 percent complete as to cardboard, 70 percent complete as to cloth, and 55 percent
complete as to conversion costs). Using the FIFO method, what are equivalent units for cloth?
a. 3,295
b. 3,395
c. 3,450
d. 3,595
ANS: A
Beginning Work in Process (Ignored for FIFO) 500 0% -
+ Ending Work in Process 350 70% 245

62. Hahn Company makes fabric-covered storage totes. The company began July with 600 totes in process
that were 100 percent complete as to cardboard, 75 percent complete as to cloth, and 65 percent complete
as to conversion costs. During the month, 3,600 totes were started. On April 30, 450 totes were in process
(100 percent complete as to cardboard, 60 percent complete as to cloth, and 50 percent complete as to
conversion costs). Using the FIFO method, what are equivalent units for cloth?
a. 3,570
b. 3,750
c. 3,870
d. 4,020
ANS: A
Beginning Work in Process (Ignored for FIFO) 600 0% -

Brewer Corporation
Brewer Corporation. has the following information for August:
Beginning Work in Process Inventory

(70% complete as to conversion) 6,000 units
Started 24,000 units
Ending Work in Process Inventory
Beginning WIP Inventory Costs:

Material $23,400
Conversion 50,607
Current Period Costs:

Material $31,500
Conversion 76,956
All material is added at the start of the process and all finished products are transferred out.
63. Refer to Brewer Corporation. How many units were transferred out in August?
a. 15,500
b. 18,000
c. 21,500
d. 24,000
ANS: C

64. Refer to Brewer Corporation. Assume that weighted average process costing is used. What is the cost per
equivalent unit for material?
a. $0.55
b. $1.05
c. $1.31
d. $1.83
ANS: D
Material Costs:
Beginning $23,400
Current Period 31,500
54,900 30,000 units = $ 1.83

65. Refer to Brewer Corporation. Assume that FIFO process costing is used. What is the cost per equivalent
unit for conversion?
a. $3.44
b. $4.24
c. $5.71
d. $7.03
ANS: B
Conversion Costs:
Beginning (Ignored for FIFO) $ -
$ 76,956
Equivalent Units
Beginning Inventory (6,000 * 30%) 1,800
Started and Completed (15,500) 15,500
Ending Inventory (8,500 * 10%) 850
18,150 eq units
Cost per equivalent unit $ 4.24

Collins Corporation
Collins Corporation. has the following information for May:

Beginning WIP Inventory Costs:

Material $25,500
Conversion 52,725

Material $34,300
Conversion 80,845
All material is added at the start of the process and all finished products are transferred out.
66. Refer to Collins Corporation. How many units were transferred out in May?
a. 17,600
b. 19,500
c. 25,100
d. 27,000
ANS: C

67. Refer to Collins Corporation. Assume that weighted average process costing is used. What is the cost per
equivalent unit for material?
a. $0.99
b. $1.18
c. $1.64
d. $1.73
ANS: D
Material Costs:
Beginning $25,500
Current Period _34,300
$59,800 34,500 units = $ 1.73

68. Refer to Collins Corporation. Assume that FIFO process costing is used. What is the cost per equivalent
unit for conversion?
a. $3.05
b. $3.87
c. $4.25
d. $6.40
ANS: B
Conversion Costs:
Beginning (Ignored for FIFO) $ -
$ 80,845
Equivalent Units
Ending Inventory (9,400 * 15%) 1,410
20,885 equivalent units
Cost per equivalent unit ($80,845/20885) $ 3.87

Fantastic Decorations Corporation
The Fantastic Decorations Corporation makes wreaths in two departments: Forming and Decorating.
Forming began the month with 500 wreaths in process that were 100 percent complete as to material and
40 percent complete as to conversion. During the month, 6,500 wreaths were started. At month end,
Forming had 2,100 wreaths that were still in process that were 100 percent complete as to material and 50
percent complete as to conversion. Assume Forming uses the weighted average method of process
costing. Costs in the Forming Department are as follows:
Beginning Work in Process Costs:

Material $1,000
Conversion 1,500
Current Costs:
Material $3,200
Conversion 5,045
The Decorating Department had 600 wreaths in process at the beginning of the month that were 80
percent complete as to material and 90 percent complete as to conversion. The department had 300 units
in ending Work in Process that were 50 percent complete as to material and 75 percent complete as to
conversion. Decorating uses the FIFO method of process costing, and costs associated with Decorating
are:
Beginning WIP Inventory:

Transferred In $1,170
Material 4,320
Conversion 6,210
Current Period:
Transferred In ?
Material $67,745
Conversion 95,820
69. Refer to Fantastic Decorations Corporation. How many units were transferred to Decorating during the
month?
a. 600
b. 4,900
c. 5,950
d. 7,000
ANS: B
Wreaths completed from BWIP 500
Wreaths started and completed 4,400
4,900

70. Refer to Fantastic Decorations Corporation. What was the cost transferred out of Forming during the
month?
a. $5,341
b. $6,419
c. $8,245
d. $8,330
ANS: D
Units Transferred Out Cost per Eq. Unit Total
4,900 1.70 $8,330

71. Refer to Fantastic Decorations Corporation. Assume 8,000 units were transferred to Decorating. Compute
the number of equivalent units as to costs in Decorating for the transferred-in cost component.
a. 7,400
b. 7,700
c. 8,000
d. 8,600
ANS: C
The transferred-in cost component is the 8,000 units that were transferred in.

72. Refer to Fantastic Decorations Corporation. Assume 8,000 units were transferred to Decorating.
Compute the number of equivalent units in Decorating for material.
a. 7,970
b. 8,000
c. 8,330
d. 8,450
ANS: A
Materials: Decorating: FIFO Units % Complete Eqiv. Units

73. Refer to Fantastic Decorations Corporation. Assume 8,000 units were transferred to Decorating. Compute
the number of equivalent units in Decorating for conversion.
a. 7,925
b. 7,985
c. 8,360
d. 8,465
ANS: B
Conversion: Decorating: FIFO Units % Complete Equiv.
Units


74. Refer to Fantastic Decorations Corporation. Assume that 8,000 units were transferred to Decorating at a
total cost of $16,000. What is the material cost per equivalent unit in Decorating?
a. $8.50
b. $8.65
c. $8.80
d. $9.04
ANS: A
When FIFO is used, consider only current costs.
Current Costs Equiv Cost/

Units Equiv Unit
$67,745 7,970 $8.50

75. Refer to Fantastic Decorations Corporation. Assume that 8,000 units were transferred to Decorating at a
total cost of $16,000. What is the conversion cost per equivalent unit in Decorating?
a. $11.32
b. $11.46
c. $12.00
d. $12.78
ANS: C
When FIFO is used, consider only current costs.
Current Costs Equiv Cost/

Units Equiv Unit
$95,820 7,985 $12.00

76. Refer to Fantastic Decorations Corporation. Assume the material cost per EUP is $8.00 and the
conversion cost per EUP is $15 in Decorating. What is the cost of completing the units in beginning
inventory?
a. $ 960
b. $ 1,380
c. $ 1,860
d. $11,940
ANS: C
Costs to Percent to Cost per
Complete Beg Inv Units Complete Unit Total
Materials 600 20% $8 $960
Conversion 600 10% $15 $900
Total Costs to Complete $1,860

Four Seasons Company
Four Seasons Company adds material at the start to its production process and has the following
information available for August:

Started this period 32,000 units
Transferred out ?
77. Refer to Four Seasons Company. Compute the number of units started and completed in August.
a. 29,500
b. 34,500
c. 36,500
d. 39,000
ANS: A
Units started this period 32,000
Less: Ending Work in Process 2,500
Units started and completed this period 29,500

78. Refer to Four Seasons Company. Calculate equivalent units of production for material using FIFO.
a. 32,000
b. 36,800
c. 37,125
d. 39,000
ANS: A
Materials are added at the beginning of the process. 32,000 units were started in the current period;
therefore there are 32,000 equivalent units for materials.

