Deck 4: Process Costing

Question 1

Which of the following statements about the Work in Process account is true?

A)Both job-order cost and process cost systems use only one Work in Process account.
B)Both job-order cost and process cost systems use several Work in Process accounts.
C)Job-order cost systems use several Work in Process accounts, but process cost systems use only one.
D)Job-order cost systems use only one Work in Process account, but process cost systems use several.

Answer 1

D

Question 2

Which of the following is true of a process cost system?

A)There is a separate Work in Process account for each process.
B)A subsidiary ledger tracks the costs of each job.
C)There is a separate Work in Process account for each product.
D)Materials are added at the beginning process, and conversion costs are added at the end.

Answer 2

A

Question 3

Which group of the following manufacturing cost elements occurs in a process cost system?

A)direct labour and conversion costs
B)direct labour and direct material
C)manufacturing overhead and conversion costs
D)direct materials, direct labour, and manufacturing overhead

Answer 3

D

Question 4

When is a process cost accounting system most appropriate?

A)when mass-produced products are manufactured that are very similar in nature
B)when a company produces multiple jobs within the same accounting period
C)when companies produce uniquely different products
D)when a variety of different products are produced, each one requiring different types of material, labour, and overhead

Question 5

Which of the following items is not a characteristic of a process cost system?

A)Once production begins, it continues until the finished product emerges.
B)The products produced are heterogeneous in nature.
C)The focus is on continually producing similar products.
D)When the finished product emerges, all units have exactly the same amount of materials, labour, and overhead.

Question 6

Which of the following statements is true?

A)Both job-order cost and process cost systems track direct materials and direct labour, but only job-order cost systems track manufacturing overhead.
B)Both job-order cost and process cost systems track direct materials and direct labour, but only process cost systems track manufacturing overhead.
C)Both job-order cost and process cost systems track direct materials, direct labour and manufacturing overhead.
D)Only manufacturing overhead costs are tracked in both job-order cost and process cost systems.

Question 7

A major difference between process costing and job-order costing is

A)costs are easy to trace to specific jobs in a job-order system but impossible to trace to products in a process costing system.
B)costing of material components is more sensitive to materials purchased in a process costing system.
C)process costing has fewer overall purchase requisitions than in a job-order costing system.
D)controls over material acquisitions is generally not as stringent in a process costing system.

Question 8

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

A)a car manufacturer
B)a spa
C)a cement plant
D)an airplane manufacturer

Question 9

Which one of the following is a difference between a job-order cost and a process cost system?

A)The manufacturing cost elements are different.
B)Costs are totalled at different points in the manufacturing process.
C)The costs flow through the accounts differently.
D)Three primary costs make up the costs of products in a job-order system, while only two costs are used in process costing.

Question 10

Which statement best reflects a distinguishing factor between a job-order cost system and a process cost system?

A)the detail at which costs are calculated
B)the time period each covers
C)the number of Work in Process accounts
D)the manufacturing cost elements included

Question 11

In process costing,

A)accounting focuses on the process involved in manufacturing products that are very unique in nature.
B)the system is used to apply costs to merchandise inventory.
C)costs are summarized in a product cost report by department.
D)total costs are determinable at any point in time by examining the account balances.

Question 12

Which statement is true concerning process cost systems?

A)Each Work in Process account represents the cost of a different product.
B)The cost of each unit of product is determined after each unit is produced.
C)Product costs are determined when the products are sold.
D)Product costs are summarized on production cost reports.

Question 13

Which one of the following is a true statement about process cost systems?

A)In process cost systems, costs are accumulated and assigned.
B)A process cost system has one Work in Process account for each job.
C)In process cost systems, costs are summarized by batch.
D)Unit costs are ignored in process cost systems because they are identical.

Question 14

A company should use process costing instead of job-order costing when

A)products are manufactured to customers' specifications.
B)there is a wide variety of products manufactured.
C)most of the products are similar and can be mass produced.
D)the product requires several different manufacturing processes to be completed.

Question 15

Which of the following are characteristics of process cost systems?

A)They used by companies that mass-produce similar products in a continuous fashion.
B)They are best utilized when tracking costs by department are not important.
C)They are focused on tracking job cost information.
D)They help determine inventory amounts but not cost of goods.

