Deck 4: Process Costing

Question 1

In process costing, the equivalent units computed for materials is generally the same as that computed for conversion costs.

Answer 1

False

Question 2

A flour manufacturer is more likely to use process costing than job-order costing whereas a manufacturer of customized leather jackets is more likely to use job-order costing than process costing.

Answer 2

True

Question 3

A job-order costing system would be best suited for production of a large quantity of a homogeneous product.

Answer 3

False

Question 4

In calculating cost per equivalent unit under the weighted-average method, prior period costs are combined with current period costs.

Question 5

The following journal entry would be made in a processing costing system when units that have been completed in the final processing department are transferred to the finished goods warehouse:

Question 6

Under the weighted-average method, the cost of ending work in process inventory is determined by dividing the equivalent units of production for ending inventory by the cost per equivalent unit for each cost category and then summing the result.

Question 7

The cost reconciliation report has two sections: "Costs to be accounted for" followed by "Costs accounted for". The "Costs accounted for" portion of the cost reconciliation report includes the cost of ending work in process inventory and the cost of beginning work in process inventory.

Question 8

Job-order costing would be more likely to be used than process costing in situations where many different products or services are produced each period to customer specifications.

Question 9

The cost reconciliation report has two sections: "Costs to be accounted for" followed by "Costs accounted for". The "Costs accounted for" portion of the cost reconciliation report includes the cost of beginning work in process inventory and the cost of units transferred out.

Question 10

The equivalent units in beginning work in process inventory plus the equivalent units in ending work in process inventory equals the units transferred out plus the equivalent units for the work done during the period.

Question 11

Any difference in the equivalent units calculated under the weighted-average and the first-in, first-out methods is due to the units in the ending work in process inventory.

Question 12

When comparing the two process costing methods for the same company, equivalent units computed under the first-in, first-out method will always be less than or equal to equivalent units computed under the weighted-average method.

Question 13

When materials are purchased in a process costing system, a work in process account is debited with the cost of the materials.

Question 14

In a process costing system, manufacturing overhead cost is also called conversion cost.

Question 15

The cost reconciliation report has two sections: "Costs to be accounted for" followed by "Costs accounted for". The "Costs accounted for" portion of the cost reconciliation report includes the cost of beginning work in process inventory and the costs added during the period.

Question 16

When computing the cost per equivalent unit, it is necessary to consider the percentage completion of the units in beginning inventory under the weighted-average method.

Question 17

When all materials are added at the beginning of the production process, under a weighted-average process costing system the equivalent units for materials is equal to the units completed and transferred out.

Question 18

Process costing is employed in industries that produce basically homogeneous products such as bricks, flour, or cement but would not be appropriate for assembly-type operations such as those that manufacture computers.

Question 19

The units in beginning work in process inventory plus the units started into production must equal the units transferred out of the department plus the units in ending work in process inventory.

Question 20

In a process costing system, overhead is allocated to departments after being applied to units of product.

Question 21

Assume there was no beginning work in process inventory and the ending work in process inventory is 70% complete with respect to conversion costs. Under the weighted-average method, the number of equivalent units of production with respect to conversion costs would be:

A) the same as the units completed.
B) less than the units completed.
C) the same as the units started during the period.
D) less than the units started during the period.

Question 22

From the standpoint of cost control, the first-in, first-out method of process costing is superior to the weighted-average method.

Question 23

The step-down method of service department cost allocation ignores interdepartmental services provided from one service department to another service department and allocates all service department costs directly to operating departments.

Question 24

In both the direct and step-down methods of allocating service department costs, any amount of the allocation base that is attributable to the service department whose cost is being allocated is ignored.

Question 25

The order in which the costs of service departments are allocated will affect the amounts allocated to an operating department when the direct method is used.

Question 26

In the cost reconciliation report under the first-in, first-out method, the costs accounted for equals the cost of units transferred out plus the costs added during the period.

Question 27

The equivalent units in the ending work in process inventory will be different under the first-in, first-out and the weighted-average methods of process costing.

Question 28

Which of the following journal entries would be used to record direct labor costs in a company having two processing departments (Department A and Department
B)?

A)
B)
C)
D)

Question 29

The step-down method of cost allocation is more accurate than the direct method because the step-down method takes into account the services that service departments provide to each other.

Question 30

When computing the cost per equivalent unit, the weighted-average method of process costing considers:

A) costs incurred during the current period only.
B) costs incurred during the current period plus cost of ending work in process inventory.
C) costs incurred during the current period plus cost of beginning work in process inventory.
D) costs incurred during the current period less cost of beginning work in process inventory.

