Deck 6: Process Costing

Question 1

In parallel processing, two subcomponents can be worked on simultaneously in different processes and then brought together in a final process for completion.

Answer 1

True

Question 2

A production report provides information about the physical units processed in a department and also about the manufacturing costs associated with them.

Answer 2

True

Question 3

The cost information section of the production report has two major subdivisions: (1) costs to account for; and (2) costs accounted for.

Answer 3

True

Question 4

The production report is the document that summarizes the manufacturing activity that takes place in a process department for a given period of time.

Question 5

Any product or service that is basically homogeneous and repetitively produced can take advantage of a process costing approach.

Question 6

Process costing is least useful in situations where there are a large number of homogeneous products.

Question 7

Zero beginning and ending Work-in-Process Inventory leads to much of the complication surrounding process costing.

Question 8

The FIFO costing method is one of the methods used to calculate equivalent units in process costing.

Question 9

There are two approaches for dealing with the prior-period output and prior-period costs found in beginning Work-in-Process Inventory: the weighted average costing method and the FIFO costing method.

Question 10

A production report contains information on costs transferred in from prior departments as well as costs added in the department such as direct materials, direct labour, and overhead.

Question 11

Transferred-in costs are a type of raw material cost.

Question 12

Process costing systems are specifically designed to support costing of mass-produced heterogeneous products.

Question 13

In process costing, each producing department has its own Work-in-Process Inventory account.

Question 14

The unit information section of the production report has two major subdivisions: (1) units to account for; and (2) units accounted for.

Question 15

The FIFO costing method separates work and costs of the equivalent units in beginning inventory from work and costs of the equivalent units produced during the current period. Only current work and costs are used to calculate this period's unit cost.

Question 16

The FIFO costing method assumes that units in beginning Work-in-Process Inventory are completed first, before any new units are started.

Question 17

Large manufacturing plants, such as chemical, food, and tire manufacturers, typically use process costing.

Question 18

To calculate the equivalent units of production, the number of physical units is divided by the percentage of completion.

Question 19

Process costing is most appropriate for manufacturers of unique products.

Question 20

Process costing accumulates costs by individual jobs rather than by process.

Question 21

The weighted average costing method assumes that units in beginning Work-in-Process Inventory are completed first, before any new units are started.

Question 22

Since the FIFO costing method excludes prior-period work and costs, it is necessary to create three categories of completed units.

Question 23

Under the FIFO costing method, for the beginning Work-in-Process Inventory units, the total associated manufacturing costs are the sum of the prior-period costs plus the costs incurred in the current period to finish the units.

Question 24

If changes occur in the purchase price of the manufacturing inputs from one period to the next, then the FIFO costing method produces a more accurate unit cost than does the weighted average costing method.

Question 25

The weighted average costing method combines beginning inventory costs and work done with current period costs and work to calculate this period's unit cost.

Question 26

Firms that offer service cannot have Work-in-Process Inventory.

Question 27

Which business is most likely to use process costing?

A) a dentist
B) an accounting firm
C) a tire manufacturer
D) a custom machine manufacturer

Question 28

In process costing, it is reasonable to assume uniform application of material costs.

Question 29

Equivalent units of output are the complete units that could have been produced given the total amount of manufacturing effort expended for the period under consideration.

Question 30

Which business is most likely to use process costing?

A) a law firm
B) an orthodontist
C) a paint manufacturer
D) a custom home builder

Question 31

The major benefit of the FIFO costing method is simplicity.

Question 32

The costs transferred from a prior process to a subsequent process are referred to as transferred-out costs.

Question 33

The weighted average costing method assumes that units in beginning Work-in-Process Inventory are completed first, before any new units are started.

Question 34

The major benefit of the weighted average costing method is simplicity.

Question 35

Manufacturing firms always operate with significant Work-in-Process Inventory.

Question 36

Which costing system is most likely to be used by manufacturer that produces unique products?

A) parallel costing
B) process costing
C) job-order costing
D) sequential costing

Question 37

Which type of costing system works best with a large number of homogeneous products?

A) parallel costing
B) process costing
C) job-order costing
D) sequential costing

Question 38

Equivalent percentage completion figures for manufacturing inputs pose a problem for the calculation of equivalent units, unit cost, and valuation of ending Work-in-Process Inventory.

Question 39

The solution for different percentage completion figures for manufacturing inputs is to calculate equivalent units for one category of manufacturing input.

Question 40

The usual approach is to treat transferred-in goods as a separate conversion category when calculating equivalent units.

Question 41

Which statement best describes parallel processing?

A) A large number of similar products pass through an identical set of processes.
B) Units typically pass through a series of manufacturing or producing departments.
C) Units must pass through one process before they can be worked on in later processes.
D) Partially completed units can be worked on simultaneously in different processes and then brought together in a final process for completion.