Question 16

Which of the following is correct concerning the number of Work in Process accounts used by job-order and process cost systems?

A)job-order = several; process cost = one
B)job-order = one control account for each job; process cost = one for each process
C)job-order = one control account; process cost = one for each process
D)job-order = none; process cost = several

Question 17

A major difference between process costing and job-order costing is

A)costs are calculated at each step in a job-order system while only calculated at the end of a process costing system.
B)costing of material components is more sensitive in a process costing system.
C)job-order costing is focused on each specific job while process costing focuses on departmental activity.
D)process costing uses only one work-in-progress account while job-order costing uses many work-in-progress accounts.

Question 18

Which of the following is considered a difference between a job-order cost system and a process cost system?

A)the accumulation of the costs of materials, labour, and overhead
B)the flow of costs
C)the manufacturing cost elements
D)unit cost computations

Question 19

Which of the following is a characteristic of products that are mass produced in a continuous fashion?

A)They are grouped in batches.
B)They are produced all in one process.
C)Each batch of costs is accumulated in a separate Cost of Goods Sold account.
D)The products are identical or very similar in nature.

Question 20

For which one of the following would a process cost system most likely be used?

A)custom furniture
B)potato chips
C)motion pictures
D)cruise ships

Question 21

Myrna's Manufacturing has 6,000 units in beginning Work in Process, 15% complete as to conversion costs, 15,000 units transferred out to Finished Goods, and 2,000 units in ending Work in Process 10% complete as to conversion costs.Materials are fully added at the beginning of the process.How much are equivalent units for materials if the weighted-average method is used?

A)11,000
B)17,000
C)21,000
D)23,000

Question 22

Use the following information to answer questions
The output of a company's mixing department during the period consists of 25,000 units completed and transferred out, and 15,000 units in ending Work in Process that were 30% complete as to materials and conversion costs.Beginning inventory was 17,000 units that were 15% complete as to materials and conversion costs.
Under the weighted-average method, what are the equivalent units of production for materials?

A)32,050
B)29,500
C)25,000
D)4,500

Question 23

Which of the following only applies to process costing?

A)product cost averaging
B)predetermined overhead rates
C)equivalent units of production
D)individual job activity

Question 24

Conversion costs are typically comprised of what two types of items?

A)management's discretion of certain production expenses
B)direct labour and indirect labour
C)manufacturing overhead and materials
D)direct labour and manufacturing overhead

Question 25

There are no units in process at the beginning of the period, 500 units in process at the end of the period that are 30% complete, and 3,000 units transferred out during the period.Based on this information, how many units were started during the period under the weighted-average method?

A)2,500
B)3,500
C)3,150
D)3,000

Question 26

In the Carter Company, there are 15,000 units in beginning Work in Process, 30,000 units started into production, and 7,000 units in ending Work in Process 60% completed.How many physical units are to be accounted for?

A)45,000
B)38,000
C)52,000
D)27,000

Question 27

Hace, Inc.began March with 650 units in beginning Work in Process, 11,400 units started into production, and 500 units in ending Work in Process that are 30% completed.How many physical units are to be accounted for?

A)11,550
B)12,050
C)11,900
D)11,250

Question 28

Which one of the following will appear as a credit in the Work in Process account of a first department in a two stage production process?

A)materials used
B)overhead applied
C)cost of goods sold
D)cost of products transferred into the second department

Question 29

Why are materials requisition forms used less frequently in process costing?

A)Materials are rarely used in production.
B)Requisitions are for larger quantities so fewer orders are needed.
C)Materials are only added at the beginning of production.
D)There are no materials inventories because process costing uses a just-in-time system.

Question 30

2,000 units are in a process that is 75% complete for conversion costs.To what are these units referred?

A)1,500 equivalent units of production
B)500 process units
C)2,000 completed units
D)1,500 physical units of production

Question 31

Zargus Company began the month of June with 1,650 units in beginning Work in Process, 11,400 units started into production, and 500 units in ending Work in Process that are 30% completed.How many units were transferred out during June?

A)12,550
B)12,050
C)11,550
D)11,250

Question 32

A product requires processing in two departments, Department 22 and then Department 23, before it is completed.What happens to costs transferred out of Department 22?