79. Refer to Four Seasons Company. Calculate equivalent units of production for conversion using FIFO.
a. 30,125
b. 34,325
c. 37,125
d. 39,000
ANS: B
Equivalent Units for Conversion
34,325 eq. units

80. Refer to Four Seasons Company. Calculate equivalent units of production for material using weighted
average.
a. 32,000
b. 34,325
c. 37,125
d. 39,000
ANS: D
Equivalent Units--Materials
Beginning Inventory (7,000 units) 7,000
Started this Period (32,000) 32,000
39,000 eq. units

81. Refer to Four Seasons Company. Calculate equivalent units of production for conversion using weighted
average.
a. 34,325
b. 37,125
c. 38,375
d. 39,925
ANS: B
Equivalent Units--Conversion
37,125 eq. units

Simpson Company
Simpson Company adds material at the start of production. The following production information is
available for September:

Started this period 120,000 units
Beginning Work in Process Inventory Costs:

Material $24,500
Conversion 68,905

Material $ 75,600
Conversion 130,053
82. Refer to Simpson Company. How many units must be accounted for?
a. 118,200
b. 128,200
c. 130,000
d. 138,200
ANS: C
Units Started 120,000
Total Units 130,000

83. Refer to Simpson Company. What is the total cost to account for?
a. $ 93,405
b. $205,653
c. $274,558
d. $299,058
ANS: D
BWIP: Materials $ 24,500
BWIP: Conversion 68,905
Current Period: Materials 75,600
Current Period: Conversion 130,053
Total Costs $299,058
84. Refer to Simpson Company. How many units were started and completed in the period?
a. 111,800
b. 120,000
c. 121,800
d. 130,000
ANS: A
Units started this period 120,000
Less: Ending Work in Process 8,200
Units started and completed this period 111,800

85. Refer to Simpson Company. What are the equivalent units for material using the weighted average
method?
a. 120,000
b. 123,860
c. 128,360
d. 130,000
ANS: D
Equivalent Units
130,000 eq. units

86. Refer to Simpson Company. What are the equivalent units for material using the FIFO method?
a. 111,800
b. 120,000
c. 125,500
d. 130,000
ANS: B
Equivalent Units
Beginning Inventory (Ignored for FIFO) 0
120,000 eq. units

87. Refer to Simpson Company. What are the equivalent units for conversion using the weighted average
method?
a. 120,000
b. 123,440
c. 128,360
d. 130,000
ANS: C

88. Refer to Simpson Company. What are the equivalent units for conversion using the FIFO method?
a. 118,360
b. 122,860
c. 123,860
d. 128,360
ANS: C
Beginning Work in Process (ignored) 10,000 0% -

89. Refer to Simpson Company. What is the material cost per equivalent unit using the weighted average
method?
a. $.58
b. $.62
c. $.77
d. $.82
ANS: C
Material Costs:
Beginning $ 24,500
100,100 130,000 units= $ 0.77 per unit

90. Refer to Simpson Company. What is the conversion cost per equivalent unit using the weighted average
method?
a. $1.01
b. $1.05
c. $1.55
d. $1.61
ANS: C
Conversion Costs:
Beginning $ 68,905
198,958 128,360 units= $ 1.55 per unit

91. Refer to Simpson Company. What is the cost of units completed using the weighted average method?
a. $237,510
b. $266,742
c. $278,400
d. $282,576
ANS: D
Units Completed Costs per Equivalent Unit Total
121,800 (1.55 + .77) = $2.32 $282,576

92. Refer to Simpson Company. What is the conversion cost per equivalent unit using the FIFO method?
a. $1.05
b. $.95
c. $1.61
d. $1.55
ANS: A
Conversion Costs:
Beginning (Ignored)
Current Period $130,053
$130,053 123,860 units= $1.05 per unit

93. Refer to Simpson Company. What is the cost of all units transferred out using the FIFO method?
a. $204,624
b. $191,289
c. $287,004
d. $298,029
ANS: C
Beginning Inventory
10,000 units:
Raw Materials (prior period) $24,500
Direct Labor (prior period 68,905
FOH (10,000 * .55 * $1.05) 5,775
$99,180
Units Started and Completed
111,800 units * $ (.63+1.05): $187,824
Total $287,004

Mercury Corporation
Beginning inventory (30% complete as to Material B 700 units

and 60% complete for conversion)
Started this cycle 2,000 units
Ending inventory (50% complete as to Material B and 500 units
80% complete for conversion)
Beginning inventory costs:

Material A $14,270
Material B 5,950
Conversion 5,640
Current Period costs:

Material A $40,000
Material B 70,000
Conversion 98,100
Material A is added at the start of production, while Material B is added uniformly throughout the
process.
94. Refer to Mercury Corporation. Assuming a weighted average method of process costing, compute EUP
units for Materials A and B.
a. 2,700 and 2,280, respectively
b. 2,700 and 2,450, respectively
c. 2,000 and 2,240, respectively
d. 2,240 and 2,700, respectively
ANS: B
Weighted Average Material A Material B
Beginning Work in Process 700 700
Units Started and Completed 1,500 1,500
Ending Work in Process 500 250
EUP Materials 2,700 2,450

95. Refer to Mercury Corporation Assuming a FIFO method of process costing, compute EUP units for
Materials A and B.
a. 2,700 and 2,280, respectively
b. 2,700 and 2,450, respectively
c. 2,000 and 2,240, respectively
d. 2,450 and 2,880, respectively
ANS: C
FIFO Material A Material B
Beginning Work in Process 0 490
Units Started and Completed 1,500 1,500
Ending Work in Process 500 250
EUP Materials 2,000 2,240

96. Refer to Mercury Corporation Assuming a weighted average method of process costing, compute EUP for
conversion.
a. 2,600
b. 2,180
c. 2,000
d. 2,700
ANS: A
Weighted Average
Beginning Work in Process 700
Ending Work in Process 400
2,600

97. Refer to Mercury Corporation Assuming a FIFO method of process costing, compute EUP for
conversion.
a. 2,240
b. 2,180
c. 2,280
d. 2,700
ANS: B
FIFO
Beginning Work in Process (700 * 40%) 280
Ending Work in Process (500 * 80%) 400
2,180

98. Refer to Mercury Corporation Assuming a weighted average method of process costing, compute the
average cost per unit for Material A.
a. $20.10
b. $20.00
c. $31.25
d. $31.00
ANS: A
Weighted Average: Material A
Beginning $ 14,270
54,270 2,700 units= $ 20.10 per unit

99. Refer to Mercury Corporation Assuming a FIFO method of process costing, compute the average cost per
EUP for Material A.
a. $31.25
b. $20.10
c. $20.00
d. $31.00
ANS: C
Material A Costs Equivalent Units Average Cost per EUP
(Current Period)
$40,000 2,000 $20.00

EUP for Material B.
a. $20.10
b. $31.25
c. $20.00
d. $31.00
ANS: B
Material B Costs
(Current Period) Equivalent Units Average Cost per EUP
$70,000 2,240 $31.25

average cost per EUP for Material B.
a. $20.00
b. $31.25
c. $20.10
d. $31.00
ANS: D
Material B Costs
(Beginning Inventory and Current Period) Equivalent Units Average Cost per EUP
$75,950 2,450 $31.00

EUP for conversion.
a. $45.50
b. $45.00
c. $43.03
d. $47.59
ANS: B
Conversion Costs Equivalent Units Average Cost per EUP
(Current Period)
$98,100 2,180 $45.00

average cost per EUP for conversion.
a. $39.90
b. $45.00
c. $43.03
d. $47.59
ANS: A
Conversion Costs
(Beginning WIP and Current Period) Equivalent Units Average Cost per EUP
$(98,100 + $5,640)=$103,640 2,600 $39.90

Guthrie Corporation
The following information is available for Guthrie Corporation for the current year:
Beginning Work in Process Costs of Beginning Work in Process:

(75% complete) 14,500 units Material $25,100
Started 75,000 units Conversion 50,000
Ending Work in Process Current Costs:
(60% complete) 16,000 units Material $120,000
Abnormal spoilage 2,500 units Conversion 300,000
Normal spoilage 5,000 units
(continuous)
Transferred out 66,000 units
All materials are added at the start of production.
104. Refer to Guthrie Corporation. Using weighted average, what are equivalent units for material?
a. 82,000
b. 89,500
c. 84,500
d. 70,000
ANS: C
Materials: Weighted Average Units % Complete Eq. Units
+ Abnormal Spoilage 2,500 100% 2,500

105. Refer to Guthrie Corporation. Using weighted average, what are equivalent units for conversion costs?
a. 80,600
b. 78,100
c. 83,100
d. 75,600
ANS: B
Conversion: Weighted Average Units % Complete Eq Units

106. Refer to Guthrie Corporation. What is the cost per equivalent unit for material using weighted average?
a. $1.72
b. $1.62
c. $1.77
d. $2.07
ANS: A
Weighted Average: Materials
Beginning $ 25,100
145,100 84,500 units= $1.72 per unit

107. Refer to Guthrie Corporation. What is the cost per equivalent unit for conversion costs using weighted
average?
a. $4.62
b. $4.21
c. $4.48
d. $4.34
ANS: C
Weighted Average: Conversion
Beginning $ 50,000
$ 350,000 78,100 units = $ 4.48 per unit
108. Refer to Guthrie Corporation. What is the cost assigned to normal spoilage using weighted average?
a. $31,000
b. $15,500
c. $30,850
d. None of the responses are correct
ANS: D
No costs are assigned to normal, continuous spoilage. Higher costs are assigned to good units
produced.

