Answer Key - Quiz 2
April 17, 2017 | Author: Rachel Caroline Leachon | Category: N/A
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D E L A S A L L E U N I V E R S I T Y -M A N IL A C O B – D e p a r tm e n t o f A c c o u n ta n c y MODCOS2 A n s w e r K e y - Q u iz 2 D ir e c tio n : • True or False: Write the word TRUE if the statement is correct; Write the word FALSE if the statement is incorrect. • Multiple-Choice: Choose the best answer among the given choices. • Problem Solving: Show your solution in good form using your 10-column worksheet. TRUE OR FALSE 1 . S o m e a m o u n ts o f s p o ila g e , re w o rk , o r s c ra p a re in h e re n t in m a n y p ro d u c tio n p ro c e sse s. Answer: TRUE 2 . R e w o rk e d g o o d s a re u n a c c e p ta b le u n its o f p ro d u c tio n u su a lly N O T c a p a b le o f b e in g re p a ire d o r c o n v e rte d in to a sa la b le p ro d u c t. Answer: FALSE E x p la n a tio n : R e w o r k is u n its o f p ro d u c tio n th a t d o n o t m e e t th e sp e c ific a tio n s re q u ire d b y c u sto m e rs b u t th a t a re su b se q u e n tly re p a ire d a n d so ld a s g o o d fin ish e d u n its. 3 . T h e c o sts o f n o rm a l sp o ila g e a re ty p ic a lly in c lu d e d a s a c o m p o n e n t o f th e c o sts o f g o o d u n its m a n u fa c tu re d . Answer: TRUE 4 . A b n o rm a l s p o ila g e is s p o ila g e in h e re n t in a p a rtic u la r p ro d u c tio n p ro c e s s. Answer: FALSE E x p la n a tio n : N o rm a l sp o ila g e is sp o ila g e in h e re n t in a p a rtic u la r p ro d u c tio n p ro c e ss. 5 . C o sts o f a b n o rm a l sp o ila g e a re se p a ra te ly a c c o u n te d fo r a s lo sse s o f th e p e rio d . Answer: TRUE 6 . C o u n tin g sp o ile d u n its a s p a rt o f o u tp u t u n its in a p ro c e ss-c o stin g sy ste m u su a lly re su lts in a h ig h e r c o st p e r u n it. Answer: FALSE E x p la n a tio n : C o u n tin g sp o ile d u n its u su a lly re su lts in a lo w e r c o st p e r u n it. 7 . C o sts in b e g in n in g in v e n to ry a re p o o le d w ith c o sts in th e c u rre n t p e rio d w h e n d e te rm in in g th e c o sts o f g o o d u n its u n d e r th e w e ig h te d-a v e ra g e m e th o d o f p ro c e ss c o stin g . Answer: TRUE 8 . U n d e r th e w e ig h te d -a v e ra g e m e th o d , th e c o sts o f n o rm a l sp o ila g e a re a d d ed to th e c o sts o f th e ir re la te d g o o d u n its. H e n c e , th e c o st p e r g o o d u n it c o m p le te d a n d tra n sfe rre d o u t e q u a ls th e to ta l c o sts tra n sfe rre d o u t d iv id e d b y th e n u m b e r o f g o o d u n its p ro d u c e d . Answer: TRUE 9 . N o rm a l s p o ila g e c o s ts a re u s u a lly d e d u c te d fro m th e c o s ts o f g o o d u n its .
