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Exam 5: Process Costing and Operation Costing

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Question 31

Multiple Choice

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Which of the following is not required when calculating the equivalent units for conversion? I percentage of conversion for ending work in progress Ii percentage of conversion for physical units that have been completed and transferred out of the department Iii) cost of direct materials

A) i only
B) i and ii
C) i,ii and iii
D) i and iii

E) A) and C)
F) B) and D)

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Question 32

Multiple Choice

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A company starts work on 1000 physical units and completes 75 per cent of conversion activity.The costs are $1500 for conversion and $5000 for direct material.What is the cost per equivalent unit for conversion?

A) $1.00 per unit
B) $1.50 per unit
C) $2.50 per unit
D) $2.00 per unit

E) B) and C)
F) C) and D)

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Question 33

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South River Chemicals Pty Ltd manufactures a product called Zybek.Direct materials are added at the beginning of the process and conversion activity occurs uniformly throughout the process.The following data pertain to the month of May.What are the unit costs for the period (rounded to two decimal places) assuming FIFO costing?

Rex Company Ltd had 4000 units in work in process at 1 April.During April,11 000 units were completed.At 30 April,5000 units remained in work in process.How many units were started during April?

Rebex Chemical Company manufactures Compound 2 in two sequential departments.On June 1,Department 2 had 3000 units,which were 50 per cent complete as to conversion cost.During June,15 000 units were completed and transferred from Department 1.On June 30,Department 2 had 4000 units,which were 20 per cent complete as to conversion costs.How many units were completed and transferred from Department 2 during the month of June?

Heara Ltd manufactures metal sheets and uses the weighted average method process costing.On 1 May the Rolling Department had 2 000 units work in progress,which were 20 per cent completed as to conversion costs.During May 10 000 units were completed and transferred out.The remaining work in progress on 30 May was 50 per cent complete in terms of conversion rate.If the equivalent unit is 12 000 units,what is the 30 May work in progress?

Assume material is added at the beginning of a process,and the beginning WIP inventory is 30 per cent complete as to conversion costs.Using the FIFO method of costing,the total equivalent units for material for this process during this period is equal to:

The difference in cost per equivalent units between the weighted average method and the FIFO method…

What is the inventory formula that shows the physical flow of production units during a given month,under the weighted average method?

Abnormal spoilage is identified to assist managers in tracking the costs of wasted resources.

In which of the following ways is normal spoilage accounted for?

A company starts work on 1000 physical units and completes 75 per cent of conversion activity.The costs are $1500 for conversion and $5000 for direct material.What is the cost per equivalent unit for direct material?

Process costing can be used in service businesses if the service is routine and repetitive.

Owl's Hours produces herbal tea and prides itself in having one of the largest ranges of herbal teas in Australia.It sells more than 50 varieties of tea leaves with a wide range of prices (depending on where the tea leaves are grown) .The production processes of its products is simple,but vary depending on whether the tea is sold as loose leaves (which requires packing tea leaves in various sized boxes) or tea bags (which requires additional process in packaging tea in specially designed tea bags) .Owl's Hours decides to use an operation costing system.This decision is:

Inventory valuation in operation costing requires:

South River Chemicals Pty Ltd manufactures a product called Zybek.Direct materials are added at the end of the process and conversion activity occurs uniformly throughout the process.The following data pertain to the month of May.Using the FIFO method of process costing,calculate the equivalent units of direct materials and conversion activity for the month of May.

Which of the following are needed to calculate ending work in process under process costing? Unit cost Equivalent units Cost in beg.work in process

Eldervale Winery produces premium wine in the Hunter Valley.During the bottling process,small amount of spillage is often unavoidable.How should the costs associated with the spillage be treated?

Healthy Flavour is a food processing company that makes a product called Health Nut soup in two processes-blending and condensing.The output of the blending department is transferred to the condensing department.All materials are added at the beginning of the blending process,and conversion activity occurs uniformly throughout both processes.The following data pertain to the month of April in the blending department.Using the FIFO method of process costing,calculate the cost per equivalent unit of conversion activity for the month of April.

The following data apply to Zilch Ltd in its mixing department for the month of April.All material is introduced at the start of the process and conversion occurs evenly through the process.Spoilage occurred at the mid point in the process.Using the weighted average method,what are the equivalent units for conversion?