109. Refer to Guthrie Corporation. Assume that the cost per EUP for material and conversion are $1.75 and
$4.55, respectively. What is the cost assigned to ending Work in Process?
a. $100,800
b. $87,430
c. $103,180
d. $71,680
ANS: D
Equivalent Cost per
Units Equivalent Unit Total
16,000 $1.75 $28,000
9,600 $4.55 $43,680
$71,680

110. Refer to Guthrie Corporation. Using FIFO, what are equivalent units for material?
a. 75,000
b. 72,500
c. 84,500
d. 70,000
ANS: D
Materials: FIFO
Beginning Work in Process - 0% -

111. Refer to Guthrie Corporation. Using FIFO, what are equivalent units for conversion costs?
a. 72,225
b. 67,225
c. 69,725
d. 78,100
ANS: B
Conversion: FIFO

112. Refer to Guthrie Corporation. Using FIFO, what is the cost per equivalent unit for material?
a. $1.42
b. $1.66
c. $1.71
d. $1.60
ANS: C
FIFO: Materials
Current Period $ 120,000
120,000 70,000 units = $1.71 per unit

113. Refer to Guthrie Corporation. Using FIFO, what is the cost per equivalent unit for conversion costs?
a. $4.46
b. $4.15
c. $4.30
d. $3.84
ANS: A
FIFO: Conversion
300,000 67,225 units = $ 4.46 per unit

114. Refer to Guthrie Corporation. Assume that the FIFO EUP cost for material and conversion are $1.50 and
$4.75, respectively. Using FIFO what is the total cost assigned to the units transferred out?
a. $414,194
b. $339,094
c. $445,444
d. $396,975
ANS: A
Transferred Out Units: FIFO Equiv Cost per Total
Units Equiv Unit
+ Completion of Beginning Inventory (14,500 * 25%) 3,625 4.75 17,219
+Units Started and Completed 51,500 6.25 321,875

Crafton Corporation
Crafton Corporation has the following information for the current month:
Units started 100,000 units

Beginning Work in Process: (35% complete) 20,000 units
Normal spoilage (discrete) 3,500 units
Abnormal spoilage 5,000 units
Ending Work in Process: (70% complete) 14,500 units
Material $15,000
Conversion 10,000
All materials are added at the start of the production process. Crafton Corporation inspects goods at 75
percent completion as to conversion.
115. Refer to Crafton Corporation. What are equivalent units of production for material, assuming FIFO?
a. 100,000
b. 96,500
c. 95,000
d. 120,000
ANS: A
Materials: FIFO
+ Normal Spoilage--Discrete 3,500 100% 3,500

116. Refer to Crafton Corporation. What are equivalent units of production for conversion costs, assuming
FIFO?
a. 108,900
b. 103,900
c. 108,650
d. 106,525
ANS: D
Conversion: FIFO
+Normal Spoilage--Discrete 3,500 75% 2,625

117. Refer to Crafton Corporation. Assume that the costs per EUP for material and conversion are $1.00 and
$1.50, respectively. What is the amount of the period cost for July using FIFO?
a. $0
b. $9,375
c. $10,625
d. $12,500
ANS: C
Abnormal spoilage is a period cost.
Materials 5,000 * $1.00/unit $5,000
Conversion Costs 3,750 * $1.50/unit 5,625
Total Abnormal Spoilage $10,625

$1.50, respectively. Using FIFO, what is the total cost assigned to the transferred-out units (rounded to
the nearest dollar)?
a. $245,750
b. $244,438
c. $237,000
d. $224,938
ANS: B
Transferred Out Units: FIFO
Beginning Work in Process $ 25,000
+ Completion of Beginning Inventory (20,000 * 65%) 13,000 1.50 19,500
+ Units Started and Completed 77,000 2.50 192,500
+Normal Spoilage--Discrete-Materials 3,500 1.00 3,500
+Normal Spoilage--Discrete-Conversion 2,625 1.50 3,938
Equivalent Units of Production $244,438

119. Refer to Crafton Corporation. What are equivalent units of production for material assuming weighted
average is used?
a. 107,000
b. 116,500
c. 120,000
d. 115,000
ANS: C
Materials: Weighted Average

120. Refer to Crafton Corporation. What are equivalent units of production for conversion costs assuming
weighted average is used?
a. 113,525
b. 114,400
c. 114,775
d. 115,650
ANS: A
Conversion: Weighted Average

$1.50, respectively. What is the cost assigned to normal spoilage, using weighted average, and where is it
assigned?
Value Assigned To
a. $7,438 Units transferred out and Ending Inventory

b. $7,438 Units transferred out
c. $8,750 Units transferred out and Ending Inventory
d. $8,750 Units transferred out
ANS: B
Cost per
Equivalent Units Equivalent Unit Total
3,500 $1.00 $3,500
2,625 $1.50 3,938
$7,438
This amount is transferred out.
$1.50, respectively. Assuming that weighted average is used, what is the cost assigned to ending
inventory?
a. $29,725.00
b. $37,162.50
c. $38,475.00
d. $36,250.00
ANS: A
Ending Inventory: Weighted Average
Materials 14,500 $1.00 $ 14,500.00
Conversion (14,500 * 70%) 10,150 1.50 15,225.00
Total $ 29,725.00

Knight Corporation
Knight Corporation has the following information for the current month:
Units started 95,000 units

Material $18,000
Conversion 14,000
All materials are added at the start of the production process. Knight Corporation inspects goods at 75
percent completion as to conversion.
123. Refer to Knight Corporation. What are equivalent units of production for material, assuming FIFO?
a. 91,000
b. 92,000
c. 95,000
d. 110,000
ANS: C
Materials: FIFO
124. Refer to Knight Corporation. What are equivalent units of production for conversion costs, assuming
FIFO?
a. 97,750
b. 100,000
c. 101,750
d. 104,500
ANS: B
Conversion: FIFO

125. Refer to Knight Corporation. Assume that the costs per EUP for material and conversion are $2.00 and
$2.25, respectively. What is the amount of the period cost for July using FIFO?
a. $0
b. $12,750
c. $14,750
d. $17,000
ANS: C
Abnormal spoilage is a period cost.
Materials 4,000 * $2.00/unit $ 8,000
Conversion Costs 3,000 * $2.25/unit 6,750
Total Abnormal Spoilage $14,750

$2.25, respectively. Using FIFO, what is the total cost assigned to the transferred-out units (rounded to
the nearest dollar)?
a. $344,938
b. $365,875
c. $376,938
d. $378,625
ANS: C
Transferred Out Units: FIFO
+ Completion of Beginning Inventory (15,000 * 70%) 10,500 $2.25 23,625
+ Units Started and Completed 73,000 4.25 310,250
+Normal Spoilage--Discrete-Materials 3,000 2.00 6,000
+Normal Spoilage--Discrete-Conversion (3,000 * 75%) 2,250 2.25 5,063
Total Costs Assigned to Transferred Units $376,938
127. Refer to Knight Corporation. What are equivalent units of production for material assuming weighted
average is used?
a. 105,500
b. 106,000
c. 107,000
d. 110,000
ANS: D
Materials: Weighted Average

128. Refer to Knight Corporation. What are equivalent units of production for conversion costs assuming
weighted average is used?
a. 103,750
b. 104,500
c. 104,750
d. 105,500
ANS: B
Conversion: Weighted Average

$2.25, respectively. What is the cost assigned to normal spoilage, using weighted average, and where is it
assigned?
Value Assigned To
a. $11,063 Units transferred out and Ending Inventory

b. $11,063 Units transferred out
c. $12,750 Units transferred out and Ending Inventory
d. $12,750 Units transferred out
ANS: B
Equivalent Cost per
Units Equivalent Unit Total
3,000 $2.00 $6,000
2,250 $2.25 5,063
$11,063
This amount is transferred out.

