Deck 6: Process Costing

Question 1

When manufacturing companies exhibit characteristics of both job and process environments, they use batch production processes.

Answer 1

True

Question 2

In a process-costing system, the costing of goods transferred out in BWIP inventory is difficult because there are multiple categories of completed units.

Answer 2

False

Question 3

The production report is the document that summarizes the manufacturing activity that takes place in a work-in- process department.

Answer 3

False

Question 4

Services that are basically homogeneous and repetitive cannot take advantage of a process-costing approach.

Question 5

The major benefit of the weighted average method is simplicity. The major disadvantage is that accuracy and performance measurements are impaired.

Question 6

In JIT manufacturing, work cells are created that produce a product from start to finish.

Question 7

Equivalent units are the incomplete units that could have been produced given the total amount of effort expended.

Question 8

In a process-costing system, work-in-process inventory, materials are added uniformly so that multiple calculations of equivalent units are needed for each type of input.

Question 9

A process is a series of activities or operations, which are linked to perform a specific objective.

Question 10

FIFO follows the job-order costing principle.

Question 11

In firms with ending work-in-process inventories, output is measured using equivalent units.

Question 12

Transferred-in goods, must be converted to the units of measure used by the current department.

Question 13

For the receiving department of a process-costing manufacturer, transferred-in goods are materials that are added at the end of the process.

Question 14

The weighted average method treats the equivalent output and costs in beginning work-in-process inventories as if they belong to the current period when calculating unit cost.

Question 15

The cost flows for a process-costing system are totally different from those of a job order costing system.

Question 16

The FIFO method unit costs are used to value output that is related to future periods.

Question 17

The FIFO costing method recognizes that the work and costs carried over from the prior period legitimately belong to that period.

Question 18

In calculating equivalent units of production using the weighted average method, the transferred-in goods are treated as materials added at the beginning of the process.

Question 19

Process systems are characterized by a larger number of homogeneous products passing through a series of processes.

Question 20

Many service organizations and just-in-time (JIT) manufacturing firms operate in an environment without work-in- process inventories.

Question 21

The weighted average costing method picks up inventory costs and outputs and treats them as if they belong in the current period.

Question 22

In a __________ costing system, production costs are accumulated by process.

Question 23

The method is a unit-costing method that merges prior-period work and costs with current period work and costs.

Question 24

Companies using JIT manufacturing do not use inventories for their process costing.

Question 25

The units that could have been produced in a period given the amount of manufacturing inputs used are called
__________ .

Question 26

In process costing, costing can be used to assign shared overhead to processes.

Question 27

In operation costing, job-order procedures are used to assign direct materials costs and process procedures are used to assign conversion costs.

Question 28

The unit-costing method that excludes prior-period work and costs in computing current-period unit work and costs is called the costing method.

Question 29

Abnormal spoilage costs are treated the same as normal spoilage for process costing.

Question 30

Spoilage in a process costing process means that more units enter the process than leave it.

Question 31

A key input to the cost of production report is costs.

Question 32

The accounting system which accumulates production costs by process and uses a work-in-process account for each process is called .

Question 33

Using the weighted average costing method, the costing of goods transferred out is since there is only one category of completed units.

Question 34

For beginning work-in-process category using FIFO, the manufacturing cost is the sum of the current-period
__________ and the current __________ to complete the BWIP.

Question 35

Operation costing uses a blend of job-order and process-costing procedures whenever batches of dissimilar products are produced.

Question 36

FIFO follows the principle.

Question 37

When materials are not added uniformly using a work-in-process system, of equivalent units are needed, one for each type of input.

Question 38

The basic characteristics of process costing include: cost flows, journal entries, and the __________ report.

Question 39

The process that determines the equality of the costs in beginning work in process and the costs incurred during the period is called .

Question 40

When spoilage is assumed to be normal, it is not tracked separately, it is simply included in the total cost of good units.

Question 41

When spoilage is due to the exacting nature of a particular job it is called spoilage.

Question 42

The process that accumulates production costs by process and uses a work-in-process account for each process is called:

A) Process costing
B) Joint costing
C) Variable costing
D) Job-order costing

Question 43

is a costing system that blends job-order and process-costing procedures applied to batches of homogeneous products.

Question 44

Manufacturing firms that have characteristics of both job and process environments often use processes.

Question 45

Which is NOT a difference between the job-order costing system and the process costing system?

A) They accumulate their costs to different cost objectives.
B) The number of work-in-process accounts is different.
C) One does not use the finished goods account.
D) all of the above.