Question 31

Under the step-down method of cost allocation, the service department that provides the least amount of service to the other departments should be allocated first.

Question 32

The cost per equivalent unit under the first-in, first-out method of process costing is equal to the cost added during the period divided by the equivalent units of production for the period.

Question 33

In the cost reconciliation report under the first-in, first-out method, the costs accounted for equals the cost of beginning work in process inventory plus the costs added during the period.

Question 34

Malcolm Company uses a weighted-average process costing system. All materials at Malcolm are added at the beginning of the production process. The equivalent units for materials at Malcolm would be the sum of:

A) units in ending work in process and the units started.
B) units in beginning work in process and the units started.
C) units in ending work in process and the units started and completed.
D) units in beginning work in process and the units started and completed.

Question 35

Under the weighted-average method, the cost of units transferred out of a department is computed as follows for a cost category:

A) Costs added during the period + Cost of beginning work in process inventory
B) Units transferred to the next department × Cost per equivalent unit
C) Units in ending work in process inventory × Cost per equivalent unit
D) Cost of ending work in process inventory − Cost of beginning work in process inventory

Question 36

The step-down method ultimately results in less total cost being allocated to operating departments than the direct method.

Question 37

The cost per equivalent unit for conversion costs will always be the same under both the first-in, first-out and the weighted-average methods if there is no beginning work in process inventory.

Question 38

The equivalent units of production for a department using the first-in, first-out process costing method is equal to the number of units completed plus the equivalent units in the ending inventory.

Question 39

Under the first-in, first-out method of product costing, equivalent units of production consider units in the beginning inventory as if they were started and completed during the current period.

Question 40

In the cost reconciliation report under the first-in, first-out method, the costs to be accounted for equals the cost of ending work in process inventory plus the costs added during the period.

Question 41

Darden Corporation uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 20,200 units in its beginning work in process inventory that were 10% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $21,700. An additional 95,000 units were started into production during the month. There were 28,000 units in the ending work in process inventory of the Welding Department that were 70% complete with respect to conversion costs. A total of $847,880 in conversion costs were incurred in the department during the month. The cost per equivalent unit for conversion costs for the month is closest to:

A) $10.486
B) $11.200
C) $8.142
D) $9.985

Question 42

In the cost reconciliation report under the weighted-average method, the "Total cost accounted for" equals:

A) Cost of beginning work in process inventory + Cost of units transferred out
B) Cost of beginning work in process inventory + Cost of units transferred in
C) Cost of ending work in process inventory + Cost of units transferred out
D) Cost of ending work in process inventory + Cost added to production during the period

Question 43

Fabert Corporation uses the weighted-average method in its process costing system. The Assembly Department started the month with 16,000 units in its beginning work in process inventory that were 40% complete with respect to conversion costs. An additional 60,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. During the month 65,000 units were completed in the Assembly Department and transferred to the next processing department. There were 11,000 units in the ending work in process inventory of the Assembly Department that were 50% complete with respect to conversion costs. What were the equivalent units for conversion costs in the Assembly Department for the month?

A) 65,000
B) 70,500
C) 64,100
D) 55,000

Question 44

Bims Corporation uses the weighted-average method in its process costing system. The Assembly Department started the month with 5,000 units in its beginning work in process inventory that were 70% complete with respect to conversion costs. An additional 68,500 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 33,000 units in the ending work in process inventory of the Assembly Department that were 60% complete with respect to conversion costs. What were the equivalent units for conversion costs in the Assembly Department for the month?

A) 40,500
B) 96,500
C) 56,800
D) 60,300

Question 45

Which of the following types of companies would typically use process costing rather than job-order costing?

A) A small appliance repair shop.
B) A manufacturer of commercial passenger aircraft.
C) A specialty equipment manufacturer.
D) A breakfast cereal manufacturer.

Question 46

Carrington Corporation produces canned vegetable soup. The company uses the weighted-average method in its process costing system. The company sold 300,000 units in January. Data concerning inventories follow: What were the equivalent units for conversion costs for January?

A) 285,000 units.
B) 303,000 units
C) 300,000 units
D) 309,000 units

Question 47

Jared Beverage Corporation uses a process costing system to collect costs related to the production of its celery flavored cola. The cola is first processed in a Mixing Department and is then transferred out and finished up in the Bottling Department. The finished cases of cola are then transferred to Finished Goods Inventory. The following information relates to the company's two departments for the month of January: How many cases of cola were completed and transferred to Finished Goods Inventory during January?