Question 42

Which statement best describes the cost of production report?

A) The production report includes the costs related to a specific job.
B) The production report provides information about the physical units processed by the department.
C) The production report provides information about the manufacturing costs incurred by the department.
D) The production report summarizes the manufacturing activity, including related costs, that takes place in a process department for a given period of time.

Question 43

Suppose that finished units are now in the last (final) department. To which account will the cost of the finished units flow from the Work-in-Process Inventory account?

A) Sales
B) Expenses
C) Cost of Goods Sold
D) Finished Goods Inventory

Question 44

When should process costing techniques be used in assigning costs to products?

A) when the product is unique and made to order
B) when the product is manufactured according to customer specifications
C) when the product is composed of mass-produced homogeneous products
D) any time production is only partially completed during the accounting period

Question 45

Which account do the costs of completed products move to after Work-in-Process Inventory?

A) Sales
B) Expenses
C) Cost of Goods Sold
D) Finished Goods Inventory

Question 46

Which statement best describes sequential processing?

A) A large number of similar products pass through an identical set of processes.
B) Units must pass through one process before they can be worked on in later processes.
C) Units typically pass through a series of manufacturing or producing departments at the same time.
D) Partially completed units can be worked on simultaneously in different processes and then brought together in a final process for completion.

Question 47

Which of the following does NOT appear in the production report?

A) costs added in the department
B) retail value of the units produced
C) costs transferred from prior departments
D) physical units passing through the department

Question 48

Which statement best describes sequential processing?

A) Only one process can be applied to a product in each department.
B) Several sequences of production are applied to a product in the department.
C) Units must pass through one process before they can be worked on in later processes.
D) Subcomponents can be worked on simultaneously in different processes and then brought together in a final process for completion.

Question 49

What type of business would likely use process costing?

A) a modular home builder
B) a paper cup manufacturer
C) a cruise ship manufacturer
D) a custom snowboard company

Question 50

Which statement best describes parallel processing?

A) Units must pass sequentially through a process.
B) Units that are not processed in the correct sequence are discarded.
C) Units must pass through one process before they can be worked on in later processes.
D) Subcomponents can be worked on simultaneously in different processes and then brought together in a final process for completion.

Question 51

Suppose a one-to-one relationship exists between the output measures. What would the units started in a subsequent department be equal to?

A) the equivalent units of that department
B) the materials added plus conversion costs
C) the equivalent units plus the materials added
D) the units transferred out from the prior department

Question 52

What is included in the cost of a department's transferred-in goods?

A) materials and overhead
B) materials and conversion costs
C) materials, labour, and overhead
D) goods transferred out as computed in the prior department

Question 53

Which company would be least likely to use a process costing system?

A) a print shop
B) a chemical producer
C) a paint manufacturer
D) a disposable diaper manufacturer

Question 54

Which term refers to the cost of partially completed goods from a prior period?

A) an added-in cost
B) a transferred-in cost
C) a Work-in-Process Inventory transfer cost
D) beginning Work-in-Process Inventory cost

Question 55

For which business is process costing is most appropriate?

A) a print shop
B) a headhunting firm
C) a custom bike builder
D) a vitamin manufacturer

Question 56

Which term refers to a cost transferred from a prior process to a subsequent process?

A) an added-in cost
B) a transferred-in cost
C) a Work-in-Process Inventory transfer cost
D) the beginning Work-in-Process Inventory cost

Question 57

What goods are moved from a prior department to subsequent department?

A) Beginning Goods
B) Transferred-in Goods
C) Finished Goods Inventory
D) Work-in-Process Inventory

Question 58

What type of input is normally found in a process costing accounting system?

A) selling costs
B) marketing costs
C) administrative costs
D) manufacturing overhead costs

Question 59

In process costing, which account will the cost of Finished Goods Inventory be transferred to when the goods are sold?

A) Sales
B) Expenses
C) Cost of Goods Sold
D) Finished Goods Inventory

Question 60

Which of the following is used to record direct materials, direct labour, and applied overhead costs at the time they are used?

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

Question 61

In which measure is equivalent production expressed to describe all activity of the period?

A) fully completed units
B) partially completed units
C) Work-in-Process Inventory
D) materials, labour and overhead

Question 62

Which two methods determine the equivalent units of production in process costing?

A) actual costing and LIFO costing method
B) FIFO costing method and LIFO costing method
C) weighted average costing method and FIFO costing method
D) weighted average costing method and actual costing

Question 63

What information is found in the cost of production report?

A) the units planned to be produced by a department
B) the fixed costs and the physical units processed by the department
C) the manufacturing costs incurred by the department and the variable costs
D) the physical units processed and the manufacturing costs incurred by the department

Question 64

Which method combines partially completed units in beginning inventory with current period production when computing equivalent units of production?

