Deck 5: Process Costing

Question 1

1-18 The product costing system normally used to assign costs to goods that are mass produced is:

A)fixed costing.
B)job costing.
C)LIFO costing.
D)process costing.

Answer 1

D

Question 2

1-20 Which of the following would use process costing?

A)Clear Channel advertising
B)PIP Printing
C)Pepsi
D)DBA Management Consultants

Answer 2

C

Question 3

1-4 Both process and job costing assign costs to units as they proceed through the process.

Answer 3

True

Question 4

1-11 To simplify the accounting,the journal entry to record the transfer of costs from one WIP account to the next WIP account is generally made once a month to reflect ALL physical transfers that occurred during the month.

Question 5

1-19 Process costing is most likely used in which of the following industries?

A)Aircraft
B)Chemicals
C)Construction
D)Printing

Question 6

1-14 When units are moved from one processing department to the next,the cost associated with those units must also be moved from one WIP account to the next.These costs are called:

A)transported costs.
B)transmitted costs.
C)conveyed costs.
D)transferred costs.

Question 7

1-17 What are the two basic types of product costing systems?

A)Department and plant
B)FIFO and weighted-average
C)Job and process
D)Variable and process

Question 8

1-2 A separate work in process inventory account is maintained for each process.

Question 9

1-1 Cost for direct materials,direct labor and manufacturing overhead are assigned to each job.

Question 10

1-5 Each manufacturing process will have a WIP inventory account.

Question 11

1-10 In process costing,the costs flow from Work in Process Inventory,to Raw Materials Inventory,to Finished Goods Inventory

Question 12

1-16 Hallow Company produces ping pong balls using a three-step sequential process that includes molding,coloring and finishing.At what stage would the ping-pong balls be allocated manufacturing overhead?

A)When the balls are in WIP inventory─molding
B)When the balls are in WIP inventory─finishing
C)When the balls are in WIP inventory─coloring
D)All of the above

Question 13

1-13 The costs moved from one processing department to the next processing department are called "transported- out" costs in the first department and "transported-in" costs in the next department

Question 14

1-12 In process costing,the manufacturing costs assigned to the product must always follow the physical movement of the product.

Question 15

1-9 Indirect labor would be a component of conversion costs.

Question 16

1-7 Prime costs include direct labor and direct materials.

Question 17

1-6 In a job cost system,all costs flow to a particular job.

Question 18

1-8 Conversion costs are the sum of direct labor and manufacturing overhead.

Question 19

1-3 Unique or custom-made goods use a job costing system.

Question 20

1-15 Hallow Company produces ping pong balls using a three-step sequential process that includes molding,coloring and finishing.When the balls are completely finished,out of which account should their cost be transferred?

A)Finished goods inventory
B)WIP inventory─finishing
C)WIP inventory─coloring
D)WIP inventory─molding

Question 21

1-24 A system for assigning costs for products made in a continuous process is:

A)job costing.
B)process costing.
C)equivalent units costing.
D)conversion cost costing.

Question 22

2-2 Equivalent units are the sum of direct materials and direct labor.

Question 23

2-14 The number of equivalent units is usually the same for direct materials and conversion costs.

Question 24

2-5 Equivalent units express the amount of work done during a period of time in terms of fully completed units of output.

Question 25

A company manufactures exterior paint.Last month's costs were: $$\begin{array} { | l | l | } \hline{ \text { Direct } } & \\\text { materials } & \$ 110,000 \\\hline \text { Direct labor } & \$ 150,000 \\\hline \begin{array} { l } \text { Marufacturing } \\\text { averhead }\end{array} & \$ 135,000 \\\hline\end{array}$$ What were the conversion costs for the month?

A)$260,000
B)$395,000
C)$285,000
D)$110,000

Question 26

1-23 The costing system used by a company making computer chips would be:

A)job costing.
B)process costing.
C)equivalent units costing.
D)conversion cost costing.

Question 27

2-9 In a process costing environment,direct labor and manufacturing overhead are usually combined into one cost category called "conversion cost".

Question 28

2-7 Conversion costs and direct materials costs are generally both added at the end of the production process.

Question 29

2-8 In a process costing environment,direct materials and direct labor are usually combined into one cost category called "conversion costs"

Question 30

2-11 Companies that use automated production processes often condense the three manufacturing costs into two categories-Direct materials and Conversion costs.

Question 31

2-4 The number of partially completed units multiplied by the percentage of process started equals the number of equivalent units.

Question 32

1-22 The costing system used by a company producing custom window treatments would be:

A)job costing.
B)process costing.
C)equivalent units costing.
D)conversion cost costing.

Question 33

2-13 Direct materials are usually added evenly throughout the production process.