$2.25, respectively. Assuming that weighted average is used, what is the cost assigned to ending
inventory?
a. $55,312.50
b. $63,750.00
c. $66,375.00
d. $72,312.50
ANS: A
Ending Inventory: Weighted Average
Materials 15,000 $2.00 $ 30,000.00
Conversion (15,000 * 75%) 11,250 2.25 25,312.50
Total $ 55,312.50

Chapman Corporation
The following information is available for Chapman Corporation for the current month:
Started this month 80,000 units

Beginning WIP
(40% complete) 7,500 units
Abnormal spoilage 900 units
Ending WIP
(70% complete) 13,000 units

Material $10,400
Conversion 13,800
Current Costs:
Material $120,000
Conversion 350,000
All materials are added at the start of production and the inspection point is at the end of the process.
131. Refer to Chapman Corporation. What are equivalent units of production for material using FIFO?
a. 80,000
b. 79,100
c. 78,900
d. 87,500
ANS: A
Materials: FIFO
-
Beginning Work in Process 0% -
+ Normal Spoilage (discrete) 1,100 100% 1,100
+ Abnormal Spoilage 900 100% 900

132. Refer to Chapman Corporation. What are equivalent units of production for conversion costs using FIFO?
a. 79,700
b. 79,500
c. 81,100
d. 80,600
ANS: D
Conversion: FIFO % Complete
Units EUP

133. Refer to Chapman Corporation. What are equivalent units of production for material using weighted
average?
a. 86,600
b. 87,500
c. 86,400
d. 85,500
ANS: B
Materials: Weighted Average Units % Complete EUP

134. Refer to Chapman Corporation. What are equivalent units of production for conversion costs using
weighted average?
a. 83,600
b. 82,700
c. 82,500
d. 81,600
ANS: A
Conversion: FIFO Units % Complete EUP

135. Refer to Chapman Corporation. What is cost per equivalent unit for material using FIFO?
a. $1.63
b. $1.37
c. $1.50
d. $1.56
ANS: C
FIFO: Materials
$ 120,000 80,000 $ 1.50 per unit
units=

136. Refer to Chapman Corporation. What is cost per equivalent unit for conversion costs using FIFO?
a. $4.00
b. $4.19
c. $4.34
d. $4.38
ANS: C
FIFO: Conversion
$ 350,000 80,600 units = $ 4.34 per unit

137. Refer to Chapman Corporation. What is cost per equivalent unit for material using weighted average?
a. $1.49
b. $1.63
c. $1.56
d. $1.44
ANS: A
Weighted Average:
Materials
Beginning $ 10,400
130,400 87,500 units = $ 1.49 /unit

138. Refer to Chapman Corporation. What is cost per equivalent unit for conversion costs using weighted
average?
a. $4.19
b. $4.41
c. $4.55
d. $4.35
ANS: D
Weighted Average:
Conversion
Beginning $ 13,800
363,800 83,600 units = $4.35 per unit

139. Refer to Chapman Corporation. What is the cost assigned to ending inventory using FIFO?
a. $75,920
b. $58,994
c. $56,420
d. $53,144
ANS: B
Ending Inventory: FIFO
Materials 13,000 $ 1.50 $ 19,500
Conversion (13,000 * 70%) 9,100 4.34 39,494
Total $ 58,994

140. Refer to Chapman Corporation. What is the cost assigned to abnormal spoilage using FIFO?
a. $1,350
b. $3,906
c. $5,256
d. $6,424
ANS: C
Abnormal
Spoiled Units Price per Equivalent Unit Total
900 $5.84 $5,256

141. Refer to Chapman Corporation. What is the cost assigned to normal spoilage and how is it classified
using weighted average?
a. $6,193 allocated between WIP and Transferred Out
b. $6,424 allocated between WIP and Transferred Out
c. $6,193 assigned to loss account
d. $6,424 assigned to units Transferred Out
ANS: D
Normal
Spoiled Units Price per Equivalent Unit Total
1,100 $5.84 $6,424 Transferred Out

142. Refer to Chapman Corporation. What is the total cost assigned to goods transferred out using weighted
average?
a. $435,080
b. $429,824
c. $428,656
d. $423,400
ANS: B
Goods Transferred Out/ Price per Eq Unit Total
73,600 $5.84 $429,824

SHORT ANSWER
1.Discuss the assignment of costs to transferred-out inventories in both process costing methods.
ANS:
The assignment of costs in a process costing system first involves determining total production costs.
These costs are then assigned to units completed and transferred out during the period and to the units in
Work in Process Inventory at the end of the period. To assign costs, the cost per equivalent unit must be
established using either the FIFO or weighted average method. The cost per EUP is then multiplied by the
number of equivalent units in the component being costed. Transferred-out costs using the weighted
average method are computed as the number of units transferred times the total price per equivalent unit.
When using FIFO, transferred-out units are computed as follows: the costs in beginning WIP are added to
the current period costs to complete the units which sums to the total cost of beginning WIP; the units
started and completed are priced at current period costs; the total of the costs of beginning inventory and
units started and completed are then transferred out.
PTS: 1 DIF: Moderate OBJ: 6-3 | 6-4

2. Discuss process costing in a multi-department atmosphere.
ANS:
When a business has more than one department in its production process, products are transferred from
Department A to Department B and so on. As the products are transferred from department to department
so, too, must the costs be transferred. When products are transferred, the units and costs are treated as
input material in the next department. The new department may add additional material or may simply
add conversion costs and finish the products. The total cost of the products is a cumulative total from all
departments within the process.
PTS: 1 DIF: Moderate OBJ: 6-3

3. List and explain the six steps of cost assignment when using process costing. How does cost assignment
differ between the weighted average and FIFO methods?
ANS:
Step 1--Determine the total physical units to account for by adding beginning work in process inventory
in physical units and the physical units started. The result of this step should be identical for both
weighted average and FIFO methods.
Step 2--Determine the total physical units accounted for. The units will either be transferred out, spoiled
(normal or abnormal) or remain in ending work in process inventory. The result of this step is identical
for both weighted average and FIFO methods.
It is also possible to compute Units started and completed by subtracting units in beginning inventory
from units transferred out.
At this point the results from Step 1 should equal the result from Step 2.
Step 3--Calculate equivalent units of production (EUP):

Weighted Average: Beginning WIP Inventory in physical units + Units Started and Completed + (Units
in Ending WIP Inventory x Percentage of Completion)
FIFO: Beginning WIP inventory in physical units x Percentage of work done in CURRENT period) +
Units Started and Completed + (Units in Ending WIP Inventory x Percentage of Completion)
Note that the only difference between the weighted average and FIFO methods is the computation of the
beginning inventory.
Step 4--Calculate total costs to account for. This equals the total costs in beginning WIP inventory and the
costs incurred during the current period. These costs are the same for both weighted average and FIFO.
These costs will be separated into materials costs and conversion costs.
Step 5--Calculate cost per equivalent unit for each cost component (materials and conversion).
Weighted Average: (Costs in beginning inventory + Current period costs)/EUP (computed in step 3)--
Note that all costs in beginning WIP inventory are included in this computation)
FIFO: Current period inventory costs/EUP (computed in step 3). Do not include beginning inventory
costs in computation of EUP.
The sum of the individual components equal the total cost per completed EU.
Step 6--Assign the costs (from Step 4) to goods transferred out, abnormal spoilage (if any), and ending
WIP. The total costs assigned must equal the costs computed in Step 4.
Weighted Average
Transferred Out--Units Transferred Out x Total Cost per EUP
Ending WIP Inventory--Sum of (EUP per component x Cost per EUP)
FIFO
Transferred Out--Beginning WIP Costs + (Units in BI x % completed during current period x Cost per
EU Component) + Units Started and Completed during period x Total Cost per EUP)
Ending WIP Inventory--Sum of (EUP per component x Cost per EUP)--The EUPs
for each component are the same under the FIFO method and the weighted average
method; however, the cost per EUP differs under weighted average. Therefore, the
total ending WIP inventory will differ between FIFO and weighted average.

