Cost accounting (1) 4 th Year Alaa Salama F.

R Part 1 page 1 of 31

Cost Accounting (1)

FCES – Damanhour 2024-2025 Part
4 th Year - 1st Term [1]
by : Alaa Salama

Cost Accounting (1)

Final Revision
Part [1]

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Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 2 of 31
Quiz 1
Dam. Company makes small metal containers. The company began December with 250
containers in process that were 30 percent complete as to material and 40 percent complete
as to conversion costs. During the month, 5,000 containers were started. At month end,
1,700 containers were still in process (45 percent complete as to material and 80 percent
complete as to conversion costs).
1) Using the weighted average method, what are the equivalent units for conversion
costs?
(A) 3,450 (B) 4,560
(C) 4,610 (D) 4,910

Solution
1- The flow of physical units:
Data Department (A)
Beginning WIP inventory 250 (30% DM, 40% Conversion)
+ Units started 5,000
Total inputs 5,250
Units completed and transferred out 3,550
+ Ending WIP inventory 1,700 (45% DM, 80% Conversion)
Total outputs 5,250

2- Equivalent Units:
(Units completed & transferred out × 100%) + (Ending inventory × Completion degree)
Direct material = (3,550 × 100%) + (1,700 × 45%) = 4,315 Units
Conversion = (3,550 × 100%) + (1,700 × 80%) = 4,910 Units ✓

2) Cost structure consists of ………….

(A) Manufacturing costs and product costs
(B) Non-manufacturing costs and period costs
(C) Product costs and period costs
(D) Product costs and direct costs

Consider the following data for a department in manufacturing company during May: 2,500
Units in beginning inventory (35% complete for all cost elements). 6,000 units started in
process during the current period. 7,000 units completed and transferred out. ??? Units in
ending inventory (60% complete for all cost elements). Required:
3) Determine the equivalent units.
(A) 8,500 units (B) 7,900 units
(C) 7,000 units (D) 5,500 units

Solution
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 3 of 31
1. The flow of physical units:
Data Department (A)
Beginning WIP inventory 2,500 (35% Completion degree)
+ Units started 6,000
Total inputs 8,500
Units completed and transferred out 7,000
+ Ending WIP inventory 1,500 (60% Completion degree)
Total outputs 8,500
2. Equivalent Units:
(Units completed & transferred out × 100%) + (Ending inventory × Completion degree)
Equivalent Units = (7,000 × 100%) + (1,500 × 60%) = 7,900 units ✓

4) Administrative costs are part of period costs.

(A) True (B) False

5) One company has three processes (A), (B) and (C).

- The company uses weighted-average process costing method.
- Consider the August 2024 data for physical units in process (A):
• Beginning inventory, 5,000 units (30% complete for conversion costs).
• Units started, 25,000 units.
• Ending inventory, 8,000 units (40% complete for conversion costs).

- Direct materials are added twice in the process; 50% at the beginning of the process and
the remainder at the end of the process.
- Conversion costs are added evenly throughout the process.
The following information is available:
Direct materials Conversion cost
Cost of beginning inventory $26,000 $17,000
Current costs $52,000 $33,400

Required:
1. Determine equivalent units for direct materials and conversion costs:
(A) 26,000 units & 25,200 units
(B) 21,800 units & 20,920 units
(C) 21,000 units & 20,600 units
(D) 20,000 units & 20,000 units

2. Determine cost per unit:

(A) $3 & $2 per unit (B) $2 & $3.5
(C) $5 & $6 (D) $20 & $30

Solution
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 4 of 31
Addition of materials

30% 40%

DM Conv. DM Conversion
50% 30% 50% 40%

Completion degrees of Completion degrees of

Beginning inventory Ending inventory

1. The flow of physical units:

Data Department (A)
Beginning WIP inventory 5,000 (50% DM, 30% Conversion)
+ Units started 25,000
Total inputs 30,000
Units completed and transferred out 22,000
+ Ending WIP inventory 8,000 (50% DM, 40% Conversion)
Total outputs 30,000

2. Equivalent Units: (DM, Conversion)

(Units completed & transferred out × 100%) + (Ending inventory × Completion degree)
Direct material = (22,000 × 100%) + (8,000 × 50%) = 26,000 units ✓
Conversion = (22,000 × 100%) + (8,000 × 40%) = 25,200 Units ✓

3. Total costs (Given)

4. Cost per equivalent unit (DM, Conversion)

Cost of beginning inventory + Current cost
Cost per equivalent unit =
Equivalent units
26,000 + 52,000
Direct material = = $3 per unit
26,000

17,000 + 33,400
Conversion = = $2 per unit
25,200

The costs per unit respectively = $3 & $2 per unit ✓

Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 5 of 31
5. The Production cost report:
Data Department (A)
1- Input Costs
* Costs of beginning inventory:
Direct material 26,000
Conversion costs 17,000
Total 43,000
* Current Costs:
Direct material 52,000
Conversion costs 33,400
Total 85,400
Total Input Costs 128,400
2- Output Costs
* Costs of units completed and transferred out
DM (22,000 unit × 3 cost per unit) 66,000
Conversion (22,000 unit × 2 cost per unit) 44,000
Total 110,000
* Costs of ending inventory
DM (8,000 unit × 3 cost per unit × 50% completion degree) 12,000
Conversion (8,000 × 2 × 40% completion degree) 6,400
Total 18,400
Total Output Costs 128,400

6) Retailing company has ……...........…… inventory

(A) Factory supplies (B) Work-in-Process
(C) Merchandise (D) Supplies

7) Conversion costs include all direct manufacturing costs.

(A) True (B) False

8) Conversion costs contain indirect manufacturing Costs.

(A) True (B) False

9) …………… is a voluntary sacrifice of economic resources to obtain benefits in the

present or in the future.
(A) Expense (B) Opportunity cost
(C) Sunk Costs (D) Cost

10) Opportunity cost is a past, present, or future cash outflow.

