Quiz 3

Rocky Mountain Company produces two products (X and Y) from a joint process. Each product
may be sold at the split-off point or processed further. Additional processing requires no special
facilities, and production costs of further processing are entirely variable and traceable to the
products involved. Joint manufacturing costs for the year were $60,000. Sales values and costs
were as follows:

If the joint production costs are allocated based on the physical-units method, the amount of joint
cost assigned to product X would be:
$24,000.
$36,000.
$30,000.
$20,000.
$40,000.

Corruption, Inc. overstated the percentage of work completed with respect to conversion cost on
the ending work-in-process inventory. What is the effect of this overstatement on conversion-cost
equivalent units and physical units manufactured, respectively?
Overstated, understated.
None, overstated.
Overstated, none.
Overstated, overstated.
None, none.

Which of the following statements is false?

In job-order costing, costs are accumulated by job order.
In process costing, costs are accumulated by department.
In job-order costing, the unit cost is found by dividing the job's total cost by the job's total units.
In process costing, the cost per unit in a department is found by spreading the period's
manufacturing costs over the production activity.
In process costing, the total cost of each unit is found by dividing the total factory costs by the
number of units completed.

Forest Company, which uses a weighted-average process-costing system, had 7,000 units in
production at the end of the current period that were 60% complete. Material A is introduced at
the beginning of the process; material B is introduced at the end of the process; and conversion
cost is introduced evenly throughout manufacturing. Equivalent-unit production costs follow.

Material A: $12.50
Material B: $2.00
Conversion cost: $6.60
The cost of the company's ending work-in-process inventory is:
None of the answers is correct.
$123,620.
$147,700.
$88,620.
$115,220.

Which of the following choices correctly denotes the data needed to allocate joint costs under the
relative-sales-value method?

Choice D
Choice B
Choice E
Choice C
Choice A

Majesco, which uses a process-costing system, adds material at the beginning of production and
incurs conversion cost evenly throughout manufacturing. The following selected information was
taken from the company's accounting records:

Total equivalent units of materials: 5,000

Total equivalent units of conversion: 4,400
Units started and completed during the period: 3,500

On the basis of this information, the ending work-in-process inventory's stage of completion is:
40%.
80%.
70%.
some other percentage not listed.
60%.

Isthmus Corporation uses the physical-units method to allocate costs among its three joint
products: X, Y, and Z. The following data are available for the period just ended:

Joint processing cost: $800,000

Total production: 150,000 pounds
Share of joint cost allocated to X: $160,000
Share of joint cost allocated to Y: $400,000

Which of the following statements is true?

The company would have relied on the sales value of each product when allocating joint costs to
X, Y, and Z.
Ithaca produced 45,000 pounds of Z during the period.
Ithaca produced 105,000 pounds of Z during the period.
Based on the data presented, it is not possible to determine Ithaca's production of Z during the
period.
Ithaca produced 30,000 pounds of Z during the period.

Aglow Company uses a process-cost system for its single product. Material A is added at the
beginning of the process; in contrast, material B is added when the units are 50% complete. The
firm's ending work-in-process inventory consists of 4,000 units that are 75% complete. Which of
the following correctly expresses the equivalent units of production with respect to materials A
and B in the ending work-in-process inventory?
A, 4,000; B, 0.
A, 4,000; B, 3,000.
A, 3,000; B, 3,000.
A, 4,000; B, 4,000.
A, 3,000; B, 0.

Rocky Mountain Company produces two products (X and Y) from a joint process. Each product
may be sold at the split-off point or processed further. Additional processing requires no special
facilities, and production costs of further processing are entirely variable and traceable to the
products involved. Joint manufacturing costs for the year were $60,000. Sales values and costs
were as follows:

If the joint production costs are allocated based on the net-realizable-value method, the amount
of joint cost assigned to product Y would be:
$33,000.
$27,000.
$40,000.
None of the other answers are correct.
$20,000.

Which of the following is true concerning cost drivers for the predetermined overhead rate in a
process-costing system?
Cost drivers are irrelevant in process-costing systems.
If direct labor hours is the cost driver, direct labor and manufacturing overhead may be combined
into the single element of conversion cost.
If direct material cost is the cost driver, direct labor and direct materials may be combined into
the single element of prime cost.
If direct labor cost is the cost driver, direct labor and manufacturing overhead may be combined
into the single element of conversion cost.
Predetermined overhead rates are not used in a process-costing system.

Barrett Corporation had 6,500 units of work in process on April 1. During April, 19,100 units were
completed and as of April 30, 5,100 units remained in production. How many units were started
during April?
17,700.
20,500.
30,700.
11,600.
None of the other answers are correct.

