Management Accounting: Concepts, Techniques & Controversial Issues
Chapter 5 Extra MC Questions

James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida

Chapter 5 | MAAW's Textbook Table of Contents

The Parker Company produces a single product in one operation and uses historical full absorption process costing. Spoilage up to 1% of completed units is considered normal.

1. If materials are issued at the beginning of the process, the unit material cost using weighted average would be:

a. $1.3696
b. $1.8043
c. $2.3055
d. $1.75
e. $1.575
f. $1.8020

2. If materials are issued at the half way point in the process, the unit material cost using weighted average would be:

a. $1.75
b. $2.3055
c. $2.075
d. $1.8043
e. $1.575
f. $1.8020

3. What would be the unit material cost using weighted average if materials are issued at the end of the process? Assume beginning materials cost is zero rather than $10,000 as shown above.

a. $1.575
b. $1.75
c. $1.8043
d. $2.3055
e. $2.075

4. What is the unit conversion cost using weighted average?

a. $4.27
b. 3.52
c. $3.8818
d. $3.20
e. $3.8765

5. Now ignore your previous answers and assume that the total unit cost is $5 which represents $2 for material and $3 for conversion. What dollar amount of costs would be transferred to finished goods using weighted average?

a. $109,000
b. $106,000
c. $101,900
d. $129,000
e. $100,000

6. Using the original data and assuming materials are issued at the beginning of the process, what would be the unit material cost using FIFO?

a. $2.075
b. $1.75
c. $1.575
d. $2.3055
e. $1.7471

7. Again using the original data, the unit conversion cost using FIFO would be:

a. $3.91
b. $4.27
c. $3.8818
d. $3.52
e. $3.7053

8. Now ignore your previous answers and assume that the total unit cost is $5 which represents $2 for material and $3 for conversion. Material is issued at the beginning of the process. Using FIFO what would be the completed cost of the 5,000 units that were in the beginning inventory?

a. $34,000
b. $35,000
c. $31,000
d. $25,000
e. $6,000

9. Again assuming the total unit cost is $5 as in the previous question ($2 mat. $3 conv.) and that material is added at the beginning of the process, what dollar amount of costs would be transferred to finished goods using FIFO?

a. $100,000
b. $106,150
c. $76,000
d. $106,000
e. $109,150

Assume that a process showed the following unit data at the end of the month.

Also assume that spoilage up to one percent of good completed units is considered normal. Anything above that amount is considered abnormal.

10. The number of units of total spoilage is

a. 180
b. 179
c. 200
d. 2,200
e. none of these.

11. The number of units of normal spoilage is

a. 180
b. 179
c. 200
d. 190
e. none of these.

12. The number of units of abnormal spoilage is

a. 0
b. 179
c. 200
d. 21
e. 20

13. Normal spoilage is

a. a product cost
b. a loss
c. an expense
d. an expired cost
e. none of these.

14. Abnormal spoilage is

a. a product cost
b. a loss
c. an expense
d. a liability
e. none of these.

The Vale Company uses normal historical full absorption process costing and processes a single product in several departments. The following data are given for department 2 in the process. Material is added at the end just after inspection. Any spoilage up to one percent of good completed units is considered normal.

15. The total amount of spoilage is

a. zero.
b. 42 units.
c. 58 units.
d. 100 units.
e. none of these.

16. The amount of normal spoilage is

a. zero.
b. 42 units.
c. 58 units.
d. 100 units.
e. none of these.

17. The amount of abnormal spoilage is

a. zero.
b. 42 units.
c. 58 units.
d. 100 units.
e. none of these.

18. The amount of spoilage that provides the basis for charging the loss account is

a. zero.
b. 42 units.
c. 58 units.
d. 100 units.
e. none of these.

The Zale Company assembles a single product in several processes. The data below are for process number 3. Direct material is added at the beginning in process 3. The inspection point is at the end of the process.

19. The unit transferred-in cost using weighted average is

a. 20.2341
b. 21.2458
c. 20.0000
d. 20.3960
e. 19.9961

20. The unit transferred-in cost for the previous month was

a. 19.9961
b. 26.4000
c. 20.0000
d. 19.8000
e. 79.2000

21. The unit material cost for the month based on weighted average is

a. 12.0039
b. 12.1468
c. 11.8227
d. 12.0000
e. 12.2000

22. The unit cost of the new material added during the month is

a. 12.0039
b. 12.1468
c. 11.8227
d. 12.0000
e. 12.2000

23. The unit conversion cost for the month using weighted is

a. 5.9524
b. 5.9356
c. 5.9827
d. 5.9124
e. 5.9821

24. The unit conversion cost for the previous month was

a. 1.5300
b. 2.0400
c. 6.0000
d. 6.1200
e. none of these.

25. Now ignore your previous unit cost calculations and assume that the weighted average total unit cost is $38, where transferred-in is $20, material is $12 and conversion is $6. Using these unit costs, the costs transferred to finished goods would be

a. 182,400
b. 183,920
c. 184,680
d. 186,200
e. 183,923

26. Using the unit costs given above, the costs assigned to the ending inventory of work in process (EWIP) would be

a. 9,120
b. 5,880
c. 8,760
d. 3,960
e. none of these.

27. Now, assume that the total unit cost using FIFO is $38 as indicated above. Using these costs, the cost transferred to finished goods based on FIFO would be

a. 182,400
b. 183,920
c. 182,403
d. 186,203
e. 183,923

28. Using the unit cost of $38 given above, the cost transferred to the loss account would be

a. zero
b. 760
c. 570
d. 2,280
e. 1,520

29. The number of units transferred to finished goods is

a. 5,000
b. 4,840
c. 4,860
d. 4,820
e. 4,800

Question 29 is the last question that refers to the previous set of data.

30. When using the weighted average cost flow assumption, the unit cost in process costing represents

a. the average cost of the work performed during the current month.
b. the average cost of the work remaining at the end of the previous month and the work performed during the current month.
c. the average cost of the work performed during the current month, less the work performed on the beginning inventory during the month.
d. the average cost of all the work performed during both the current month and the previous month.
e. none of these.

31. When using the FIFO cost flow assumption, the unit cost in process costing represents

a. the average cost of the work performed during the current month.
b. the average cost of the work remaining at the end of the previous month and the work performed during the current month.
c. the average cost of the work performed during the current month, less the work performed on the beginning inventory during the month.
d. the average cost of all the work performed during both the current month and the previous month.
e. none of these.

32. Assume that the beginning inventory of work in process equals zero. If the cost of materials added per unit during the current period were greater than the cost of materials added per unit during the previous period, then

a. the unit material cost calculated using weighted average would be equal to the unit material cost calculated using FIFO.
b. the unit material cost calculated using weighted average would be greater than the unit material cost calculated using FIFO.
c. the unit material cost calculated using weighted average would be less than the unit material cost calculated using FIFO.
d. this question cannot be answered without additional data.

33. Assume the beginning inventory of work in process is greater than zero. If the cost of materials added per unit during the current period were greater than the cost of materials added per unit during the previous period, then

a. the unit material cost calculated using weighted average would be equal to the unit material cost calculated using FIFO.
b. the unit material cost calculated using weighted average would be greater than the unit material cost calculated using FIFO.
c. the unit material cost calculated using weighted average would be less than the unit material cost calculated using FIFO.
d. this question cannot be answered without additional data.

Chapter 5 Extra MC Solution