FIFO method of accounting for cost flows is incorrect?
a) Using the FIFO method, the equivalent units are calculated differently from
the weighted-average method because the equivalent work done on the
opening work-in-progress last period is excluded from the computation.
b) The weighted-average method averages the costs associated with the work
done in the previous period with the costs incurred in the current period.
c) The fact that there are two different methods suggests that it is not possible to
state which method provides more accurate results.
d) When there are no beginning inventories or ending inventories, both methods
will provide identical results.
2. Which of the following statements about a process costing system is incorrect?
a) In a process costing system, there is a work-in-progress account for each
b) In a process costing system, equivalent units are separately computed for
materials and for conversion costs.
c) In a process costing system, overhead can be under- or overapplied, just as in
d) In a process costing system, materials costs are traced to units of products.
3. In which production setting is operation costing most appropriate?
a) Custom automobile repair shop
b) Landscaping business
c) Oil refinery
d) Clothing manufacturer