Deck 14: Topic Focus: Process Costing

Question 1

The costs incurred in a process costing system,direct material,direct labor and overhead,are the same as the costs incurred in a job order costing system.

Answer 1

True

Question 2

The soft drink bottler Dr.Pepper is an example of a company that would use a process costing system.

Answer 2

True

Question 3

In process costing,all materials are added at the beginning of the production process,then labor and overhead is added during the production process.

Answer 3

False

Question 4

The accounting firm PriceWaterhouseCoopers is an example of a company that would use a process costing system.

Question 5

Costs incurred in a process costing system include direct material,direct labor and overhead.

Question 6

In process costing,direct materials may be added at different points of a department's production process.

Question 7

In a job order costing system, all product costs for the period are accumulated and divided evenly over all units produced during the period.

Question 8

The inventories used in a process costing system are the same as those used in a job order costing system.

Question 9

In a process costing system, all product costs for the period are accumulated and divided evenly over all units produced during the period.

Question 10

In a job order costing system,the costs of each job are accumulated on a job cost sheet,while in process costing,the costs are accumulated by department.

Question 11

The inventories used in a process costing system include work-in-process and finished goods,but $\textbf{ not }$ raw materials.

Question 12

Like process costing,job order costing makes no attempt to track an individual product's costs,all the products have similar costs.

Question 13

Both the process costing and job order costing systems accumulate product costs throughout the production process and assign those costs to individual units of production.

Question 14

Companies that mass produce similar products or employ a continuous production process typically use a process costing system.

Question 15

The journal entries used to record cost flows in a process costing system are the same as those used to record cost flows in a job order costing system.

Question 16

When work is in process at the end of an accounting period,cost accumulation and reporting is extremely easy under process costing,as the product costs are simply added up and divided evenly among the products produced.

Question 17

Both process costing systems and job order costing systems accumulate costs on a job cost sheet.

Question 18

When there is no work in process inventory at the end of a period,cost accumulation and reporting is extremely easy under process costing,as the product costs are simply added up and divided evenly among the products produced.

Question 19

Companies that mass produce similar products or employ a continuous production process typically use a job order system.

Question 20

The journal entries used to record cost flows in a process costing system differ from those used to record cost flows in a job order costing system.

Question 21

Which of the following is a similarity between job order costing and process costing systems?

A)Both accumulate product costs throughout the production process and assign those costs to individual
B)Both track individual product costs
C)Both accumulate product costs in each production department during the period
D)Both accumulate costs on a job cost sheet

Question 22

Which of the following is a similarity between job order costing and process costing systems?

A)Both mass-produce identical products
B)Both accumulate direct materials,direct labor and manufacturing overhead costs
C)Both accumulate product cost on a departmental production report
D)None of these ans choices are similarities between job costing and process costing systems.

Question 23

In a process costing system,labor and overhead costs are typically combined and referred to as equivalent costs.

Question 24

Which of the following types of entities would probably use a process costing system?

A)Oil refiner
B)Construction company
C)Airplane manufacturer
D)CPA firm

Question 25

The costing systems in which all product costs for the period are accumulated and divided evenly over all units produced during the period is referred to as

A)Job order costing system
B)Accumulation costing system
C)Departmental costing system
D)Process costing system

Question 26

Which of the following types of entities would probably use a process costing system?

A)Construction
B)Ship building
C)Soft drink bottler
D)CPA firm

Question 27

Which of the following inventory accounts is used in a process costing system?

A)Raw materials
B)Work in process
C)Finished goods
D)All of these ans choices are correct

Question 28

Equivalent units EU of production is based on the percentage of completion for work in process inventory at the end of the period.

Question 29

In a job order costing system,the costs of each job are accumulated on a

A)Job cost sheet.
B)Departmental cost sheet.
C)End-of-job accumulation sheet.
D)None of these ans choices are correct.

Question 30

In a process costing system,when raw materials are moved into the mixing department,in which of the following balance sheet accounts is it recorded?

A)Raw materials inventory - mixing
B)Work in process inventory - mixing
C)Finished goods inventory - mixing
D)Cost of goods sold

Question 31

Which of the following costs are incurred in a process costing system?

A)Direct material
B)Direct labor
C)Manufacturing overhead
D)All of these ans choices are correct

Question 32

Which of the following inventory accounts is $\textbf{ not }$ used in a process costing system?