A)They are debited to Finished Goods Inventory.
B)They are transferred to Cost of Goods Sold.
C)They are debited to Work in Process-Department 23.
D)They are credited to Manufacturing Overhead.

Question 33

Use the following information to answer questions
The output of a company's mixing department during the period consists of 25,000 units completed and transferred out, and 15,000 units in ending Work in Process that were 30% complete as to materials and conversion costs.Beginning inventory was 17,000 units that were 15% complete as to materials and conversion costs.
How many units were started during the period?

A)27,000
B)25,000
C)23,000
D)17,000

Question 34

Swick Industries uses a process cost system.The company assigned manufacturing overhead costs to production.What transaction was recognized?

A)Finished Goods Inventory account was increased.
B)Cost of Goods Sold was increased.
C)A Manufacturing Overhead account was reduced.
D)The Work in Process account was reduced.

Question 35

Which of the following is not correct?

A)Equivalent units of production are used to determine the cost per unit of all products, whether completed or not.
B)The equivalent units of production of ten units that are 20% complete is two full units.
C)Equivalent units of production is an expression of the number of units that would have been started and finished if all of the effort were directed at that purpose.
D)The weighted-average method of computing equivalent units assumes that products are at the same point of completion for both materials and conversion costs.

Question 36

Macor Manufacturing assigns overhead based on machine hours.Department R logs 500 machine hours and Department W shows 400 machine hours for the period.The overhead rate is $7 per machine hour.What will the entry to assign overhead include?

A)a debit to Manufacturing Overhead for $6,300
B)a credit to Work in Process-Department R for $3,500
C)a debit to Work in Process-Department W for $2,800
D)a credit to Manufacturing Overhead for $6,300

Question 37

Myrna's Manufacturing has 6,000 units in beginning Work in Process, 15% complete as to conversion costs, 15,000 units transferred out to Finished Goods, and 2,000 units in ending Work in Process 10% complete as to conversion costs.Materials are fully added at the beginning of the process.How much are equivalent units for conversion costs if the weighted-average method is used?

A)15,700
B)15,200
C)14,300
D)13,900

Question 38

What are physical units?

A)the actual units to be accounted for during a period
B)the pro-rata portion of units completed during the period
C)units in process at the end of the period
D)the total units completed and transferred out during the period

Question 39

When inventory is sold, where are the related costs transferred to?

A)Work in Process
B)Cost of Goods Sold
C)Finished Goods
D)Manufacturing Overhead

Question 40

Which one of the following is used most frequently to allocate overhead costs in continuous manufacturing operations?

A)direct labour dollars
B)direct labour hours
C)machine hours
D)machine maintenance dollars

Question 41

A process began the month with 2,000 units in the beginning Work in Process and ended the month with 800 units in the ending Work in Process.If 3,600 units were completed and transferred out of the process during the month, how many units were started into production during the month?

A)3,200 units
B)2,400 units
C)3,600 units
D)2,000 units

Question 42

Why is it necessary to calculate equivalent units of production in a department?

A)A physical count of units is impossible.
B)A company may transfer numerous batches out during the year.
C)The physical units in the department are always 100% complete.
D)Some units worked on in the department are not fully complete.

Question 43

Which equation is correct?

A)Total units to be accounted for − units in beginning Work in Process = units started into production
B)Total units to be accounted for = beginning Work in Process − units in ending Work in Process
C)Total units accounted for = units in beginning Work in Process + units in ending Work in Process
D)Total units to be accounted for = equivalent units + units in ending Work in Process

Question 44

Special J Company had the following department information about physical units and percentage of completion: $\begin{array}{cc}&\underline{\text { Physical Units }}\\ \text { Work in process, May \( 1(60 \%) \) } &14,400\\ \text { Completed and transferred out } &26,000\\ \text {Work in process. May \( 31(50 \%) \) } &12,000\\\end{array}$

Materials are added at the beginning of the production process. Corversion costs are added equally throughout production. What is the tatal number of equivalent units during May for carversian costs if the weighted-average method is used?