(A) True (B) False
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 6 of 31
Quiz 2
1) The first step in preparing the production cost report is to …………….

(A) Summarize the flow of physical units

(B) Calculate the cost per equivalent unit
(C) Assign costs to the items completed and items in ending work in process inventory
(D) Account for product cost

2) The following is the flow of physical units for a manufacturing company uses process
costing system:
Data Process (A) Process (B) Process (C)
Beginning WIP inventory 950 (25%) 2,200 (70%) 1,000 (30%)
+ Units started 5,000 ??? ???
+ Additional units ??? Zero 200
Total inputs ??? ??? ???
Units completed and transferred out ??? 5,200 ???
+ Ending WIP inventory 1,800 (60%) ??? (40%) 400 (10%)
Total outputs 6,100 ??? ???

Required:
1. Determine the additional units of process (A)
(A) 150 (B) 200
(C) 220 (D) 950

2. Determine the units started of process (B).

(A) 5,000 (B) 6,100
(C) 4,300 (D) 1,800

3. Determine the units completed & transferred out of process (C).

(A) 5,000 (B) 6,000
(C) 6,400 (D) 6,500
Solution

Data Process (A) Process (B) Process (C)

Beginning WIP inventory 950 (25%) 2,200 (70%) 1,000 (30%)
+ Units started 5,000 4,300 5,200
Additional units 150 Zero 200
Total inputs 6,100 6,500 6,400
Units completed and transferred out 4,300 5,200 6,000
+ Ending WIP inventory 1,800 (60%) 1,300 (40%) 400 (10%)

Total outputs 6,100 6,500 6,400

Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 7 of 31
3) Prime costs are direct costs.
(A) True (B) False

4) Consider the following data for a department in manufacturing company using weighted-
average costing during April:
• 4,000 Units in beginning inventory (50% complete for all cost elements)
• 10,000 units started in process during the current period.
• 9,000 units completed and transferred out.
• 5,000 units in ending inventory (20% complete for all cost elements)

The department costs during April are as follows:

Costs of beginning inventory are $6,800 for direct material & $4,200 for conversion costs.
Current costs are $83,000 for direct material & $32,000 for conversion costs.
Required:
1. How much the equivalent units would be?
(A) 9,000 (B) 9,500
(C) 10,000 (D) 11,000

2. How much the cost per unit would be?

(A) $1.1 (B) $10.4
(C) $11.5 (D) $12.6

3. How much the Cost of units completed and transferred out would be?
(A) 83,000 (B) 115,000
(C) 113,400 (D) 126,000

Solution
1. The flow of physical units:
Data Department (A)
Beginning WIP inventory 4,000 (50% Completion degree)
+ Units started 10,000
Total inputs 14,000
Units completed and transferred out 9,000
+ Ending WIP inventory 5,000 (20% Completion degree)
Total outputs 14,000

2. Equivalent Units:
(Units completed & transferred out × 100%) + (Ending inventory × Completion degree)

Equivalent Units = (9,000 × 100%) + (5,000 × 20%) = 10,000 units ✓

3. Total costs (Given)

Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 8 of 31
4. Cost per equivalent unit
Cost of beginning inventory + Current cost
Cost per equivalent unit =
Equivalent units
(6,800 + 4,200) + (83,000 + 32,000)
Cost per equivalent unit = = $12.6 per unit ✓
10,000 units

5. The Production cost report:

Data Department (A)
1- Input Costs
* Costs of beginning inventory:
Direct material 6,800
Conversion costs 4,200
Total 11,000
* Current Costs:
Direct material 83,000
Conversion costs 32,000
Total 115,000
Total input Costs 126,000
2- Output Costs
* Costs of units completed and transferred out 113,400 ✓
(9,000 unit × 12.6 cost per unit)

* Costs of ending inventory 12,600

(5,000 unit × 12.6 cost per unit × 20% Completion degree)

Total output Costs 126,000

Alex. Company uses a FIFO process costing system. The company had 5,000 units that were
60 percent complete as to conversion costs at the beginning of the month. The company
started 22,000 units this period and had 7,000 units in ending Work in Process Inventory
that were 35 percent complete as to conversion costs.
5) What are equivalent units for material if material is added at the beginning of the
process?
(A) 22,000 units (B) 21,450 units
(C) 19,450 units (D) 27,000 units
Solution

Addition of materials

35% 60%

Completion degrees of DM Conversion DM Conversion Completion degrees of

Ending inventory 100% 35% 100% 60% Beginning inventory
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 9 of 31

1. The flow of physical units:

Data Department (A)
Beginning WIP inventory 5,000 (100% DM, 60% Conversion)
+ Units started 22,000
Total inputs 27,000
Units completed and transferred out 20,000
+ Ending WIP inventory 7,000 (100% DM, 35% Conversion)
Total outputs 27,000

2. Equivalent Units: (FIFO)

Beginning inventory × (100% - completion degree)
+ (Units completed & transferred out - Beginning inventory) × 100%
+ (Ending inventory × Completion degree)
DM = 5,000 × (100% - 100%) + [(20,000 – 5,000) × 100%] + (7,000 × 100%)
= Zero + 15,000 + 7,000 = 22,000 ✓

6) Services companies haven't any account of inventory.