Answer: FALSE E x p la n a tio n : N o rm a l sp o ila g e is u su a lly a d d e d to th e c o st o f th e g o o d u n its. 1 0 . C o sts o f a b n o rm a l sp o ila g e a re N O T c o n sid e re d to b e in v e n to ria b le c o sts a n d a re w ritte n o ff a s c o sts o f th e a c c o u n tin g p e rio d in w h ic h th e a b n o rm a l sp o ila g e is d e te c te d . Answer: TRUE M U L T I P L E -C H O IC E 1 . U n a c c e p ta b le u n its o f p ro d u c tio n th a t a re d is c a rd e d o r s o ld fo r re d u c e d p ric e s a re re fe rre d to a s: a . re w o rk e d u n its b . sp o ila g e c . sc ra p d . d e fe c tiv e u n its Answer: B 2 . C o sts o f p o o r q u a lity p ro d u c tio n in c lu d e th e : a . o p p o rtu n ity c o st o f th e p la n t a n d w o rk e rs b . e ffe c t o n c u rre n t c u sto m e rs c . e ffe c t o n p o te n tia l c u sto m e rs d . A ll o f th e s e a n s w e rs a re c o rre c t. Answer: D 3 . S p o ila g e th a t sh o u ld N O T a rise u n d e r e ffic ie n t o p e ra tin g c o n d itio n s is re fe rre d to a s: a . o rd in a ry sp o ila g e b . n o rm a l sp o ila g e c . a b n o rm a l sp o ila g e d . N o n e o f th e s e a n s w e rs is c o rre c t. Answer: C 4 . N o rm a l s p o ila g e s h o u ld b e c o m p u te d u s in g a s th e b a s e th e : a . to ta l u n its c o m p le te d b . to ta l g o o d u n its c o m p le te d c . to ta l a c tu a l u n its sta rte d in to p ro d u c tio n d . N o n e o f th e s e a n s w e rs is c o rre c t. Answer: B 5 . W h ic h o n e o f th e fo llo w in g c o n d itio n s u su a lly e x ists w h e n c o m p a rin g n o rm a l a n d a b n o rm a l sp o ila g e to c o n tro lla b ility ? N o rm a l S p o ila g e a . C o n tro lla b le b . C o n tro lla b le c . U n c o n tro lla b le d . U n c o n tro lla b le Answer: D
A b n o rm a l S p o ila g e C o n tro lla b le U n c o n tro lla b le U n c o n tro lla b le C o n tro lla b le
6 . N O T c o u n tin g s p o ile d u n its in th e e q u iv a le n t-u n it c a lc u la tio n re su lts in : a . lo w e r c o st p e r g o o d u n it. b . h ig h e r c o st p e r g o o d u n it
c . b e tte r m a n a g e m e n t in fo rm a tio n d . B o th A a n d C a re c o rre c t. Answer: B 7 . T h e in sp e c tio n p o in t is th e : a . sta g e o f th e p ro d u c tio n c y c le w h e re p ro d u c ts a re c h e c k e d to d e te rm in e w h e th e r th e y a re a c c e p ta b le o r u n a c c e p ta b le u n its b . p o in t a t w h ic h c o sts a re a llo c a te d b e tw e e n n o rm a l a n d a b n o rm a l sp o ila g e c . p o in t a t w h ic h th e c a lc u la tio n o f e q u iv a le n t u n its is m a d e d . N o n e o f th e s e a n s w e rs is c o rre c t. Answer: A 8 . T h e c o sts o f n o rm a l sp o ila g e a re a llo c a te d to th e u n its in e n d in g w o rk -in -p ro c e ss in v e n to ry , in a d d itio n to c o m p le te d u n its if th e u n its: a . in e n d in g in v e n to ry h a v e n o t p a sse d th e in sp e c tio n p o in t b . in e n d in g w o rk -in -p ro c e ss in v e n to ry h a v e p a sse d th e in sp e c tio n p o in t c . in e n d in g w o rk in p ro c e ss in v e n to ry a re m o re th a n 5 0 % c o m p le te d . in e n d in g w o rk -in -p ro c e ss in v e n to ry a re le ss th a n 5 0 % c o m p le te Answer: B 9 . T h e c o st p e r g o o d u n it in th e w e ig h te d -a v e ra g e m e th o d is e q u a l to th e : a . to ta l c o st o f d ire c t m a te ria ls a n d c o n v e rsio n c o sts p e r e q u iv a le n t u n it, p lu s a sh a re o f n o rm a l s p o ila g e b . su m o f th e c o sts p e r e q u iv a le n t u n it o f d ire c t m a te ria ls, a n d c o n v e rsio n c o s ts c . to ta l c o sts d iv id e d b y to ta l e q u iv a le n t u n its d . N o n e o f th e s e a n s w e rs is c o rre c t. Answer: A 1 0 . A b n o rm a l s p o ila g e c a n b e C o n tin u o u s a. Yes b. No c. Yes d. No Answer: C
D is c re te No No Yes Yes
