Deck 3: Process Costing

Question 1

The number of beginning units in process plus the number of ending units in process should equal the number of units started plus the number of units completed.The number of beginning units in process plus the number of units started should equal the number of units completed plus the number of ending units in process.

Answer 1

False

Question 2

If 1,800 units were started and there were 200 units in beginning inventory and 400 units in ending inventory,then the number of units completed is 1,600.The number of beginning units in process (200)plus the number of units started (1,800)should equal the number of units completed (1,600)plus the number of ending units in process (400).

Answer 2

True

Question 3

Under the weighted-average method,the only partially completed units that need to be addressed are the units in beginning inventory.Under the weighted-average method,the only partially completed units that need to be addressed are the units in ending inventory.

Answer 3

False

Question 4

A separate Work in Process Inventory account is used in process costing for each major production process.In process costing,there will be a separate Work in Process Inventory account for each of the major processes.

Question 5

A major difference between job order costing and process costing is the treatment of nonmanufacturing costs.In both job order costing and process costing,nonmanufacturing costs are expensed in the period in which they are incurred.

Question 6

Process costing is used to calculate the cost of homogenous goods or services.Process costing is used by companies that produce homogeneous products or services using a series of standardized processes.

Question 7

The three major categories of product costs in process costing are direct materials,conversion costs,and manufacturing overhead.The three major categories of product costs in process costing are direct materials,direct labor,and manufacturing overhead,or direct labor and manufacturing overhead can be combined into conversion costs.

Question 8

A process costing production report prepared using the weighted-average method is acceptable for external reporting purposes whereas a process costing production report prepared using the FIFO method is not acceptable for external reporting purposes.Either method of preparing a process costing production report is acceptable for external reporting (GAAP).

Question 9

The process costing production report can be prepared using either the weighted-average method or the last-in,first-out (LIFO)method.The process costing production report can be prepared using either the weighted-average method or the first-in,first-out (FIFO)method.

Question 10

The key difference between a process costing production report prepared using one of the two acceptable methods is how they deal with any units and costs that are in ending Work in Process Inventory.The key difference between a process costing production report prepared using one of the two acceptable methods is how they deal with any units and costs that are in beginning Work in Process Inventory.

Question 11

A company that offers customized products would use job order costing.Job order costing is used by companies that offer customized products or services.

Question 12

Computing equivalent units is particularly important for products that take a long time to manufacture,such as airplanes.Computing equivalent units is particularly important for products that take a long time to manufacture,such as wine that must be aged or airplanes.

Question 13

A process costing production report prepared using the weighted-average method is more accurate but generally more costly to prepare than one prepared using the FIFO method.A process costing production report prepared using the weighted-average method is simpler and less costly to prepare.But,a process costing production report prepared using the FIFO method is generally more accurate.

Question 14

Equivalent units are calculated by multiplying the number of physical units by their percentage of completion.This is how equivalent units are calculated.

Question 15

Equivalent units for materials may differ from the equivalent units for conversion costs.Equivalent units may differ for the two categories since their percentage of completion may differ.

Question 16

Process costing does not use a Work in Process Inventory account.In process costing,there will be a separate Work in Process Inventory account for each of the major processes.

Question 17

Conversion costs consist of direct labor as well as manufacturing overhead.In process costing,direct labor and manufacturing overhead are often combined into a single category called conversion costs.

Question 18

An equivalent unit is a measure used to convert costs incurred in the previous period to costs incurred in the current period.An equivalent unit is a measure used to convert partially completed units into the equivalent of a full unit.

Question 19

The process costing production report is used to determine how much manufacturing cost to transfer out of Finished Goods Inventory and into Cost of Goods Sold.The process costing report is used to determine how much manufacturing cost to transfer out of Work in Process Inventory and into the next processing department.

Question 20

Process costing often combines direct materials and direct labor into a single category called conversion costs.In process costing,direct labor and manufacturing overhead are often combined into a single category called conversion costs.

Question 21

The FIFO method combines last period's costs as well as this period's costs in the calculation of unit costs.The FIFO method separates the costs of beginning inventory from the costs that were incurred during the current period.

Question 22

Which of the following statements is true?

A)A process costing system will have a single Work in Process Inventory account.
B)A process costing system will have a separate Work in Process Inventory account for each of the major processes.
C)A job costing system will have a separate Work in Process Inventory account for each of the major processes.
D)A process costing system will have a separate Raw Materials Inventory account for each of the major processes.