A)52,400
B)32,000
C)23,360
D)31,760

Question 45

Use the following information for questions
A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process.For the month of January, there were no units in the beginning Work in Process inventory; 10,000 units were started into production in January; and there were 4,000 units that were 60% complete in the ending Work in Process inventory at the end of January.The weighted-average method is used.
What were the equivalent units of production for conversion costs for the month of January?

A)8,400 equivalent units
B)14,000 equivalent units
C)10,000 equivalent units
D)12,400 equivalent units

Question 46

How are equivalent units calculated?

A)multiplying the percentage of work done by the physical units
B)dividing physical units by the percentage of work done
C)multiplying the percentage of work done by the equivalent units of output
D)dividing equivalent units by the percentage of work done

Question 47

A process with no beginning Work in Process, completed and transferred out 12,000 units during a period and had 1,000 units in the ending Work in Process that were 30% complete.Materials are added at the beginning of the process and conversion costs are added equally throughout the process.How much is the equivalent units of production for the period for conversion costs if the weighted-average method is used?

A)13,000 equivalent units
B)11,000 equivalent units
C)12,000 equivalent units
D)12,300 equivalent units

Question 48

Use the following information to answer questions
In the month of March, a department had 8,000 units in beginning Work in Process that were 75% complete.During March, 30,000 units were transferred into production from another department.At the end of March there were 2,000 units in ending Work in Process that were 75% complete.Materials are added at the beginning of the process while conversion costs are incurred uniformly throughout the process.The weighted-average method is used.
How many units were transferred out of the process in March?

A)36,000 units
B)32,000 units
C)21,000 units
D)30,000 units

Question 49

The Finishing Department shows the following information: $\begin{array}{cc} \text { Beginning Work in Process } & \text {14,000 units } \\ \text { Ending Work in Process } & \text {17,000 units } \\ \text { Units Transferred Out } & \text {25,000 units } \\\end{array}$


How mary tatal units were started by the Finishing Department?

A)42,000
B)11,000
C)28,000
D)36,000

Question 50

Cyrprano Company had the following department data: $\begin{array}{cc} \text { Work in process, physical units, beginning } &-0-\\ \text { Units started. } &25,000\\ \text { Completed and transferred out physical units} &20,000\\ \text {Work in process, physical units, ending } &5,000\\\end{array}$


Materials are added at the beginning of the process. Corversion costs are added evenly throughaut the process. The incamplete units are $40 \%$ campleted as to conversian costs.
What is the total number of equivalent units for materials during the period if the weightedaverage method is used?

A)25,000
B)15,000
C)22,000
D)23,000

Question 51

Use the following information to answer questions
In the month of March, a department had 8,000 units in beginning Work in Process that were 75% complete.During March, 30,000 units were transferred into production from another department.At the end of March there were 2,000 units in ending Work in Process that were 75% complete.Materials are added at the beginning of the process while conversion costs are incurred uniformly throughout the process.The weighted-average method is used.
How much are equivalent units of production for materials for March?

A)42,000 equivalent units
B)28,500 equivalent units
C)37,500 equivalent units
D)38,000 equivalent units

Question 52

The last department in a production process shows the following information at the end of the period: $\begin{array}{cc} \text { Beginn?ng Work in Process. } & \text { 2,000 units} \\ \text { Started into Production} & \text { 24,000 units } \\ \text { Ending Work in Process } & \text { 16,000 units} \\\end{array}$

How many units have been transferred out to Finished Goads during the periad?

A)10,000
B)24,000
C)28,000
D)16,000

Question 53

Wind Mill Company had the following department data: $$\begin{array} { l } \text { Wark in pracess, physical units, August } 1 \ldots \ldots \ldots&72,000 \\\text { Campleted and transferred out physical units ..... } &106,000\\\text { Wark in process, physical units, August } 31 \ldots \ldots . .&74,000\end{array}$$ Materials are added at the beginning of the process.What is the total number of equivalent units for materials in August if the weighted-average method is used?

A)104,000
B)108,000
C)180,000
D)252,000

Question 54

Use the following information to answer questions
In the month of March, a department had 8,000 units in beginning Work in Process that were 75% complete.During March, 30,000 units were transferred into production from another department.At the end of March there were 2,000 units in ending Work in Process that were 75% complete.Materials are added at the beginning of the process while conversion costs are incurred uniformly throughout the process.The weighted-average method is used.
How much is the equivalent units of production for conversion costs for March?