4. Discuss standard costing as used in conjunction with process costing.
ANS:
When standard costing is used in conjunction with process costing, the costing procedure is simplified.
Standard costing eliminates the calculation in each new period of a new production cost because the
standards are established as on-going norms for (at least) a one-year period of time. Standard costing in a
process costing system is essentially a FIFO system that permits variances to be recognized during the
period.

5. What are two alternative calculations that can be used to either verify the number of equivalent units or to
obtain the number initially?
ANS:
One alternative method of calculating equivalent units for weighted average is to determine units
transferred out and add to that the equivalent units of ending work in process. Another alternative method
of calculating equivalent units for FIFO is to determine equivalent units of production under weighted
average and subtract the beginning work in process equivalent units that were completed in the last
period. Both of these methods may be used to "check" original answers.

6. When is a hybrid costing system appropriate in a manufacturing setting?
ANS:
A hybrid costing system combines characteristics of both job order and process costing systems. Such a
system would be appropriate in a manufacturing setting where products can be mass produced up to a
certain point and then must be customized after that point. For example an automobile manufacturer that
sells a wide variety of options on vehicles would use a hybrid costing system--process for manufacturing
the chassis and motor, then job order for the distinguishing features such as specialized interiors.
Likewise a company that manufactured different types of clothes would use job order costing for the
materials but process costing for processing the materials into finished products.

7. Discuss how spoilage is treated in EUP computations.
ANS:
If spoilage is normal and continuous, the calculations for EUP do not include this spoilage (method of
neglect), and the good units simply absorb the cost of such spoilage. If spoilage is normal and discrete,
the equivalent units are used in the EUP calculations, and the spoilage cost is assigned to all units that
passed through the inspection point during the current period. If the spoilage is abnormal and either
discrete or continuous, the equivalent units are used in EUP calculations and costed at the cost per EUP;
the total cost is then assigned to a loss account.

8. Discuss why units are lost during production.
ANS:
In most production processes, losses are anticipated to a certain degree. Losses may be classified as
normal and abnormal depending on management's expectations. A normal loss is one that is expected,
while an abnormal loss is one that exceeds the normal loss. The losses may result in spoiled or defective
units. Spoiled units cannot be economically reworked; defective units can be. Losses can occur on a
continuous or a discrete basis. Quality control points are established at the end of and/or within the
process to inspect goods and remove from further processing those units that are either spoiled or
defective.

9. Distinguish between discrete and continuous production losses and the method of accounting for these
losses.
ANS:
Discrete production losses occur at a specific point in the production process. Such a loss is detectable
only when a quality check is performed. The cost of normal discrete losses should be assigned only to
units that have passed the inspection point in ending inventory and transferred out on an EUP basis as a
product cost. Abnormal discrete losses should be treated as a period cost and written off on an EUP basis.
Continuous production losses occur throughout the production process. Normal continuous production
losses are handled through the method of neglect, which ignores the spoiled units in the EUP schedule.
This results in a smaller EUP and a greater cost per equivalent unit. Abnormal discrete losses are treated
as a period cost and written off on an EUP basis.

PROBLEM
Powers Corporation
Powers Corporation has the following information available for May of the current year:


Material $ 2,100
Conversion 2,030

Material $ 33,000
Conversion 109,695
All material is added at the start of production and all products completed are transferred out.
1. Refer to Powers Corporation. Prepare an equivalent units schedule using the (a) FIFO and (b) weighted
average method.
ANS:
Powers Corporation
Schedule of Equivalent Units for
FIFO and Weighted Average
May 31, current year
FIFO Weighted Average

Beginning Work In Process 10,000 Beginning Work In 10,000
Process
Units Started 120,000 Units Started 120,000
Units to Acct. For 130,000 Units to Acct. For 130,000
Beginning Work In Process 10,000 Transferred Out 100,000
Started & Completed 90,000 Ending Work in 30,000
Process
Ending Work in Process 30,000 Units Accounted For 130,000
Units Accounted For 130,000
(a) FIFO (b) Weighted Average
Mat. CC Mat. CC
BWIP 0 7,500
S&C 90,000 90,000 TO 100,000 100,000
EWIP 30,000 9,000 EI 30,000 9,000
EUP 120,000 106,500 EUP 130,000 109,000
PTS: 1 DIF: Moderate OBJ: 6-3 | 6-4 NAT: AACSB: Analytical Skills
2. Refer to Powers Corporation. Prepare a schedule showing the computation for cost per equivalent unit
assuming the (a) FIFO and (b) weighted average method.
ANS:
Powers Corporation
Schedule of Average Cost Per Unit

Mat. CC Mat. CC
Costs $33,000 $109,695 $ 35,100 $111,725
Eq Units 120,000 106,500 130,000 109,000
$.275/eq unit $ 1.03/eq unit $ .27/eq unit $ 1.025/eq unit
Total cost/eq. unit $ 1.305/eq unit $ 1.295/eq unit
3. Refer to Powers Corporation. Prepare a schedule showing the assignment of costs assuming the (a) FIFO
and (b) weighted average method.
ANS:
Powers Corporation
Schedule of Assigned Costs
(a) FIFO
To complete (7,500 $1.03) = 7,725
$ 11,855
Started and Completed

90,000 $1.305 = 117,450
Total costs transferred out $129,305
Ending Work in Process
30,000 $ .275 = $ 8,250
9,000 $1.03 = 9,270
$ 17,520
Total costs accounted for $146,825

(b) Weighted Average
Completed
100,000 $1.295 = $129,500
30,000 $ .27 = $ 8,100
9,000 $1.025 = 9,225
$ 17,325
PTS: 1 DIF: Difficult OBJ: 6-3 | 6-4 NAT: AACSB: Analytical Skills
Crosson Corporation
Crosson Corporation has the following information available for June of the current year:


Material $ 2,500
Conversion 2,650

Material $ 36,000
Conversion 112,750
All material is added at the start of production and all products completed are transferred out.
4. Refer to Crosson Corporation. Prepare an equivalent units schedule using the (a) FIFO and (b) weighted
average method.
ANS:
Crosson Corporation
Schedule of Equivalent Units for
June 30, current year
FIFO Weighted Average

Beginning Work In Process 12,000 Beginning Work In 12,000
Process
Units Started 150,000 Units Started 150,000
Units to Acct. For 162,000 Units to Acct. For 130,000
Beginning Work In Process 12,000 Transferred Out 127,000
Started & Completed 115,000 Ending Work in 35,000
Process
Ending Work in Process 35,000 Units Accounted For 162,000
Units Accounted For 162,000

Mat. CC Mat. CC
BWIP 0 9,600
S&C 115,000 115,000 TO 127,000 127,000
EWIP 35,000 8,750 EI 35,000 8,750
EUP 150,000 133,350 EUP 162,000 135,750
5. Refer to Crosson Corporation. Prepare a schedule showing the computation for cost per equivalent unit
assuming the (a) FIFO and (b) weighted average method.
ANS:
Crosson Corporation
Schedule of Average Cost Per Unit

Mat. CC Mat. CC
Costs $36,000 $112,750 $ 38,500 $115,400
Eq Units 150,000 133,350 162,000 135,750
$.24/eq unit $ .8455/eq unit $ .2377/eq unit $ .850/eq unit
Total cost/eq. unit $ 1.0855/eq unit $ 1.0877/eq unit
6. Refer to Crosson Corporation. Prepare a schedule showing the assignment of costs assuming the (a) FIFO
and (b) weighted average method.
ANS:
Crosson Corporation
Schedule of Assigned Costs
(a) FIFO
To complete (9,600 $.8455) = 8,117
$ 13,267
Started and Completed

