Deck 5: Process Costing

Question 1

Process costing is typically used for businesses that make large quantities of identical items.

Answer 1

True

Question 2

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

Answer 2

True

Question 3

Unique or custom-made goods use a process costing system.

Answer 3

False

Question 4

Process costing differs from job costing in that process costing doesn't directly trace any materials or labor to any part of the production process.

Question 5

Prime costs include direct labor and direct materials.

Question 6

Each manufacturing process will have a WIP Inventory account.

Question 7

Cost for direct materials, direct labor and Manufacturing Overhead are assigned to each job.

Question 8

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

Question 9

Process costing is typically used for businesses that make unique goods in relatively small amounts.

Question 10

Conversion costs are the sum of direct labor and direct materials.

Question 11

In process costing, the costs flow from Raw Materials Inventory, to Work In Process Inventory, to Finished Goods Inventory.

Question 12

A separate Work in Process Inventory account is maintained for each process.

Question 13

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 14

How are manufacturing costs treated in process costing?

A)The manufacturing costs are added only when the goods are in finished inventory.
B)The manufacturing costs are added only when the goods are sold.
C)The manufacturing costs always follow the physical movement of the product.
D)None of the above.

Question 15

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

Question 16

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

Question 17

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 18

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

Question 19

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

Question 20

Indirect labor would not be a component of conversion costs.

Question 21

Baxter Company produces Frisbees using a three-step sequential process that includes molding, coloring and finishing. At what stage would the sets be allocated Manufacturing Overhead?

A)When the Frisbees are in WIP Inventory-Molding
B)When the Frisbees are in WIP Inventory-Finishing
C)When the Frisbees are in WIP Inventory-Coloring
D)All of the above

Question 22

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

A)Pharmaceuticals
B)Health Care
C)Shipbuilding
D)Construction

Question 23

A company manufactures mirrors. Last month's costs were: What were the conversion costs for the month?

A)$308,000
B)$394,000
C)$235,000
D)$86,000

Question 24

The Candy Factory manufactures healthy candy that it sells to consumers and groups in the marketplace. The business produces chocolate-covered cherries in a three-step process to develop the center of the cherries, coat the cherries in chocolate, and package the final product. The total cost to produce a pound of chocolate covered cherries is the sum of the cost per pound in each of the following processes:
The managerial accountant reported that there is no Work in Process Inventory. Assuming that there is no work in process inventories, calculate the total cost per pound for each of the three processes listed above and the total cost to produce a pound of chocolate covered cherries. Explain why the cost in each process is important to the managerial accountant. Discuss at least three reasons why the cost in the process is important and how this cost is used at the company.

Question 25

The costing system used by an oil refinery would be

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

Question 26

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

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

Question 27

The costing system used by a company producing custom fireplace mantels would be

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

Question 28

Conversion costs are generally added evenly throughout a process.

Question 29

What does direct labor costs plus Manufacturing Overhead equal?

A)Prime costs
B)Operating costs
C)Conversion costs
D)Equivalent costs

Question 30

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. What are these costs called?

A)Transported costs
B)Transmitted costs
C)Transferred costs
D)Conveyed costs

Question 31

A company manufactures wallets. Last month's costs were: What were the conversion costs for the month?

A)$247,000
B)$396,000
C)$219,000
D)$466,000

Question 32

Process costing would likely be used by which of the following?

A)Clear Channel Advertising
B)PIP Printing
C)DBA Management Consultants
D)PepsiCo

Question 33

The costing system used by a company making computer chips would be

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

Question 34

In process costing, manufacturing costs are usually combined into two categories: direct materials and conversion costs.

Question 35

Process costing would not be used by which of the following companies?

A)Sherwin-Williams, manufacturer of paint and stains
B)Coca-Cola, soft drink manufacturer
C)American Custom Yachts, Inc., manufacturer of custom yachts
D)Jelly Belly, manufacturer of jelly beans and other candy

Question 36

The two basic types of product costing systems are

A)department and plant.
B)FIFO and weighted-average.
C)variable and process.
D)job and process.

Question 37

Baxter Company produces children's wiffle ball sets using a three-step sequential process that includes molding, coloring and finishing. When the sets are completely finished, out of which account should the cost be transferred?

A)Finished Goods Inventory
B)WIP Inventory-Coloring
C)WIP Inventory-Finishing
D)WIP Inventory-Molding

Question 38

Which of the following product costing systems is normally used to assign costs to goods that are produced in unique batches?