1 1 . A c o n tin u o u s lo s s a . O c c u rs u n e v e n ly th ro u g h o u t a p ro c e s s . b . N e v e r o c c u rs d u rin g th e p ro d u c tio n p ro c e s s . c . A lw a y s o c c u rs a t th e s a m e p la c e in a p ro d u c tio n p ro c e ss. d . O c c u rs e v e n ly th ro u g h o u t th e p ro d u c tio n p ro c e s s . Answer: D 1 2 . W h ic h o f th e fo llo w in g w o u ld b e c o n sid e re d a d isc re te lo ss in a p ro d u c tio n p ro c e ss? a . A d d in g th e c o rre c t in g re d ie n ts to m a k e a b o ttle o f k e tc h u p . b . P u ttin g th e a p p ro p ria te c o m p o n e n ts to g e th e r fo r a ste re o . c . A d d in g th e w ro n g c o m p o n e n ts w h e n a s s e m b lin g a s te re o . d . P u ttin g th e a p p ro p ria te p ie c e s fo r a b ik e in th e b o x . Answer: C
1 3 . T h e m e th o d o f n e g le c t h a n d le s sp o ila g e th a t is a . D is c re te a n d a b n o rm a l b . D is c re te a n d n o rm a l c . C o n tin u o u s a n d a b n o rm a l d . C o n tin u o u s a n d n o rm a l Answer: D 1 4 . T h e c o st o f n o rm a l d isc re te lo sse s is a . A b s o rb e d b y a ll u n its p a s t th e in s p e c tio n p o in t o n a n e q u iv a le n t u n it b a s is . b . A b s o rb e d b y a ll u n its in e n d in g in v e n to ry . c . C o n sid e re d a p e rio d c o st. d . W ritte n o ff a s a lo ss o n a n e q u iv a le n t u n it b a sis. Answer: A 1 5 . N o rm a l s p o ila g e u n its re s u ltin g fro m a c o n tin u o u s p ro c e s s a . A re e x te n d e d to th e E U P s c h e d u le . b . R e su lt in a h ig h e r u n it c o st fo r th e g o o d u n its p ro d u c e d . c . R e su lt in a lo ss b e in g in c u rre d . d . C a u se e stim a te d o v e rh e a d to in c re a se . Answer: B P R O B L E M S O L V IN G P r o b le m 1 ( 9 p o i n t s ) Mercury Corporation Beginning inventory (30% complete as to Material B and 60% complete for conversion) Started this cycle Ending inventory (50% complete as to Material B and 80% complete for conversion)
700
units
2,000 500
units units
Beginning inventory costs: Material A Material B Conversion
P14,270 5,950 5,640
Current Period costs: Material A Material B Conversion
P40,000 70,000 98,100
Material A is added at the start of production, while Material B is added uniformly throughout the process. 1 . Assuming a weighted average method of process costing, compute EUP units for Materials A and B.
Weighted Average Beginning Work in Process Units Started and Completed
Material A 700 1,500
Material B 700 1,500
Ending Work in Process EUP Materials
500 2,700
250 2,450
2. Assuming a FIFO method of process costing, compute EUP units for Materials A and B. FIFO Beginning Work in Process Units Started and Completed Ending Work in Process EUP Materials
Material A 0 1,500 500 2,000
Material B 490 1,500 250 2,240
3. Assuming a weighted average method of process costing, compute EUP for conversion. Weighted Average Beginning Work in Process Units Started and Completed Ending Work in Process
700 1,500 400 2,600
4. Assuming a FIFO method of process costing, compute EUP for conversion. FIFO Beginning Work in Process (700 * 40%) Units Started and Completed Ending Work in Process (500 * 80%)
280 1,500 400 2,180
________________________________________________________________________ P r o b le m 2 ( 9 p o i n t s ) Silver Spoon Incorporated is a manufacturer of kitchen utensils. It produces all of its products in one department. The information for the current month is as follows: Beginning work in process Units started Units completed Ending work in process Spoilage Beginning work-in-process direct materials Beginning work-in-process conversion Direct materials added during month Direct manufacturing labor during month
37,500 units 55,000 units 75,000 units 14,500 units 3,000 units P25,000 P 10,000 P113,750 P40,020
Beginning work in process was 25% complete as to conversion. Direct materials are added at the beginning of the process. Factory overhead is applied at a rate equal to 37.5% of direct manufacturing labor. Ending work in process was 60% complete. All spoilage is normal and is detected at the end of the process.