115,000 $1.0855 = 124,833
Total costs transferred out $138,100

35,000 $ .24 = $ 8,400
8,750 $.8455 = (rounded) 7,400
$ 15,800
(b) Weighted Average
Completed
127,000 $1.0877 = rounded $138,142
35,000 $ .2377 = $ 8,320
8,750 x $.850 7,438
$ 15,758
7. Spectacular Candy Corporation has two processing departments, Cooking and Packaging. Ingredients are
placed into production at the beginning of the process in Cooking, where they are formed into various
shapes. When finished, they are transferred into Packaging, where the candy is placed into heart and
tuxedo boxes and covered with foil. All material added in Packaging is considered as one material for
convenience. Since the boxes contain a variety of candies, they are considered partially complete until
filled with the appropriate assortment. The following information relates to the two departments for the
month of February:
Cooking Department:
Beginning WIP (30% complete as to conversion) 4,500 units
Units started this period 15,000 units
Ending WIP (60% complete as to conversion) 2,400 units
Packaging Department:
Beginning WIP (90% complete as to material, 80% complete as 1,000 units
to conversion)
Units started during period ?
Ending WIP (80% complete as to material and 80% complete as 500 units
to conversion)
a. Determine equivalent units of production for both departments using the weighted average method.
b. Determine equivalent units of production for both departments using the FIFO method.
ANS:
a. Cooking Department
Materials Conversion
Costs
Transferred Out 17,100 17,100
Ending Work in Process 2,400 1,440
TOTAL EUP 19,500 18,540
Packaging Department
Transferred In Materials. Conversion
Costs
Transferred Out 17,600 17,600 17,600
Ending Work in Process 500 400 400
TOTAL EUP 18,100 18,000 18,000
b. Cooking Department
Materials Conversion
Costs
Beginning Work in Process 0 3,150
Transferred from Cooking 12,600 12,600
Ending Work in Process 2,400 1,440
TOTAL EUP 15,000 17,190
Packaging Department
Transferred In Materials Conversion
Costs
Beginning Work in Process 0 100 200
Transferred from Cooking 16,600 16,600 16,600
Ending Work in Process 500 400 400
TOTAL EUP 17,100 17,100 17,200
8. The following costs were accumulated by Department 2 of Tulsa Company during November:
Cost Transferred
from Dept. 1 Material Conversion Total
Costs
Beginning Inventory $ 17,050 0 $ 5,450 $ 22,500
Current Period Cost 184,000 $ 34,000 104,000 322,000
$ 201,050 $ 34,000 $ 109,450 $344,500
Production for November in Department 2 (in units):

WIP-November 1 2,000 60% complete
Complete period transferred 20,000
WIP-November 30 5,000 40% complete
Materials are not added in Department 2 until the very end of processing Department 2.
Required: Compute the cost of units completed and the value of ending WIP for:
a. Weighted average inventory assumption
b. FIFO inventory assumption
ANS:
a. Weighted average inventory assumption
Dept 1 MAT CC
Complete 20,000 20,000 20,000
Eq-End WIP 5,000 0 2,000
EP-WA 25,000 20,000 22,000
Unit $201,050 = $8.042 $34,000 = $1.70 $109,450 = $4.975 = $14.717

Cost 25,000 20,000 22,000
End WIP Dept 1 = 5,000 $8.042 = $40,210

CC = 2,000 units $4.975 = 9,950
$50,160
COGM = $344,500 - $50,160 = $294,340
b. FIFO inventory assumption
Dept 1 MAT CC
Complete 20,000 20,000 20,000
Eq-End WIP 5,000 0 2,000
- Eq-Begin (2,000) 0 (1,200)
EP-FIFO 23,000 20,000 20,800
Unit $184,000 = $8.00 $34,000 = $1.70 $104,000 = $5.00 = $14.70

Cost 23,000 20,000 20,800
End WIP Dept 1 = 5,000 units $8.00 = $40,000

CC = 2,000 units $5.00 = 10,000
$50,000
COGM = $344,500 - $50,000 = $294,500
9. The formula for a chemical compound requires one pound of Chemical X and one pound of Chemical Y.
One pound of Chemical X is processed in Department A and transferred to Department B for further
processing where one pound of Chemical Y is added when the process is 50 percent complete. When the
processing is complete in Department B, the finished compound is transferred to finished goods. The
process is continuous, operating 24 hours a day.
Normal spoilage occurs in Department A. Five percent of material is lost in the first few seconds of
processing. No spoilage occurs in Department B.
The following data are available for the month of October:
Dept. A Dept. B
Units in process, October 1 8,000 10,000
Stage of completion of beginning inventory 3/4 3/10
Units started or transferred in 50,000 ?
Units transferred out 46,500 ?
Units in process, October 31 ? ?
Stage of completion of ending inventory 1/3 1/5
Units of Chemical Y added in Department B 44,500
Required:
a. Prepare a schedule showing finished equivalents for Chemical X and for conversion cost for
Department A using the FIFO method.
b. Determine for Department B the number of units of good product completed during October
and the number of units in process on October 31.
c. Prepare a schedule for Department B showing finished equivalents for preceding department
cost, cost of Chemical Y, and conversion cost using the FIFO method.
ANS:
a. c.
Materials Conversion Costs Transferred In Mat CC
46,500 46,500 44,500 44,500 44,500
9,000 3,000 12,000 0 2,400
(8,000) (6,000) (10,000) 0 (3,000)
47,500 43,500 46,500 44,500 43,900
b. Since the material in the second department goes in at the 50 percent point and the ending WIP
inventory is only at the 20 percent point, units complete is the same as the equivalents of
material 44,500, given that units started plus units in beginning WIP are equal to units
complete plus ending WIP 10,000 + 46,500 - 44,500 = 12,000 units in ending WIP.
10. Smithfield Company manufactures a specialized product. Department 2 adds new material to the units
received from Department 1 at the end of process. A normal loss occurs early in processing. Production
and cost data for Department 2 for the month of April are as follows:
Production record (in units):

In process, April 1-75% complete for processing cost 4,000
Received from Department 1 20,000
Completed and transferred to finished goods 16,000
Lost in processing (normal) 2,000
In process, April 30-2/3 complete for process cost 6,000
Cost Record:
Work in process inventory, April 1:
Preceding department cost $ 620
Processing cost 2,000 $2,620
Cost from preceding department in April 1,800
Material cost for April 4,800
Processing cost for April 10,200
Required: Determine the following for Department 2 under (a) weighted average the method of costing
and (b) the FIFO method of costing: (1) unit costs for each cost component, (2) cost of production
transferred to finished goods, (3) cost of work in process inventory of April 30.
ANS:
Equivalent production TI Material Conv. cost
Units complete 16,000 16,000 16,000
+ Equiv. ending WIP 6,000 0 4,000
= Equiv. prod. average 22,000 16,000 20,000
- Equiv. begin. WIP (4,000) 0 (3,000)
= Equiv. prod. FIFO 18,000 16,000 17,000
Unit Cost Average Unit Cost FIFO

TI = $620 + 1,800 TI = $1,800
22,000 = $0.11 18,000 = $0.10
Mat = $4,800 Mat = $4,800

16,000 = $0.30 16,000 = $0.30
CC = $2,000 + 10,200 CC = $10,200

20,000 = $0.61 17,000 = $0.60
End. WIP-WA End. WIP-FIFO

PD 6,000 $0.11 $ 660.00 6,000 $0.10 $ 600.00
= =
CC 4,000 $0.61 2,440.00 4,000 $0.60 2,400.00
= =
$3,100.00 $3,000.00
Cost of Goods Complete
WA FIFO
$19,420 - 3,100 = $16,320.00 $19,420 - 3,000 = $16,420.00
11. Patterson Manufacturing employs a weighted average process costing system for its products. One
product passes through three departments (Molding, Assembly, and Finishing) during production. The
following activity took place in the Finishing Department during April:.
Units in beginning inventory 4,200

Units transferred in from Assembly 42,000
Units spoiled 2,100
Good units transferred out 33,600
The costs per equivalent unit of production for each cost failure area as follows:
Cost of prior departments $5.00

Raw material 1.00
Conversion 3.00
Total cost per EUP $9.00
Raw material is added at the beginning of the Finishing process without changing the number of units
being processed. Work in process inventory was 40 percent complete as to conversion on April 30. All
spoilage was discovered at final inspection. Of the total units spoiled, 1,680 were within normal limits.
Spoilage is considered discrete.
Required:
a. Calculate the equivalent units of production
b. Determine the cost of units transferred out of Finishing
c. Determine the cost of ending Work in Process Inventory
d. The portion of the total transferred in cost associated with beginning Work in Process
Inventory amounted to $18,900. What is the current period cost that was transferred in
from Assembly to Finishing?
e. Determine the cost associated with abnormal spoilage for the month.
ANS:
a.
TI Mat CC
Complete 33,600 33,600 33,600
+ Equiv Ending WIP 10,500 10,500 4,200
+ Normal Sp 1,680 1,680 1,680
+ Abnor Sp 420 420 420
46,200 46,200 39,900
b. 33,600 $9 $302,400 TC = 46,200 $5 $231,000