A)Work in process
B)Finished goods
C)Cost of goods sold
D)All of these ans choices are used in a process costing system

Question 33

In a process costing system,when raw material is received in which of the following balance sheet accounts is it recorded?

A)Raw materials inventory
B)Work in process inventory
C)Finished goods inventory
D)Cost of goods sold

Question 34

Companies that mass-produce similar products or employ a continuous production process typically use which of the following costing systems?

A)Process
B)Job order
C)Either process or job order
D)Neither process nor job order

Question 35

In a process costing system,labor and overhead costs are typically combined and referred to as conversion costs.

Question 36

Which of the following types of entities would probably use a process costing system?

A)Automobile repair shop
B)Paint manufacturer
C)Printing company
D)Law firm

Question 37

Which of the following is a similarity between job order costing and process costing systems?

A)Both accumulate costs on a job cost sheet
B)Both accumulate product costs in each production department during the period
C)Both systems track cost flows from raw materials to work in process,from work in process to finished goods,and from finished goods to cost of goods sold
D)Both produce many different types of products,often to customer specifications

Question 38

Equivalent units for direct materials and conversion costs should be added separately to total units completed to arrive at the total equivalent units for materials and the total equivalent units for conversion.

Question 39

The objective of process costing is the same as job order costing: to assign all costs to specific jobs.

Question 40

Companies that mass-produce similar products or employ a continuous production process typically use which of the following costing systems?

A)Job order
B)Process
C)Accumulation
D)Variable

Question 41

Which of the following is a difference between job order costing and process costing systems?

A)Companies that use a process costing system mass-produce identical products while companies that use a job order costing system produce many different types of products.
B)Companies that use a process costing system accumulate product costs throughout the production process while companies that use a job order costing system accumulate product cost only at the end of the production process.
C)Companies that use a process costing system accumulate direct material and direct labor,but not manufacturing overhead while companies that use a job order costing systems accumulate direct material,direct labor and manufacturing overhead.
D)All of these ans choices are differences between process costing and job order costing systems.

Question 42

When a department has work in process at the end of the period, the incomplete units must be converted to

A)Actual units
B)Equivalent units
C)Transferred-in units
D)None of these ans choices are correct

Question 43

At the end of January, Monroe Industries had completed 65,000 units and left 8,000 units in Work In process, 60% complete with respect to materials and 80% complete with respect to conversion. How many equivalent units will be used to determine the cost per equivalent unit for materials?

A) 66,600
B) 68,200
C) 69,800
D) 71,400

Question 44

Which of the following is $\textbf{ not }$ a step in calculating the

A)Calculate the physical unit flow
B)Calculate the equivalent units of production
C)Calculate the cost per equivalent unit
D)Multiply the physical unit flow by the equivalent unit cost.

Question 45

On March 31,Morgan Company recorded the following information in the Assembly Department's Work in Process account:
$\begin{array}{lll} & \underline{\text { Units }} & \underline{\text { Cost }} \\\text { Beginning balance } 70 \% \text { complete } & 14,000 & \$ 60,000 \\\text { Started into production } & 80,000 & \$ 229,852 \\\text { Completed and transferred to Packaging } & 90,000 & \\\text { Ending balance } 80 \% \text { complete } & 4,000 &\end{array}$
Assume that the unfinished units in ending inventory are 80% complete for both materials and conversion. What is the total cost assigned to ending work in process?

A) $9,856
B) $9,952
C) $12,880
D) $14,480

Question 46

Bemis Corporation’s Assembly Department had 2,000 units in beginning inventory that were 70% complete with respect to conversion. An additional 60,000 units were transferred into Assembly during the period. Assembly had 12,000 units remaining in work in process at the end of the period. These units were 60% complete with respect to conversion. What were the equivalent units for conversion?

A) 54,800
B) 57,200
C) 64,800
D) 72,000

Question 47

Identify which costing method is more likely to be used to accumulate costs for the following products or services by marking an "X" in the appropriate column.
$$\begin{array} { | l | l | l | } \hline & \text { Process } & \text { Job Order } \\\hline \text { High-rise office building } & & \\\hline \text { Cooking oil } & & \\\hline \text { Artwork } & & \\\hline \text { M\&M candy } & & \\\hline \text { Light bulbs } & & \\\hline\end{array}$$

Question 48

On December 31,Berry Company recorded the following information in the Mixing Department's Work in Process account:
$\begin{array}{lll} & \underline{\text { Units }} & \underline{\text { Cost }} \\\text { Beginning balance } 80 \% \text { complete } & 5,000 & \$ 50,000 \\\text { Started into production } & 100,000 & \$ 500,000 \\\text { Completed and transferred to Packaging } & 95,000 & \\\text { Ending balance } 60 \% \text { complete } & 10,000 &\end{array}$
Assume that the unfinished units in ending inventory are 60% complete for both materials and conversion. What is the cost per equivalent unit?

