Deck 2: Process Costing: Methods and Applications

Question 1

In order to compute equivalent units of production using the Weighted Average method of process costing, the following equation should be used:

A)Equivalent units of beginning work in process + units completed and transferred out
B)Equivalent units of beginning work in process + equivalent units of ending work in process
C)Units completed and transferred out + equivalent units of ending work in process
D)Units completed and transferred out + equivalent units of beginning work in process

Answer 1

Units completed and transferred out + equivalent units of ending work in process

Question 2

If beginning work in process is 2,000 units, ending work in process is 1,000 units, and the units accounted for equals 5,000 units, what are the units completed and transferred out?

A)7000
B)6000
C)4000
D)2000

Answer 2

4000

Question 3

Conversion costs are the sum of:

A)Direct materials costs and direct labor costs
B)Indirect materials costs and indirect labor costs
C)Direct materials costs and overhead costs
D)Direct labor costs and overhead costs

Answer 3

Direct labor costs and overhead costs

Question 4

A production cost report

A)Used to record the costs chargeable to a specific job
B)Shows only cost data for a production department
C)Provides a basis for evaluating the productivity of a department
D)Combines process cost and job order costing systems costs

Question 5

Which is not a similarity between job order costing and process costing?

A)Methods of assigned costs
B)Tracking of direct materials, direct labor and manufacturing overhead
C)Accumulating journal entries
D)Flow of costs

Question 6

The journal entry that assigns raw materials costs in a process costing system includes

A)Debit to raw materials
B)Credit to raw materials
C)Debit to Accounts Payable
D)Credit to Work in Process

Question 7

Calculating equivalent units in a weighted average method:

A)The beginning inventory percentage complete is used only for conversion costs
B)The beginning inventory percentage complete is used for both material and conversion costs
C)The beginning inventory amount is not accounted for
D)The beginning inventory amount is used in total

Question 8

in a process costing system, manufacturing overhead is assigned to work in process by

A)Department based on actual overhead costs incurred
B)Department based on predetermined overhead rates
C)Job based on actual overhead costs incurred
D)Job based on predetermined overhead rates

Question 9

Which of the following system applies when standard goods are produced under a series of inter connected operations?

A)Job order costing
B)Process costing
C)Standard costing
D)All of the above

Question 10

The process costing system is best suited for

A)Industries where different types of products are manufactured
B)Industries where homogenous products are manufactured on continuous basis
C)Service industry only
D)All of the above

Question 11

Which of the following business is likely to adopt a process costing system?

A)Plan manufactures
B)Construction companies
C)Sugar refining
D)Printing press

Question 12

Materials labor and overhead costs are traced to processing departments rather than individual products or jobs. This statement is true for

A)A job order costing system
B)An activity based costing system
C)A process costing system
D)A variable costing system

Question 13

In process costing system, the materials can be added in

A)First department only
B)Last department only
C)First and last department only
D)Any department

Question 14

Which of the following is not relevant to a process costing system?

A)Heterogeneous products
B)Recitative production
C)High production volume
D)Low production flexibility

Question 15

Which of the following is not correct about process costing and job order costing?

A)Both the system classify materials as direct material and or indirect materials.
B)Both the system classify labor ans direct labor and or indirect labor
C)Direct materials under job order costing might be indirect under process costing and vice versa.
D)Both the systems assigns costs by process.

Question 16

In process costing system, when partially completed units are expressed in terms of fully completed units they are known as

A)Completed units
B)Equivalent units
C)Unfinished units
D)Transferred units

Question 17

The direct material costing Rs. 4000 has been used in mixing department. The correct journal entry would be

A)Direct materials Dr. and work in process-mixing department CR
B)Work-in -process-mixing department Dr and Direct materials Cr
C)Finished goods DR and Direct materials Cr
D)Mixing department Dr and Direct material Cr

Question 18

In a process costing system, the manufacturing overhead (or factory OH) is usually applied using

A)Predetermined overhead rate
B)An actual overhead rate
C)A conversion overhead rate
D)An indirect labor rate

Question 19

In process costing system, the predetermined overhead rate is computed.

A)Only once and used for all the processing department
B)Separately for each processing department
C)Only for the first processing department where units are started
D)Only for the last department where units are completed and transferred to finished goods area.

Question 20

Where the normal loss in a department is identified at the end of process, its cost is :-

A)Ignored
B)Charged to work in progress ending inventory only
C)Charged to units completed and transferred out only
D)Charged to work in process ending inventory as well as to units completed and transferred out

Question 21

While preparing the cost of production report of a processing department, use per unit cost from producing department needs to be adjusted when the

A)Normal loss is identified during the process.
B)Normal loss is identified at the end of the process
C)Abnormal loss is identified during the process
D)Abnormal loss is identified at the end of the process.

Question 22

The normal or standard loss in processing department is generally considered

A)An avoidable loss
B)Un avoidable loss
C)An additional loss
D)A basic loss

Question 23

A loss in processing departments which can be avoided under normal and efficient working conditions is generally known as

A)Normal loss
B)Extra loss
C)Abnormal loss
D)Department loss

Question 24

In process costing the abnormal loss occurred in a production department is

A)Charged to finished goods
B)Charged to unfinished goods
C)Charged to factory overhead
D)Ignored