Smelly Cat Co. uses process costing to account for the production of rubber balls.

1.             Smelly Cat Co. uses process costing to account for the production of rubber balls. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Equivalent units have been calculated to be 12,000 units for materials and 10,000 units for conversion costs. Beginning inventory consisted of $14,000 in materials and $8,000 in conversion costs. April costs were $72,000 for materials and $80,000 for conversion costs. Ending inventory still in process was 4,000 units (100% complete for materials, 50% for conversion). The total cost per unit using the FIFO method would be closest to

a.    $14.0000

b.    $14.5000 

c.    $15.9666

d.    $13.8182

2.             To determine how much cost should be assigned to ending Work in Process Inventory: 

a.    Multiply costs per equivalent unit by the number of equivalent units associated with units completed.

b.    Multiply costs per equivalent unit by the number of equivalent units associated with ending Work in Process Inventory

c.    Subtract cost of beginning inventory from current period costs.

d.    Add cost of beginning inventory and current period costs.

3.             Which of the following is not a type of quality cost? 

a.    Appraisal or inspection costs

b.    Development costs

c.    Prevention costs

d.    Internal failure costs

4.             Gunther, Inc. produces two different products (Standard and Luxury) using two different activities: Machining, which uses machine hours as an activity driver, and Inspection, which uses number of batches as an activity driver. The cost of Machining is $500,000, while the cost of Inspection is $30,000. Standard uses 30% of total machine hours and 70% of total batches. What is the total activity cost assigned to Luxury?

a.    $7,500

b.    $171,000

c.    $375,000

d.    $359,000

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