A)38,000 equivalent units
B)28,500 equivalent units
C)37,500 equivalent units
D)30,000 equivalent units

Question 55

Which statement is true?

A)Total units accounted for = beginning Work in Process - units transferred out
B)Beginning Work in Process + ending Work in Process = total units accounted for
C)Total units accounted for = units in ending Work in Process + units transferred out
D)Ending Work in Process - equivalent units = total units accounted for

Question 56

Use the following information to answer questions
Department T45 of a two department-production process showed the following units:
$\begin{array}{cc} \text { Beginning Work in Process. } & \text {15.000 \text { units } }\\ \text {Ending Work in Process } & \text {17.000 \text { units } }\\ \text { Total units to be accounted for } & \text {75.000 \text { units } }\\\end{array}$


-How many units were started into production in Department T45?

A)92,000
B)90,000
C)58,000
D)60,000

Question 57

Snapps, Inc.uses a process cost system with a weighted-average method.What amount will always be the same as the number of units to be accounted for in a department?

A)number of units started or transferred into the department
B)number of equivalent units for conversion costs
C)ending inventory plus the units started or transferred into the department
D)units in the beginning inventory plus the units started or transferred into the department

Question 58

Use the following information for questions
A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process.For the month of January, there were no units in the beginning Work in Process inventory; 10,000 units were started into production in January; and there were 4,000 units that were 60% complete in the ending Work in Process inventory at the end of January.The weighted-average method is used.
What were the equivalent units of production for materials for the month of January?

A)8,400 equivalent units
B)14,000 equivalent units
C)10,000 equivalent units
D)4,000 equivalent units

Question 59

Use the following information to answer questions
Department T45 of a two department-production process showed the following units:
$\begin{array}{cc} \text { Beginning Work in Process. } & \text {15.000 \text { units } }\\ \text {Ending Work in Process } & \text {17.000 \text { units } }\\ \text { Total units to be accounted for } & \text {75.000 \text { units } }\\\end{array}$


-How many units were transferred out from Department T45?

A)56,000
B)58,000
C)62,000
D)75,000

Question 60

What situation is created if there are no units in process at the beginning of the period?

A)The company must be using a job-order cost system.
B)The units to be accounted for will equal the units transferred out plus the units in process at the end of the period.
C)The units started into production will equal the number of units transferred out.
D)Equivalent units of production for materials and conversion costs will be the same.

Question 61

Under the weighted-average process cost method, we ignore

A)when costs are actually incurred.
B)whether costs are material costs or conversion costs.
C)equivalent units of production.
D)factory labour costs.

Question 62

Tivoli-Ng Company's Assembly Department started 14,000 units and completed 16,000 units.If beginning Work in Process was 2,600 units, how many units are in ending Work in Process?

A)600
B)2,000
C)11,400
D)13,400

Question 63

If 20,000 units are started into production and 12,000 units are in process at the end of the period, how many units were completed and transferred out if there was no beginning Work in Process?

A)20,000
B)12,000
C)8,000
D)42,000

Question 64

The Dolly Company began the period with no units in process and in Finished Goods Inventory.During the period they began 96,000 units and completed 80,000 units.If equivalent units for the period totalled 90,000, then the units in process were what percent complete? (rounded)

A)62.5%
B)83.3%
C)88.9%
D)75%

Question 65

In a process with 800 units of beginning Work in Process, the company completed and transferred out 10,000 units during a period.There were 5,000 units in the ending Work in Process that were 50% complete as to conversion costs.Materials are added 80% at the beginning of the process and 20% when the units are 90% complete.How much is equivalent units of production for the period for material costs if the weighted-average method is used?

A)12,000 equivalent units
B)15,000 equivalent units
C)11,000 equivalent units
D)14,000 equivalent units

Question 66

A process with no beginning Work in Process, completed and transferred out 10,000 units during a period and had 5,000 units in the ending Work in Process that were 50% complete.How much is equivalent units of production for the period for conversion costs if the weighted-average method is used?

