Mirchawala’s Hub of Accountancy:
MA1:Management Information :
Process Costing:
Question#1:
Which of the following would occur in a production environment where process costing is used?
(1)Continuous production process
(2)Output of one process may become the input of the next process
(3)Output is always a single product
A. 3 only
B. 1 and 2 only
C. 1 and 3 only
D. 1, 2 and 3
Question#2:
Lilly Co produced a single product called Bud using a single process. No losses occur during the process.
During June 500 kg of raw material were input into the process at a total cost of $8,000. Conversion
costs during the month amounted to $2,500. There was no work in progress at the start of June.
At the end of June, 350 kg of Bud were transferred to finished goods. The remaining work in progress
was 100% complete with respect to materials and 80% complete with respect to conversion costs.
What are the equivalent units for conversion at the end of the month?
A. 400 kg
B. 380 kg
C. 500 kg
D. 470 kg
Question#3:
Zed Co uses process costing for product Alpha.
Production began on 1 September and there was no work-in-progress brought forward. During the
production period 600 kg of raw material were input to the process and 200 kg of the finished product
were output from the process.
At the end of the period work-in-progress was 80% complete with respect to materials and 60%
complete with respect to conversion costs.
During the production process no losses occurred.
What are the equivalent units for materials at the end of the production period?
A. 440 kg
B. 520 kg
C. 600 kg
D. 560 kg
Question#4:
Daz Co uses process costing and a number of separate processes:
(1)Process Alpha has losses of 5% of input
(2)Process Beta has losses of 3% of input
Both processes have the same inputs.
Which of the following statements is/are true in relation to these processes?
(1)The Alpha total process cost is the same as the Beta total process cost
(2)The Alpha cost per unit is higher than the Beta cost per unit
A. Neither statement 1 nor statement 2
B. Both statement 1 and statement 2
C. Statement 2 only
D. Statement 1 only
From the desk of Sir Ahmed Shafi: Page 1
Mirchawala’s Hub of Accountancy:
Question#5:
Which of the following would use process costing?
(1)Education provision
(2)Accounts preparation
(3)Soft drink production
(4)Oil refining
A. 1 and 2
B. 3 and 4
C. 3 only
D. 1 only
Question#6:
Zed Co uses process costing for product Alpha. Production began on 1 September and there is no
wastage in the process. It was estimated initially that the percentage completion of work in progress
(WIP) was 80%. Subsequent checking found that this was incorrect and the percentage completion of
WIP had been overstated.
When the error is corrected, how will the total value of WIP and cost per unit of finished output be
affected?
A. Total Value of WIP: Increase Cost per unit: Increase
B. Total Value of WIP: Increase Cost per unit: Decrease
C. Total Value of WIP: Decrease Cost per unit: Increase
D. Total Value of WIP: Decrease Cost per unit: Decrease
Question#7:
The following information was available for process X during April:
Number of units entering the process at 1 April: 3,500
Number of units leaving the process at 30 April: 2,000
Non-completed units are all 75% complete at 30 April for direct materials, direct labour and overhead.
What is the number of equivalent units produced in April?
A. 1,500
B. 3,500
C. 3,125
D. 1,125
Question#8:
In which of the following industries would process costing be appropriate?
A. Manufacturing components
B. Fitting bathrooms
C. Building offices
D. Manufacturing chemicals
Question#9:
6,150 kg were input to a manufacturing process in a period during which output was 5,820 kg. The
normal weight loss in the process is 10%
What was the abnormal gain/loss?
A. 285 kg abnormal loss
B. 330 kg abnormal loss
C. 330 kg abnormal gain
D. 285 kg abnormal gain
From the desk of Sir Ahmed Shafi: Page 2
Mirchawala’s Hub of Accountancy:
Question#10:
Costs totaling $4,250 were incurred in a process in a period. 80 units of output were rejected and
destroyed in the period,20 units more than allowed for as a normal loss, leaving 420 units of good
production to be transferred to finished goods.
What is the amount written off as abnormal loss (to the nearest $)?
A. $193
B. $177
C. $170
D. $202
Question#11:
Is each of the following statements relating to process costing true or false?
True False
Abnormal gains are debited to the process account at the cost per unit incurred
on normal production
Normal losses are credited to the process account at the cost per unit incurred
on normal production
Question#12:
The following data for last month relate to a production process in which no work-in-progress is held:
Input 12,800 litres
Normal loss 4% of input
Output 12,500 litres
What was the abnormal loss or abnormal gain for last month?
A. Abnormal loss of 212 litres
B. Abnormal gain of 212 litres
C. Abnormal loss of 300 litres
D. Abnormal gain of 200 litres
Question#13:
Data relating to two processes (L and M) are as follows:
Process Normal loss as % of input Input (litres) Output (litres)
L 6 800,000 750,000
M 6 600,000 570,000
For each process, was there an abnormal gain or an abnormal loss?
Abnormal gain Abnormal loss
Process M
Process L
Question#14:
Manufacturing process costs total $179,070 for a period. 9,000 kg of raw materials were processed with
the following result:
Completed good output 8,100 kg
Normal loss 1,200 kg
Abnormal gain 300 kg
What was the cost per kg (to two decimal places)?
A. $19.90
B. $21.32
C. $22.11
D. $22.96
From the desk of Sir Ahmed Shafi: Page 3
Mirchawala’s Hub of Accountancy:
Question#15:
12,000 kg of materials, costing $86,090, were input to a manufacturing process in a period during which
conversion costs totalled $39,320. Losses in the period were 960 kg with no saleable value. The normal
loss is 10% of input.
What was the total manufacturing cost per kg of expected output (to two decimal places of $)?
A. $9.68
B. $10.45
C. $11.36
D. $11.61
Question#16:
In the manufacture of Chemical X there is a normal loss of 10% of the material input into the process.
340 litres of Chemical X were manufactured in a period during which there was an abnormal loss of 5%
of the material input into the process.
How many litres of material were input into the process during the period?
A. $378
B. $289
C. $306
D. $400
Question#17:
12,000 kg of a material were input to a process in a period. The normal loss is 10% of input. There is no
opening or closing work-in-progress. Output in the period was 10,920 kg.
What was the abnormal gain/loss in the period?
A. Abnormal gain of 120 kg
B. Abnormal loss of 120 kg
C. Abnormal gain of 1,080 kg
D. Abnormal loss of 1,080 kg
Question#18:
Which of the following signify an abnormal gain?
A. Actual loss less than normal loss
B. Actual loss more than normal loss
C. Actual loss equal to normal loss
D. None of the above
Question#19:
800 litres of a chemical were input in a period. There is a normal loss of 25% of material input into the
process. Output in the period was 500 litres.
What was the abnormal gain/loss in the period?
A. 100 litres
B. 1,500 litres
C. 1,100 litres
D. 500 litres
Question#20:
10,000 litres of a chemical were input in a period. There is a normal loss of 20% of material input into
the process. Output in the period was 8,300 litres.
What was the abnormal gain/loss in the period?
A. 2000 litres
B. 300 litres
C. 500 litres
D. 800 litres
From the desk of Sir Ahmed Shafi: Page 4
Mirchawala’s Hub of Accountancy:
From the desk of Sir Ahmed Shafi: Page 5
Mirchawala’s Hub of Accountancy:
From the desk of Sir Ahmed Shafi: Page 6