Question 34

2-12 Companies that use automated production processes often condense the three manufacturing costs into two categories-Direct labor and Conversion costs.

Question 35

2-6 If a company has 5,000 units that are 60% complete,the equivalent unit figure is 3,000.

Question 36

2-10 In a mass-production environment,direct labor is usually a relatively small component of the total manufacturing costs.

Question 37

2-3 Equivalent units should be computed separately for direct materials and conversion costs.

Question 38

A company manufactures organic juices.Last month's costs were: $$\begin{array} { | l | r | } \hline { \text { Direct } } & \\\text { materials } & \$ 210,000 \\\hline \text { Direct labor } & \$ 175,000 \\\hline \begin{array} { l } \text { Marufacturing } \\\text { overhead }\end{array} & \$ 75,000 \\\hline\end{array}$$ What were the conversion costs for the month?

A)$250,000
B)$385,000
C)$460,000
D)$210,000

Question 39

2-1 Conversion costs are generally added evenly throughout a process.

Question 40

1-21 Direct labor costs plus manufacturing overhead costs equal:

A)prime costs.
B)operating costs.
C)equivalent costs.
D)conversion costs.

Question 41

2-21 If conversion costs are added evenly throughout the production process,and the units have made it 50% of the way through the production process,then the percentage completion for conversion costs is 50%.

Question 42

2-33 A business has 200 full-time workers who work 8 hours per day.They have 100 part-time workers who work 5 hours per day.What is the number of full-time equivalent employees?

A)263
B)300
C)200
D)188

Question 43

2-22 The weighted average and FIFO methods differ only in how they treat beginning inventory.

Question 44

2-30 A company uses a process system.The number of equivalent units in ending WIP inventory regarding direct materials costs and conversion costs is:

A)always lower for direct materials.
B)always equal.
C)always lower for conversion costs.
D)none of the above

Question 45

2-28 If conversion costs are added evenly throughout the production process,and the units have made it 50% of the way through the production process,then the percentage completion for direct materials is:

A)0%.
B)100%.
C)50%.
D)unknown,based on the given information.

Question 46

2-15 If all direct materials are added at the beginning of the production process,and the units have made it 50% of the way through the production process,then the percentage completion for direct materials is 100%.

Question 47

2-25 In a process costing system,manufacturing costs are usually combined into two categories:

A)direct materials and conversion costs.
B)direct labor and conversion costs.
C)manufacturing overhead and conversion costs.
D)direct materials and direct labor.

Question 48

2-16 If all direct materials are added at the beginning of the production process,and the units have made it 50% of the way through the production process,then the percentage completion for direct materials is 50%.

Question 49

2-24 The weighted-average method of process costing is simpler than the FIFO method.

Question 50

2-31 In a process system,direct labor and manufacturing overhead are normally:

A)incurred at the end of the process.
B)incurred in full at the beginning of the process.
C)incurred evenly throughout the process.
D)not recorded.

Question 51

2-23 The FIFO method requires that any units in beginning inventory be costed separately from any units started in the current period.

Question 52

2-26 If all direct materials are added at the end of the production process,and the units have made it 50% of the way through the production process,then the percentage completion for direct materials is:

A)0%.
B)100%.
C)50%.
D)none of the above.

Question 53

2-18 If all direct materials are added at the end of the production process,and the units have made it 50% of the way through the production process,then the percentage completion for direct materials is 100%.

Question 54

2-29 If conversion costs are added evenly throughout the production process,and the units have made it 50% of the way through the production process,then the percentage completion for conversion costs is:

A)0%.
B)100%.
C)50%.
D)none of the above.

Question 55

2-32 A measure of the amount of work done,expressed in complete units of output is:

A)job costing.
B)process costing.
C)equivalent units
D)conversion costs.

Question 56

2-34 The full-time employees at Percy Enterprises work 8 hours per day,while the part-time employees work 4 hours per day.Percy has 2,000 full-time employees and 800 part-time employees.What is the number of full-time equivalent employees?

A)2,000
B)1,400
C)2,400
D)2,800

Question 57

2-17 If all direct materials are added at the beginning of the production process,and the units have made it 50% of the way through the production process,then the percentage completion for direct materials is 0%.

Question 58

2-20 If all direct materials are added at the end of the production process,and the units have made it 50% of the way through the production process,then the percentage completion for direct materials is 0%.

Question 59

2-19 If all direct materials are added at the end of the production process,and the units have made it 50% of the way through the production process,then the percentage completion for direct materials is 50%.

Question 60

2-27 If all direct materials are added at the beginning of the production process,and the units have made it 50% of the way through the production process,then the percentage completion for direct materials is:

A)0%.
B)100%.
C)50%.
D)none of the above.

