MODELA

Cost accounting / mid exam 2009/2010 / Islamic university – Gaza
Tuesday 22/04/2010 / / College of commerce
1 hour / Accounting department

Name: …………………………………………………… Id.:…………………………

Question 1 (15 marks): put True or False.

# / Statement
1 / Examples of industries that would use process costing include the pharmaceutical and semiconductor industry
2 / The equivalent unit concept is a means by which a process costing system can compare partially completed work done in each of the various process categories to obtain a total measure of work done
3 / Equivalent units are calculated separately for each input
4 / The weighted-average process costing method does not distinguish between units started in the previous period but completed during the current period and units started and completed during the current period
5 / To calculate weighted-average conversion cost per equivalent unit, you divide total conversion costs to date by total equivalent units of work done to date
6 / Reducing defects helps to reduce costs, but it does not make the business more competitive
7 / An item classified as spoilage has no value
8 / Rework is finished production that is not in accordance with customer desires. The product is redone and sold as finished goods
9 / The value of scrap material can have either a high or low sales value relative to the product with which it is associated
10 / Scrap and rework are considered to be the same thing by managerial accountants.
11 / Abnormal spoilage is spoilage that should arise under efficient operating conditions
12 / When spoiled goods have a disposal value, the net cost of spoilage is computed by adding the disposal value to the costs of the spoiled goods accumulated to the inspection point.
13 / If companies increase market share in a given product line because their reported costs are less than their actual costs, they will become more profitable in the long run.
14 / If a company undercosts one of its products, then it will overcost at least one of its other products
15 / When refining a costing system, a company should classify as many costs as possible as indirect costs.

Question 2(10marks) : choose the best answer.

1 / Costing systems that are used for the costing of like or similar units of products in mass production are called:
A / inventory-costing systems
B / job-costing systems
C / Process-costing systems
D / weighted-average costing systems
2 / Which of the following manufactured products would not use process costing?
A / 767 jet aircraft
B / 19-inch television sets
C / Custom built houses
D / Both A and C are correct
3 / Conversion costs:
A / Include all the factors of production
B / Include direct materials
C / in process costing are usually considered to be added evenly throughout the production process
D / Both B and C are correct
4 / In a process-costing system, the calculation of equivalent units is used for calculating
A / the dollar amount of ending inventory
B / the dollar amount of the cost of goods sold for the accounting period
C / the dollar cost of a particular job
D / Both A and B are correct.
5 / Material left over when making a product is referred to as:
A / reworked units
B / Spoilage
C / Scrap
D / defective units
6 / Costs of normal spoilage are usually accounted for as
A / part of the cost of goods sold
B / part of the cost of goods manufactured
C / a separate line item in the income statement
D / an asset in the balance sheet
7 / Costs of abnormal spoilage are usually accounted for as:
A / part of the cost of goods sold
B / part of the cost of goods manufactured
C / a separate line item in the income statement
D / an asset in the balance shee
8 / Undercosting a particular product may result in:
A / loss of market share
B / lower profits
C / operating inefficiencies
D / understating total product costs
9 / Overcosting of a product is MOST likely to result from:
A / misallocating direct labor costs
B / overpricing the product
C / undercosting another product
D / understating total product costs
10 / Misleading cost numbers are MOST likely the result of misallocating:
A / direct material costs
B / direct manufacturing labor costs
C / indirect costs
D / All of these answers are correct.

Question 3(10 marks): answer the following:

1.  Moh co. manufactures personal computer (P C). The firm implements process costing system using FIFO method .the following information is available:

In put / Out put
Item / Beginning work in process / Started during the period / Completed from the beginning work in process / Started & finished / Ending work in process
Quantity / 0 / 100.000 / ?? / ?? / 20.000

What is the quantity completed from the beginning work in process ?

2.  Moh co. manufactures personal computer (P C). The firm implements process costing system using the FIFO method .the following information is available:

Input / Output
Item / Beginning work in process / Started during the period / Completed from the beginning work in process / Started & finished / Ending work in process
Quantity / 20.000 / 100.000 / ?? / ?? / 20.000

What is the quantity of out put (physically) ?

3.  Moh co. manufactures personal computer (P C). The firm implements process costing system using FIFO method .the information of output are :

Completed from the beginning work in process / Started and finished / Ending work in process
40.000 (50 % completion level) / 80.000 / 20.000 (50 % completion level)

Direct material are added at the beginning, conversion cost are added evenly during process.

What is The equivalent units of direct material ?

4.  Moh co. manufactures personal computer (P C). The firm implements process costing system using the FIFO method .the information of output are :

Completed from the beginning work in process / Started and finished / Ending work in process
40.000 (50 % completion level) / 80.000 / 20.000 (50 % completion level)

Direct material are added at the beginning, conversion cost are added evenly during process.

What is The equivalent units of conversion cost?

5.  Moh co. manufactures personal computer (P C). The firm implements process costing system using the FIFO method .the following information is available :

Equivalent units
Direct material / Conversion cost
Completed from beginning work in process / 0 / 10.000
Started and finished / 100.000 / 100.000
Ending work in process / 50.000 / 10.000
Direct material cost / Conversion cost
Cost of beginning work in process / 10.000 / 10.000
Period cost / 300.000 / 240.000

What is the Cost of direct material assigned for beginning work in process during the period ?

With best wishes

Mohammad Marwan Al Ashi

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