A) 70,000
B) 63,000
C) 58,000
D) 77,000

Question 48

The Werner Corporation uses the weighted-average method in its process costing system. The company recorded 24,400 equivalent units for conversion costs for November in a particular department. There were 4,000 units in the ending work in process inventory on November 30 which were 60% complete with respect to conversion costs. The November 1 work in process inventory consisted of 5,000 units which were 40% complete with respect to conversion costs. A total of 22,000 units were completed and transferred out of the department during the month. The number of units started during November in the department was:

A) 22,000 units
B) 17,000 units
C) 26,000 units
D) 21,000 units

Question 49

Darden Corporation uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 18,000 units in its beginning work in process inventory that were 10% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $16,200. An additional 84,000 units were started into production during the month. There were 17,000 units in the ending work in process inventory of the Welding Department that were 70% complete with respect to conversion costs. A total of $836,880 in conversion costs were incurred in the department during the month. The cost per equivalent unit for conversion costs for the month is closest to:

A) $8.286
B) $9.000
C) $8.804
D) $9.963

Question 50

Bims Corporation uses the weighted-average method in its process costing system. The Assembly Department started the month with 2,000 units in its beginning work in process inventory that were 70% complete with respect to conversion costs. An additional 61,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 18,000 units in the ending work in process inventory of the Assembly Department that were 60% complete with respect to conversion costs. What were the equivalent units for conversion costs in the Assembly Department for the month?

A) 45,000
B) 77,000
C) 54,400
D) 55,800

Question 51

Jersey Corporation has a process costing system in which it uses the weighted-average method. The equivalent units for conversion costs for the month were 47,500 units. The beginning work in process inventory consisted of 15,000 units, 60% complete with respect to conversion costs. The ending work in process inventory consisted of 10,000 units, 75% complete with respect to conversion costs. The number of units started during the month was:

A) 25,000 units
B) 34,000 units
C) 35,000 units
D) 40,000 units

Question 52

Janner Corporation uses the weighted-average method in its process costing system. Operating data for the Painting Department for the month of April appear below: What were the equivalent units for conversion costs in the Painting Department for April?

A) 93,760
B) 92,800
C) 91,360
D) 88,000

Question 53

Paceheco Corporation uses the weighted-average method in its process costing system. The Molding Department is the second department in its production process. The data below summarize the department's operations in January. The accounting records indicate that the conversion cost that had been assigned to beginning work in process inventory was $34,558 and a total of $559,254 in conversion costs were incurred in the department during January. The cost per equivalent unit for conversion costs for January in the Molding Department is closest to:

A) $9.479
B) $9.943
C) $9.680
D) $8.435

Question 54

Nabais Corporation uses the weighted-average method in its process costing system. Operating data for the Lubricating Department for the month of October appear below: What were the equivalent units for conversion costs in the Lubricating Department for October?

A) 31,780
B) 33,280
C) 32,200
D) 29,200

Question 55

The Assembly Department started the month with 24,200 units in its beginning work in process inventory. An additional 309,200 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 29,200 units in the ending work in process inventory of the Assembly Department. How many units were transferred to the next processing department during the month?

A) 333,400
B) 362,600
C) 304,200
D) 314,200

Question 56

In the cost reconciliation report under the weighted-average method, the "Costs to be accounted for" section contains which of the following items?

A) Cost of beginning work in process inventory
B) Cost of ending work in process inventory
C) Cost of units transferred out
D) Cost of ending finished goods inventory

Question 57

A process costing system is employed in those situations where:

A) many different products, jobs, or batches of production are being produced each period.
B) where manufacturing involves a single, homogeneous product that flows evenly through the production process on a continuous basis.
C) a service is performed such as in a law firm or an accounting firm.
D) full or absorption cost approach is not employed.

Question 58

The Assembly Department started the month with 24,000 units in its beginning work in process inventory. An additional 309,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 29,000 units in the ending work in process inventory of the Assembly Department. How many units were transferred to the next processing department during the month?

A) 333,000
B) 362,000
C) 304,000
D) 314,000

Question 59

Paceheco Corporation uses the weighted-average method in its process costing system. The Molding Department is the second department in its production process. The data below summarize the department's operations in January. The accounting records indicate that the conversion cost that had been assigned to beginning work in process inventory was $34,958 and a total of $559,654 in conversion costs were incurred in the department during January. The cost per equivalent unit for conversion costs for January in the Molding Department is closest to:

A) $9.543
B) $9.864
C) $9.744
D) $8.499

Question 60

All of the following statements are correct when referring to process costing except:

A) Process costing would be appropriate for a jeweler who makes custom jewelry to order.
B) A process costing system has the same basic purposes as a job-order costing system.
C) Units produced are indistinguishable from each other.
D) Costs are accumulated by department.

