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

Process costing is appropriate for companies providing services.

Answer 2

True

Question 3

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

Answer 3

True

Question 4

Process costing is most appropriate for manufacturers of homogeneous products.

Question 5

Process costing accumulates costs by individual jobs.

Question 6

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

Question 7

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 8

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

Question 9

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

Question 10

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

Question 11

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

Question 12

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 13

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

Question 14

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

Question 15

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

Question 16

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

Question 17

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 18

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

Question 19

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

Question 20

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

Question 21

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

Question 22

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 23

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 24

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 25

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

Question 26

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

Question 27

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

Question 28

The major benefit of the FIFO method is simplicity.

Question 29

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 30

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 31

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

Question 32

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 33

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 34

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 35

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 36

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 37

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

Question 38

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

Question 39

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 40

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

Question 41

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 42

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 43

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 44

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 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
computation of unit cost

Question 46

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

Question 47

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 48

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 49

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 50

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

Question 51

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 52

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 53

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

Question 54

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

Question 55

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

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

Question 57

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 58

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 59

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 60

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

Question 63

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 64

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

Question 65

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 66

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

Question 67

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

Question 68

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 69

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

Question 70

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 71

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

Question 72

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 73

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 74

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

Question 75

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 76

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

Question 77

___________ costs are a type of raw material cost.

Question 78

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

Question 79

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 80

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