Zena Company manufactures two products (A and B) from a joint process that cost $200,000 for
the year just ended. Each product may be sold at the split-off point or processed further.
Additional processing requires no special facilities, and production costs of further processing are
entirely variable and traceable to the products involved. Further information follows.

If the joint costs are allocated based on the physical-units method, the amount of joint cost
assigned to product A would be:
$120,000.
None of the other answers are correct.
$80,000.
$104,000.
$100,000.

Gajewski began operations on January 1 of the current year. The company uses a process-
costing system, and conversion cost is incurred evenly throughout manufacturing. By January
31, the firm had completed 56,000 units. Which of the following statements is true about the
ending work-in-process inventory if equivalent units for conversion cost totaled 59,000 units?
The ending work-in-process inventory of 20,000 physical units was 85% complete.
More than one of the other answers is true.
The ending work-in-process inventory of 10,000 physical units was 30% complete.
The ending work-in-process inventory totaled 3,000 physical units.
There is no ending work-in-process inventory.

Xin Co., had 3,000 units of work in process on April 1 that were 60% complete. During April,
10,000 units were completed and as of April 30, 4,000 units that were 40% complete remained in
production. How many units were started during April?
9,800.
12,200.
11,000.
8,600.
None of the other answers are correct.

Which of the following methods should be selected if a company terminates all processing at the
split-off point and desires to use a cost-allocation approach that considers the "revenue-
producing ability" of each product?
Relative-sales-value method.
Gross margin at split-off method.
Physical-units method.
Net-realizable-value method.
Reciprocal-accounting method.

Corruption, Inc. overstated the percentage of work completed with respect to conversion cost on
the ending work-in-process inventory. What is the effect of this overstatement on conversion-cost
equivalent units and physical units manufactured, respectively?
None, overstated.
Overstated, none.
Overstated, understated.
Overstated, overstated.
None, none.

Ohio, Inc., which uses a process-cost accounting system, began operations on January 1 of the
current year. The company incurs conversion cost evenly throughout manufacturing. If Ohio
started work on 3,000 units during the period and these units were 70% of the way through
manufacturing, it would be correct to say that the company has:
3,000 equivalent units of production.
3,000 physical units in production.
2,100 completed units.
900 in-process units.
900 equivalent units of production.

Haskins Textile Co. manufactures a variety of fabrics. All materials are introduced at the
beginning of production; conversion cost is incurred evenly through manufacturing. The Weaving
Department had 2,000 units of work in process on April 1 that were 30% complete as to
conversion costs. During April, 9,000 units were completed and on April 30, 4,000 units remained
in production, 40% complete with respect to conversion costs.

The equivalent units of conversion for April total:

11,200.
12,000.
12,600.
10,600.
9,000.

Willingham uses a process-costing system for its single product, which is manufactured from
Material X and Material Y. X and Y are introduced to the product as follows:
Material X: Added at the beginning of manufacturing
Material Y: Added at the 75% stage of completion

The company started and completed 40,000 units during the period, and had an ending work-in-
process inventory amounting to 8,000 units, 20% complete. Which of the following choices
correctly expresses the total equivalent units of production for Material X and Material Y?

Choice B
Choice C
Choice A
Choice E
Choice D

Unit costs in a process-costing system are derived by using:

in-process units.
equivalent units.
completed units.
physical units.

Forest Company, which uses a weighted-average process-costing system, had 7,000 units in
production at the end of the current period that were 60% complete. Material A is introduced at
the beginning of the process; material B is introduced at the end of the process; and conversion
cost is introduced evenly throughout manufacturing. Equivalent-unit production costs follow.

Material A: $12.50
Material B: $2.00
Conversion cost: $6.60

The cost of the company's ending work-in-process inventory is:

None of the answers is correct.
$123,620.
$88,620.
$147,700.
$115,220.

Which of the following data are needed to calculate total equivalent units under the weighted-
average method?
Work to complete beginning work in process, units completed, and work done on ending work in
process.
Units completed, work to complete beginning work in process.
Work-to-date on ending work in process, units started during the period.
Units completed during the period, work-to-date on ending work in process.
Southern Lake Chemical manufactures a product called Zubek. Direct materials are added at the
beginning of the process, and conversion activity occurs uniformly throughout production. The
beginning work-in-process inventory is 60% complete with respect to conversion; the ending
work-in-process inventory is 20% complete. The following data pertain to May:

Using the weighted-average method of process costing, the equivalent units of direct materials
total:
75,000.
69,400.
68,000.
None of the answers is correct.
74,000.