Question 61

Mundes Corporation uses the weighted-average method in its process costing system. The beginning work in process inventory in its Painting Department consisted of 2,000 units that were 60% complete with respect to materials and 40% complete with respect to conversion costs. The cost of the beginning work in process inventory in the department was recorded as $8,800. During the period, 8,000 units were completed and transferred on to the next department. The costs per equivalent unit for the period were $4.00 for material and $5.00 for conversion costs. The cost of units transferred out during the month was:

A) $40,000
B) $63,200
C) $72,000
D) $80,800

Question 62

Mundes Corporation uses the weighted-average method in its process costing system. The beginning work in process inventory in its Painting Department consisted of 3,700 units that were 60% complete with respect to materials and 40% complete with respect to conversion costs. The cost of the beginning work in process inventory in the department was recorded as $10,500. During the period, 9,700 units were completed and transferred on to the next department. The costs per equivalent unit for the period were $5.70 for material and $6.70 for conversion costs. The cost of units transferred out during the month was:

A) $64,990
B) $66,600
C) $120,280
D) $84,200

Question 63

The following data were taken from the accounting records of the Mixing Department of Kappa Corporation which uses the weighted-average method in its process costing system: The cost of units transferred out was:

A) $184,500
B) $149,500
C) $167,500
D) $145,000

Question 64

Walbin Corporation uses the weighted-average method in its process costing system. The beginning work in process inventory in a particular department consisted of 20,500 units, 100% complete with respect to materials cost and 30% complete with respect to conversion costs. The total cost in the beginning work in process inventory was $26,200. A total of 58,000 units were transferred out of the department during the month. The costs per equivalent unit were computed to be $2.10 for materials and $3.80 for conversion costs. The total cost of the units completed and transferred out of the department was:

A) $342,200
B) $373,660
C) $276,080
D) $330,610

Question 65

Hache Corporation uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 17,000 units in its beginning work in process inventory that were 20% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $7,480. An additional 89,000 units were started into production during the month and 92,000 units were completed in the Welding Department and transferred to the next processing department. There were 14,000 units in the ending work in process inventory of the Welding Department that were 90% complete with respect to conversion costs. A total of $202,400 in conversion costs were incurred in the department during the month. The cost per equivalent unit for conversion costs for the month is closest to:

A) $1.965
B) $2.200
C) $2.007
D) $2.274

Question 66

Raider Corporation uses the weighted-average method in its process costing system. The Molding Department is the second department in its production process. The data below summarize the department's operations in January. The Molding Department's cost per equivalent unit for conversion cost for January was $3.39. How much conversion cost was assigned to the ending work in process inventory in the Molding Department for January?

A) $22,126.70
B) $33,561.00
C) $26,848.80
D) $6,712.20

Question 67

Lap Corporation uses the weighted-average method in its process costing system. The beginning work in process inventory in a particular department consisted of 80,000 units, 100% complete with respect to materials and 25% complete with respect to conversion costs. The total dollar value of this inventory was $226,000. During the month, 150,000 units were transferred out of the department. The costs per equivalent unit for the month were $2.00 for materials and $3.50 for conversion costs. The cost of the units completed and transferred out of the department was:

A) $681,000
B) $765,000
C) $821,000
D) $825,000

Question 68

In July, one of the processing departments at Okamura Corporation had beginning work in process inventory of $13,000 and ending work in process inventory of $18,000. During the month, the cost of units transferred out from the department was $148,000. In the department's cost reconciliation report for July, the total cost to be accounted for under the weighted-average method would be:

A) $31,000
B) $119,000
C) $132,000
D) $166,000

Question 69

Lanjan Corporation uses the weighted-average method in its process costing system. Operating data for the first processing department for the month of June appear below: According to the company's records, the conversion cost in beginning work in process inventory was $92,218 at the beginning of June. Additional conversion costs of $571,618 were incurred in the department during the month. What was the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.)

