8.

In order to compute equivalent units of production using

1. An equivalent unit of material or conversion cost is the fifo method of process costing, work for
equal to: the period must be broken down to units:
A.the prime cost A. started and completed during the period
B.the amount of material or conversion cost necessary B. completed during the period and units in
to complete one unit of production ending inventory
C.a unit of work in process inventory C. completed from beginning inventory,
D.the amount of material or conversion cost necessary started and completed during the month,
to start a unit of production into work in process and units in ending inventory
2. An item that does not appear on a cost of production D. started during the period and units
report is: transferred out during the period
A. work in processCbeginning inventory
B. cumulative costs through the end of departmental 9. The first-in, first-out method of process costing will
production produce the same cost of goods manufactured
C. finished goodsCending inventory amount as the average cost method when:
D. materials used in the department A. there is no beginning inventory
3. A characteristic of a process costing system is that: B. there is no ending inventory
A. costs are accumulated by order C. beginning and ending inventories are
B. it is used by a company manufacturing custom machinery each 50% complete
C. it requires a lot more detailed accounting than does a job D. beginning inventories are 100%
order system complete as to materials
D. work in process inventory is restated in terms of
completed units 10. The FIFO method of process costing differs from the
4. In accounting for beginning inventory costs, the method average cost method of process costing in that
that allows the addition of beginning inventory costs FIFO:
with costs incurred during the period is referred to A. allocates costs based on whole units, but
as: the average cost method uses equivalent
A. first-in, first-out C. last-in, first-out units
B. addition D. average B. considers the stage of completion of
5. In determining the cost of goods transferred in from a beginning work in process in computing
previous department under the average cost method: equivalent units of production, but the
A. a simple average of unit costs is used average cost method does not
B. beginning inventory costs are separated from costs C. does not consider the stage of
transferred in during the period completion of beginning work in
C. a first-in, first-out approach is used process in computing equivalent units of
D. a weighted average of unit costs is used production, but the average cost method
6. The average and fifo process costing methods differ in does
that the average method: D. is applicable only to those companies
A. can be used under any cost flow assumption using the fifo inventory pricing method,
B. is much more difficult to apply than the fifo method but the average cost method may be
C. requires that ending work in process inventory be used with any inventory pricing method
stated in terms of equivalent units of production
D. does not consider the degree of completion of 11. Spoilage occurs as a result of an internal failure in a
beginning work in process inventory when computing process cost system. Using average costing,
equivalent units of production the number of equivalent units that production
7. Beginning work in process was 60% complete as to costs should be charged to would be based
conversion costs, and ending work in process upon:
was 45% complete as to conversion costs. The A. spoiled units
dollar amount of the conversion cost included B. units transferred out and spoiled units
in ending work in process (using the average C. units transferred out, spoiled units, and
cost method) is determined by multiplying the units in ending inventory
average unit conversion costs by what D. units transferred out and units in ending
percentage of the total units in ending work in inventory
process?
A. 60% 12. Spoilage occurs as a result of normal production
B. 55% shrinkage in a process cost system. Using
C. 45% average costing, the number of equivalent
D. 52%
 units that production costs should be charged 18. Of the following variances, the one that is most useful
to would be based upon: in assessing the performance of the Purchasing
A. spoiled units Department is the:
B. units transferred out and spoiled units A. idle capacity variance
C. units transferred out, spoiled units, and B. overhead price variance
units in ending inventory C. materials purchase price variance
D. units transferred out and units in ending D. materials price usage variance
inventory
19. A purpose of standard costing is to:
13. If spoilage occurs as a result of normal production A. allocate cost with more accuracy
shrinkage in a process cost system, using fifo B. eliminate the need for subjective
costing, the number of equivalent units that decisions by management
production costs should be charged to would C. determine the "break-even" production
be based on: level
A. spoiled units D. control costs
B. units transferred out and spoiled units
C. units transferred out, beginning 20. Which one of the following is true concerning standard
inventory, and units in ending inventory costs?
D. units transferred out, spoiled units, units A. If properly used, standards can help
in ending inventory, and units in motivate employees.
beginning inventory B. Unfavorable variances, material in
amount, should be investigated, but
14. The allocation of joint costs to individual products is large favorable variances need not be
useful primarily for purposes of: investigated.
A. determining whether to produce one of C. Standard costs are difficult to use with a
the joint products process costing system.
B. inventory costing D. Standard costs are estimates of costs
C. determining the best market price attainable only under the most ideal
D. deciding whether to sell at the split-off conditions, but rarely practicable.
point
II. Problem-solving Questions
15. In a joint production process, a by-product is also Direction: Analyze the problems and choose the best
described as: answer for each item. Provide and show your computations
A. a simultaneously produced product of on a separate sheet of paper.
relatively low value
B. a form of main product with controllable Siemey Corporation’s standard cost system contains the
production proportions following overhead costs, computed based on a monthly
C. waste
normal volume of 25,000 units or 50,000 direct labor
D. products of low value recovered at the
hours:
end of a production process
Variable factory P12 per
16. Costs to be incurred after the split-off point are most overhead unit
useful for: Fixed factory 8 per unit
A. adjusting inequities in the joint cost overhead
allocation procedure Total P20 per
B. determining the levels of joint unit
production
C. assessing the desirability of further The following information pertains to the month of April
processing 2019:
D. setting the mix of output products
Actual FOH costs
17. Standard costs are used for all of the following except: incurred:
A. income determination Variable P316,680
B. controlling costs Fixed P225,000
C. measuring efficiencies Actual production 26,000 units
D. forming a basis for price setting Actual direct 54,600 hours
labor hours
worked
 a. 10,950 unfavorable c. 3,450 u
1. The total FOH cost variance is b. 7,500 unfavorable d. 7,500
a. P25,000 unfavorable c. P21,680 unfavorable
b. P17,000 unfavorable d. P4,680 Department
unfavorable II of Love Manufacturing Company
presents the following production data for the month of
2. Using the two-variance method, the controllable February, 2020:
variance is Opening inventory, 4,000 units
a. P21,680 unfavorable c. P29,680 unfavorable 3/8 completed
b. P 4,680 unfavorable d. P15,600 unfavorable Started in process 13,000 units
Transferred 9,000 units
3. Using the three-variance method for analyzing Closing inventory, 4,000 units
FOH variance, the budget or spending variance amounts to ½ completed
a. P 4, 680 unfavorable c. P25,000 unfavorable 4,000 units
b. P14,080 unfavorable d. P13,680 unfavorable ¾ completed