1,680 $9 15,120 46,200 $1 46,200
$317,520 39,900 $3 119,700
$396,900
c. 10,500 $5 $52,500
10,500 $1 10,500
4,200 $3 12,600
$75,600
COGM = $396,900 - 75,600 - 3,780 = $317,520

d. $5 = $18,900 + X
46,200
X = $231,000 - 18,900 = $212,100
e. ABN = 420 $9 = $3,780
12. Ellis Industries manufactures wood furniture. In the Lamination Department, varnish is added when the
goods are 60 percent complete as to overhead. The units that are spoiled during processing are found
upon inspection at the end of production. Spoilage is considered discrete.
Production Data for Current Month
Beginning inventory (80% complete as to labor, 70% complete as to 1,000 units
overhead)
Transferred in during month 7,450 units
Ending inventory (40% complete as to labor, 20% complete as to overhead) 1,500 units
Normal spoilage (found during final quality inspection) 100 units
Abnormal spoilage-found at 30% completion of direct labor and 15% of 200 units
conversion; the sanding machine was misaligned and scarred the chairs
All other units were transferred to finished goods
Cost Data for Current Month

Beginning work in process inventory:
Prior department costs $7,510
Varnish 950
Direct labor 2,194
Overhead 5,522 $ 16,176
Current period costs:
Prior department costs $68,540
Varnish 7,015
Direct labor 23,000
Overhead 56,782 155,337
Total costs to account for $171,513
Required: Determine the proper disposition of the current month costs for the Laminating Department
using the weighted average method.
ANS:
TI MAT DL MOH
Complete 6,650 6,650 6,650 6,650
+ end 1,500 0 600 300
+ normal 100 100 100 100
+ abnormal 200 0 60 30
8,450 6,750 7,410 7,080
Unit Cost
End WIP
DL 600 $3.40 = $ 2,040

MOH 300 $8.80 = 2,640
TI 1,500 $9.00 = 13,500
$18,180
Abnormal Loss 60 $3.40 = $ 204

DL 30 $8.80 = 264
MOH 200 $9.00 = 1,800
TI $ 2,268
COGM = $171,513 - 18,180 - 2,268 = $151,065
13. Consider the following data for a cooking department for the month of February:
Physical
Units
Work in process, beginning inventory* 11,000
Started during current period 74,000
To account for 85,000
Good units completed and transferred out during current
period:
From beginning work in process 11,000
Started and completed 50,000
Good units completed 61,000
Spoiled units 8,000
Work in process, ending inventory~ 16,000
Accounted for 85,000
*Direct material, 100% complete; conversion costs, 25% complete

~Direct material, 100% complete; conversion costs, 75% complete
Inspection occurs when production is 100 percent completed. Normal spoilage is 11 percent of good units
completed and transferred out during the current period.
The following cost data are available:
Work in process, beginning inventory:

Direct material $220,000
Conversion costs 30,000 $ 250,000
Costs added during current period:
Direct material 1,480,000
Conversion costs 942,000
Costs to account for $2,672,000
Required: Prepare a detailed cost of production report. Use the FIFO method. Distinguish between
normal and abnormal spoilage.
ANS:
Normal Sp = 11% 61,000 = 6,710 units FIFO
Abnormal Sp = 8,000 - 6,710 = 1,290 units
Mat CC Mat = $1,480,000 = $22.00

67,290
Complete 61,000 61,000
+ End 16,000 12,000
+ Ab Sp 1,290 1,290 CC = $942,000 = 13.17
= Ave 78,290 74,290 71,540 $35.17
- Beg (11,000) (2,750)
FIFO 67,290 71,540
WIP
Material 16,000 $352,000
$22.00
CC 12,000 158,040
$13.17
$510,040
Loss = 1,290 $35.17 45,369
COGM = $2,672,000 - 510,040 - 45,369 = $2,116,591
14. Choctaw Industries has two departments. Department 1 uses FIFO costing and Department 2 uses
weighted average.
Units are introduced into the process in Department 1 (this is the only material added in Department 1).
Spoilage occurs continuously through the department and normal spoilage should not exceed 10 percent
of the units started.
Department 2 adds material (packaging) at the 75 percent completion point; this material does not cause
an increase in the number of units being processed. A quality control inspection takes place when the
goods are 80 percent complete. Spoilage should not exceed 5 percent of the units transferred in from
Department 1.
The following production cost data are applicable for operations for August of the current year:
Department 1 Production Data

Beginning inventory (65% complete) 1,000
Units started 25,000
Units completed 22,000
Units in ending inventory (40% complete) 2,800
Department 1 Cost Data

Beginning inventory:
Material $ 1,550
Conversion 2,300 $ 3,850
Current period:
Material $38,080
Conversion 78,645 116,725
Department 2 Production Data

Beginning inventory (90% complete) 8,000
Units transferred in 22,000
Units completed 24,000
Units in ending inventory (20% complete) 4,500
Department 2 Cost Data
Beginning inventory:
Transferred in $40,800
Material 24,000
Conversion 4,320 $ 69,120*
Current period:
Transferred in $113,700
Material` 53,775
Conversion 11,079 178,554
*This may not be the same amount determined for Department 1; ignore any difference and use this
figure.
Required:
a. Compute the equivalent units of production in each department.
b. Determine the cost per equivalent unit in each department and compute the cost transferred out,
the cost in ending inventory, and the cost of spoilage (if necessary).
ANS:
a.
Mat CC Mat = $38,080 = $ 1.60
23,800
Complete 22,000 22,000
+ End WIP 2,800 1,120 (2,800 CC = $78,645 = $ 3.50
4)
24,800 23,120 22,470
- Beg WIP (1,000) (650) (1,000 End 2,800 = $ 4,480

.65) WIP = $1.60
23,800 22,470 1,120 3,920
$3.50
$ 8,400
COGM = $120,575 - 8,400 $112,175
b.
TI Mat CC Mat = $ 77,775 = $ $3.05
25,500
Complete 24,000 24,000 24,000
+ End WIP 4,500 0 900 CC = $ 15,399 = $ $0.59
+ Normal 1,100 1,100 880 26,100
+ Abnormal 400 400 320
30,000 25,500 26,100 TI = $154,500 = $ 5.15
30,000
End WIP Abn Loss

4,500 $5.15 $23,175 400 $3.05 $1,220
900 $0.59 531 320 $0.59 189
$23,706 400 $5.15 2,060
$3,469
COGM = $247,674 - 23,706 - 3,469 = $220,499

15. Hagler Company manufactures a single product. All material is added at the beginning of the process.
Costs Material Conversion Total

Beginning inventory $ 30,000 $ 3,600 $ 33,600
Current period 885,120 335,088 1,220,208
Total costs $915,120 $338,688 $1,253,808
UNITS
Beginning inventory (30% complete-conversion) 6,000 units
Completed 152,000 units
Ending inventory (70% complete-conversion) 20,000 units
Normal spoilage 4,800 units
Required: Find ending WIP inventory, abnormal loss, and COGM. Assume that, for conversion costs,
abnormal shrinkage is 60 percent.
ANS:
Mat CC
Units Complete 152,000 152,000
+ Equivalents Ending WIP 20,000 14,000
+ Abnormal Loss 9,200 5,520 (9,200 .6)
= Equivalent Production-WA 181,200 171,520
= Equivalent Begin WIP (6,000) (1,800)
= Equivalent Production-FIFO 175,200 169,720
Unit Costs:
WA FIFO
Mat $915,120 = $5.05 Mat $885,120 = $5.05
181,200 175,200
CC $338,688 = $1.97 CC $335,088 = $1.97

171,520 169,720
Ending WIP
Material 20,000 $5.05 $101,000
CC 14,000 $1.97 27,580
$128,580
Abnormal Spoilage
Material 9,200 $5.05 $ 46,460
CC 5,520 $1.97 10,874
$ 57,334
Cost of Good Transferred