(A) True (B) False
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 10 of 31
Quiz 3
Consider the following data of process (A) in a drug company: - 800 units on November 1,
2024; 100% completed for direct materials, and 40% completed for conversion costs. -
20,000 units completed and transferred out. - 1,000 units on November 31, 2024; 100%
completed for direct materials, and 60% completed for conversion costs.
1) Under FIFO method, the equivalent units of production of process (A) for November
are: ............
(A) 21,800 units for materials and 20,920 units for conversion costs
(B) 21,000 units for materials and 20,600 units for conversion costs
(C) 20,000 units for materials and 20,000 units for conversion costs
(D) 20,200 units for materials and 20,280 units for conversion costs

Solution
1. The flow of physical units:
Data Department (A)
Beginning WIP inventory 800 (100% DM, 40% Conversion)
+ Units started 20,200
Total inputs 21,000
Units completed and transferred out 20,000
+ Ending WIP inventory 1,000 (100% DM, 60% Conversion)
Total outputs 21,000

2. Equivalent Units: (FIFO)

Beginning inventory × (100% - completion degree)
+ (Units completed & transferred out - Beginning inventory) × 100%
+ (Ending inventory × Completion degree)

DM = 800 × (100% - 100%) + [(20,000 – 800) × 100%] + (1000 × 100%) = 20,200 units ✓
Conversion = 800 × (100% - 40%) + [(20,000 – 800) × 100%] + (1000 × 60%) = 20,280 units ✓

2) Consider the following data for a company with one process and many products:
- Joint costs are $ 75,000.
-The company produces two joint products (A) and (B) .
-The total production units of each product and its price are as follows :
Product (A) Product (B)
Production units 1,200 800
Units sold 1,000 500
Selling price per unit $30.8 $58.8

Required:
Allocate joint costs using the sales value at split-off point method, and determine:
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 11 of 31
1. Cost per unit of product (A)?
(A) $52.5 (B) $27.5
(C) $20.5 (D) $15.75

2. Cost per unit of product (B)?

(A) $52.5 (B) $27.5
(C) $20.5 (D) $15.75

3. Cost of ending inventory of product (A)?

(A) $5,500 (B) $10,500
(C) $4,100 (D) $3,150

4. Cost of ending inventory of product (B)?

(A) $4,725 (B) $6,150
(C) $8,250 (D) $15,750

Solution
Product Quantities Price Sales value Weighting Joint cost allocation Cost per unit
A 1,200 units $30.8 36,960 44% 75,000 × 44% = 33,000 33,000 / 1,200 =
$27.5 ✓
B 800 units $58.8 47,040 56% 75,000 × 56% = 42,000 42,000 / 800 =
$52.5 ✓
Total --- --- 84,000 100% 75,000 ---

Cost of goods sold:

Product A: 1,000 units sold × $27.5 cost per unit = 27,500
Product B: 500 units sold × $52.5 = 26,250

Gross margin:
A B Total
Revenue 1,000 units sold × $30.8 S.P = 30,800 500 × $58.8 = 29,400 60,200
- Cost of goods sold (27,500) (26,250) (53,750)
Gross Margin 6,450

Costs of ending inventory:

Product A: (1,200 Physical units – 1,000 units sold) × $27.5 cost per unit = $5,500 ✓
Product B: (800 Physical units – 500 units sold) × $52.5 cost per unit = $15,750 ✓
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 12 of 31
Consider the following data for a department in manufacturing company uses weighted-
average costing during November: - 4,500 Units in beginning inventory (35% complete for all
cost elements) - 16,000 units started in process during the current period. - 18,000 units
completed and transferred out. - ??? Units in ending inventory (60% complete for all cost
elements). Required:
3) Determine the equivalent units:
(A) 19,500 units (B) 18,000 units
(C) 20,500 units (D) 16,000 units

Solution
1. The flow of physical units:
Data Department (A)
Beginning WIP inventory 4,500 (35% Completion degree)
+ Units started 16,000
Total inputs 20,500
Units completed and transferred out 18,000
+ Ending WIP inventory 2,500 (60% Completion degree)
Total outputs 20,500

2. Equivalent Units:
(Units completed & transferred out × 100%) + (Ending inventory × Completion degree)

Equivalent Units = (18,000 × 100%) + (2,500 × 60%) = 19,500 units ✓

Winner Company undertook a Contract No. 7 for the construction of a building consists of 6
floors.
• Winner purchased material for the contract at a cost of $95,000 .
• Issues from stores were $60,000.
• Materials valued $5,300 were returned to stores, while materials costing $1,400 were
destroyed by fire.
• Materials costing $6,800 were sold for $4,900 .
• Materials worth $15,000 were received from Contract No. 5 which was completed .
• Materials worth $2,000 were transferred to Contract No. 10.
• Materials on hand at the end of the accounting period were valued at $17,000 .

4) How much the materials used during the accounting period would be?
(A) $170,000 (B) $120,500
(C) $137,500 (D) $139,400

Solution
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 13 of 31
Beginning materials on site ---
+ Materials received from the suppliers 95,000
+ Materials received from the stores 60,000
+ Materials transfer from other contracts 15,000
+ The normal loss of material ---
(-) Materials returned to suppliers (6,800)
(-) Materials returned to stores (5,300)
(-) Materials transfer to another contract (2,000)
(-) Ending materials on site (17,000)
(-) The abnormal loss of material (1,400)
Materials used during the accounting period 137,500 ✓

5) Which of the following entries record the direct labor cost in the accounting books
of a construction company?
(A) Debit the contract account, credit the accounts payable account
(B) Debit the contract account, credit the cash account
(C) Debit the owner's capital account, credit the contract account
(D) Debit the cash account, credit the contract account

6) Consider the following data for a Process (A) in manufacturing company uses weighted-
average costing during June:
• 1,000 Units in beginning inventory (35% complete for all cost elements)
• 4,000 units started in process during the current period.
• 3,200 units completed and transferred out to Process (B).
• 300 normal loss of units
• 700 abnormal loss of units
• 800 units in ending inventory (50% complete for all cost elements)

The Process costs during June are as follows:

• $4,000 Costs of beginning inventory, Completion degree = Zero%, Cost of normal loss
• $19,400 Current costs. is charged to units completed & transferred out
and Ending inventory
Inspection occurs at the beginning of the processing; units in ending inventory are inspected.
Required:
1. How much the equivalent units would be?
(A) 3,200 (B) 3,600
(C) 4,600 (D) 5,000

2. How much the cost per unit would be?

(A) $5 (B) $6.5
(C) $9 (D) $12.6
Solution
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 14 of 31
1. The flow of physical units:

Data Department (A)