Kendra Corporation uses a process-cost accounting system. The company adds direct materials
and direct labor at the start of its production process; overhead cost is incurred evenly throughout
manufacturing. The firm has no beginning work-in-process inventory; its ending work in process
is 40% complete. Which of the following sets of percentages would be used to calculate the
correct number of equivalent units in the ending work-in-process inventory?
Materials, 100%; labor 40%; overhead cost, 40%.
Materials, 40%; labor, 40%; overhead cost, 100%.
Materials, 40%; labor, 40%; overhead cost, 60%.
Materials, 100%; labor, 100%; overhead cost, 40%.
Materials, 100%; labor, 100%; overhead cost, 100%.

Herbster manufactures A, B, and C, all of which are joint products, and D, which is classified as a
by-product. If joint manufacturing costs amount to $450,000 and the company is using a popular
accounting method, the firm will:
decrease $450,000 by the net realizable value of D and then allocate the total among A, B, C,
and D.
increase $450,000 by the net realizable value of D and then allocate the total among A, B, and C.
allocate $450,000 among A, B, and C.
allocate $450,000 among A, B, C, and D.
decrease $450,000 by the net realizable value of D and then allocate the total among A, B, and
C.
Fiero Corporation adds all materials at the beginning of production and incurs conversion cost
evenly throughout manufacturing. The company completed 70,000 units during the year and had
12,000 units in process at year end, 20% complete with respect to conversion cost. Equivalent
units for the year total:
materials, 70,000; conversion, 2,400.
materials, 82,000; conversion, 82,000.
materials, 70,000; conversion, 70,000.
materials, 82,000; conversion, 72,400.
materials, 72,400; conversion, 72,400.

Barrett Corporation had 6,500 units of work in process on April 1. During April, 19,100 units were
completed and as of April 30, 5,100 units remained in production. How many units were started
during April?
20,500.
None of the other answers are correct.
11,600.
30,700.
17,700.

Ohio, Inc., which uses a process-cost accounting system, began operations on January 1 of the
current year. The company incurs conversion cost evenly throughout manufacturing. If Ohio
started work on 3,000 units during the period and these units were 70% of the way through
manufacturing, it would be correct to say that the company has:
3,000 equivalent units of production.
900 equivalent units of production.
2,100 completed units.
900 in-process units.
3,000 physical units in production.

Muhares, which uses a process-costing system, adds material at the beginning of production and
incurs conversion cost evenly throughout manufacturing. The following selected information was
taken from the company's accounting records:

Total equivalent units of materials: 8,000

Total equivalent units of conversion: 7,400
Units started and completed during the period: 6,500

On the basis of this information, the ending work-in-process inventory's stage of completion is:
40%.
70%.
60%.
80%.
some other percentage

Garage Specialty Corporation manufactures joint products P and Q. During a recent period, joint
costs amounted to $80,000 in the production of 20,000 gallons of P and 60,000 gallons of Q.
Garage can sell P and Q at split-off for $2.20 per gallon and $2.60 per gallon, respectively.
Alternatively, both products can be processed beyond the split-off point, as follows:
The joint cost allocated to Q under the relative-sales-value method would be:
None of the other answers are correct.
$64,000.
$40,000.
$65,600.
$62,400.

Rocky Mountain Company produces two products (X and Y) from a joint process. Each product
may be sold at the split-off point or processed further. Additional processing requires no special
facilities, and production costs of further processing are entirely variable and traceable to the
products involved. Joint manufacturing costs for the year were $60,000. Sales values and costs
were as follows:

If the joint production costs are allocated based on the physical-units method, the amount of joint
cost assigned to product X would be:
$30,000.
$20,000.
$24,000.
$36,000.
$40,000.

Rocky Mountain Company produces two products (X and Y) from a joint process. Each product
may be sold at the split-off point or processed further. Additional processing requires no special
facilities, and production costs of further processing are entirely variable and traceable to the
products involved. Joint manufacturing costs for the year were $60,000. Sales values and costs
were as follows:

If the joint production costs are allocated based on the relative-sales-value method, the amount
of joint cost assigned to product X would be:
$33,000.
$27,000.
$20,000.
$40,000.
None of the other answers are correct.

Aglow Company uses a process-cost system for its single product. Material A is added at the
beginning of the process; in contrast, material B is added when the units are 50% complete. The
firm's ending work-in-process inventory consists of 4,000 units that are 75% complete. Which of
the following correctly expresses the equivalent units of production with respect to materials A
and B in the ending work-in-process inventory?
A, 3,000; B, 3,000.
A, 4,000; B, 3,000.
A, 4,000; B, 0.
A, 3,000; B, 0.
A, 4,000; B, 4,000.