1,253,808 - 128,580 - 57,334 = $1,067,894
16. Incredible Ice Cream Company produces ice cream in two departments-Mixing and Finishing. In Mixing,
all ingredients except fruit are added at the start of production. In Finishing, fruit is added and then the
mixture is placed into containers. Adding the fruit to the basic ice cream mixture increases the volume
transferred in by the number of gallons of fruit added. Any spoilage that occurs is in the Finishing
Department. Spoilage is detected just before the ice cream is placed into containers or at the 98 percent
completion point. All spoilage is abnormal.
Finishing Department
BWIP (100% fruit, 0% container, 30% CC) 5,000 gallons

Gallons transferred in 5,500
Gallons of fruit added 1,200
EWIP (100% fruit, 0% container, 60% CC) 1,700 gallons
Gallons transferred out 9,000
Abnormal spoilage 1,000
BWIP Costs:
Transferred In $ 9,700
Fruit 10,500
CC 15,000
Current Costs:
Transferred In 12,400
Fruit 54,000
Containers 11,000
CC 98,000
Total Costs $ 210,600
Prepare a cost of production report for October 20XY. The company uses weighted average.
ANS:
Incredible Ice Cream Company

Cost Report
October 31, 20XY
BWIP 5,000
Trans. In 5,500
Fruit 1,200
Acctble. For 11,700
TI Fruit Container CC
Transferred Out 9,000 9,000 9,000 9,000
EWIP 1,700 1,700 0 1,020
Abnormal Spoilage 1,000 1,000 0 980
11,700 11,700 9,000 11,000
Costs:
TI Fruit Container CC
BWIP $ 9,700 $10,500 $ 0 $ 15,000
Current 12,400 54,000 11,000 98,000
$22,100 $64,500 $11,000 $113,000
EUP 11,700 11,700 9,000 11,000
Per unit $1.89 $5.51 $1.22 $10.27
Cost Assignment:
EWIP
1,700 $1.89 = $ 3,213
1,700 $5.51 = 9,367
1,020 $10.27 = 10,475 $ 23,055
Spoilage
1,000 $1.89 = $ 1,890
1,000 $5.51 = 5,510
980 $10.27 = 10,065 17,465
Transferred Out
$210,600 - 23,055 - 17,465 = 170,080
Total accounted for $210,600
Winthrop Company
The following information is available for Winthrop Company for March of the current year. All
materials are added at the start of production.

Normal spoilage (continuous) 6,000 units

Material $ 14,000
Conversion 45,000
Current Costs:
Material 50,000
Conversion 175,000
Total Costs $ 284,000
17. Refer to Winthrop Company. Prepare a cost of production report for March using FIFO.
ANS:
BI 8,000 + Started 35,000 = Accountable for 43,000
Winthrop Company
Cost Report
March 31, 20XY
Material CC
BWIP 8,000 0 1,600
S&C 11,500 11,500 11,500
EWIP 15,000 15,000 8,250
Norm 6,000 0 0
Abnorm. 2,500 2,500 2,500
Acctd. for 43,000 29,000 23,850
Material: $50,000/29,000 = $1.72

Conversion Costs: $175,000/23,850 = $7.34
Cost Assignment:

15,000 $1.72 = $ 25,800
8,250 $7.34 = 60,555 $ 86,355
Abnormal Spoilage
2,500 $9.06 = 22,650
Cost Transferred Out
$284,000 - 86,355 - 22,650 = 174,995
Total costs accounted for $ 284,000
18. Refer to Winthrop Company. Prepare the cost of production report assuming the weighted average
method.
ANS:
BI 8,000 + Started 35,000 = Accountable for 43,000
Winthrop Company
Cost Report
March 31, 20XY
Material CC
Transferred Out 19,500 19,500 19,500
Ending Work In Process 15,000 15,000 8,250
Normal Spoilage 6,000 0 0
Abnormal Spoilage 2,500 2,500 2,500
Accounted For 43,000 37,000 30,250
Material: $64,000/37,000 = $1.73

Conversion Costs: $220,000/30,250 = $ 7.27
Cost Assignment:

15,000 $1.73 = $25,950
8,250 $7.27 = 59,978 $ 85,928
Abnormal Spoilage
2,500 $9.00 = 22,500
Transferred Out
$284,000 - 85,928 - 22,500 = 175,572
Total costs accounted for $ 284,000

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11.

A total variance is best defined as the difference between total

Ideal Practical Expected annual

Ideal Practical Expected annual

VOH spending Total overhead budget Volume

a. yes yes yes

Material Price Variance = (AP - SP) * AQ

51. Refer to Crichton Company. What is the material quantity variance?

52. Refer to Crichton Company. What is the labor rate variance?

53. Refer to Crichton Company. What is the labor efficiency variance?

The following information is for Reichs Companys September production:

Material Price Variance = (AP - SP) * AQ

55. Refer to Reichs Company. What is the material quantity variance?

56. Refer to Reichs Company. What is the labor rate variance?

57. Refer to Reichs Company. What is the labor efficiency variance?

Labor Efficiency Variance = (AQ - SQ) * SP

Labor efficiency variance = (AQ - SQ)* SP

61. Refer to Hazelton Company. What is the material quantity variance?

Labor Rate Variance = (AP - SP) * AQ

64. Refer to Wimberly Company. What is the labor efficiency variance?

Labor efficiency variance = (AQ - SQ)* SP

66. Refer to Wimberly Company. What is the material quantity variance?

Total Variance = (16,700 * $5.10) - (4,200 * 4.0 * $5.25)

Uncontrollable Variance = Budgeted Overhead Based on SQ - Applied Overhead

Volume Variance = Budget Based on Standard Quantity - Overhead Applied

Variable OH Spending Variance = Actual VOH - Budgeted VOH/Actual

Total Variance = Actual Overhead - Applied Overhead

Standard fixed OH rate per DLH $1

The total applied manufacturing overhead for September should be

Direct labor hours 24,000

Actual data for October were as follows:

106. The following information is available from the Fitzgerald Company:

Actual variable OH incurred $196,000

PTS: 1 DIF: Moderate OBJ: 7-3 NAT: AACSB: Analytical Skills

Total actual overhead incurred $12,600

What is the total overhead variance?

PTS: 1 DIF: Easy OBJ: 7-3 NAT: AACSB: Analytical Skills

National Toy Company

Standard costs per unit:

Actual machine hours used were 165,000.

PTS: 1 DIF: Moderate OBJ: 7-3 NAT: AACSB: Analytical Skills

PTS: 1 DIF: Moderate OBJ: 7-3 NAT: AACSB: Analytical Skills

PTS: 1 DIF: Moderate OBJ: 7-3 NAT: AACSB: Analytical Skills

PTS: 1 DIF: Moderate OBJ: 7-3 NAT: AACSB: Analytical Skills

Classic Cleaning Company

Skilled Labor: 4 hours @ $12 per hour

Skilled labor hours: 1,950 @ $11.90 per hour

Round all answers to the nearest whole dollar.

PTS: 1 DIF: Moderate OBJ: 7-7 NAT: AACSB: Analytical Skills

PTS: 1 DIF: Difficult OBJ: 7-7 NAT: AACSB: Analytical Skills

PTS: 1 DIF: Difficult OBJ: 7-7 NAT: AACSB: Analytical Skills

PTS: 1 DIF: Moderate OBJ: 7-7 NAT: AACSB: Analytical Skills

PTS: 1 DIF: Difficult OBJ: 7-7 NAT: AACSB: Analytical Skills

PTS: 1 DIF: Difficult OBJ: 7-7 NAT: AACSB: Analytical Skills

Material quantity variance:

PTS: 1 DIF: Moderate OBJ: 7-3 NAT: AACSB: Analytical Skills

Labor efficiency variance:

PTS: 1 DIF: Moderate OBJ: 7-3 NAT: AACSB: Analytical Skills

PTS: 1 DIF: Moderate OBJ: 7-3 NAT: AACSB: Analytical Skills

PTS: 1 DIF: Moderate OBJ: 7-3 NAT: AACSB: Analytical Skills

Actual FOH $17,500

PTS: 1 DIF: Moderate OBJ: 7-3 NAT: AACSB: Analytical Skills

PTS: 1 DIF: Moderate OBJ: 7-3 NAT: AACSB: Analytical Skills