Beginning WIP inventory 1,000 (35% Completion degree)
+ Units started 4,000
Total inputs 5,000
Units completed and transferred out 3,200
+ Ending WIP inventory 800 (50% Completion degree)
+ Normal loss 300 (0%)
+ Abnormal loss 700 (0%)
Total outputs 5,000

2. Equivalent Units: (WA)

(Units completed & transferred out × 100%) + (Ending inventory × Completion degree)
+ (Normal loss × Completion degree) + (Abnormal loss × Completion degree)

Equivalent Units = (3,200 × 100%) + (800 × 50%) + (300 × 0%) + (700 × 0%) = 3,600 units ✓

3. Total costs (Given)

4. Cost per equivalent unit: (WA)

Costs of beginning inventory + Current costs
Cost per equivalent unit =
Equivalent units
4,000 + 19,400
Cost per equivalent unit = = $6.5 per unit ✓
3,600 units

5. The Production cost report: (WA)

Data Department (A)
1- Input Costs
Costs of beginning inventory 4,000
Current Costs 19,400
Total input Costs 23,400
2- Output Costs
Costs of units completed and transferred out 20,800
(3,200 unit × 6.5 cost per unit × 100%)
Costs of Normal loss (300 × 5 × 0%) × (3,200 completed / 4,000) zero
Total 17,500
Costs of ending inventory 2,600
(800 unit × 6.5 cost per unit × 50% Completion degree)
Costs of Normal loss (300 × 5 × 0%) × (800 ending units / 4,000)

Costs of Abnormal loss (700 × 5 × 0%) zero

Total output Costs 23,400
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 15 of 31
Quiz 4
1) Consider the following data for a company with one process and many products:
• Joint costs are $200,000.
• The company produces two joint products (A) and (B), and a by-product (C).
The total production units of each product are as follows:
• Physical Quantities (production units) of product (A) are 40,000 units
• Physical Quantities (production units) of product (B) are 60,000 units
• Physical Quantities (production units) of product (C) are 5,000 units
Required:
Allocate joint costs using the Physical Quantities method, and determine:
1) Cost per unit of product (A)?
(A) $2 (B) $4
(C) $6 (D) $6.5

2) Cost per unit of product (B)?

(A) $2 (B) $4
(C) $6 (D) $6.5

Solution

Product Physical quantities Weighting Joint cost allocation Cost per unit
A 40,000 units 40% 200,000 × 40% = 80,000 80,000 / 40,000 = $2 ✓

B 60,000 units 60% 200,000 × 60% = 120,000 120,000 / 60,000 = $2 ✓

Total 100,000 units 100% 200,000 ---

2) Consider the following data for a process (A) in a manufacturing company during November:
• FIFO equivalent units are 1,200 units.
• Cost per unit under FIFO costing method is $50.
• Cost per unit under Weighted-average costing method is $25.
• Costs of beginning inventory are $20,000.
Required:
1. How much are the current costs?
(A) $30,000 (B) $60,000
(C) $960,000 (D) $20,000

2. How much are the Weighted-average equivalent units?

(A) 3,200 units (B) 1,200 units
(C) 800 units (D) 400 units
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 16 of 31
Solution
Cost per equivalent unit: (FIFO)
Costs of beginning inventory + Current costs
Cost per equivalent unit =
Equivalent units

???
Cost per equivalent unit = = $50 per unit
1,200 units

Current costs = 1,200 × $50 = 60,000 ✓

Cost per equivalent unit: (Weighted-average)

Costs of beginning inventory + Current costs
Cost per equivalent unit =
Equivalent units

20,000 + 60,000
Cost per equivalent unit = = $25 per unit
???

Weighted-average equivalent units = 80,000 / $25 = 3,200 units ✓

3) The following costs were incurred on the contract No. 28 for the year ending December
31, 202X.
• Contract price $10,000,000
• Direct materials 3,000,000
• Abnormal loss of material on site 2,300
• Direct labor 1,500,000
• Subcontracts 350,000
• Equipment cost (20% Depreciation rate) 300,000
• Indirect costs 10,300

85% of work completed had been certified on 31st December 202X.

Cost of work completed but not certified was 15%.
The value of certified work was $5,000,000 of which 90% had been received in Cash.

1. The contract costs are: …

(A) $737,700 (B) $4,918,000
(C) $4,180,300 (D) $10,000,000

2. The cost of work certified is: …

(A) $737,700 (B) $1,500,000
(C) $4,180,300 (D) $4,918,000

3. The cost of work uncertified is:………

(A) $737,700 (B) $1,500,000
(C) $4,180,300 (D) $4,918,000
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 17 of 31

4. The profit of contract No. 28 for the year ended on 31st December 202X is: ……
(A) $500,000 (B) $819,700
(C) $4,500,000 (D) $5,000,000

5. The value of accounts receivable that appears on the company's December 31, 202X
balance sheet is: ………
(A) $4,500,000 (B) $500,000
(C) $737,700 (D) Zero

Dr Contract No. 28 account Cr

Direct materials 3,000,000 Cost of work certified 4,180,300 ✓
Abnormal loss of material (2,300) (4,918,000 × 85%)
Direct labor 1,500,000 737,700 ✓
Cost of work Uncertified
Subcontracts 350,000
(4,918,000 × 15%)
Depreciation expense 60,000
(20% × 300,000)
Indirect costs 10,300

Total 4,918,000 Contract costs 4,918,000 ✓

Work Completed & Certified account

Dr Contract No. 28 Cr
Cost of work certified 4,180,300 Value of work certified $5,000,000
Profit ($5,000,000 – 4,180,000) 819,700 ✓

Total $4,800,000 $5,000,000

Balance Sheet
Cash ($5,000,000 × 90%) 4,500,000
Accounts Receivable 500,000 ✓
($5,000,000 × 10%)
Cost of Work Uncertified 737,700

4) Which of the following entries record the materials and supplies cost, that
transferred from the store, in the accounting books of a construction company?
(A) Debit the contract account, credit the accounts payable account
(B) Debit the owner's capital account, credit the contract account
(C) Debit the cash account, credit the contract account
(D) Debit the contract account, credit the inventory control account
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 18 of 31
<< Exam 2023 >>
Choose the correct answer:
1) …………… is a voluntary sacrifice of economic resources to obtain benefits in the present or
in the future.
(A) Cost (B) Expense
(C) Opportunity cost (D) Sunk costs

2) Cost structure consists of ………….