A)12,500 equivalent units
B)15,000 equivalent units
C)17,500 equivalent units
D)7,500 equivalent units

Question 67

The Winston Company began the period with no units in process and 80,000 units in Finished Goods Inventory.During the period they sold 280,000 units and also had the following at the end of the period: $\begin{array}{cc} \text { Finished goods (units) } &40,000\\ \text { Work in process ( \( 50 \% \) conversion complete) } &12,000\\\end{array}$ Equivalent units for the period totalled

A)314,000.
B)280,000.
C)240,000.
D)246,000.

Question 68

If beginning Work in Process is 2,000 units, ending Work in Process is 1,000 units, and the units accounted for equals 5,000 units, what must units started in production be?

A)7,000
B)6,000
C)3,000
D)4,000

Question 69

If equivalent units are 6,000 for conversion costs and units transferred out equals 4,000, what stage of completion should the ending Work in Process be for the 8,000 units remaining?

A)75%
B)25%
C)10%
D)20%

Question 70

Halston Company has no beginning Work in Process; 5,000 units are transferred out and 1,000 units in ending Work in Process are 25% finished as to conversion costs and fully complete as to materials cost.If materials added and beginning Work in Process materials cost totals $18,000, how much is the materials cost per unit if the weighted-average method is used?

A)$3.00
B)$3.43
C)$3.13
D)There is not enough information provided.

Question 71

If 20,000 units are transferred out of a department, there is no beginning inventory, and there are 6,000 units still in process at the end of a period, how many units were started into production during the period?

A)36,000
B)30,000
C)26,000
D)6,000

Question 72

Cohen Manufacturing is trying to determine the equivalent units for conversion costs with 2,000 units of ending Work in Process at 80% completion and 14,000 physical units that are 100% complete as to materials.There are no beginning units in the department.Materials are added at the beginning of the process, and conversion costs occur evenly throughout the entire production period.What are the equivalent units for conversion costs for the current period if the weighted-average method is used?

A)16,000
B)15,600
C)1,600
D)13,600

Question 73

Equivalent units for materials total 9,000.There were 7,000 units completed and transferred out.Equivalent units for conversion costs equal 8,000.How much are the physical units for conversion costs if ending Work in Process is 25% complete?

A)3,750
B)11,000
C)8,000
D)1,750

Question 74

Gloria Company had no beginning Work in Process.During the period, 5,000 units were completed, and there were 500 units of ending Work in Process.How many units were started in production?

A)5,500
B)5,000
C)4,500
D)500

Question 75

Hanker Company had the following department data on physical units: $\begin{array}{cc} \text { Work in process, beginning } &7,000\\ \text { Completed and transferred out } &12,000\\ \text { Work in process, ending } &9,000\\\end{array}$

Materials are added at the beginning of the process. What is the total number of equivalent units for materials during the period if the weighted-average method is used?

A)14,000
B)19,000
C)21,000
D)28,000

Question 76

When using the weighted-average method, equivalent units are

A)the number of units completed in a period.
B)the number of units completed in a period plus the number of units in process at the end of the period multiplied by the percentage of which the units have been completed.
C)the number of units in beginning inventory plus the number of units completed in a period.
D)the number of units produced in a period less the number of units in process at the end of the period.

Question 77

What is a production cost report used for?

A)It is an external report provided to shareholders.
B)It shows costs charged to a department and costs accounted for.
C)It shows equivalent units of production but not physical units.
D)It shows the basis on which overhead is allocated.

Question 78

Harms Company enters materials at beginning of the process.On January 1, there was no beginning Work in Process, but there were 100 units in ending Work in Process inventory.To what is the 'number of units completed' equal?

A)the same as the number of units started
B)the number of units started less 100
C)the number of units started plus 100
D)the same as the number of equivalent units

Question 79

A department had the following information for the month: $\begin{array}{cc} \text {Total materials costs. } &\$ 90,000\\ \text { Conversion cost per unit } &\$ 3.00\\ \text { Total manufacturing cost per unit } &\$ 5.00\\\end{array}$


What are the equivalent units of production for materials if the weighted-average methor 5 used?

A)30,000
B)11,250
C)45,000
D)cannot be determined

Question 80

In order to arrive at equivalent units, what adjustments are made to physical units?

A)the percent the units are complete
B)the cost incurred during the year
C)an arbitrary factor
D)manufacturing overhead