Question 61

A pizza company produces frozen pizzas in three departments: assembly,freezing,and packaging.In assembly,crust ingredients are added at the beginning of the process.After the crust is made,the sauce,cheese,and toppings are added at the end of the process.Conversion costs are added evenly.Data for the assembly department includes: $$\begin{array} { | l | r | } \hline \text { Bepinging WIP inventory } & \text { 0 units } \\\hline \text { Units started } & 22,000 \text { urits } \\\hline \text { Units completed/transferred to freecing } & 19,800 \text { urits } \\\hline \text { Ending WIP (70\% through assembly) } & 2,200 \text { units } \\\hline \text { Crust ingredients added } & \$ 31,000 \\\hline \text { Cheese added } & \$ 16,000 \\\hline \text { Sauce and toppings added } & \$ 8,000 \\\hline \text { Direct labor } & \$ 22,216 \\\hline \text { Manufacturing overhead } & \$ 5,486 \\\hline\end{array}$$

- At the end of the period,what are the total equivalent units for cheese,sauce and toppings?

A)19,800
B)22,000
C)21,340
D)2,200

Question 62

3-3 Wong completed 25,000 units and had another 8,000 units 35% complete.The total equivalent units for the period are 27,800.

Question 63

3-4 Total direct materials = $90,000,and there is no beginning WIP inventory.Units completed are 18,000 with no ending work in process inventory.The cost per unit is $5.00.

Question 64

2-37 Natural Desserts has 2,500 gallons of paint in WIP inventory,with all materials already added.What are equivalent units in ending WIP inventory for materials if the paint is 80% through the process?

A)0
B)2,500
C)500
D)2,000

Question 65

2-36 Green Paints has 4,000 gallons of paint in WIP inventory,with all materials already added.The paint is 80% through the process.Assuming all conversion costs are added evenly throughout the process,what are the equivalent units for conversion costs?

A)800
B)0
C)3,200
D)4,000

Question 66

3-1 Costs of ending WIP inventory are not included in the cost per equivalent unit computation.

Question 67

3-5 The production equivalent unit report summarizes all costs.

Question 68

The following information is provided by Dart Manufacturing: $$\begin{array} { | l | r | } \hline \text { WIP inventory, January 1 } & \text { 0 units } \\\hline \text { Units started } & 5,000 \\\hline \begin{array} { l } \text { Units completed and } \\\text { transferred out }\end{array} & 2,000 \\\hline \text { WIP inventory, December 31 } & 3,000 \\\hline \text { Direct materials } & \$ 12,500 \\\hline \text { Direct labor } & \$ 16,300 \\\hline \text { Manufacturing overhead } & \$ 8,700 \\\hline\end{array}$$ The units in ending WIP inventory were 90% complete for materials and 60% complete for conversion costs.

-
What are the total equivalent units for direct materials?

A)5,000
B)2,700
C)3,000
D)4,700

Question 69

The following information is provided by Abbott Corporation: $$\begin{array} { | l | r | } \hline \text { WIP inventory, January 1 } & \text { 0 units } \\\hline \text { Units started } & 12,000 \\\hline \begin{array} { l } \text { Units completed and } \\\text { transferred out }\end{array} & 8,000 \\\hline \text { WIP inventory, December 31 } & 4,000 \\\hline \text { Direct materials } & \$ 26,700 \\\hline \text { Direct labor } & \$ 15,400 \\\hline \text { Manufacturing overhead } & \$ 9,000 \\\hline\end{array}$$ The units in ending WIP inventory were 80% complete for materials and 40% complete for conversion costs.

-
What are the total equivalent units for direct materials?

A)4,000
B)3,200
C)11,200
D)12,000

Question 70

A pizza company produces frozen pizzas in three departments: assembly,freezing,and packaging.In assembly,crust ingredients are added at the beginning of the process.After the crust is made,the sauce,cheese,and toppings are added at the end of the process.Conversion costs are added evenly.Data for the assembly department includes: $$\begin{array} { | l | r | } \hline \text { Bepinging WIP inventory } & \text { 0 units } \\\hline \text { Units started } & 22,000 \text { urits } \\\hline \text { Units completed/transferred to freecing } & 19,800 \text { urits } \\\hline \text { Ending WIP (70\% through assembly) } & 2,200 \text { units } \\\hline \text { Crust ingredients added } & \$ 31,000 \\\hline \text { Cheese added } & \$ 16,000 \\\hline \text { Sauce and toppings added } & \$ 8,000 \\\hline \text { Direct labor } & \$ 22,216 \\\hline \text { Manufacturing overhead } & \$ 5,486 \\\hline\end{array}$$

- What are the total equivalent units for conversion costs?