(A) Manufacturing costs and product costs
(B) Non-manufacturing costs and period costs
(C) Product costs and period costs
(D) Product costs and direct costs

3) When calculating the equivalent units in a weighted average method:

(A) The completion degree of beginning inventory is used only for conversion costs
(B) The completion degree of beginning inventory is used for both material and conversion costs
(C) The beginning inventory amount is not accounted for
(D) The beginning inventory amount is used in total

Equivalent Units: (WA)

(Units completed & transferred out × 100%) + (Ending inventory × Completion degree)

Alex. Company makes juice cans. It uses the weighted-average costing method in its process
costing system. The department (A) in Alex. Company had the following data during October:

• 15,000 Units in beginning inventory (100% complete for direct material & 20% complete
for conversion costs)
• 89,000 units started in process during the current period.
• 24,000 units in ending inventory (100% complete for direct material & 90% complete for
conversion costs)
The department costs during October are as follow:
Data Direct material Conversion costs
Costs of beginning inventory 10,100 15,660
Current costs 424,620 526,884

Required:
4) What are the costs per equivalent unit for direct material and conversion costs
respectively?
A) $2.16 & $3.5 B) $4.18 & $5.34 C) $6.5 & $7 D) $6 & $7.75

5) What is the cost of units completed and transferred out?

A) $215,664 B) $228,480 C) $761,600 D) $977,264

6) What is the cost of ending inventory?

A) $100,320 B) $215,664 C) $228,480 D) $977,264
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 19 of 31
Solution
1.The flow of physical units: (WA)

Data Department (A)

Beginning WIP inventory 15,000 (100% DM, 20% Conversion)
+ Units started 89,000
Total Inputs 104,000
Units completed and transferred out 80,000
+ Ending WIP inventory 24,000 (100% DM, 90% Conversion)
Total Outputs 104,000

2. Equivalent Units: (WA)

(Units completed & transferred out × 100%) + (Ending inventory × Completion degree)

Direct Material = (80,000 × 100%) + (24,000 × 100%) = 104,000 units

Conversion = (80,000 × 100%) + (24,000 × 90%) = 101,600 units

3. Total costs (Given)

4. Cost per equivalent unit: (WA)

Costs of beginning inventory + Current costs
Cost per equivalent unit =
Equivalent units

(10,100 + 424,620)
DM = = $4.18 per unit ✓
104,000 units
(15,660 + 526,884)
Conversion = = $5.34 per unit ✓
101,600 units

5- The Production cost report: (WA)

Data Department (A)

1- Input Costs
* Costs of beginning inventory:
Direct material 10,100
Conversion costs 15,660
Total 25,760
* Current Costs:
Direct material 424,620
Conversion costs 526,884
Total 951,504
Total input Costs 977,264

2- Output Costs
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 20 of 31
* Costs of units completed and transferred out:
DM (80,000 unit × $4.18 cost per unit) 334,400
Conversion (80,000 × $5.34) 427,200
Total 761,600 ✓
* Costs of ending inventory:
DM (24,000 unit × 4.18 cost per unit × 100%) 100,320
Conversion (24,000 × 5.34 × 90%) 115,344
Total 215,664 ✓
Total output Costs 977,264

7 ) Alex, Company uses a FIFO process costing system. The company had 5,000 units that
were 60% complete is to conversion costs at the beginning of the month. The company
started 22,000 units this period and had 7,000 units in ending work in process inventory that
were 35% complete as to conversion costs. What are equivalent units for material if material
is added at the beginning of the process?
A) 22,000 units B) 21,450 units C) 19,450 units D) $977,264

Solution

Addition of materials

35% 60%

Completion degrees of DM Conversion DM Conversion Completion degrees of

Ending inventory 100% 35% 100% 60% Beginning inventory

1. The flow of physical units:

Data Department (A)
Beginning WIP inventory 5,000 (100% DM, 60% Conversion)
+ Units started 22,000
Total inputs 27,000
Units completed and transferred out 20,000
+ Ending WIP inventory 7,000 (100% DM, 35% Conversion)
Total outputs 27,000

2. Equivalent Units: (FIFO)

Beginning inventory × (100% - completion degree)
+ (Units completed & transferred out - Beginning inventory) × 100%
+ (Ending inventory × Completion degree)
DM = 5,000 × (100% - 100%) + [(20,000 – 5,000) × 100%] + (7,000 × 100%)
= Zero + 15,000 + 7,000 = 22,000 ✓
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 21 of 31
Consider the following data for a Process (B) a manufacturing company that uses weighted-
average costing method (The following data is available for one period):
• 200 Units in beginning inventory (20% complete for all cost elements)
• 4,000 units started in process during the current period.
• 2,200 units completed and transferred out to Process (C).
• 500 units in ending inventory (40% complete for all cost elements)
- A total of 20% of the lost units were due to abnormal conditions.
- Inspection occurs at the end of the process. Completion degree = 100%, Cost of normal loss is
charged only to units completed & transferred out

The Process costs during current period are as follows:

Data Transferred-in cost Direct material Conversion costs
Costs of beginning inventory 8,000 5,000 6,200
Current costs 17,200 13,850 12,000
Required:
8) The cost per unit for transferred-in costs is ...
A) $4.8 B) $3.55 C) $5.1 D) $6

