Cost Accounting Quiz: Process Costing Cost Assignment

5 questions · exam conditions

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Process Costing Cost AssignmentQuestion 1 of 5

Sigma Company uses FIFO process costing with two cost categories: materials (added at the beginning) and conversion costs (added evenly throughout). In June, beginning WIP consisted of 5,000 units (30% complete for conversion) with costs of $35,000. The company started 30,000 units and incurred $245,000 in current period costs. If 28,000 units were completed and the cost per equivalent unit for the current period is $7.00, what is the total cost of units transferred out?

$196,000

$231,000

$245,000

$210,000

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Cost Accounting Quiz

Cost Accounting Quiz: Process Costing Cost Assignment

Practice Process Costing Cost Assignment in Cost Accounting with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.

What this quiz covers

This quiz focuses on Process Costing Cost Assignment, giving you a quick way to practice the rules, question types, and explanations that matter most for Cost Accounting.

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Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

All questions

Question 1

$196,000
$231,000 (correct answer)
$245,000
$210,000

Explanation: Under FIFO, cost of units transferred out = Beginning WIP cost + Cost to complete beginning WIP + Cost of units started and completed. Beginning WIP cost = $35,000. Cost to complete beginning WIP = 5,000 × 70% × $7.00 = $24,500. Units started and completed = 28,000 - 5,000 = 23,000. Cost of units started and completed = 23,000 × $7.00 = $161,000. Total transferred out = $35,000 + $24,500 + $161,000 = $231,000. Choice A omits beginning WIP costs. Choice C uses total current period costs. Choice D miscalculates completion percentage.

Question 2

Zenith Manufacturing uses weighted-average process costing. During March, the Finishing Department had 8,000 units in beginning work-in-process inventory that were 60% complete with respect to conversion costs. The department started 42,000 units during March and completed 45,000 units. Ending work-in-process was 40% complete with respect to conversion costs. Beginning WIP had $24,000 in materials costs and $18,600 in conversion costs. Current period costs were $126,000 for materials and $155,400 for conversion costs.

What is the cost assigned to units transferred out during March?

$281,400 (correct answer)
$304,000
$270,000
$292,500

Explanation: Under weighted-average method: Equivalent units for materials = 45,000 + 5,000(100%) = 50,000. Equivalent units for conversion = 45,000 + 5,000(40%) = 47,000. Cost per equivalent unit: Materials = ($24,000 + $126,000) ÷ 50,000 =

3.00. Conversion = (

18,600 + $155,400) ÷ 47,000 = $3.70. Total cost per unit = $6.70. Cost of units transferred out = 45,000 × $6.70 = $281,400. Choice B uses FIFO method incorrectly. Choice C omits beginning WIP costs. Choice D incorrectly calculates conversion equivalent units as 45,000.

Question 3

Theta Manufacturing uses FIFO process costing. Department A transfers units to Department B. In October, Department B received 20,000 units from Department A. Department B had 2,000 units in beginning WIP (100% complete for transferred-in costs, 40% complete for Department B processing costs). Department B completed 19,000 units during October. The remaining 3,000 units in ending WIP were 100% complete for transferred-in costs and 70% complete for Department B processing costs. If the cost per equivalent unit for Department B processing is $3.20 and for transferred-in costs is $8.50, what portion of total costs is assigned to ending WIP?

$28,260
$31,440
$25,500
$32,220 (correct answer)

Explanation: When you encounter FIFO process costing problems involving transferred-in costs, focus on calculating equivalent units separately for each cost category, then multiply by the respective cost per equivalent unit. For ending WIP costs, you need equivalent units for both transferred-in costs and Department B processing costs. The 3,000 units in ending WIP are 100% complete for transferred-in costs (since they've already been received from Department A) and 70% complete for Department B processing. Equivalent units in ending WIP:

Transferred-in costs: 3,000 × 100% = 3,000 equivalent units
Department B processing: 3,000 × 70% = 2,100 equivalent units

Total costs assigned to ending WIP:

Transferred-in costs: 3,000 × $8.50 = $25,500
Department B processing: 2,100 × $3.20 = $6,720
Total ending WIP costs: $25,500 + $6,720 = $32,220

Answer D ($32,220) is correct. Answer A (

28,260) incorrectly uses 3,000 equivalent units for Department B processing instead of 2,100. Answer B (

31,440) appears to use an incorrect completion percentage calculation. Answer C ($25,500) only includes the transferred-in costs portion and completely omits the Department B processing costs assigned to ending WIP. Remember: ending WIP always includes costs from all departments that have worked on those units. Always calculate equivalent units separately for each cost category and multiply by the appropriate cost per equivalent unit.

Question 4

Apex Company uses FIFO process costing in its Assembly Department. Beginning WIP contained 2,000 units that were 75% complete for conversion costs with a total cost of $15,000. During the period, 18,000 units were started, and 16,000 units were completed and transferred out. Ending WIP was 25% complete for conversion costs. Current period costs totaled $144,000. If the cost per equivalent unit for conversion costs is $4.50, what amount should be assigned to ending WIP inventory?

$4,500 (correct answer)
$6,750
$9,000
$18,000

Explanation: Under FIFO, ending WIP = 2,000 + 18,000 - 16,000 = 4,000 units. These 4,000 units are 25% complete for conversion costs. Ending WIP conversion cost = 4,000 × 25% × $4.50 = $4,500. Note that this problem only asks for conversion costs assigned to ending WIP, not total costs. Choice B incorrectly uses 75% completion. Choice C uses 100% completion rate. Choice D calculates total equivalent units instead of ending WIP cost.

Question 5

Lambda Corporation uses weighted-average process costing in its Blending Department. During September, the department had the following activity: Beginning WIP: 4,000 units (25% complete for conversion costs, $22,000 total cost); Units started: 36,000; Units completed: 35,000; Ending WIP: 5,000 units (60% complete for conversion costs); Current period costs: $198,000. Materials are added at the beginning of the process.

If the company discovers that 1,000 of the completed units should be classified as defective units (which reduces their transfer value by 40%), what is the impact on the cost allocation between transferred units and ending WIP?

Transferred units decrease by $11,200; ending WIP increases by $11,200
Transferred units decrease by $21,000; ending WIP unchanged
No change in cost allocation between transferred units and ending WIP (correct answer)
Transferred units decrease by $8,400; ending WIP increases by $8,400

Explanation: The discovery of defective units affects the valuation of transferred units but not the cost allocation between transferred units and ending WIP. Under weighted-average process costing, costs are allocated based on equivalent units of production. The 1,000 defective units were still completed (used full equivalent units of input) so they receive full allocation of production costs. The 40% reduction in transfer value is a separate adjustment that doesn't change the fundamental cost allocation. Choice A and D incorrectly assume cost reallocation. Choice B misunderstands that defective units still consumed full production resources.