Christiansen Corporation manufactures joint products W and X. During a recent period, joint
costs amounted to $300,000 in the production of 20,000 gallons of W and 60,000 gallons of X.
Both products will be processed beyond the split-off point, giving rise to the following data:

The joint cost allocated to W under the net-realizable-value method would be:
$90,000.
$80,000.
None of the other answers are correct.
$75,000.
$84,000.

Christiansen Corporation manufactures joint products W and X. During a recent period, joint
costs amounted to $300,000 in the production of 20,000 gallons of W and 60,000 gallons of X.
Both products will be processed beyond the split-off point, giving rise to the following data:

The joint cost allocated to X under the net-realizable-value method would be:
$184,000.
$210,000.
None of the other answers are correct.
$180,000.
$190,000.
Cosby uses a weighted-average process-costing system. All materials are added at the
beginning of the process; conversion costs are incurred evenly throughout production. The
company finished 40,000 units during the period and had 15,000 units in progress at year-end,
the latter at the 40% stage of completion. Total material costs amounted to $220,000; conversion
costs were $414,000.

The cost of goods completed is:

$312,000.
$414,000.
None of the answers is correct.
$520,000.
$634,000.

Cosby uses a weighted-average process-costing system. All materials are added at the
beginning of the process; conversion costs are incurred evenly throughout production. The
company finished 40,000 units during the period and had 15,000 units in progress at year-end,
the latter at the 40% stage of completion. Total material costs amounted to $220,000; conversion
costs were $414,000.

The cost of the ending work in process is:

$54,000.
$114,000.
$195,000.
$78,000.
None of the answers is correct.

Southern Lake Chemical manufactures a product called Zubek. Direct materials are added at the
beginning of the process, and conversion activity occurs uniformly throughout production. The
beginning work-in-process inventory is 60% complete with respect to conversion; the ending
work-in-process inventory is 20% complete. The following data pertain to May:
Using the weighted-average method of process costing, the cost per unit of conversion activity is:
None of the answers is correct.
$2.50.
$2.76.
$2.70.
$2.53.

Lester Corporation had 8,200 units of work in process on November 1. During November, 26,800
units were started and as of November 30, 7,900 units remained in production. How many units
were completed during November?
42,800.
26,500.
27,100.
None of the other answers are correct.
16,100.

When calculating unit costs under the weighted-average process-costing method, the unit cost is
based on:
only the current period's manufacturing costs.
only costs incurred in previous accounting periods.
a summation of the costs in the beginning work-in-process inventory plus costs incurred in the
current period.
only costs in the period's beginning work-in-process inventory.
a summation of the costs in the beginning work-in-process inventory plus costs to be incurred in
the upcoming period.

Which of the following statements about joint-cost allocation is false?

Joint-cost allocation is useful in deciding whether to further process a product after split-off.
Joint-cost allocation can be based on the number of units produced.
Joint-cost allocation is useful in making a profit determination about individual joint products.
Joint-cost allocation can be accomplished by using several different methods that focus on sales
value and product "worth."
Joint-cost allocation is helpful in inventory valuation.

Which of the following statements is false?

In job-order costing, the unit cost is found by dividing the job's total cost by the job's total units.
In process costing, the cost per unit in a department is found by spreading the period's
manufacturing costs over the production activity.
In job-order costing, costs are accumulated by job order.
In process costing, costs are accumulated by department.
In process costing, the total cost of each unit is found by dividing the total factory costs by the
number of units completed.

Gilberto adds materials at the beginning of production and incurs conversion cost uniformly
throughout manufacturing. Consider the data that follow.
Conversion cost in the beginning work-in-process inventory totaled $120,000, and August
conversion cost totaled $270,000. Assuming use of the weighted-average method, which of the
following choices correctly depicts the number of equivalent units for materials and the
conversion cost per equivalent unit?

Choice E
Choice A
Choice B
Choice C
Choice D

Chen Corporation, a new company, adds material at the beginning of its production process;
conversion cost, in contrast, is incurred evenly throughout manufacturing. During May, the firm
completed 15,000 units and had ending work in process of 2,000 units, 60% complete.
Equivalent-unit costs were: materials, $15; conversion, $22.

The cost of Chen's completed production is:

$330,000.
$333,000.
None of the answers is correct.
$555,000.
$225,000.