A) actual cost method
B) FIFO costing method
C) LIFO costing method
D) weighted average costing method

Question 65

Which method can be used to account for the costs and work of beginning Work-in-Process Inventory?

A) FIFO costing method and sequential processing method
B) sequential processing method and LIFO costing method
C) weighted average costing method and LIFO costing method
D) weighted average costing method and FIFO costing method

Question 66

Which statement best defines the concept of equivalent units of production?

A) Equivalent units are the measure of a period's output.
B) Equivalent units are the units completed in a department.
C) Equivalent units are the total of the units produced by all departments.
D) Equivalent units are the number of units completed at the end of the last process.

Question 67

What is the major advantage of the weighted average costing method?

A) It is simple.
B) It is accurate.
C) It is the required method.
D) It is the preferred method.

Question 68

Which two methods are used to determine equivalent units of production in process costing?

A) exact costing and LIFO costing method
B) FIFO costing method and LIFO costing method
C) weighted average costing method and exact costing
D) weighted average costing method and FIFO costing method

Question 69

The following information is provided: Units
Work-in-Process Inventory, May 1 (10% complete) 5,000
Started in May 18,000
Work-in-Process Inventory, May 31 (40% complete) 4,000
Materials and conversion are incurred uniformly throughout the process.
What would be the equivalent units of production for conversion when using the weighted average costing method?

A) 17,400
B) 20,600
C) 21,000
D) 22,000

Question 70

What are the two sections of a production report?

A) goods produced and goods in process
B) Work-in-Process Inventory and completed goods
C) Finished Goods Inventory and Cost of Goods Sold
D) a unit information section and a cost information section

Question 71

Which method considers the percentage of completion of ending Work-in-Process Inventory?

A) LIFO costing method and CVP analysis
B) FIFO costing method and LIFO costing method
C) weighted average costing method and CVP analysis
D) weighted average costing method and FIFO costing method

Question 72

For which process costing method is simplicity the main advantage?

A) actual cost method
B) FIFO costing method
C) LIFO costing method
D) weighted average costing method

Question 73

Beginning inventory for the month contained 4,000 units that were 65% complete with respect to materials. During the month, 60,000 units were completed and transferred out. Ending inventory contained 6,000 units that were 40% complete with respect to materials. What would be the weighted average equivalent units of production for materials for the month?

A) 62,400
B) 60,000
C) 57,600
D) 56,000

Question 74

Which statement best describes process accounting?

A) It accumulates costs by individual job.
B) It works best with a small number of unique products.
C) It is used on unique products that are produced on a continuous basis.
D) It uses equivalent units computed by the weighted average costing method or the FIFO costing method.

Question 75

The Glove Company uses the weighted average costing method. The beginning Work-in-Process Inventory consists of 25,000 units (100% completed as to materials and 50% complete as to conversion costs). The number of units completed was 100,000. The ending Work-in-Process Inventory consists of 15,000 units (100% complete as to materials and 25% complete as to conversion costs). What would be the equivalent units of production for conversion costs?

A) 40,000
B) 103,750
C) 112,500
D) 116,250

Question 76

What does an accountant need to know to calculate unit cost?

A) materials cost plus overhead
B) conversion costs and prime costs
C) total units produced by all departments
D) the output for a period and the manufacturing costs for the department for that period

Question 77

The following information concerns Transformation Inc.'s equivalent units in June: $\begin{array}{lr}\text { units }\\\text { Beginning Work-in-Process Inventory (50\% complete) } & 2,000 \\\text { Units started during June } & 10,900 \\\text { Units completed and transferred } & 10,000 \\\text { Ending Work-in-Process Inv entory (70\% complete) } & 2,900\end{array}$ What are Transformation's equivalent units for June when using the weighted average costing method?

A) 10,000
B) 12,030
C) 12,900
D) 22,900

Question 78

Beginning inventory for the month contained 3,000 units that were 60% complete with respect to materials. During the month, 50,000 units were completed and transferred out. Ending inventory contained 5,000 units that were 30% complete with respect to materials. What would be the weighted average equivalent units of production for materials for the month?

A) 51,500
B) 50,300
C) 50,000
D) 49,500

Question 79

Which term reflects total cost divided by units produced?

A) unit cost
B) unit driver
C) process costs
D) total costs incurred

Question 80

Beginning inventory for the month contained 12,000 units that were 60% complete with respect to materials. During the month, 80,000 units were completed and transferred out. Ending inventory contained 6,000 units, 30% complete with respect to materials. What would be the weighted average equivalent units of production for materials for the month?

A) 12,000
B) 80,000
C) 81,800
D) 92,000