Deck 6: Process Costing

Question 1

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

Answer 1

True

Question 2

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 2

True

Question 3

Process costing accumulates costs by individual jobs.

Answer 3

False

Question 4

Process costing is most appropriate for manufacturers of homogeneous products.

Question 5

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

Question 6

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

Question 7

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 8

Process costing is appropriate for companies providing services.

Question 9

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 10

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

Question 11

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

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

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

Question 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

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

Question 20

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

Question 21

MATCHING
Choose the most likely used costing system for the industries listed below.
a.
Process Costing
b.
Job Order Costing
Costing system used by a chemical manufacturer.

Question 22

MATCHING
Choose the most likely used costing system for the industries listed below.
a.
Process Costing
b.
Job Order Costing
Costing system used by a home builder.

Question 23

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

Question 24

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

Question 25

MATCHING
Choose the most likely used costing system for the industries listed below.
a.
Process Costing
b.
Job Order Costing
Costing system used by a food manufacturer.

Question 26

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

Question 27

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 28

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

Question 29

The major benefit of the FIFO method is simplicity.

Question 30

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

Question 31

MATCHING
Choose the most likely used costing system for the industries listed below.
a.
Process Costing
b.
Job Order Costing
Costing system used by an architectural firm.

Question 32

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 33

MATCHING
Choose the most likely used costing system for the industries listed below.
a.
Process Costing
b.
Job Order Costing
Costing system used by a tire manufacturer.

Question 34

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 35

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

Question 36

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 37

MATCHING
Choose the most likely used costing system for the industries listed below.
a.
Process Costing
b.
Job Order Costing
Costing system used by a manufacturer of custom furniture.

Question 38

The solution for different percentage completion figures for manufacturing inputs is to calculate equivalent units as if there were uniform manufacturing inputs.

Question 39

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 40

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

Question 41

Select the appropriate definition for each of the items listed below
a.
parallel processing
b.
sequential processing
c.
process costing
d.
weighted-average costing method
partially completed units can be worked on simultaneously in different processes then brought together in a final process for completion

Question 42

Select the appropriate definition for each of the items listed below
a.
parallel processing
b.
sequential processing
c.
process costing
d.
weighted-average costing method
units pass through one process before they can be worked on in the next processes

Question 43

Select the appropriate definition for each of the items listed below
a.
equivalent units of production
b.
transferred-in costs
c.
FIFO costing methods
d.
Production report
The costs transferred from a prior process to a subsequent process.

Question 44

Select the appropriate definition for each of the items listed below
a.
parallel processing
b.
sequential processing
c.
process costing
d.
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 45

Match the five steps involved in creating the department production report with the steps below in the proper order.
a.
step 1 in preparing a Production Report
b.
step 2 in preparing a Production Report
c.
step 3 in preparing a Production Report
d.
step 4 in preparing a Production Report
e.
step 5 in preparing a Production Report
physical flow analysis

Question 46

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

Question 47

Select the appropriate definition for each of the items listed below
a.
equivalent units of production
b.
transferred-in costs
c.
FIFO costing methods
d.
Production report
The document that summarizes the manufacturing activity that takes place in a process department for a given period of time.

Question 48

Match the five steps involved in creating the department production report with the steps below in the proper order.
a.
step 1 in preparing a Production Report
b.
step 2 in preparing a Production Report
c.
step 3 in preparing a Production Report
d.
step 4 in preparing a Production Report
e.
step 5 in preparing a Production Report
computation of unit cost

Question 49

Select the appropriate definition for each of the items listed below
a.
parallel processing
b.
sequential processing
c.
process costing
d.
weighted-average costing method
works well whenever relatively homogeneous products pass through a series of processes and receive similar amounts of manufacturing costs

Question 50

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

Question 51

Select the appropriate definition for each of the items listed below
a.
equivalent units of production
b.
transferred-in costs
c.
FIFO costing methods
d.
Production report
Complete units that could have been produced given the total amount of manufacturing effort expended for the period under consideration.

Question 52

Match the five steps involved in creating the department production report with the steps below in the proper order.
a.
step 1 in preparing a Production Report
b.
step 2 in preparing a Production Report
c.
step 3 in preparing a Production Report
d.
step 4 in preparing a Production Report
e.
step 5 in preparing a Production Report
valuation of inventories

Question 53

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

Question 54

Match the five steps involved in creating the department production report with the steps below in the proper order.
a.
step 1 in preparing a Production Report
b.
step 2 in preparing a Production Report
c.
step 3 in preparing a Production Report
d.
step 4 in preparing a Production Report
e.
step 5 in preparing a Production Report
calculation of equivalent units

Question 55

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 56

Select the appropriate definition for each of the items listed below
a.
equivalent units of production
b.
transferred-in costs
c.
FIFO costing methods
d.
Production report
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 57

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

Question 58

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

Question 59

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

Question 60

Match the five steps involved in creating the department production report with the steps below in the proper order.
a.
step 1 in preparing a Production Report
b.
step 2 in preparing a Production Report
c.
step 3 in preparing a Production Report
d.
step 4 in preparing a Production Report
e.
step 5 in preparing a Production Report
cost reconciliation

Question 61

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 62

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

Question 63

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 64

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 65

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

Question 66

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

Question 67

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 68

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

Question 69

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

Question 70

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

Question 71

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 72

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

Question 73

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 74

___________ costs are a type of raw material cost.

Question 75

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

Question 76

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 77

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 78

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 79

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

Question 80

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