Question 1

If a company uses a process costing system to account for costs in its four production departments,how many Work in Process accounts will it use?

Accepted Answer

A)  5 
B)  3 
C)  1 
D)  4 
A)  5 
B)  3 
C)  1 
D)  4

Question 2

Production processes that lend themselves to the use of process cost analysis usually have a FIFO product flow within the process.

Accepted Answer

A) True 
 B)False

Question 3

One of the steps in preparing the process cost report under FIFO method requires dividing current costs charged to the Work in Process Inventory account of each department or production process by equivalent units to calculate the cost per equivalent unit.

Accepted Answer

A) True 
 B)False

Question 4

Use the following data from a company using a process costing system to answer the question below. Beginning Work in Process Inventory on June 1 :
 2,000 units - 100 percent complete as to direct materials
 80 percent complete as to conversion costs

Units Started During June:
12,800 units

Ending Work in Process Inventory on June 30: 
2,400 units - 100 percent complete as to direct materials 
40 percent complete as to conversion costs

The company uses average process costing method.
Units completed and transferred out of the department during the month totaled

Accepted Answer

A)  12,800. 
B)  12,400. 
C)  14,800. 
D)  10,400. 
A)  12,800. 
B)  12,400. 
C)  14,800. 
D)  10,400.

Question 5

Which of the following entities probably would use a process costing system?

Accepted Answer

A)  An oil refinery 
B)  A yacht builder 
C)  A custom furniture company 
D)  A custom screw manufacturer 
A)  An oil refinery 
B)  A yacht builder 
C)  A custom furniture company 
D)  A custom screw manufacturer

Question 6

Equivalent production is a measure of productive output of units for a period of time,expressed in terms of fully completed or equivalent whole units produced.

Accepted Answer

A) True 
 B)False

Question 7

Because process costing is normally associated with a continuous production flow,products that are in process at the beginning of the period are assumed to be the first completed during the current period.

Accepted Answer

A) True 
 B)False

Question 8

In a process costing system,products flow in a LIFO manner,from department to department.

Accepted Answer

A) True 
 B)False

Question 9

The Taylor Company uses a process costing system.Assume that direct materials are added at the beginning of the period and that direct labor and overhead are added continuously throughout the process.The company uses the FIFO costing method.The following data are available for one of its accounting periods: $$\begin{array} { | l cl| } 
\hline & \text { Units } \
\text { Beginning work in process } & 26,000& \text { (70 percent complete for conversion costs) } \
\text { Units started } & 180,000 \
\text { Units transferred out } & 191,000 \
\text { Ending work in process } & 15,000 &\text { (60 percent complete for conversion costs) } \
\hline
\end{array}$$
 
Equivalent units for conversion costs are

Accepted Answer

A)  207,800. 
B)  192,200. 
C)  181,800. 
D)  200,000. 
A)  207,800. 
B)  192,200. 
C)  181,800. 
D)  200,000.

Question 10

The Taylor Company uses a process costing system.Assume that direct materials are added at the beginning of the period and that direct labor and overhead are added continuously throughout the process.The company uses the average costing method.The following data are available for one of its accounting periods: $\begin{array}{lr}
&\text { Units }\
\text { Beginning work in process } & 26,000& \text { (70 percent complete for } \
&&\text { conversion costs) } \
\text { Units started } & 180,000 \
\text { Units transferred out } & 191,000 \
\text { Ending work in process } & 15,000 &\text { (60 percent complete for } \
&& \text { conversion costs) }
\end{array}$
 
Equivalent units for direct materials are

Accepted Answer

A)  180,000. 
B)  206,000. 
C)  176,000. 
D)  191,000. 
A)  180,000. 
B)  206,000. 
C)  176,000. 
D)  191,000.

Question 11

In order to be classified as a process costing system,the product flow must represent a series of processes in which only one process has input into the next process.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements is true?

Accepted Answer

A)  The Work in Process Inventory account is the focal point of process costing. 
B)  Labor costs are accounted for differently from overhead costs in a process costing system. 
C)  Equivalent units usually are computed for direct materials and overhead combined. 
D)  To compute unit costs using the FIFO process costing approach, total costs of direct materials, direct labor, and overhead that have been accumulated in the Work in Process Inventory account or accounts are divided by the units worked on during the period. 
A)  The Work in Process Inventory account is the focal point of process costing. 
B)  Labor costs are accounted for differently from overhead costs in a process costing system. 
C)  Equivalent units usually are computed for direct materials and overhead combined. 
D)  To compute unit costs using the FIFO process costing approach, total costs of direct materials, direct labor, and overhead that have been accumulated in the Work in Process Inventory account or accounts are divided by the units worked on during the period.

Question 13

The total costs that will be transferred into the Finished Goods Inventory account during the current period are

Accepted Answer

A)  $144,768. 
B)  $180,050. 
C)  $164,736. 
D)  $160,080. 
A)  $144,768. 
B)  $180,050. 
C)  $164,736. 
D)  $160,080.