9) The cost per unit for manufacturing costs is

A) $4.67 B) $3.1 C) $4.92 D) $9.5

Solution
1. The flow of physical units:
Data Department (B)
Beginning WIP inventory 200 (20% Completion degree)
+ Units started 4,000
Total inputs 4,200
Units completed and transferred out 2,200
2,700
+ Ending WIP inventory 500 (40% Completion degree)
+ Normal loss 1,500 × 80% = 1,200 (100%)
1,500
+ Abnormal loss 1,500 × 20% = 300 (100%)
Total outputs 4,200

2- Equivalent Units: (WA)

(Units completed & transferred out × 100%) + (Ending inventory × Completion degree)
+ (Normal loss × Completion degree) + (Abnormal loss × Completion degree)
Transferred-in = (2,200 × 100%) + (500 × 100%) + (1,200 × 100%) + (300 × 100%) = 4,200 units
Manufacturing costs = (2,200 × 100%) + (500 × 40%) + (1,200 × 100%) + (300 × 100%) = 3,900 units

4- Cost per equivalent unit: (WA)

Costs of beginning inventory + Current costs
Cost per equivalent unit =
Equivalent units
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 22 of 31
8,000 + 17,200
Transferred-in costs = = $6 per unit ✓
4,200 units

(5,000 + 6,200) + (13,850 + 12,000)

Manufacturing costs = = $9.5 per unit ✓
3,900 units

10) Which of the following entries record the materials and supplies cost, that transferred
from the store, in the account the one of a construction company?
(A) Debit the contract account, credit the accounts payable account
(B) Debit the contract account, credit the inventory control account
(C) Debit the owner's capital account, credit the contract account
(D) Debit the cash account, credit the contract account

11) Which of the following entries record the direct labor cost in the accounting books of a
construction company?
(A) Debit the contract account, credit the accounts payable account
(B) Debit the contract account, credit the cash account
(C) Debit the owner's capital account, credit the contract account
(D) Debit the cash account, credit the contract account

The following costs were incurred on contract No. 28 for the year ending December 31,
202X.

Contract price $10,000,000

Direct materials 3,000,000
Abnormal loss of material on site 2,300
Direct labor 1,500,000
Subcontracts 350,000
Equipment (20% Depreciation rate) 300,000
Indirect costs 10,300
• 85% of work completed had been certified on 31st December 202X.
• Cost of work completed but not certified was 15%.
• The value of certified work was $5,000,000 of which 90% had been received in Cash.
Required: Choose the correct answer:

12) The contract costs are: …

(A) $737,700 (B) $4,180,300 (C) $4,918,000 (D) $10,000,000

13) The cost of work certified is: …

(A) $737,700 (B) $1,500,000 (C) $4,180,300 (D) $4,918,000

14) The cost of work uncertified is: …

(A) $737,700 (B) $1,500,000 (C) $4,180,300 (D) $4,918,000
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 23 of 31
15) The profit of contract No. 28 for the year ended on 31st December 202X is: ……
(A) $500,000 (B) $819,700 (C) $4,500,000 (D) $5,000,000

16) The value of accounts receivable that appears on the company's December 31, 202X
balance sheet is: ………
(A) $4,500,000 (B) $500,000 (C) $737,700 (D) Zero

Solution
Dr Contract No. 28 account Cr
Direct materials 3,000,000 Cost of work certified 4,180,300 ✓
Abnormal loss of material (2,300) (4,918,000 × 85%)
Direct labor 1,500,000 737,700 ✓
Cost of work Uncertified
Subcontracts 350,000
(4,918,000 × 15%)
Depreciation expense 60,000
(20% × 300,000)
Indirect costs 10,300

Total 4,918,000 Contract costs 4,918,000 ✓

Work Completed & Certified account

Dr Contract No. 28 Cr
Cost of work certified 4,180,300 Value of work certified $5,000,000
Profit ($5,000,000 – 4,180,000) 819,700 ✓

Total $4,800,000 $5,000,000

Balance Sheet
Cash ($5,000,000 × 90%) 4,500,000
Accounts Receivable 500,000 ✓
($5,000,000 × 10%)
Cost of Work Uncertified 737,700
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 24 of 31
<< Exam 2024 >>
Choose the correct answer:
1) …………… is a voluntary sacrifice of economic resources to obtain benefits in the present or
in the future.
(A) Expense (B) Opportunity cost
(C) Cost (D) Sunk costs

2) Cost structure consists of ………….

(A) Product costs and period costs
(B) Non-manufacturing costs and period costs
(C) Manufacturing costs and product costs
(D) Product costs and direct costs

3) The first step in preparing the production cost report is to

(A) summarize the flow of physical units.
(B) calculate the cost per equivalent unit.
(C) assign costs to the items completed and items in ending work in prosess inventory
(D) account for product cost.

4) Dam. Company makes small metal containers. The company began December with 250
containers in process that were 30 percent complete as to material and 40 percent complete
as to conversion costs. During the month, 5,000 containers were started. At month end,
1,700 containers were still in process (45 percent complete as to material and 80 percent
complete as to conversion costs). Using the weighted average method, what are the
equivalent units for conversion costs?
A) $3,450 B) $4,560 C) $4,610 D) $4,910
Solution
1- The flow of physical units:
Data Department (A)
Beginning WIP inventory 250 (30% DM, 40% Conversion)
+ Units started 5,000
Total inputs 5,250
Units completed and transferred out 3,550
+ Ending WIP inventory 1,700 (45% DM, 80% Conversion)
Total outputs 5,250

2- Equivalent Units:
(Units completed & transferred out × 100%) + (Ending inventory × Completion degree)
Direct material = (3,550 × 100%) + (1,700 × 45%) = 4,315 Units
Conversion = (3,550 × 100%) + (1,700 × 80%) = 4,910 Units ✓
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 25 of 31
Consider the following data for a department in a manufacturing company during November :
FIFO equivalent units are 1,520 units for all cost elements.
The department costs during November are as follows:
Data Direct material Conversion costs
Costs of beginning inventory 1,036 520
Current costs 4,080 2,000

5) How many completion degree(s) in this exercise?