Question 46

Figure 6-2
Leandro Corp. manufactures wooden desks. Production consists of three processes: cutting, assembly, and finishing. The following costs are given for April:
There were no work in process inventories and 1,000 podiums were produced.
Refer to Figure 6-2. What is the cost transferred out of the assembly department.

A) $43,000
B) $54,000
C) $29,000
D) $14,000
E) none of the above

Question 47

The costing system that uses job-order procedures to assign direct material costs to batches and process procedures to assign conversion costs is called costing.

Question 48

The documents used to collect production costs for each batch in operation costing are called .

Question 49

In process costing, costs are accounted for by

A) job.
B) batch.
C) process.
D) year.

Question 50

Figure 6-1
The Allen Company has the following information for the Assembly Department for October 2016:

Refer to Figure 6-1. The journal entry to record goods completed and transferred out of the Assembly Department would include a

A) debit to Finished Goods Inventory for $125,000.
B) credit to Materials Inventory for $125,000.
C) debit to Work in Process-Assembly Department for $125,000.
D) debit to Work in Process-Finishing Department for $125,000.

Question 51

When spoilage is assumed to be it is embedded in the total cost of good units.

Question 52

In operation costing, the process which produces batches of different products which are identical in many ways but differ in others is called process

Question 53

Figure 6-1
The Allen Company has the following information for the Assembly Department for October 2016:

Refer to Figure 6-1. The journal entry to record materials purchased would include a

A) debit to Materials Inventory for $45,000.
B) debit to Materials Inventory for $49,000.
C)
C) credit to Accounts Payable for $49,000.
D) both b and

Question 54

What system would a manufacturer of unique special orders or batch processes most likely use to accumulate costs?

A) contract costing
B) variable costing
C) process costing
D) job-order costing

Question 55

The cost assigned to goods from a prior process is called the cost.

Question 56

The usual approach in process manufacturing is to treat transferred-in goods as a separate material category when calculating .

Question 57

For the receiving department, transferred in goods are added at the of the process.

Question 58

The appropriate cost accounting system to use when inventory items are produced on an assembly line is

A) weighted average.
B) job-order costing.
C) process costing.
D) perpetual method.

Question 59

Figure 6-1
The Allen Company has the following information for the Assembly Department for October 2016:

Refer to Figure 6-1. What is the total amount of debits to Work in Process-Assembly Department for October?

A) $125,000
B) $131,000
C) $139,000
D) $109,000

Question 60

Figure 6-1
The Allen Company has the following information for the Assembly Department for October 2016:

When products and their costs are moved from one process to the next process, these costs are referred to as

A) unit costs.
B) transferred-in costs.
C) WIP inventory costs.
D) equivalent unit costs.

Question 61

Figure 6-5
Maynard Inc. manufactures desks. The following data was given for production in February: units, beginning work in process 0
units started 200
units completed ?
units, ending work in process (40% complete) 50
Refer to figure 6-5. What were the total number of units to account for?

A) 50
B) 150
C) 200
D) 400
E) none of the above

Question 62

Equivalent units expresses all activity of the period in terms of

A) direct labor hours.
B) partially completed units.
C) fully completed units.
D) units of input.

Question 63

Figure 6-2
Leandro Corp. manufactures wooden desks. Production consists of three processes: cutting, assembly, and finishing. The following costs are given for April:
There were no work in process inventories and 1,000 podiums were produced.
In a process costing system, which of the following would be TRUE?

A) There is no need to use time tickets to assign costs to processes.
B) There is no need to track materials to processes.
C) A process costing system is more expensive to maintain because it has more work-in-process accounts.
D) all of the above are true.

Question 64

Figure 6-4
The following information is available from the records of Diamond Cut, Inc.:

Refer to Figure 6-4. What are the conversion costs in the Finishing Department?

A) $35,000
B) $37,500
C) $40,000
D) $57,500

Question 65

Figure 6-2
Leandro Corp. manufactures wooden desks. Production consists of three processes: cutting, assembly, and finishing. The following costs are given for April:
There were no work in process inventories and 1,000 podiums were produced.
Refer to Figure 6-2. Record the journal entries to record the transfer of goods from process to process.
a. Work in Process - Assembly 14,000
Work in Process - Cutting 14,000 Work in Process - Finishing 43,000
Work in Process - Assembly 43,000 Finished Goods 54,000
Work in Process - Finishing 54,000
b. Work in Process - Assembly 29,000
Work in Process - Cutting 29,000 Work in Process - Finishing 11,000
Work in Process - Assembly 11,000 Finished Goods 54,000
Work in Process - Finishing 54,000
c. Work in Process - Cutting 14,000
Raw Materials 14,000 Work in Process - Assembly 29,000
Raw materials 29,000 Work in Process - Finishing 11,000
Raw Materials 11,000
d. none of the above

Question 66

Figure 6-2
Leandro Corp. manufactures wooden desks. Production consists of three processes: cutting, assembly, and finishing. The following costs are given for April:
There were no work in process inventories and 1,000 podiums were produced.
As production occurs, materials, direct labor, and applied manufacturing overhead are recorded in

A) cost of goods sold.
B) work in process.
C) materials.
D) finished goods.

