Deck 6: Process Costing

Question 1

In process costing,each producing department has its own work-in-process account.

Answer 1

True

Question 2

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

Answer 2

True

Question 3

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

Answer 3

True

Question 4

The presence of beginning and ending work-in-process inventories leads to much of the complication surrounding process costing.

Question 5

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

Question 6

Firms that offer services cannot have work-in-process inventories.

Question 7

Parallel processing requires that units pass through one process before they can be worked on in the next process.

Question 8

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 9

Process costing accumulates costs by individual jobs.

Question 10

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

Question 11

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

Question 12

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 labor,and overhead.

Question 13

Process costing is most appropriate for manufacturers of homogeneous products.

Question 14

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

Question 15

Manufacturing firms may operate without significant work-in-process inventories.

Question 16

Process costing is appropriate for companies providing services.

Question 17

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

Question 18

The FIFO method is the only method used to calculate equivalent units in process costing.

Question 19

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

Question 20

Process costing is most useful in situations when relatively homogeneous products are produced.

Question 21

In process costing,each producing department has its own ________________ account.
or
or

Question 22

Different percentage completion figures for manufacturing inputs pose a problem for the calculation of equivalent units,unit cost,and valuation of ending work in process.

Question 23

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 24

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

Question 25

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

Question 26

Under the FIFO method,for the beginning work-in-process 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 27

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

Question 28

___________________ requires that units pass through one process before they can be worked on in the next process.

Question 29

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

Question 30

The processing pattern in which partially completed units can be worked on simultaneously in different processes and then brought together in a final process for completion is known as ____________________.

Question 31

The major benefit of the FIFO method is simplicity.

Question 32

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

Question 33

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

Question 34

There are two approaches for dealing with the prior-period output and prior-period costs found in beginning work in process: the weighted average method and the FIFO method.

Question 35

Firms that have adopted a __________ approach try to reduce WIP inventories to very low levels.
or
or

Question 36

FIFO assumes that units in beginning work in process are completed last.

Question 37

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

Question 38

_________________ works well whenever relatively homogeneous products pass through a series of processes and receives similar amounts of manufacturing costs.

Question 39

Direct materials used in production,direct labor,and applied overhead are charged to the _______________ account.

Question 40

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

Question 41

_________________________ are costs transferred from a prior process to a subsequent process.

Question 42

Manufacturers that produce a large number of homogeneous products are most likely to use which of the following?

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

Question 43

The _______________________ separates work and costs of the equivalent units in beginning inventory from work and costs of the equivalent units produced during the current period.

Question 44

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

A)custom home builder
B)CPA firm
C)chemical manufacturer
D)custom machine tools manufacturer

Question 45

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

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

Question 46

When inputs are added _______________,equivalent units and unit cost are calculated for each separate input category.

Question 47

Under the _________________ method there are two categories of completed units; units started and completed during the period and units from beginning inventory.

Question 48

If great accuracy in computing unit costs is desired,a company should use the _________ method to determine unit cost.

Question 49

The _________________________ combines beginning inventory costs and work done with current-period costs and work to calculate this period's unit cost.

Question 50

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

Question 51

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

Question 52

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

Question 53

The _____________________ provides an analysis of the physical flow of units.

Question 54

What types of costs are normally found in a process accounting system?

A)materials,labor and overhead
B)materials and labor
C)labor and overhead
D)overhead,selling and administrative

Question 55

_____________________ checks to see if the costs to account for are exactly assigned to inventories.

Question 56

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

A)chemical plant
B)architectural firm
C)dentist's office
D)manufacturer of fine furniture

Question 57

Under the _______________ method equivalent units of output are computed by adding units completed to equivalent units in ending working-in-process.

Question 58

Which of the following companies would be least likely to use a process costing system?

A)An oil refinery
B)A home-builder
C)A fertilizer company
D)A chemical company

Question 59

The number of physical units is multiplied by the _____________________ to calculate equivalent units.

Question 60

___________ costs are a type of raw material cost.

Question 61

The cost of units finished at the last (final)department will flow from work in process to:

A)raw materials
B)finished goods
C)cost of goods sold
D)accounts receivable

Question 62

Process accounting can be appropriate for

A)service firms.
B)manufacturing firms with JIT orientation.
C)traditional manufacturing firms.
D)all of these.

Question 63

Which statement best describes 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 64

Process accounting is most probably used by a(n)

A)paint manufacturer
B)cement manufacturer
C)oil change and lube shop
D)all of these

Question 65

In process costing,the cost of units finished in the last department will be transferred from work in process to

A)cost of goods sold.
B)completed processes.
C)finished goods.
D)sales.

Question 66

Process costing would be most appropriate for which of the following?

A)soft drink bottler
B)custom home builder
C)Caterer
D)photocopy shop

Question 67

Units transferred from a prior process to a subsequent process are referred to as

A)transferred in units
B)finished goods
C)cost of goods sold
D)beginning goods

Question 68

At the time they are used,raw materials,direct labor,and applied overhead costs are recorded in

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

Question 69

When computing equivalent units of production,the method that combines partially completed units in beginning inventory with current period production is the

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

Question 70

Which is the best description of the production report?

A)The production report provides information about the manufacturing costs incurred by the department.
B)The report provides information about the physical units processed by the department.
C)The production report is the document that summarizes the manufacturing activity that takes place in a process department for a given period of time.
D)none of these

Question 71

The Fox Company uses the weighted average method.The beginning work in process consists of 20,000 units (100% completed as to materials and 50% complete as to conversion costs).The number of units completed was 80,000.The ending work in process consists of 10,000 units (100% complete as to materials and 20% complete as to conversion costs).Calculate the equivalent units of production for conversion costs.

A)110,000
B)82,000
C)80,000
D)90,000

Question 72

Two methods used to determine equivalent units of production in process costing are

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

Question 73

How is unit cost calculated?

A)Total units divided by total costs
B)Sum of all cost drivers
C)Total cost divided by equivalent units produced
D)Total of all costs incurred

Question 74

Equivalent production expresses all activity of the period in terms of

A)work in process
B)materials labor and overhead
C)fully completed units
D)partially completed units

Question 75

Which of the following methods uses costs and work of beginning work in process?

A)Weighted average method
B)FIFO method
C)sequential processing method
D)Both the weighted average and FIFO method can be used

Question 76

A cost transferred from a prior process to a subsequent process is referred to as

A)work in process transfer
B)beginning work in process
C)transferred in cost
D)costs added in

Question 77

Which of the following best describes sequential processing?

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

Question 78

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

A)Any time production is only partially completed during the accounting period.
B)If the product is composed of mass-produced homogeneous products.
C)If the product is manufactured according to customer specifications.
D)All of these.

Question 79

Which of the following 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)Partially completed units can be worked on simultaneously in different processes and then brought together in a final process for completion.
D)Units must pass through one process before they can be worked on in the next processes.

Question 80

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

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