4. Using the three-variance method for FOH 10. What is the equivalent unit of production
analysis, the efficiency variance is for the month of February under FIFO costing?
a. the variable efficiency variance of P15,600 a. 12,500 units c. 15,000 units
unfavorable b. 17,000 units d. 13,000 units
b. the variable efficiency variance of
P15,600 unfavorable and volume variance 11. What is the equivalent unit of production
of P8,000 favorable for the month of February under average costing?
c. equal to P8,000 favorable a. 13,000 units c. 14,000 units
d. never computed b. 12,500 units d. 17,000 units

Aristeo Company produced 3,200 units of product. Each Hope Manufacturing Company, using the FIFO
unit requires 2 standard hours. The standard labor rate is process cost system, has the following data for the
P15 per hour. Actual direct labor for the period was month of April:
P79,200 (6,600 x P12). Percentage of Completion
Actual Materials Conversion
5. What is the direct labor efficiency variance? Units Cost
a. 19,800 favorable c. 2,400 unfavorable
Beginning 15,000 100% 40%
b. 16,800 favorable d. 3,000 unfavorable
Inventory
Transferred In 150,000
6. What is the direct labor rate variance?
a. 19,800 favorable Transferred out 120,000
c. 2,400 unfavorable
b. 16,800 favorable Ending
d. 3,000 unfavorable 45,000 100% 30%
Inventory
During July, a company’s direct materials costs for the
production of Product X were as follows: 12. What are the equivalent units in production for
Standard unit price P 12.50 the month of April?
Standard quantity allowed 6,300 units Material Conversion Costs
for actual production s
Actual unit purchase price P 13.00 a. 150,000 127,500
Quantity purchased and 6,900 units b. 165,000 139,500
used for actual production c. 135,000 124,500
d. 150,000 133,500
7. What is the total direct materials variance?
a. 89,700 unfavorable c. 10,950 favorable
Numbers 13-17 are based on the following information.
b. 78,750 unfavorable d. 10,950 unfavorable
Air Force Inc. manufactures their product in two
departments in a continuous process. Production data for
8. The materials efficiency or usage variance is
a. 10,950 unfavorable the month of October 2019 are as follows:
c. 3,450 unfavorable
b. 7,500 unfavorable Beginning work in 500 units
d. 7,500 favorable
process, 40% completed
9. The materials price variance is Received from 2,000 units
 preceding department they can be sold. Product E is further processed in
Normal spoilage 200 units Department 2 while Product F in Department 3. The
Abnormal spoilage 300 units following data are the cost summary of JMG Company:
Units completed and 1,700 units
transferred out Department Department Department
Ending work in process, 300 units 1 2 3
1/3 completed Cost of
Conversion costs in P610 Article
beginning inventory X
Current period P3,990 Direct P 144,000 - -
conversion costs Materials
Direct 21,000 P 67,500 P 97,500
All spoilage occurs at the end of the process. Labor
Factory 15,000 31,500 73,500
13. The equivalent units of production using FIFO Overhead
method Product D Product E Product F
a. 2,500 Units 30,000 45,000 67,500
b. 2,100 sold
c. 2,300 Units on 15,000 - 22,500
d. 2,200 hand,
July 31