Garage Specialty Corporation manufactures joint products P and Q. During a recent period, joint
costs amounted to $80,000 in the production of 20,000 gallons of P and 60,000 gallons of Q.
Garage can sell P and Q at split-off for $2.20 per gallon and $2.60 per gallon, respectively.
Alternatively, both products can be processed beyond the split-off point, as follows:

The joint cost allocated to P under the relative-sales-value method would be:
$16,400.
$25,600.
$17,600.
$24,000.
None of the other answers are correct.

Southern Lake Chemical manufactures a product called Zubek. Direct materials are added at the
beginning of the process, and conversion activity occurs uniformly throughout production. The
beginning work-in-process inventory is 60% complete with respect to conversion; the ending
work-in-process inventory is 20% complete. The following data pertain to May:

Using the weighted-average method of process costing, the cost of goods completed and
transferred during May is:
None of the answers is correct.
$263,840.
$249,560.
$250,240.
$258,400.

Southern Lake Chemical manufactures a product called Zubek. Direct materials are added at the
beginning of the process, and conversion activity occurs uniformly throughout production. The
beginning work-in-process inventory is 60% complete with respect to conversion; the ending
work-in-process inventory is 20% complete. The following data pertain to May:
Using the weighted-average method of process costing, the total costs remaining in work in
process on May 31 are:
$0.
$17,480.
$25,640.
$12,040.
None of the answers is correct.

Universal Manufacturing uses a weighted-average process-costing system. All materials are

introduced at the start of manufacturing, and conversion costs are incurred evenly throughout the
process. The company's beginning and ending work-in-process inventories totaled 10,000 units
and 15,000 units, respectively, with the latter units being 2/3 complete at the end of the period.
Universal started 30,000 units into production and completed 25,000 units. Manufacturing costs
follow.

Beginning work in process: Materials, $60,000; conversion cost, $150,000

Current costs: Materials, $180,000; conversion cost, $480,000

Universal's equivalent-unit cost for materials is:

$8.00.
$9.60.
None of the answers is correct.
$4.50.
$6.00.

Universal Manufacturing uses a weighted-average process-costing system. All materials are

introduced at the start of manufacturing, and conversion costs are incurred evenly throughout the
process. The company's beginning and ending work-in-process inventories totaled 10,000 units
and 15,000 units, respectively, with the latter units being 2/3 complete at the end of the period.
Universal started 30,000 units into production and completed 25,000 units. Manufacturing costs
follow.

Beginning work in process: Materials, $60,000; conversion cost, $150,000

Current costs: Materials, $180,000; conversion cost, $480,000

Universal's equivalent-unit cost for conversion cost is:

$25.20.
$13.71.
$18.00.
$21.00.
None of the answers is correct.

Kentucky Corporation uses a process-cost accounting system. The company adds direct
materials at the start of its production process; conversion cost, on the other hand, is incurred
evenly throughout manufacturing. The firm has no beginning work-in-process inventory; its
ending work in process is 40% complete. Which of the following sets of percentages would be
used to calculate the correct number of equivalent units in the ending work-in-process inventory?
Materials, 40%; conversion cost, 100%.
Materials, 100%; conversion cost, 40%.
Materials, 40%; conversion cost, 40%.
Materials, 100%; conversion cost, 60%.
Materials, 100%; conversion cost, 100%.

Which of the following data are needed to calculate total equivalent units under the weighted-
average method?
Work to complete beginning work in process, work-to-date on ending work in process.
Work-to-date on ending work in process, units started during the period.
Units completed, work to complete beginning work in process.
Work to complete beginning work in process, units completed, and work done on ending work in
process.
Units completed during the period, work-to-date on ending work in process.

Southern Lake Chemical manufactures a product called Zubek. Direct materials are added at the
beginning of the process, and conversion activity occurs uniformly throughout production. The
beginning work-in-process inventory is 60% complete with respect to conversion; the ending
work-in-process inventory is 20% complete. The following data pertain to May:

Using the weighted-average method of process costing, the cost per unit of direct materials is:
$1.28.
None of the answers is correct.
$1.17.
$1.20.
$1.18.

Southern Lake Chemical manufactures a product called Zubek. Direct materials are added at the
beginning of the process, and conversion activity occurs uniformly throughout production. The
beginning work-in-process inventory is 60% complete with respect to conversion; the ending
work-in-process inventory is 20% complete. The following data pertain to May:

Using the weighted-average method of process costing, the equivalent units of conversion
activity total:
None of the answers is correct.
69,400.
60,400.
68,000.
74,000.