Deck 4: Process Cost Accounting

Question 1

Equivalent units of production are used to determine the cost per unit of all products, whether completed or not.

Answer 1

True

Question 2

Operations costing involves a combination of a process cost and a job-order cost system.

Answer 2

True

Question 3

The accumulation of the three manufacturing cost elements to Work in Process in a process cost system differs significantly from how they are assigned in a job-order cost system.

Answer 3

False

Question 4

In a process cost system, costs are tracked through individual jobs.

Question 5

In a process cost system, labour and overhead can be added in any production department; however, materials are only added in the first department.

Question 6

Production of Mountain Dew would likely be done using a process cost system.

Question 7

Process cost accounting focuses on the process involved in manufacturing products that are very unique in nature.

Question 8

Process cost systems are used to apply costs to merchandise inventory.

Question 9

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.

Question 10

More frequent materials requisitions are generally required in a process cost system than in a job-order cost system.

Question 11

In process manufacturing, units are mass produced in a continuous fashion.

Question 12

The equivalent units of production of ten units that are 20% complete is 2 full units.

Question 13

The flow of costs in a process costing system requires that materials, labour, and overhead be added in equal amounts in each process or department involved to complete the product.

Question 14

One similarity of process cost accounting with job-order cost accounting is that both determine manufacturing costs.

Question 15

When goods are completed, the entry to record the transfer of the goods out of the last department includes a debit to Cost of Goods Sold.

Question 16

A primary driver of overhead costs in continuous manufacturing operations is direct labour hours.

Question 17

One Work in Process account is used in a process cost system.

Question 18

In a process cost system, total costs are determinable at any point in time by examining the account balances.

Question 19

In a process cost system under the weighted-average method, labour costs are added to Work in Process in each producing department as incurred.

Question 20

Companies often use a combination of a process cost and a job-order cost system, called job process costing.

Question 21

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 22

When material costs and conversion costs do NOT occur in the same process at the same time, the weighted-average method cannot be used effectively.

Question 23

The FIFO method is easier to understand and use than the weighted-average method.

Question 24

There are no units in ending Work in Process at the end of the period under the FIFO method.

Question 25

The cost reconciliation schedule shows that total costs accounted for equal the total costs to be accounted for.

Question 26

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 27

The FIFO method is conceptually superior to the weighted-average method.

Question 28

In order to calculate the physical unit flow, a company must first calculate the equivalent units of production.

Question 29

When comparing the FIFO with the weighted-average method, the FIFO method provides current cost information.

Question 30

Under the weighted-average method, unit material cost is calculated by taking total beginning material costs plus the material costs added during the period, then dividing by the equivalent units in the process during the period.

Question 31

A production cost report is an internal document for management that shows production quantity and cost data for a particular production department.

Question 32

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 33

Under the weighted-average method, the physical units in a department are the actual units in a department regardless of the degree of any work performed.

Question 34

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 35

The first step performed in preparing a production cost report is computing the physical unit flow.

Question 36

Unit production costs must be calculated before the equivalent units of production can be calculated.

Question 37

Companies using the weighted-average method do NOT complete units left over from the previous accounting periods.They always start new units.

Question 38

Conversion cost is another name for manufacturing overhead.

Question 39

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, there were 3,500 units started during the period under the weighted-average method.

Question 40

Beginning Work in Process is added to units completed and transferred out to determine equivalent units of production under the weighted-average method.

Question 41

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 42

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

Question 43

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 44

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 45

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.

Question 46

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 47

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 48

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 49

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 50

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 51

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 52

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 53

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.

Question 54

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 55

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 56

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 57

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 58

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 59

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 60

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 61

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 62

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 63

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 64

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 65

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 Mav \( 31(50 \%) \) } &12,000\\\end{array}$
Materials are added at the beginning of the production process.Conversion costs are added equally throughout production.What is the total number of equivalent units during May for conversion costs if the weighted-average method is used?

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

Question 66

Use the following information to answer questions
The mixing department of a company's output 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 67

Wind Mill Company had the following department data: $\begin{array}{ll}\text {Work in process, physical units, August 1 }&72,000\\\text {Completed and transferred out physical units. }&106,000\\\text {Work in process physical units Auqust 31 }&74,000\\\end{array}$
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 68

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 69

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 70

Which of the following only applies to process costing?

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

Question 71

Use the following information to answer questions
The mixing department of a company's output 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 72

Cyrprano Company had the following department data: $\begin{array}{ll}\text {Work in process, physical units, beginning }&-0-\\\text {Units started }&25,000\\\text {Completed and transferred out physical units }&20,000\\\text { Work in process physical units ending}&5,000\\\end{array}$
Materials are added at the beginning of the process.Conversion costs are added evenly throughout the process.The incomplete units are 40% completed as to conversion costs.What is the total number of equivalent units for materials during the period if the weighted-average method is used?

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

Question 73

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 74

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 75

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 76

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 77

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 78

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 79

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 80

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