Question 23

Which of the following is not a category used to reconcile the number of physical units using the weighted average method of process costing?

A)Units started
B)Ending units in process
C)Cost of goods sold
D)Units completed

Question 24

Under the FIFO method,cost per equivalent unit is calculated by dividing current period costs by equivalent units.This is the formula for cost per equivalent unit under the FIFO method.

Question 25

Cost per equivalent unit is calculated separately for direct materials and for conversion costs.Because equivalent units are different for direct materials and conversion costs,we must make a separate calculation for each category.

Question 26

The total cost of Work in Process incurred in one department during the period must be split between costs transferred to the next department and costs transferred to Finished Goods.The total cost of Work in Process incurred during the period must be split between costs transferred to the next department and costs remaining in the current department as Work in Process Inventory.

Question 27

Which of the following companies would most likely use process costing?

A)A soft drink company
B)A law firm
C)A garden equipment manufacturer
D)A home remodeling company

Question 28

Under process costing when the product is through the last production process,the journal entry for total manufacturing cost includes a debit to Work in Process Inventory and a credit to Finished Goods Inventory.Under process costing when the product is through the last production process,the journal entry for total manufacturing cost includes a debit to Finished Goods Inventory and a credit to Work in Process Inventory.

Question 29

The production report contains information about the number of physical units and equivalent units,but not their costs.The production report includes information about the number of physical units,equivalent units,cost per equivalent unit,and a reconciliation of the cost of work in process.

Question 30

Which of the following accounts will be treated differently by a process costing system than by a job order costing system?

A)Raw Materials Inventory
B)Work in Process Inventory
C)Finished Goods Inventory
D)Cost of Goods Sold

Question 31

Under the FIFO method,the units completed during the period must be split between beginning units in process and units started and completed.In FIFO,physical units are divided between beginning units in process,units started and completed,and ending units in process.

Question 32

Selling,general,and administrative costs are included on the production cost report and included as part of cost of goods manufactured.Selling,general,and administrative costs are treated as period costs and expensed during the period incurred.

Question 33

(Beginning inventory + Current costs)/Equivalent units is the formula to calculate the cost per equivalent unit using the weighted-average method.This is the correct formula for calculating cost per equivalent unit.

Question 34

Which of the following is a characteristic of process costing?

A)Products are unique.
B)Costs are traced to products rather than to production processes.
C)It is employed by companies that use standardized processes.
D)It can only be used for manufacturing firms and not used for service firms.

Question 35

Which of the following is not a characteristic of process costing?

A)Products are homogenous.
B)Costs are traced to production processes rather than products.
C)Service firms cannot use process costing.
D)Processes are standardizeD.Service firms can use process costing.

Question 36

Which of the following statements is incorrect regarding the production costing report?

A)A separate production report is prepared for each major production process on an annual basis.
B)The production report provides information about the number of units and manufacturing costs that flow through a production process during an accounting period.
C)The production report is used to determine how much manufacturing cost to transfer out of Work in Process Inventory and into the next processing department.
D)The production report is used to value any units that are in process at the end of the accounting perioD.The production report provides information about the number of units and manufacturing costs that flow through a production process during an accounting period.It is used to determine how much manufacturing cost to transfer out of Work in Process Inventory and into the next processing department (or Finished Goods Inventory if it is the last production process)and to value any units that are in process at the end of the accounting period.A separate production report is prepared for each major production process on either a monthly or quarterly basis.

Question 37

Which of the following companies would most likely use job order costing?

A)A computer memory chip manufacturer
B)A sugar beet processor
C)An auto body repair shop
D)An oil refinery

Question 38

Conversion costs consist of

A)all costs of production.
B)raw materials and direct labor.
C)direct labor and manufacturing overhead.
D)raw materials and manufacturing overheaD.Direct labor and manufacturing overhead costs can be lumped together in a single category called conversion cost.

Question 39

Under process costing,the amount of under- or overapplied conversion cost should be transferred to Work in Process Inventory at the end of the period.Under process costing,the amount of under- or overapplied conversion cost should be transferred to Cost of Goods Sold at the end of the period.

Question 40

To reconcile the total cost of Work in Process Inventory,the costs that were in Work in Process Inventory at the beginning of the period plus any costs that were added during the current period must be accounted for.To reconcile the total cost of Work in Process Inventory,we must account for any costs that were in Work in Process Inventory at the beginning of the period plus any costs that were added during the current period.