A)Fixed costing
B)Job costing
C)Process costing
D)LIFO costing

Question 39

Which of the following product costing systems is normally used to assign costs to goods that are mass-produced goods?

A)Fixed costing
B)Job costing
C)Process costing
D)LIFO costing

Question 40

A system for assigning costs for products made in a continuous process is

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

Question 41

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

Question 42

Equivalent units express the amount of work done during a period in terms of partially completed units.

Question 43

Conversion costs are usually incurred evenly throughout productions.

Question 44

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 45

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

Question 46

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

The number of partially completed units multiplied by the percentage of process completed equals the number of equivalent units.

Question 48

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 49

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

Question 50

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

Question 51

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 52

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

Question 53

Direct materials are often added at a particular point in the production process.

Question 54

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 55

If a company has 6,000 units that are 60% complete, the equivalent unit figure is 3,600.

Question 56

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 57

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

Question 58

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

Question 59

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 60

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

Question 61

Manufacturing costs are usually combined into two categories in a process costing system. These two categories are

A)direct labor and conversion costs.
B)direct materials and conversion costs.
C)Manufacturing Overhead and conversion costs.
D)direct materials and direct labor.

Question 62

In process costing, units that are partially completed are accounted for the same as units in Finished Goods Inventory.

Question 63

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)cannot determine

Question 64

Yummy Tummy Desserts has 3100 quarts of ice cream in WIP Inventory, with all materials already added. What are equivalent units in ending WIP Inventory for materials if the ice cream is 67% through the process?

A)3100
B)2077
C)1023
D)0

Question 65

Perfect Pigments has 3200 gallons of paint in WIP Inventory, with 73% of materials already added. What are equivalent units in ending WIP Inventory for materials if the paint is 46% through the process?

A)2336
B)1472
C)0
D)864

Question 66

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

Question 67

Start the Day Right has 2800 gallons of orange juice in WIP Inventory, with 72% of materials already added. The orange juice is 55% through the process. Assuming all conversion costs are added evenly throughout the process, what are the equivalent units for conversion costs?

A)0
B)476
C)1540
D)2016

Question 68

Which of the following is a measure of the amount of work done, expressed in complete units of output?

A)Job costing
B)Process costing
C)Conversion costs
D)Equivalent units

Question 69

Perfect Pigments has 2900 gallons of paint in WIP Inventory, with 72% of materials already added. The paint is 40% through the process. Assuming all conversion costs are added evenly throughout the process, what are the equivalent units for conversion costs?

A)0
B)928
C)2088
D)1160

Question 70

Yummy Tummy Desserts has2600 quarts of ice cream in WIP Inventory, with all materials already added. The ice cream is 72% through the process. Assuming all conversion costs are added evenly throughout the process, what are the equivalent units for conversion costs?

A)0
B)2600
C)1872
D)728

Question 71

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

Question 72

In a process costing system, direct labor and manufacturing overhead are normally

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

Question 73

The cost per equivalent unit for direct materials will always be equal to the cost per equivalent unit for conversion costs.

Question 74

Start the Day Right has 2500 gallons of orange juice in WIP Inventory, with 75% of materials already added. What are equivalent units in ending WIP Inventory for materials if the orange juice is 58% through the process?

A)1450
B)1875
C)0
D)425

Question 75

The only difference between the weighted average method of process costing and the FIFO method is

A)the method for calculating ending inventory.
B)the method for calculating units completed.
C)the method for calculating beginning inventory.
D)the method for calculating unit cost.

Question 76

The number of equivalent units is computed before computing the cost per equivalent unit.

Question 77

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)50%.
C)100%.
D)none of the above.

Question 78

Wong completed 24,000 units and had another 6,000 units 45% complete. The total equivalent units for the period are 26,700.

Question 79

Equivalent units are calculated by

A)multiplying the physical number of units by the percentage of completion.
B)adding the physical number of units with the number of units completed last period.
C)subtracting the physical units finished this period from the physical units in beginning inventory.
D)dividing the physical number of units by the percentage of completion.

Question 80

In process costing, ________ is/are found by taking the number of partially completed physical units and multiplying it by the percentage of the process completed.

A)Cost of Goods Sold
B)equivalent units
C)fixed Manufacturing Overhead costs
D)conversion costs