Question 1

Production cost reports prepared using first-in, first-out (FIFO) method determines the average cost of equivalent units of production by combining beginning inventory costs with current period costs.

Accepted Answer

A) True 
 B)False

Question 2

Gizmo Manufacturers, a widgets manufacturing company, divides its production operations into three processes-Department 1, Department 2, and Department 3. The company uses a process costing system. Gizmo incurred the following costs during the year 2014, to produce 5,000 units. $$\begin{array} { | r | r | } 
\hline \text { Department 1 } & \$ 17,500 \
\hline \text { Department 2 } & 6,000 \
\hline \text { Department 3 } & 4,000 \
\hline
\end{array}$$ If Gizmo could sell only 3,500 units in 2014, what will be the cost per unit of widget produced?

Accepted Answer

A)  $4.70 
B)  $3.50 
C)  $7.85 
D)  $5.50

Question 3

Under process costing, the total production costs incurred must be split between the units that have been completed in that process and transferred to the next process and the:

Accepted Answer

A)  Finished Goods Inventory if it is the first process. 
B)  units not completed and remaining in Work-in-Process Inventory for that department. 
C)  Cost of Goods Sold when the units are sold. 
D)  Work-in-Process Inventory of the previous department when there are no sales.

Question 4

In a process costing system, production costs are:

Accepted Answer

A)  adjusted and allocated by jobs. 
B)  not inventoried. 
C)  directly shown on the income statement. 
D)  accumulated by departments.

Question 5

Which of the following businesses is most likely to use a process costing system?

Accepted Answer

A)  an accounting firm 
B)  a law firm 
C)  a soda manufacturer 
D)  a construction company

Question 6

Under process costing, the number of units to account for must always be ________ the number of units accounted for.

Accepted Answer

A)  greater than 
B)  lesser than 
C)  equal to 
D)  twice

Question 7

At the start of June, the Polishing Department of Wood Shiners had 15,000 units in beginning inventory which were 100% complete with respect to direct materials and conversion costs. During the month, it received 25,000 units from the Machining Department. It started and completed 17,000 units and transferred 32,000 units to the Packaging Department. It had 8,000 units in ending Work-in-Process Inventory. Direct materials are added at the beginning of the process. Units in ending Work-in-Process Inventory were 40% complete with respect to conversion costs.
Prepare the production cost report for the Polishing Department for the equivalent units of production for the month of June. Use the FIFO method.

Accepted Answer

The answer of At the start of June, the Polishing...

Question 8

If a business operates in an industry that experiences significant cost changes, it would be to its benefit to use the first-in, first-out (FIFO) method.

Accepted Answer

A) True 
 B)False

Question 9

In a process costing system, a department's total production costs incurred in a particular period must equal the total costs transferred out of the department.

Accepted Answer

A) True 
 B)False

Question 10

Jacob Company has four processing departments and follows a process costing system. It incurred $150,000 in machinery depreciation and $60,000 in indirect costs that were paid in cash. Provide the journal entry(ies) to record these transactions.

Accepted Answer

The answer of Jacob Company has four processing departments and...

Question 11

Under a process costing system, costs of completed products are transferred to the Finished Goods Inventory at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Question 12

Both job order costing and process costing track the product costs of direct materials, direct labor, and manufacturing overhead through three inventory accounts on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 13

The Polishing Department of Wood Shiners had 15,000 units in process on June 1 and received 25,000 units from the Machining Department. During the month, it completed 32,000 units and transferred them to the Packaging Department. Prepare the production cost report for the Polishing Department for the whole units for the month of June. (Use the first-in, first-out method)

Accepted Answer

The answer of The Polishing Department of Wood Shiners had...

Question 14

The Polishing Department of Wood Shiners had 15,000 units in process on June 1 and received 25,000 units from the Machining Department. During the month, it completed 32,000 units and transferred them to the Packaging Department and had 8,000 units in ending Work-in-Process Inventory. Calculate the number of units accounted for by the Polishing Department for June.

Accepted Answer

A)  17,000 units 
B)  15,000 units 
C)  8,000 units 
D)  40,000 units

Question 15

During August, the Filtering Department of Olive Company had beginning transferred in units of 200 with costs of $50,000. 500 units were started in production during the month. It had 100 units in ending Work-in-Process Inventory. Under the first-in, first-out (FIFO) method, current-period equivalent units of production for transferred in units in beginning Work-in-Process Inventory of the Filtering Department is:

Accepted Answer

A)  0 units. 
B)  500 units. 
C)  200 units. 
D)  100 units.

Question 16

Under the first-in, first-out (FIFO) method, the cost of equivalent units of production are calculated by:

Accepted Answer

A)  summing up only the transferred in costs of each department. 
B)  combining beginning inventory costs with current period costs. 
C)  considering only the transferred out costs of each department. 
D)  accounting for beginning inventory costs separately from current period costs.

Question 17

Under the first-in, first-out (FIFO) method, the current-period equivalent units of production for the units in beginning inventory is always 100%.

Accepted Answer

A) True 
 B)False

Question 18

The Polishing Department of Wood Shiners had 15,000 units in process on June 1 and received 25,000 units from the Machining Department. What is the number of units to account for by the Polishing Department for June?

Accepted Answer

A)  25,000 units 
B)  15,000 units 
C)  40,000 units 
D)  10,000 units

Question 19

Under process costing, the costs incurred by each department are recorded in a separate production cost report for each department.

Accepted Answer

A) True 
 B)False

Question 20

The number of equivalent units for direct materials and conversion costs must always be equal.

Accepted Answer

A) True 
 B)False

Exam 20: Process Costing

Production cost reports prepared using first-in, first-out (FIFO) method determines the average cost of equivalent units of production by combining beginning inventory costs with current period costs.

Under process costing, the total production costs incurred must be split between the units that have been completed in that process and transferred to the next process and the:

In a process costing system, production costs are:

Which of the following businesses is most likely to use a process costing system?

Under process costing, the number of units to account for must always be ________ the number of units accounted for.

If a business operates in an industry that experiences significant cost changes, it would be to its benefit to use the first-in, first-out (FIFO) method.

In a process costing system, a department's total production costs incurred in a particular period must equal the total costs transferred out of the department.

Jacob Company has four processing departments and follows a process costing system. It incurred $150,000 in machinery depreciation and $60,000 in indirect costs that were paid in cash. Provide the journal entry(ies) to record these transactions.

Under a process costing system, costs of completed products are transferred to the Finished Goods Inventory at the end of the accounting period.

Both job order costing and process costing track the product costs of direct materials, direct labor, and manufacturing overhead through three inventory accounts on the balance sheet.

Under the first-in, first-out (FIFO) method, the cost of equivalent units of production are calculated by:

Under the first-in, first-out (FIFO) method, the current-period equivalent units of production for the units in beginning inventory is always 100%.

The Polishing Department of Wood Shiners had 15,000 units in process on June 1 and received 25,000 units from the Machining Department. What is the number of units to account for by the Polishing Department for June?

Under process costing, the costs incurred by each department are recorded in a separate production cost report for each department.

The number of equivalent units for direct materials and conversion costs must always be equal.