Question 41

Frost,Inc.is a service firm that uses process costing.The firm worked on a total of 1,600 cases this month,800 of which were completed during the period.The remaining cases were 40% complete.The firm incurred $180,000 in direct labor and manufacturing overhead costs during the period,and had $4,800 in direct labor and manufacturing costs in beginning inventory.Using the weighted average method,what was total cost per equivalent unit?

A)$115.50
B)$141.43
C)$145.20
D)$165.00

Question 42

For a firm using the weighted average method of process costing,it would not be necessary to translate physical units into equivalent units if

A)the FIFO method were used instead.
B)direct materials were all added at the beginning of the process.
C)direct labor and manufacturing overhead were combined into a single category called conversion costs.
D)all units worked on during the period were completed during the perioD.Equivalent units = physical units × percentage of completion.If all units were 100% complete,equivalent units would equal physical units.

Question 43

For units that are completed and transferred out in a firm that uses the weighted average method of process costing,

A)the number of units that came from beginning inventory is the same as the number of units that were started during the period.
B)the number of equivalent units for direct materials is the same as the number of equivalent units for conversion cost.
C)the number of equivalent units is less than the number of physical units.
D)the number of equivalent units is more than the number of physical units.

Question 44

Bosco Corp uses a process costing system.Beginning inventory for January consisted of 1,300 units that were 60% completed.During January,13,650 units were completed.On January 31,the inventory consisted of 650 units that were 70% completed.How many units were started during January?

A)12,805
B)13,000
C)13,325
D)14,300

Question 45

An equivalent unit is calculated by

A)dividing the number of physical units by their percentage of completion.
B)multiplying the number of physical units by their percentage of completion.
C)dividing the number of physical units into direct materials and conversion costs.
D)subtracting the number of physical units in ending Work in Process Inventory from the total number of physical units.

Question 46

Brody Corp uses a process costing system in which direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process.Beginning inventory for January consisted of 1,300 units that were 40% completed.13,000 units were started into the process during January.On January 31,the inventory consisted of 650 units that were 70% completed.What would be the equivalent units for direct materials cost using the weighted average method?

A)13,000
B)13,585
C)14,105
D)14,300

Question 47

Physical units multiplied by their percentage of completion yields

A)units completed and transferred out.
B)beginning units in process.
C)equivalent units.
D)ending units in process.

Question 48

Bildy Corp uses a process costing system.During January,13,000 units were started into the process,and 13,650 units were completed.On January 31,the inventory consisted of 650 units that were 70% completed.How many units were in beginning inventory on January 1?

A)0
B)195
C)1,105
D)1,300

Question 49

How could a firm using the weighted average method of process costing calculate how many units were worked on during a period?

A)Add beginning units in process and units completed
B)Add beginning units in process and ending units in process
C)Add units completed and ending units in process
D)Add units started and units completed

Question 50

Brody Corp uses a process costing system.Beginning inventory for January consisted of 1,300 units that were 40% completed.13,000 units were started into the process during January.On January 31,the inventory consisted of 650 units that were 70% completed.How many units were completed during the period?

A)12,350
B)13,650
C)14,300
D)14,950

Question 51

For a firm that uses the weighted average method of process costing,which of the following must be true?

A)Physical units must be greater than or equal to equivalent units.
B)Equivalent units must be greater than or equal to physical units.
C)Physical units must be equal to equivalent units.
D)Physical units can be greater than or less than equivalent units.

Question 52

Braden Corp uses a process costing system.Beginning inventory for January consisted of 1,300 units that were 60% completed.13,000 units were started into the process during January.During January,13,650 units were completed.How many units were in ending inventory on January 31?

A)1,950
B)1,300
C)650
D)130

Question 53

To reconcile the number of physical units using the weighted average method of process costing,one must determine whether the units were:

A)completed or still in process at the end of the period.
B)sold or still in inventory at the end of the period.
C)in the next production process or sold at the end of the period.
D)using direct materials or conversion costs at the end of the perioD.One must determine whether the units were completed during the period or are still being worked on at the end of the period.

Question 54

A firm using process costing needs to reconcile the number of physical units in order to

A)account for units that have different percentages of completion.
B)determine the number of units that were started during the period.
C)reconcile beginning Work in Process Inventory with ending Work in Process Inventory.
D)separate physical units from the equivalent units.