A) $5.18
B) $5.23
C) $5.44
D) $5.55

Question 49

When using a process costing system, the formula to reconcile the physical unit flow is

A) Beginning WIP units + Units started = Units transferred out + Ending WIP units
B) Beginning WIP units + Units transferred out = Units started + Ending WIP units
C) Units started – Beginning WIP units= Units transferred out + Ending WIP units
D) Beginning WIP units + Units transferred out = Units started – Ending inventory

Question 50

Which of the following is a similarity between job order costing and process costing systems?

A)Both accumulate product costs throughout the production process and assign those costs to individual units of production
B)Both accumulate direct materials,direct labor,and manufacturing overhead costs
C)Both track cost flows from raw materials to work in process,from work in process to finished goods,and from finished goods to cost of goods sold
D)All of these ans choices are similarities between job costing and process costing systems

Question 51

When a department has work in process at the end of the period,we need to determine the percentage of completion for the work in process.Based on that percentage we calculate

A)Actual units of production
B)Particular units of production
C)Equivalent units of production
D)Half- units of production

Question 52

At the end of January, Monroe Industries had completed 65,000 units and left 8,000 units in Work In process, 60% complete with respect to materials and 80% complete with respect to conversion. Conversion costs will be assigned to how many equivalent units in the ending work in process inventory?

A) 1,600
B) 6,400
C) 4,800
D) 8,000

Question 53

Which of the following is a difference between job order costing and process costing systems?

A)Companies that use a process costing system accumulate product costs throughout the production process while companies that use a job order costing system accumulate product cost only at the end of the production process.
B)Companies that use a process costing system accumulate direct material and direct labor,but not manufacturing overhead while companies that use a job order costing systems accumulate direct material,direct labor and manufacturing overhead.
C)Companies that use a process costing system accumulate product costs on the departmental production report while companies that use a job order costing system accumulate product costs on the job cost sheet.
D)All of these ans choices are differences between process costing and job order costing systems.

Question 54

To determine the equivalent units produced,

A)Multiply the percentage of completion for each cost category by the number of physical units in the ending work in process inventory.
B)Divide the percentage of completion for each cost category by the number of physical units in the ending work in process inventory.
C)Add the cost of production to beginning work in process inventory and divide this total by the physical units transferred out.
D)Multiply the number of physical units in ending work in process by the cost per physical units.

Question 55

Which of the following is a difference between job order costing and process costing systems?

A)Companies that use a process costing system accumulate product costs throughout the production process while companies that use a job order costing system accumulate product cost only at the end of the production process.
B)Companies that use a process costing system accumulate product costs in each production department and allocate the costs evenly across all units produced in the department during the period while companies that use job order costing accumulate product costs by job and allocate those costs only to the units in that particular job.
C)Companies that use a process costing system accumulate direct material and direct labor,but not manufacturing overhead while companies that use a job order costing systems accumulate direct material,direct labor and manufacturing overhead.
D)All of these ans choices are differences between process costing and job order costing systems.

Question 56

When using a process costing system,the formula for reconciling the costs of production is

A)Beginning WIP balance + Costs transferred out during the period + Ending WIP = Total costs accounted for
B)Beginning WIP balance + Cost added during the period = Cost transferred out during the period + Ending WIP balance
C)Cost added during the period - Beginning WIP balance = Cost transferred out during the period + Ending WIP balance
D)Beginning WIP balance + Cost transferred out - Ending inventory = Total costs to accounted for

Question 57

Which of the following is $\textbf{ not }$ a step in calculating the

A)Calculate the equivalent
B)Allocate the equivalent
C)Divide the total equivalent costs by the total
D)Reconcile the costs of production

Question 58

The units of product in the ending work in process inventory must be converted to equivalent units of production separately for the direct materials and conversion costs because

A) The units may be in different departments at the end of the period
B) The units may not be at the same stage of completion
C) The conversion cost may have been added at the beginning of the process
D) None of these answer choices are correct