Question 14

In many instances,direct materials are added at the beginning of the process.

Accepted Answer

A) True 
 B)False

Question 15

The reason for combining direct labor and overhead costs together and calling them "conversion costs" is that

Accepted Answer

A)  they both are direct costs of production. 
B)  the equivalent unit amount for direct materials will be the same as that for direct labor and overhead costs. 
C)  both types of costs usually are incurred uniformly throughout the production process. 
D)  the costs for direct labor and overhead are not accounted for separately. 
A)  they both are direct costs of production. 
B)  the equivalent unit amount for direct materials will be the same as that for direct labor and overhead costs. 
C)  both types of costs usually are incurred uniformly throughout the production process. 
D)  the costs for direct labor and overhead are not accounted for separately.

Question 16

The Taylor Company uses a process costing system.Assume that direct materials are added at the beginning of the period and that direct labor and overhead are added continuously throughout the process.The company uses the FIFO costing method.The following data are available for one of its accounting periods: $$\begin{array} { | l cl| } 
\hline & \text { Units } \
\text { Beginning work in process } & 26,000& \text { (70 percent complete for conversion costs) } \
\text { Units started } & 180,000 \
\text { Units transferred out } & 191,000 \
\text { Ending work in process } & 15,000 &\text { (60 percent complete for conversion costs) } \
\hline
\end{array}$$ 
Equivalent units for direct materials are

Accepted Answer

A)  180,000. 
B)  202,000. 
C)  176,000. 
D)  191,000. 
A)  180,000. 
B)  202,000. 
C)  176,000. 
D)  191,000.

Question 17

Use the following information to perform the calculations requested below,assuming that the FIFO costing approach to a process costing system is being used.
Beginning work in process inventory: 16,000 units,100 percent complete as to direct materials,85 percent complete as to conversion costs
Ending work in process inventory: 36,000 units,100 percent complete as to direct materials,70 percent complete as to conversion costs
Units started during the month: 59,000
a. Calculate units to be accounted for during the month.
b. Calculate units started and completed during the month.
c. Calculate equivalent units for direct materials.
d. Calculate equivalent units for conversion costs.

Accepted Answer

@#IMG-DLM& 
a.75,000

Question 18

Which of the following cost flow assumptions most closely follows the logical product flow in a process costing environment?

Accepted Answer

A)  Average 
B)  LIFO 
C)  FIFO 
D)  HIFO 
A)  Average 
B)  LIFO 
C)  FIFO 
D)  HIFO

Question 19

Trunkey Products,Inc.,uses a process costing system and has just completed production for the month of November 20xx.The following production data were obtained from the accounting records:
a. Units in beginning inventory totaled 6,800 and were 30 percent complete as of November 1 (all direct materials were added to these products in the preceding month).
b. During the period, 156,200 units were started.
c. 19,200 units were partially completed as of November 30, 20xx.
d. Ending work in process inventory was 40 percent complete at month end.
From the data given, compute the equivalent units of production for direct materials and conversion costs for the month ended November 30, 20xx, assuming the company follows average costing method.

Accepted Answer

The answer of Trunkey Products,Inc.,uses a process costing system and...

Question 20

It is difficult to track costs to individual products in a continuous flow manufacturing process.

Accepted Answer

A) True 
 B)False

Exam 18: Costing Systems- Process Costing

If a company uses a process costing system to account for costs in its four production departments,how many Work in Process accounts will it use?

Production processes that lend themselves to the use of process cost analysis usually have a FIFO product flow within the process.

One of the steps in preparing the process cost report under FIFO method requires dividing current costs charged to the Work in Process Inventory account of each department or production process by equivalent units to calculate the cost per equivalent unit.

Which of the following entities probably would use a process costing system?

Equivalent production is a measure of productive output of units for a period of time,expressed in terms of fully completed or equivalent whole units produced.

Because process costing is normally associated with a continuous production flow,products that are in process at the beginning of the period are assumed to be the first completed during the current period.

In a process costing system,products flow in a LIFO manner,from department to department.

In order to be classified as a process costing system,the product flow must represent a series of processes in which only one process has input into the next process.

Which of the following statements is true?

The total costs that will be transferred into the Finished Goods Inventory account during the current period are

In many instances,direct materials are added at the beginning of the process.

The reason for combining direct labor and overhead costs together and calling them "conversion costs" is that

Which of the following cost flow assumptions most closely follows the logical product flow in a process costing environment?

It is difficult to track costs to individual products in a continuous flow manufacturing process.

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Contributed Capital

Investments

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

The Changing Business Environment - a Managers Perspective

Cost Concepts and Cost Allocation

Costing Systems- Job Order Costing

Value-Based Systems- Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, incltarget Costing and Transfer Pricing

Quality Management and Measurement

Financial Analysis of Performance

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