Required: Prepare a production cost worksheet if spoilage is recognized and the weighted-average method is used. Answer:
PRODUCTION COST WORKSHEET
Flow of Production Work in process, beginning Started during period To account for
Physical units 37,500 55,000 92,500
Good units completed Normal spoilage Work in process, ending Accounted for
75,000 3,000 14,500 92,500
Costs Work in process, beginning Costs added during period
Totals P 35,000 168,778
Total costs to account for Divided by equivalent units Equivalent unit costs
203,778
Assignment of costs Costs transferred out (75,000 × P2.25) Normal spoilage (3,000 × P2.25) Work in process, ending Direct materials (14,500 × P1.50) Conversion (14,500 × P0.75 × 0.60)
P 2.25
Direct materials Conversion
75,000 3,000 14,500 92,500
75,000 3,000 8,700 86,700
Direct Materials Conversion P25,000 P 10,000 113,750 55,028 138,750 92,500 P 1.50
65,028 86,700 P 0.75
P 168,750 6,750 21,750 6,525
Costs accounted for P203,775 _______________________________________________________________________ Problem 3 (9 points) C a rre ra C h e m ic a l In c . u se s a p ro c e ss c o st sy ste m w ith a n a v e ra g e c o st flo w a ssu m p tio n to a c c o u n t fo r th e p ro d u c tio n o f its o n ly p ro d u c t. T h e p ro d u c t is m a n u fa c tu re d in tw o d e p a rtm e n ts. U n its o f p ro d u c t a re sta rte d in th e C o o k in g D e p a rtm e n t a n d th e n tra n s fe rre d to th e B le n d in g D e p a rtm e n t w h e re th e y a re c o m p le te d . B e c a u se o f th e in te n se h e a t a p p lie d in th e C o o k in g D e p a rtm e n t, so m e o f th e p ro d u c tio n v o lu m e is lo st to e v a p o ra tio n . L a b o r a n d o v e rh e a d a re tre a te d a s o n e e le m e n t o f c o st in th e C o o k in g D e p a rtm e n t (i.e ., c o n v e rs io n c o s t). D a ta re la te d to M a y o p e ra tio n s in th e C o o k in g D e p a rtm e n t fo llo w : U n its U n its U n its U n its
in b e g in n in g in v e n to ry s ta rte d in p ro c e s s th is p e rio d tra n s fe rre d to th e B le n d in g D e p a rtm e n t th is p e rio d in e n d in g in v e n to ry (1 0 0 % m a te ria ls, 4 0 % c o n v e rsio n c o st)
C o sts c h a rg e d to th e d e p a rtm e n t: M a te ria ls
B e g in n in g In v e n to ry P 4 ,3 7 5
Added T h is P e rio d P 1 1 ,7 9 5
1 0 ,0 0 0 4 5 ,0 0 0 4 0 ,0 0 0 9 ,0 0 0
C o n v e rsio n c o st
2 ,9 7 5
6 ,1 8 1
R e q u ir e d : P re p a re a c o s t o f p ro d u c tio n re p o rt fo r th e C o o k in g D e p a rtm e n t b a se d o n th e d a ta p re se n te d fo r M a y . S o lu tio n : Carrera Chemical Inc. Cooking Department Cost of Production Report For May, 19--
Conversion Quantity Schedule ..............................................................................................
Materials
Cost
Quantity
Beginning inventory ............................................................................................
10,000
Started in process this period ...............................................................................
45,000 55,000
Transferred to Blending Department ...................................................................
40,000
Ending inventory .................................................................................................
100%
40%
Lost in process .....................................................................................................
9,000 6,000 55,000
Cost Charged to Department ............................................................................
Total
Equivalent
Unit
Cost
Units*
Cost
Beginning inventory: Materials ......................................................................................................
P
4,375
Conversion cost ...........................................................................................
2,975
Total cost in beginning inventory .......................................................
7,350
Cost added during period: Materials ......................................................................................................
P
Conversion cost ...........................................................................................
11,795
49,000
P.33
6,181
43,600
.21
Total cost added during period ............................................................
P
17,976
Total cost charged to the department ...................................................................
P
25,326
P.54
Cost Accounted for as Follows
Units
%
Unit
Total
Complete
Cost
Cost
Transferred to Blending Department ....................................................
40,000
100%
P.54
P21,600
Materials ........................................................
9,000
100%
P.33
P2,970
Conversion cost .............................................
9,000
40%
.21
756
Work in process, ending inventory:
3,726
Total cost accounted for.........................................
P25,326
* Total number of equivalent units required in the cost accounted for section determined as follows:
Conversion Materials
Cost
Equivalent units transferred out .....................................................................................................................
40,000
40,000
Equivalent units in ending inventory .............................................................................................................