Question 55

How could a firm using the weighted average method of process costing calculate how many units were started during a period?

A)Add units completed and beginning units in process,then subtract ending units in process.
B)Subtract beginning units in process from units completed,then add ending units in process.
C)Add beginning units in process,units completed,and ending units in process.
D)Subtract ending units in process from units completed,then add beginning units in process.

Question 56

Which of the following relationships is correct?

A)Beginning units in process + units started = units completed + ending units in process
B)Units started = beginning units in process + units completed + ending units in process
C)Units started - beginning units in process = units completed + ending units in process
D)Ending units in process + beginning units in process = units started - units completed

Question 57

Every unit that passes through the production process must have been counted in which category of physical units at some point?

A)Beginning units in process.
B)Units started.
C)Ending units in process.
D)Units started and completeD.Every unit must have been started at some point.

Question 58

Equivalent units are kept separate for what two categories?

A)Direct labor and manufacturing overhead.
B)Direct materials and conversion cost.
C)Direct materials and indirect materials.
D)Finished goods and cost of goods solD.Direct materials and conversion costs have different percentages of completion,so equivalent units are calculated separately for each of the two categories.

Question 59

Brody Corp uses a process costing system in which direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process.Beginning inventory for January consisted of 1,300 units that were 40% completed.13,000 units were started into the process during January.On January 31,the inventory consisted of 650 units that were 70% completed.What would be the equivalent units for conversion cost using the weighted average method?

A)13,000
B)13,585
C)14,105
D)14,300

Question 60

To reconcile the number of physical units using the weighted average method of process costing,one must determine whether the units were

A)in process at the beginning of the period or were completed at the beginning of the period.
B)in process at the beginning of the current period or in process at the beginning of the previous period.
C)in process at the beginning of the period or were sold at the beginning of the period.
D)in process at the beginning of the period or were started during the perioD.One must add the number of units that were on hand at the beginning of the period to the units that were started during the current period.

Question 61

Livingston Co.uses process costing to account for the production of elastic bands.Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process.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.During April 8,000 units were completed.Ending in process inventory was 4,000 units (100% complete for materials,50% for conversion).The total cost per unit using the weighted average method would be

A)$15.9667
B)$13.8382
C)$14.0000
D)$14.5000

Question 62

Stangol Co.uses process costing to account for the production of highlighter pens.Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process.Cost per equivalent unit has been calculated to be $8.80 for conversion costs and $7.1667 for materials.12,000 units were worked on during the period.Ending inventory still in process was 4,000 units (100% complete for materials,50% for conversion).The value of units completed and transferred out using the weighted average method would be closest to:

A)$127,733.60
B)$130,000.00
C)$152,000.00
D)$159,666.00

Question 63

Livingston Co.uses process costing to account for the production of elastic bands.Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process.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.During April 8,000 units were completed.Ending in process inventory was 4,000 units (100% complete for materials,50% for conversion).The cost per equivalent unit for conversion costs using the weighted average method would be

A)$8.00
B)$8.80
C)$2.20
D)$17.40

Question 64

Gatlin Manufacturing adds direct materials at the beginning of the production process,while conversion costs are incurred uniformly throughout the process.At the end of the period,equivalent units for direct materials were 250 more than equivalent units for conversion costs.1,000 units were started during the period,and 1,000 units were also completed.Ending Work in Process Inventory was 50% complete.How many physical units were in ending Work in Process Inventory?

A)250
B)500
C)750
D)1,000

Question 65

Which of the following is not used in the calculation of cost per equivalent unit?

A)Current manufacturing costs
B)Current nonmanufacturing costs
C)Equivalent units
D)Beginning inventory costs

Question 66

Stangol Co.uses process costing to account for the production of highlighter pens.Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process.Cost per equivalent unit has been calculated to be $8.80 for conversion costs and $7.1667 for materials.12,000 units were worked on during the period.Ending inventory still in process was 4,000 units (100% complete for materials,50% for conversion).The value of ending inventory using the weighted average method would be closest to:

A)$31,933.20
B)$46,266.80
C)$63,866.40
D)$130,000.00

Question 67

Macadam Corp.uses the weighted average method of process costing.Its cost per equivalent unit for direct materials was $5.00 this period,and it had 25,000 equivalent units for direct materials.Beginning inventory costs were 25% of current costs.How much were current costs?