Question 67

Figure 6-2
Leandro Corp. manufactures wooden desks. Production consists of three processes: cutting, assembly, and finishing. The following costs are given for April:
There were no work in process inventories and 1,000 podiums were produced.
Which is NOT a feature of a process costing system?

A) Standardized products pass through standardized processes.
B) Each unit is treated uniquely in receiving a process.
C) Manufacturing costs are accumulated by a process for a given time period.
D) Unit costs are calculated for each department.

Question 68

The term given to units that represents the number of completed units that is equal, in terms of production inputs, to a given number of partially completed units is:

A) Units completed
B) Equivalent units
C) Units started and completed
D) Total units in production

Question 69

Figure 6-5
Maynard Inc. manufactures desks. The following data was given for production in February: units, beginning work in process 0
units started 200
units completed ?
units, ending work in process (40% complete) 50
Refer to Figure 6-5. How many units were completed?

A) 400
B) 200
C) 150
D) 50
E) none of the above

Question 70

JIT manufacturing emphasizes

A) continuous improvement.
B) elimination of waste.
C) reduction of work-in-process inventories.
D) all of the above.

Question 71

That which determine(s) whether the costs assigned to units transferred out and to units in ending work in process are equal to the costs in beginning work in process, plus the manufacturing costs incurred in the current period is(are) called:

A) Equivalent unit of output
B) Cost reconciliation
C) Batch production process
D) Transferred-in costs

Question 72

The whole units that could have been produced in a period given the amount of manufacturing inputs used is(are) called:

A) FIFO costing
B) Transferred-in cost
C) Weighted average cost
D) Equivalent units of output

Question 73

In order to determine product costs, JIT firms are usually structured so they can use:

A) job-order costing
B) process costing
C) joint costing
D) variable costing

Question 74

Figure 6-3
Jamie Hopen, CPA, prepares tax returns. The production costs and the number of tax returns prepared for the month of September are as follows:

What is the unit cost per tax return?

A) $0.67
B) $15.00
C) $20.00
D) $3.33

Question 75

Figure 6-4
The following information is available from the records of Diamond Cut, Inc.:

Refer to Figure 6-4. What are the "total costs to account for" in the Assembly Department?

A) $32,000
B) $44,500
C) $21,000
D) $10,000

Question 76

Activity-based costing might have a role in process costing settings under what conditions?

A) under no conditions
B) when there are products produced with homogeneous processes and little diversity
C) when multiple products are being produced.
D) when only one product is being produced

Question 77

Figure 6-4
The following information is available from the records of Diamond Cut, Inc.:

When conversion costs are uniform,

A) materials, labor, and overhead are applied at different rates throughout the process.
B) materials, labor, and overhead are added throughout the process at the same rate.
C) labor and overhead are added at the same rate but different materials are added at a different point.
D) materials and labor are added at the same rate but overhead is applied uniformly.

Question 78

Figure 6-3
Jamie Hopen, CPA, prepares tax returns. The production costs and the number of tax returns prepared for the month of September are as follows:

Refer to Figure 6-3. What is the cost of services sold?
a. $1,800
b. $4,000
c. $200
d. $6,000

Question 79

Figure 6-2
Leandro Corp. manufactures wooden desks. Production consists of three processes: cutting, assembly, and finishing. The following costs are given for April:
There were no work in process inventories and 1,000 podiums were produced.
Which is TRUE about services?

A) Some services may require that a sequence of uniform processes be performed.
B) Services can never be homogeneous and repetitively produced.
C) Services cannot have work-in-process inventories.
D) All services require job-order costing.

Question 80

Figure 6-5
Maynard Inc. manufactures desks. The following data was given for production in February: units, beginning work in process 0
units started 200
units completed ?
units, ending work in process (40% complete) 50
Refer to Figure 6-5. What are the equivalent units?

A) 200
B) 170
C) 180
D) 150
E) none of the above