Question 59

The mixing department of the Glasson Company started the month with 20,000 units in its beginning work in process inventory. An additional 309,000 units were transferred into the mixing department during the month. At the end of the month 29,000 units were in ending work in process inventory in the mixing department. How many units were transferred out of the mixing department during the period?
A ) 280,000
B) 300,000
C) 318,000
D) 329,000

Question 60

On December 31,Berry Company recorded the following information in the Mixing Department's Work in Process account:
$\begin{array}{lll} & \underline{\text { Units }} & \underline{\text { Cost }} \\\text { Beginning balance } 80 \% \text { complete } & 5,000 & \$ 50,000 \\\text { Started into production } & 100,000 & \$ 500,000 \\\text { Completed and transferred to Packaging } & 95,000 & \\\text { Ending balance } 60 \% \text { complete } & 10,000 &\end{array}$
Assume that the unfinished units in ending inventory are 60% complete for both materials and conversion. What is balance in the ending Work in Process on December 31?

A) $32,640
B) $33,300
C) $51,800
D) $52,300

Question 61

Identify which costing method is more likely to be used to accumulate costs for the following products or services by marking an "X" in the appropriate column.
$$\begin{array} { | l | l | l | } \hline & \text { Process } & \text { Job Order } \\\hline \text { Bricks } & & \\\hline \text { Law firm } & & \\\hline \text { Advertising agency } & & \\\hline \text { Beverages } & & \\\hline \text { Appliance repair } & & \\\hline \text { Baby diapers } & & \\\hline \text { Airplanes } & & \\\hline \text { Chemicals } & & \\\hline \text { Movie studio } & & \\\hline \text { Breakfast cereal } & & \\\hline\end{array}$$

Question 62

List three goods or services likely to use a process costing system and three that are likely to use a job order costing system.

Question 63

When using a process costing system, explain the steps you use in assigning costs to units completed and transferred out of a department and to ending work in process.

Question 64

Identify which costing method is more likely to be used to accumulate costs for the following products or services by marking an "X" in the appropriate column.
$$\begin{array} { | l | l | l | } \hline & \text { Process} & \text { Job Order } \\\hline \text { Movies } & & \\\hline \text { Cotton fabric } & & \\\hline \text { Sculptures } & & \\\hline \text { Rice-A-Roni } & & \\\hline \text { Auto repair } & & \\\hline\end{array}$$

Question 65

Identify which costing method is described in the statements below by marking an "X" in the appropriate column some items may apply to both.
$$\begin{array} { | l | l | l | } \hline \text { Accumulates cost by department } & \text { Process } & \text { Job-Order } \\\hline \text { Manufacturing costs include direct material, direct labor and overhead } & & \\\hline \begin{array} { l } \text { Many different products produced, each with different material, labor } \\\text { and/or overhead requirements }\end{array} & & \\\hline \text { Key document is job cost sheet } & & \\\hline \text { Accumulates cost by job } & & \\\hline \begin{array} { l } \text { Cost flows from Raw Materials to Work in Process to Finished Goods to } \\\text { cost of Goods sold }\end{array} & & \\\hline \text { Requires calculation of equivalent units } & & \\\hline \text { Key document is department production report } & & \\\hline \begin{array} { l } \text { Identical products produced over a long peried, often in a continuous } \\\text { production process }\end{array} & & \\\hline\end{array}$$

Question 66

Stewart Manufacturing uses a process costing system. Information regarding units processed and processing costs for the Packaging Department for the most recent period are given below: $\begin{array}{|l|l|l|}\hline &\text{Number of Units} & \text{Percentage Complete} \\\hline \text{Beginning work in process inventory} & 1,200 & 25\% \\\hline \text{Units started into production} & 10,000 & \\\hline \text{Units completed and transferred out of Packaging} & 9,400 & \\\hline \text{Ending work in process inventory} & 1,800 & 35\% \\\hline\end{array}$
The beginning work in process had processing costs of $10,000. During the month, an additional $290,000 in processing costs were incurred. Materials and conversion costs are incurred at the same rate.

Required:

a. What are the equivalent units for processing costs for the Packaging Department for the month?

b. What is the cost per equivalent unit for the month?

Question 67

Fill in the missing data ignore indirect materials

Question 68

In March, Connor’s, Inc. completed 150,000 units; 12,000 units still in process at the end of the period were 60% complete with respect to materials and conversion.

Required:
a. How many equivalent units were in Connor’s ending work in process inventory?

b. How many equivalent units will be used to calculate the cost per equivalent unit?