A)2,200
B)22,000
C)21,340
D)23,540

Question 71

2-46 There are a total of 12,000 students at a school.Seventy percent of them go full time at 16 hours per term.Ten percent take a half-load of 8 hours per term,and twenty percent take a three- quarter load of 12 hours per term.What is the equivalent number of full-time students?

A)12,000
B)10,800
C)8,400
D)2,400

Question 72

3-7 If a company has ending work in process inventory,it must use the 5-step process costing procedure to determine the cost of making one unit.

Question 73

2-38 Natural Desserts has 2,500 gallons of paint in WIP inventory,with all materials already added.The paint is 60% through the process.Assuming all conversion costs are added evenly throughout the process,what are the equivalent units for conversion costs?

A)0
B)1,500
C)2,000
D)500

Question 74

3-2 The number of equivalent units is computed after computing the cost per equivalent unit.

Question 75

A pizza company produces frozen pizzas in three departments: assembly,freezing and packaging.In assembly,crust ingredients are added at the beginning of the process.After the crust is made,the sauce,cheese,and toppings are added at the end of the process.Conversion costs are added evenly.Data for the assembly department includes: $$\begin{array} { | l | r | } \hline \text { Bepinging WIP inventory } & \text { 0 units } \\\hline \text { Units started } & 22,000 \text { urits } \\\hline \text { Units completed/transferred to freecing } & 19,800 \text { urits } \\\hline \text { Ending WIP (70\% through assembly) } & 2,200 \text { units } \\\hline \text { Crust ingredients added } & \$ 31,000 \\\hline \text { Cheese added } & \$ 16,000 \\\hline \text { Sauce and toppings added } & \$ 8,000 \\\hline \text { Direct labor } & \$ 22,216 \\\hline \text { Manufacturing overhead } & \$ 5,486 \\\hline\end{array}$$

- What are the total equivalent units for pizza crust?

A)2,200
B)24,400
C)22,000
D)21,340

Question 76

The following information is provided by Dart Manufacturing: $$\begin{array} { | l | r | } \hline \text { WIP inventory, January 1 } & \text { 0 units } \\\hline \text { Units started } & 5,000 \\\hline \begin{array} { l } \text { Units completed and } \\\text { transferred out }\end{array} & 2,000 \\\hline \text { WIP inventory, December 31 } & 3,000 \\\hline \text { Direct materials } & \$ 12,500 \\\hline \text { Direct labor } & \$ 16,300 \\\hline \text { Manufacturing overhead } & \$ 8,700 \\\hline\end{array}$$ The units in ending WIP inventory were 90% complete for materials and 60% complete for conversion costs.

-
At the end of the year,what are the equivalent units for conversion costs?

A)3,000
B)3,800
C)2,000
D)1,800

Question 77

The following information is provided by Gibson Company:
$$\begin{array} { | l | r | } \hline \text { WIP inventory, January 1 } & \text { 0 units } \\\hline \text { Units started } & 20,000 \text { urits } \\\hline \begin{array} { l } \text { Units completed and } \\\text { transferred out }\end{array} & 17,500 \text { units } \\\hline \text { WIP inventory, December 31 } & 2,500 \text { units } \\\hline \text { Direct materials } & \$ 25,300 \\\hline \text { Direct labor } & \$ 17,400 \\\hline \text { Manufacturing overhead } & \$ 26,700 \\\hline\end{array}$$ The units in ending WIP inventory were 85% complete for materials and 35% complete for conversion costs.
Required
a.What are the total equivalent units for direct materials?
b.At the end of the year,what are the equivalent units for conversion costs?

Question 78

3-6 If a company has no ending work in process inventory,it must use the 5-step process costing procedure to determine the cost of making one unit.

Question 79

The following information is provided by Abbott Corporation: $$\begin{array} { | l | r | } \hline \text { WIP inventory, January 1 } & \text { 0 units } \\\hline \text { Units started } & 12,000 \\\hline \begin{array} { l } \text { Units completed and } \\\text { transferred out }\end{array} & 8,000 \\\hline \text { WIP inventory, December 31 } & 4,000 \\\hline \text { Direct materials } & \$ 26,700 \\\hline \text { Direct labor } & \$ 15,400 \\\hline \text { Manufacturing overhead } & \$ 9,000 \\\hline\end{array}$$ The units in ending WIP inventory were 80% complete for materials and 40% complete for conversion costs.

-
At the end of the year,what are the equivalent units for conversion costs?

A)8,000
B)9,600
C)1,600
D)4,800

Question 80

2-35 Green Paints has 4,000 gallons of paint in WIP inventory,with all materials already added.What are equivalent units in ending WIP inventory for materials if the paint is 80% through the process?

A)0
B)800
C)3,200
D)4,000