14. The equivalent units of production using Sales P 45,000 P 144,000 P 212,625
average method
a. 2,500 18. JMG uses the adjusted sales value method of
b. 2,100 allocating joint costs. What is the sales value of Product D
c. 2,300 at split-off point?
d. 2,200 a. 45,000
b. 30,000
15. What is the conversion cost per equivalent unit? c. 67,500
FIFO Method Average Method d. 22,500
a. P1.90 P1.73
b. P2.19 P2.00 19. How much is the cost of goods sold for
c. P2.00 P1.90 Product E?
d. P1.90 P2.00 a. 147,000
b. 99,000
16. What is the conversion cost of normal spoilage? c. 144,000
FIFO Method Average Method d. 135,000
a. P438 P400
b. P380 P346 20. How much is the ending inventory of Product
c. P400 P380 D?
d. P380 P400 a. 27,000
b. 18,000
17. What is the conversion cost of abnormal c. 22,500
spoilage? d. 54,000
FIFO Method Average Method
a. P570 P519 21. How much is the ending inventory of Product
b. P657 P600 F?
c. P570 P600 a. 33,500
d. P600 P570 b. 65,250
c. 42,750
d. 90,000
Products D, E, and F are joint products of JMG Company.
Units of Product D are sold at split-off point while units of 22. Which of the following shows the right
Product E and Product F require further processing before allocation of joint costs?
a. D-54,000 ; E-36,000 ; F-90,000 Materials P76,500
b. D-67,500 ; E-27,000 ; F-85,500 Conversion costs 158,175
c. D-45,000 ; E-144,000 ; F-212,625
d. D-30,000 ; E-45,000 ; F-67,500 Current Period Costs
Materials P 102,900
AA Company manufactures products A, B, and C from a Conversion Costs P 242,535
joint process. Joint product costs were P60,000. The
company also provided the following data: 27. Assume that weighted average process costing
Sales Value and Additional is used, what is the equivalent unit of production for
Units materials?
Products Costs if Processed Further
Produced a. 81,000
Sales Values Additional Costs
A 6,000 P49,000 P9,000 b. 103,500
B 4,000 42,000 7,000 c. 75,300
C 2,000 30,000 5,000 d. 28,200

23. How much is the allocated joint cost for 28. Assume that weighted average process costing
Product A using the physical measures method? is used, what is the cost per equivalent unit for conversion
a. P30,000 costs?
b. P20,000 a. P5.04
c. P10,000 b. P5.40
d. P60,000 c. P3.87
d. P3.78
24. How much is the allocated joint cost for
Product A using the adjusted sales value method? 29. Assume that FIFO method is used, what is the
a. P24,000 equivalent unit of production for conversion costs?
b. P15,000 a. 75,300
c. P21,000 b. 103,500
d. P60,000 c. 62,655
d. 79,530
25. How much is the allocated joint cost for
Product B using the adjusted sales value method? 30. Assume that FIFO method is used, what is the
a. P24,000 cost per equivalent unit for conversion costs?
b. P15,000 a. P5.04
c. P21,000 b. P5.40
d. P60,000 c. P3.87
d. P3.78
26. How much is the allocated joint cost for
Product C using the adjusted sales value method?
a. P24,000
b. P15,000
c. P21,000
d. P60,000

Pasa Co. has the following data for the month of May:
Beginning work in process
(75% complete as to 22,500
conversion, 0% complete as
to materials)
Started in Process 81,000
Ending work in process 28,200
(15% complete as to
conversion, 100% complete
as to materials)

Beginning WIP costs