9,000
3,600
Total equivalent units ....................................................................................................................................
49,000
43,600
_____________________________________________________________________________________________
P r o b le m 4 ( 9 p o i n t s ) C a rlso n C h e m ic a l C o m p a n y p ro d u c e s a c h e m ic a l in th re e d e p a rtm e n ts, M ix in g , B le n d in g , a n d B o ttlin g . M ix in g , w h e re th e c o m p o u n d s a re a d d e d , is th e first d e p a rtm e n t. T h e p o w d e r is th e n tra n sfe rre d to th e se c o n d d e p a rtm e n t w h e re w a te r is a d d e d to p ro d u c e a liq u id . A fte r w a te r h a s b e e n a d d e d , th e c h e m ic a l is b o ttle d fo r sto ra g e a n d tra n s p o rte d to c u s to m e rs . A p ro c e s s c o s t s y s te m w ith a n a v e ra g e c o s t flo w a s s u m p tio n is u s e d to a c c o u n t fo r w o rk in p ro c e s s in v e n to rie s . D a ta re la te d to o p e ra tio n s in th e B le n d in g D e p a rtm e n t d u rin g th e m o n th o f O c to b e r fo llo w : U n its U n its U n its U n its U n its
in b e g in n in g in v e n to ry re c e iv e d fro m th e M ix in g D e p a rtm e n t th is p e rio d a d d e d to p ro c e s s in th e B le n d in g D e p a rtm e n t th is p e rio d tra n s fe rre d to B o ttlin g D e p a rtm e n t th is p e rio d in e n d in g in v e n to ry (1 0 0 % m a te ria ls, 4 0 % la b o r a n d o v e rh e a d )
C o sts c h a rg e d to th e d e p a rtm e n t: C o sts fro m th e p re c e d in g d e p a rtm e n t M a te ria ls D ire c t la b o r F a c to ry o v e rh e a d
B e g in n in g In v e n to ry P 2 ,3 0 0 720 1 ,1 5 0 2 ,1 0 0
Added T h is P e rio d P 1 1 ,2 0 0 2 ,5 2 0 2 ,7 5 0 5 ,7 0 0
2 ,0 0 0 4 ,0 0 0 1 2 ,0 0 0 1 4 ,0 0 0 4 ,0 0 0
R e q u ir e d : P re p a re C o s t o f P ro d u c tio n R e p o rt fo r B le n d in g D e p a rtm e n t S o lu tio n :
Carlson Chemical Company Blending Department Cost of Production Report For October, 19--
Quantity Schedule .......................................................................
Materials
Labor
Overhead
Quantity
Beginning inventory .....................................................................
2,000
Received from Mixing Department ..............................................
4,000
Added to process in Blending Department ...................................
12,000 18,000
Transferred to Bottling Department.............................................. Ending inventory ..........................................................................
14,000 100%
40%
40%
4,000 18,000
Cost Charged to Department .....................................................
Total
Equivalent
Unit
Cost
Units*
Cost
Beginning Inventory: Cost from preceding department ..........................................
P
2,300
Materials .......................................................................
720
Labor ............................................................................
1,150
Factory overhead ..........................................................
2,100
Total cost in beginning inventory .........................................
P
6,270
P
11,200
18,000
Materials .......................................................................
2,520
18,000
.18
Labor ............................................................................
2,750
15,600
.25
Factory overhead ..........................................................
5,700
15,600
.50
Cost added during period: Cost from preceding department ..........................................
Total cost added during period .............................................
P
22,170
Total cost charged to the department ............................................
P
28,440
%
Unit
P
P
.75
1.68
Total
Cost Accounted for as Follows............................
Units
Complete
Cost
Cost
Transferred to Bottling Department ....................................................
14,000
100%
P1.68
P23,520
Work in process, ending inventory: Cost from preceding department .............................................
4,000
100
.75
P3,000
Materials ................................................
4,000
100
.18
720
Labor .....................................................
4,000
40
.25
400
Factory overhead ...................................
4,000
40
.50
800
Total cost accounted for.........................................
4,920 P28,440
* Total number of equivalent units required in the cost accounted for section determined as follows:
Prior Dept. Cost
Materials
Labor
Overhead
Equivalent units transferred out ....................................................
14,000
14,000
14,000
14,000
Equivalent units in ending inventory ............................................
4,000
4,000
1,600
1,600
Total equivalent units ...................................................................
18,000
18,000
15,600
15,600
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