A)$25,000
B)$75,000
C)$100,000
D)$125,000

Question 68

Kenney Co.uses process costing to account for the production of canned energy drinks.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 19,200 units for materials and 16,000 units for conversion costs.Beginning inventory consisted of $11,200 in materials and $6,400 in conversion costs.April costs were $57,600 for materials and $64,000 for conversion costs.Ending inventory still in process was 6,400 units (100% complete for materials,50% for conversion).The total cost per unit using the weighted average method would be closest to:

A)$7.9833
B)$6.9091
C)$7.0000
D)$7.2500

Question 69

Livingston Co.uses process costing to account for the production of elastic bands.Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process.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.During April 8,000 units were completed.Ending in process inventory was 4,000 units (100% complete for materials,50% for conversion).The equivalent cost per unit for materials using the weighted average method would be closest to:

A)$1.8333
B)$6.0000
C)$7.1667
D)$14.5000

Question 70

For a firm that uses process costing,calculating equivalent units makes it possible to fulfill which of the following requirements of GAAP?

A)Assigning an appropriate value to assets.
B)Assigning an appropriate value to liabilities.
C)Expensing period costs as they are incurred.
D)Recognizing revenue when it is realized or realizable.

Question 71

For a process costing firm,one could calculate the cost of beginning inventory in which of the following ways?

A)(Equivalent units × cost per equivalent unit)- current costs
B)Current costs - (equivalent units × cost per equivalent unit)
C)(Current costs × cost per equivalent unit)- equivalent units
D)Equivalent units × (current costs - cost per equivalent unit)

Question 72

Kenney Co.uses process costing to account for the production of canned energy drinks.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 19,200 units for materials and 16,000 units for conversion costs.Beginning inventory consisted of $11,200 in materials and $6,400 in conversion costs.April costs were $57,600 for materials and $64,000 for conversion costs.Ending inventory still in process was 6,400 units (100% complete for materials,50% for conversion).The cost per equivalent unit for materials using the weighted average method would be closest to:

A)$0.9167
B)$3.0000
C)$3.5833
D)$7.2500

Question 73

Kenney Co.uses process costing to account for the production of canned energy drinks.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 19,200 units for materials and 16,000 units for conversion costs.Beginning inventory consisted of $11,200 in materials and $6,400 in conversion costs.April costs were $57,600 for materials and $64,000 for conversion costs.Ending inventory still in process was 6,400 units (100% complete for materials,50% for conversion).The cost per equivalent unit for conversion costs using the weighted average method would be

A)$4.00
B)$4.40
C)$1.10
D)$8.70

Question 74

To calculate cost per equivalent unit in process costing,total manufacturing costs are divided by the total number of equivalent units.Under the weighted average method,what costs are reflected in total manufacturing costs?

A)Current period costs only
B)Prior period costs only
C)Both current and prior period costs
D)Both current period and future period costs

Question 75

To determine how much cost should be transferred out of 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 inventory.
C)subtract cost of beginning inventory from current period costs.
D)add cost of beginning inventory and current period costs.

Question 76

Cost per equivalent unit is kept separate for direct materials and conversion costs because

A)the physical units were different for the two categories.
B)the total manufacturing costs were different for the two categories.
C)the equivalent units were different for the two categories.
D)the ending inventories were different for the two categories.

Question 77

Crador Corp uses a process costing system in which direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process.Beginning inventory for January consisted of 1,300 units.13,000 units were started into the process during January.On January 31,the inventory consisted of 650 units.Equivalent units for conversion costs were 14,105.What percentage complete was the ending inventory with respect to conversion costs on January 31?

A)70%
B)80%
C)90%
D)100%

Question 78

Under the weighted average method of process costing,which of the following formulas is used to calculate the cost per equivalent unit?

A)(Ending Inventory + Current Costs)/Physical Units
B)(Beginning Inventory + Current Costs)/Physical Units
C)(Ending Inventory + Current Costs)/Equivalent Units
D)(Beginning Inventory + Current Costs)/Equivalent Units

Question 79

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.

Question 80

Under the weighted average method of process costing,the cost per equivalent unit is calculated for which of the following pairs of categories?

A)Units sold and units in ending Finished Goods Inventory.
B)Direct materials and conversion costs.
C)Manufacturing costs and nonmanufacturing costs.
D)Completed units and ending units in process.