A) $9.410
B) $7.521
C) $5.954
D) $9.220

Question 70

Hache Corporation uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 17,850 units in its beginning work in process inventory that were 20% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $8,160. An additional 90,700 units were started into production during the month and 93,700 units were completed in the Welding Department and transferred to the next processing department. There were 14,850 units in the ending work in process inventory of the Welding Department that were 90% complete with respect to conversion costs. A total of $204,100 in conversion costs were incurred in the department during the month. The cost per equivalent unit for conversion costs for the month is closest to:

A) $2.050
B) $2.285
C) $1.983
D) $2.359

Question 71

Lucas Corporation uses the weighted-average method in its process costing system. The company adds materials at the beginning of the process in the Forming Department, which is the first of two stages in its production process. Information concerning operations in the Forming Department in October follows: What was the materials cost of work in process at October 31?

A) $3,060
B) $5,520
C) $6,000
D) $6,120

Question 72

Vallin Manufacturing Corporation's beginning work in process inventory consisted of 8,000 units, 100% complete with respect to materials cost and 60% complete with respect to conversion costs. The total cost in the beginning inventory was $36,000. During the month, 40,000 units were transferred out. The equivalent unit cost was computed to be $2.50 for materials and $3.00 for conversion costs under the weighted-average method. Given this information, the total cost of the units completed and transferred out was:

A) $256,000
B) $185,600
C) $220,000
D) $184,000

Question 73

Saada Corporation uses the weighted-average method in its process costing system. The Fitting Department is the second department in its production process. The data below summarize the department's operations in March. The Fitting Department's cost per equivalent unit for conversion cost for March was $6.00. How much conversion cost was assigned to the units transferred out of the Fitting Department during March?

A) $334,200
B) $378,600
C) $328,013
D) $355,200

Question 74

The Richmond Corporation uses the weighted-average method in its process costing system. The company has only a single processing department. The company's ending work in process inventory on August 31 consisted of 18,000 units. The units in the ending work in process inventory were 100% complete with respect to materials and 60% complete with respect to labor and overhead. If the cost per equivalent unit for August was $2.75 for materials and $4.25 for labor and overhead, the total cost assigned to the ending work in process inventory was:

A) $126,000
B) $75,600
C) $80,100
D) $95,400

Question 75

The Richmond Corporation uses the weighted-average method in its process costing system. The company has only a single processing department. The company's ending work in process inventory on August 31 consisted of 21,200 units. The units in the ending work in process inventory were 100% complete with respect to materials and 60% complete with respect to labor and overhead. If the cost per equivalent unit for August was $3.55 for materials and $5.05 for labor and overhead, the total cost assigned to the ending work in process inventory was:

A) $182,320
B) $109,392
C) $118,084
D) $139,496

Question 76

Walbin Corporation uses the weighted-average method in its process costing system. The beginning work in process inventory in a particular department consisted of 12,000 units, 100% complete with respect to materials cost and 20% complete with respect to conversion costs. The total cost in the beginning work in process inventory was $39,400. A total of 42,000 units were transferred out of the department during the month. The costs per equivalent unit were computed to be $2.40 for materials and $4.50 for conversion costs. The total cost of the units completed and transferred out of the department was:

A) $250,200
B) $289,800
C) $250,400
D) $189,000

Question 77

In July, one of the processing departments at Okamura Corporation had beginning work in process inventory of $31,000 and ending work in process inventory of $36,000. During the month, the cost of units transferred out from the department was $166,000. In the department's cost reconciliation report for July, the total cost to be accounted for under the weighted-average method would be:

A) $67,000
B) $137,000
C) $150,000
D) $202,000

Question 78

Raider Corporation uses the weighted-average method in its process costing system. The Molding Department is the second department in its production process. The data below summarize the department's operations in January. The Molding Department's cost per equivalent unit for conversion cost for January was $3.19. How much conversion cost was assigned to the ending work in process inventory in the Molding Department for January?

A) $22,106.70
B) $25,201.00
C) $20,160.80
D) $5,040.20

Question 79

Vallin Manufacturing Corporation's beginning work in process inventory consisted of 8,500 units, 100% complete with respect to materials cost and 60% complete with respect to conversion costs. The total cost in the beginning inventory was $41,000. During the month, 45,000 units were transferred out. The equivalent unit cost was computed to be $3.00 for materials and $3.50 for conversion costs under the weighted-average method. Given this information, the total cost of the units completed and transferred out was:

A) $306,000
B) $235,600
C) $292,500
D) $234,000

Question 80

Saada Corporation uses the weighted-average method in its process costing system. The Fitting Department is the second department in its production process. The data below summarize the department's operations in March. The Fitting Department's cost per equivalent unit for conversion cost for March was $5.99. How much conversion cost was assigned to the units transferred out of the Fitting Department during March?

A) $332,445.00
B) $375,573.00
C) $328,012.40
D) $353,410.00