Question

1. Which of the following is true of the calculation of equivalent units when there is nonuniform application of manufacturing inputs?

Equivalent units are calculated using weighted average cost method only.

The ending work in process is ignored in the calculation of equivalent units.

Equivalent cost of ending work in process is considered as the equivalent cost throughout the period.

Equivalent units are calculated for each category of manufacturing input.

2. The hard disk department of a computer manufacturing company had the following data for July.

Production:
Units in process, July 1, 60% complete	12,000
Units completed and transferred out	40,000
Units in process, July 31, 50% complete	25,000

Assume that all materials are added at the beginning of the process. The company follows the weighted average method. What is the equivalent unit of output of the hard disk department for July considering the nonuniform application?

Equivalent units (materials) $40,000 and equivalent units (conversion) $52,500

Equivalent units (materials) $65,000 and equivalent units (conversion) $52,500

Equivalent units (materials) $65,000 and equivalent units (conversion) $65,000

Equivalent units (materials) $40,000 and equivalent units (conversion) $65,000

3. Which of the following is true of the transferred-in goods while calculating equivalent units?

The transferred-in goods are usually treated as a separate material category.

The cost of transferred-in goods is added to the material costs.

The cost of transferred-in goods is added to the conversion costs.

The transferred-in goods are not considered in the calculation of equivalent units.

4. Which of the following is true of the FIFO method of costing?

The total cost is treated as if it were the current period’s total manufacturing cost.

It combines the cost incurred on the units in beginning work in process and the cost incurred on the units started and completed during the current period.

It creates two categories of completed units, one for beginning work in process and the other for units started and completed.

The average cost of the units in beginning work in process and the units started and completed in the current year is considered.

5. Indigo Devices Corp. has 25,000 units in process on September 1 that are 70% complete. In September, the company completed and transferred out 60,000 units. The company has 12,000 units in process on September 30 that are 40% complete. Calculate the equivalent units of Indigo Devices for September assuming the company uses the FIFO method of costing.

35,000 units

39,800 units

60,000 units

47,300 units

6. A manufacturing company at the time of preparation of production report creates two categories of completed units namely, beginning work in process units and units started and completed during the period. It uses only current work and costs to calculate this period’s unit cost. Which of the following methods of costing is the company using?

First-in, first-out method

Weighted average method

Job costing method

Standard method

Answer 1

Q1.
Answer is Equivalent units are calculated for each category of manufacturing input.
Q2.
Answer is Equivunits: Material-65000 and Conversion-52500
Explanation
			Material	Conversion
Completed and transferred out			40000	40000
Ending inventory			25000	12500
Equivalent units			65000	52500
Q3.
Answer is Transferred in goods are usually treated as separate material category.
Q4.
Answer is It creates two category of completed units, one for beginning WIP and other for started and completed.
Q5.
Answer is 47300 units
Explanation:
Units completed from beginning WIP				7500
Units started and completed				35000
Ending WIP				4800
Equivalent units				47300
Q6.
Answer is First in first out