( A: separate unit cost calculations must be performed for direct materials and

Question

( A: separate unit cost calculations must be performed for direct materials and conversions costs if units differ in the stage of completion as to direct materials versus conversion costs. QUESTION 6 Choose "true" or false" as applicable for each of the following items regarding how a department assigns costs to inventory units under process costing. [ - j Inventory units that are 100% complete but have not A. True been physically transferred to the next production B department are included in ending work in process inventory of the current production department False The weighted average costing method requires prior period activity be tracked separately from current period activity. [ - The FIFO method requires prior period activity be tracked separately from current period activity. An incomplete inventory unit represents one equivalent full unit as long as some work has been performed during the period. Under the weighted average costing method, inventory units started in a prior month and completed in the current month can be treated as started and completed in the current month in calculating equivalent full units QUESTION 7 Choose the items that most accurately describes each of the following work flow streams. Assume all completed units are

Explanation / Answer

1. False

Explanation :- Inventory units transferred out of the department to the next department or in the case of the last department to finished goods department are always considered to be 100% complete with respect to the work done by the transferingredients department.

In y he given case the 100 % completed inventory units shold be physically transferred to the next department and it should be included in the finished goods of the current period and not to the work in progress of the current period.

2. False

Explanation:- The weighted average method combines costs from the beginning inventory with costs from the current period. It is called the weighted average method because it averages together costs from the prior period with costs of the current period.

3.True

Explanation:- The primary advantage of the FIFO method is that current period costs are tracked separately from prior period costs are tracked separately from prior period costs, allowing the managers to analyse the production costs incurred from one period to the next production. This method assumes that the first units of product completed in a processing department are the first units transferred out.

4. True

Explanation :- units that have only been partially completed pose a problem. A unit that is only 10% complete should not count as a much as an equivalent units has been completed and transferred to the next department. This is where the concept of equivalent units comes in. Equivalent units are the number of whole, completed units one could obtain from the materials and effort contained in partially completed units. Equivalent units are completed using the following:-

Equivalent units= number of partially completed units×percentage of completion.

5. True.

Explanation :- under the weighted average method, this involves adding the costs of um inventory from the beginning of the inventory to any costs added during the period to arrive at the total cost of inventory.

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