A) 4 B) 3 C) 2 D) 1

6) The cost per unit under FIFO costing method is:

A) $4 B) $3 C) $2 D) $1
Solution
4. Cost per equivalent unit: (FIFO)
Costs of beginning inventory + Current costs
Cost per equivalent unit =
Equivalent units
(4,080 + 2,000)
Cost per equivalent unit = = $4 per unit ✓
1,520 units

7) Alex, Company uses a FIFO process costing system. The company had 5,000 units that
were 60% complete is to conversion costs at the beginning of the month. The company
started 22,000 units this period and had 7,000 units in ending work in process inventory that
were 35% complete as to conversion costs. What are equivalent units for material if material
is added at the beginning of the process?
A) 22,000 units B) 21,450 units C) 19,450 units D) $977,264

Solution

Addition of materials

35% 60%

Completion degrees of DM Conversion DM Conversion Completion degrees of

Ending inventory 100% 35% 100% 60% Beginning inventory

1. The flow of physical units:

Data Department (A)
Beginning WIP inventory 5,000 (100% DM, 60% Conversion)
+ Units started 22,000
Total inputs 27,000
Units completed and transferred out 20,000
+ Ending WIP inventory 7,000 (100% DM, 35% Conversion)
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 26 of 31
Total outputs 27,000
2. Equivalent Units: (FIFO)
Beginning inventory × (100% - completion degree)
+ (Units completed & transferred out - Beginning inventory) × 100%
+ (Ending inventory × Completion degree)
DM = 5,000 × (100% - 100%) + [(20,000 – 5,000) × 100%] + (7,000 × 100%)
= Zero + 15,000 + 7,000 = 22,000 ✓

Consider the following data for a process (A) in a manufacturing Company during November:
• FIFO equivalent units are 1,200 units.
• Cost per unit under FIFO costing method is $50.
• Cost per unit under Weighted-average costing method is $25.
• Costs of beginning inventory are $20,000.
Required:
8) How much are the current costs?
(A) $30,000 (B) $60,000 (C) $960,000 (D) $20,000

9) How much are the Weighted-average equivalent units?

(A) 3,200 units (B) 1,200 units (C) 800 units (D) 400 units

Solution
Cost per equivalent unit: (FIFO)
Costs of beginning inventory + Current costs
Cost per equivalent unit =
Equivalent units

???
Cost per equivalent unit = = $50 per unit
1,200 units

Current costs = 1,200 × $50 = 60,000 ✓

Cost per equivalent unit: (Weighted-average)

Costs of beginning inventory + Current costs
Cost per equivalent unit =
Equivalent units

20,000 + 60,000
Cost per equivalent unit = = $25 per unit
???

Weighted-average equivalent units = 80,000 / $25 = 3,200 units ✓

Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 27 of 31
Consider the following data for a Process (B) a manufacturing company that uses weighted-
average costing method (The following data is available for one period):
• 200 Units in beginning inventory (20% complete for all cost elements)
• 4,000 units started in process during the current period.
• 2,200 units completed and transferred out to Process (C).
• 500 units in ending inventory (40% complete for all cost elements)
- A total of 20% of the lost units were due to abnormal conditions.
- Inspection occurs at the end of the process. Completion degree = 100%, Cost of normal loss is
charged only to units completed & transferred out

The Process costs during current period are as follows:

Data Transferred-in cost Direct material Conversion costs
Costs of beginning inventory 8,000 5,000 6,200
Current costs 17,200 13,850 12,000
Required:
10. The cost per unit for transferred-in costs is ...
A) $4.8 B) $3.55 C) $5.1 D) $6

11. The cost per unit for manufacturing costs is

A) $4.67 B) $3.1 C) $4.92 D) $9.5

Solution
1. The flow of physical units:
Data Department (B)
Beginning WIP inventory 200 (20% Completion degree)
+ Units started 4,000
Total inputs 4,200
Units completed and transferred out 2,200
2,700
+ Ending WIP inventory 500 (40% Completion degree)
+ Normal loss 1,500 × 80% = 1,200 (100%)
1,500
+ Abnormal loss 1,500 × 20% = 300 (100%)
Total outputs 4,200

2- Equivalent Units: (WA)

(Units completed & transferred out × 100%) + (Ending inventory × Completion degree)
+ (Normal loss × Completion degree) + (Abnormal loss × Completion degree)
Transferred-in = (2,200 × 100%) + (500 × 100%) + (1,200 × 100%) + (300 × 100%) = 4,200 units
Manufacturing costs = (2,200 × 100%) + (500 × 40%) + (1,200 × 100%) + (300 × 100%) = 3,900 units

4- Cost per equivalent unit: (WA)

Costs of beginning inventory + Current costs
Cost per equivalent unit =
Equivalent units
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 28 of 31
8,000 + 17,200
Transferred-in costs = = $6 per unit ✓
4,200 units

(5,000 + 6,200) + (13,850 + 12,000)

Manufacturing costs = = $9.5 per unit ✓
3,900 units

12) Which of the following entries record the direct labor cost in the accounting books of a
construction company?
(A) Debit the contract account, credit the cash account
(B) Debit the contract account, credit the accounts payable account
(C) Debit the owner's capital account, credit the contract account
(D) Debit the cash account, credit the contract account

13) Which of the following entries record the materials and supplies cost, that transferred
from the store, in the account the one of a construction company?
A) Debit the contract account, credit the accounts payable account
(B) Debit the owner's capital account, credit the contract account
(C) Debit the contract account, credit the inventory control account
(D) Debit the cash account, credit the contract account

The following costs were incurred on the contract No. 28 for the year ending December 31,
202X.
Contract price $10,000,000
Direct materials 3,000,000
Abnormal loss of material on site 2,300
Direct labor 1,500,000
Subcontracts 350,000
Equipment (20% Depreciation rate) 300,000
Indirect costs 10,300
• 85% of work completed had been certified on 31st December 202X.
• Cost of work completed but not certified was 15%.
• The value of certified work was $5,000,000 of which 90% had been received in Cash.
Required: Choose the correct answer:

14) The contract costs are: …

(A) $737,700 (B) $4,180,300 (C) $4,918,000 (D) $10,000,000

15) The cost of work certified is: …

(A) $737,700 (B) $1,500,000 (C) $4,180,300 (D) $4,918,000

16) The cost of work uncertified is: …

(A) $737,700 (B) $1,500,000 (C) $4,180,300 (D) $4,918,000
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 29 of 31
17) The profit of contract No. 28 for the year ended on 31st December 202X is: ……
(A) $500,000 (B) $819,700 (C) $4,500,000 (D) $5,000,000

18) The value of accounts receivable that appears on the company's December 31, 202X
balance sheet is: ………
(A) $4,500,000 (B) $500,000 (C) $737,700 (D) Zero

Solution
Dr Contract No. 28 account Cr
Direct materials 3,000,000 Cost of work certified 4,180,300 ✓
Abnormal loss of material (2,300) (4,918,000 × 85%)
Direct labor 1,500,000 737,700 ✓
Cost of work Uncertified
Subcontracts 350,000
(4,918,000 × 15%)
Depreciation expense 60,000
(20% × 300,000)
Indirect costs 10,300

Total 4,918,000 Contract costs 4,918,000 ✓

Work Completed & Certified account

Dr Contract No. 28 Cr
Cost of work certified 4,180,300 Value of work certified $5,000,000
Profit ($5,000,000 – 4,180,000) 819,700 ✓

Total $4,800,000 $5,000,000

Balance Sheet
Cash ($5,000,000 × 90%) 4,500,000
Accounts Receivable 500,000 ✓
($5,000,000 × 10%)
Cost of Work Uncertified 737,700
Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 30 of 31
Consider the following data for a company with one process and many products:
• Joint costs are $60,000.
• The company produces two joint products (A), (B), and one by-product (C).
• Their data are as follows:
A B C
Physical Quantities 1,000 units 500 units 300 units
Units sold 800 units 400 units 100 units
Selling price per unit $54 $72 $10.5
Separable costs to complete and sell $3,600 $2,400 0.5 per unit
The company uses the following methods:
• The estimated net market value of by-product as deduction of joint cost. "‫"يمكن تخزينه‬
• Net market value method to allocate joint costs.
Required: Determine costs of goods sold, costs of ending inventory, and gross margin.
Solution

19) What is the net market value of by-product (C)?

(A) $300 (B) $3,150 (C) $3,000 (D) $1,000

20) What is the net joint costs?

(A) $60,000 (B) $57,000 (C) $63,000 (D) $66,000

21) What is the sales value at split-off point of product (B)?

(A) $60,000 (B) $36,000 (C) $84,000 (D) $72,000

22) What are the net market value proportions for products A and B respectively
(A) 60% and 40% (B) 65% and 35% (C) 70% and 30% (D) 75% and 25%

23) What is the amount of joint costs that will be allocated to product A?
(A) $42,750 (B) $34,200 (C) $22,800 (D) $60,000

24) What is the amount of joint costs that will be allocated to product B?
(A) $22,800 (B) $34,200 (C) $57,000 (D) $60,000

25) What is the product B's cost per unit?

(A) $30 (B) $50.4 (C) $37.8 (D) $19.7

26) What is the revenue of product A?

(A) $60,000 (B) $72,000 (C) $28,800 (D) $43,200

Sales revenue = 800 × $54 =43,200

27) What is the revenue of product B?

(A) $60,000 (B) $72,000 (C) $28,800 (D) $43,200

Sales revenue = 400 × $72 =28,800

Cost accounting (1) 4 th Year Alaa Salama F.R Part 1 page 31 of 31
28) What is the cost of ending inventory of by-product C?
(A) $7,560 (B) $2,000 (C) $5,040 (D) $21,600
Solution
a) Market Value of by-product (C) = Production units of by product × Selling price per unit
= 300 units × $10.5 = $3,150

b) Net market value of by-product = Market value – Separable costs of by product "COGS"
= 3,150 – ($0.5 per unit × 300 production units) = $3,000 ✓

** Net market value per unit = $3,000 / 300 units = $10 per unit **

c) Net joint costs = Joint costs – Net market value of by product "Revenue"
= 60,000 – 3,000 = $57,000 ✓ joint costs allocation between main products

d) Allocate net joint costs:

Production Price Sales value Separable Net Market Weighting Joint cost Total Cost per
units costs value allocation cost unit
A 1,000 $54 54,000 3,600 50,400 60% 57,000 × 60% 37,800 37,800 /
= 34,200 1,000 =
$37.8
B 500 $72 36,000 2,400 33,600 40% 57,000 × 40% 25,200 25,200 /
= 22,800 500 = 50.4
Total --- --- --- --- 84,000 100% 57,000 --- ---

Cost of goods sold:

Product A: 800 units sold × $37.8 cost per unit = 30,240
Product B: 400 units sold × $50.4 cost per unit = 20,160

Gross margin:
Sales Revenue = Units sold × Selling price per unit
A B C Total
Revenue 800 × $54 = 43,200 400 × $72 = 28,800 --- 72,000
Cost of goods sold (30,240) (20,160) --- (50,400)
Gross Margin 21,600

‫تم خصم ايراداته وتكاليفه بالفعل‬

Costs of ending inventory: "‫ هيساوي صفر‬Ending ‫غت قابل للتخزين ال‬
‫يمكن تخزينه يق الطريقة دي " لو كان ر‬

Product A: (1,000 production units – 800 units sold) × $37.8 cost per unit = $7,560
Product B: (500 production units – 400 units sold) × $50.4 cost per unit = $5,040
By Product C: (300 production units – 100 units sold) × $10 net market value = $2,000 ✓

End of Final Revision part 1 by Alaa Salama 010 27 383 483