Deck 6: Process Costing

Question 1

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

Answer 1

True

Question 2

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

Answer 2

True

Question 3

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

Answer 3

False

Question 4

Process costing accumulates costs by individual jobs.

Question 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

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

Question 10

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

Question 11

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 12

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

Question 13

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

Question 14

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

Question 15

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

Question 16

Process costing is appropriate for companies providing services.

Question 17

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

Question 18

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 19

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

Question 20

Process costing is most appropriate for manufacturers of homogeneous products.

Question 21

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

Question 22

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 23

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

Question 24

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

Question 25

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 26

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 27

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

Question 28

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 29

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

Question 30

The major benefit of the FIFO method is simplicity.

Question 31

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

Question 32

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

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

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

Question 35

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 36

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

Question 37

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

Question 38

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

Question 39

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 40

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 41

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 42

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

Question 43

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 44

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

Question 45

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

Question 46

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

Question 47

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 48

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 49

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

Question 50

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

Question 51

___________ costs are a type of raw material cost.

Question 52

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

Question 53

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 54

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

Question 55

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 56

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

Question 57

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

Question 58

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 59

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 60

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

Question 61

Process costing can be appropriate for:

A) firms manufacturing heterogeneous products.
B) manufacturing firms with just-in-time ( JIT) orientation to determine product costs.
C) firms manufacturing products as per customers' order.
D) all of these.

Question 62

The Fox Company uses the weighted average method.The beginning work in process consists of 20,000 units (100% completed as to materials and 50% complete as to conversion costs).The number of units completed was 80,000.The ending work in process consists of 10,000 units (100% complete as to materials and 20% complete as to conversion costs).Calculate the equivalent units of production for conversion costs.

A) 110,000
B) 82,000
C) 80,000
D) 90,000

Question 63

In process costing, the cost of units finished in the last department will be transferred from work in process to

A) cost of goods sold.
B) completed processes.
C) finished goods.
D) sales.

Question 64

A cost received by a subsequent process from a prior process is referred to as a:

A) cost of ending work-in-process.
B) cost of goods transferred out.
C) transferred-in cost.
D) cost of beginning work-in-process.

Question 65

Process accounting is most probably used by a(n)

A) paint manufacturer
B) cement manufacturer
C) oil change and lube shop
D) All of these.

Question 66

How is unit cost calculated?

A) It is calculated by multiplying total units by total costs.
B) It is calculated by adding all cost drivers.
C) It is calculated by subtracting the ending work in process from the total sales of the period.
D) It is calculated by dividing the total costs for the period by the total output of the period.

Question 67

Process costing would be most appropriate for which of the following?

A) soft drink bottler
B) custom home builder
C) caterer
D) photocopy shop

Question 68

Which statement best describes the concept of equivalent units of production?

A) Equivalent units are a measure of a period's output.
B) Equivalent units are the units completed in a department.
C) Equivalent units are the total of the units produced by all departments.
D) Equivalent units are the number of units completed at the end of the last process.

Question 69

When computing equivalent units of production, the method that combines partially completed units in beginning inventory with current period production is the

A) FIFO method
B) LIFO method
C) weighted average method
D) actual cost method

Question 70

Which is the best description of the production report?

A) The production report provides information about the manufacturing costs incurred by the department.
B) The report provides information about the physical units processed by the department.
C) The production report is the document that summarizes the manufacturing activity that takes place in a process department for a given period of time.
D) None of these.

Question 71

​Which of the following is true of parallel processing?​

A) In parallel processing, a large number of heterogeneous products pass through an identical set of processes.
B) It is a processing pattern in which units are subjected to the different operations for a given process.
C) It is a processing pattern in which two or more sequential processes are required to produce a finished product.
D) In parallel processing, each unit produced in a period receives the unit cost at a varying rate.

Question 72

Direct materials used in production, direct labor, and applied overhead are charged to the:

A) raw materials account.
B) overhead account.
C) work in process account.
D) indirect labor account.

Question 73

Which of the following methods uses costs and work of beginning work in process?

A) weighted average method
B) FIFO method
C) sequential processing method
D) both the weighted average and FIFO methods

Question 74

Equivalent production expresses all activity of the period in terms of

A) work in process
B) materials, labor and overhead
C) fully completed units
D) partially completed units

Question 75

Which of the following best describes sequential processing?

A) It is a processing pattern in which units pass from one process to another in a set order.
B) In sequential processing, several sequences of production are applied to a product in the department.
C) Sequential processing requires two or more sequential processes to produce a finished good.
D) Sequential processing requires two or more sequential processes to produce a finished good.

Question 76

When should process costing techniques be used in assigning costs to products?

A) If the firm manufactures heterogeneous products
B) If the products are repetitively produced
C) If the products are manufactured according to customer specifications
D) All of these

Question 77

An accountant calculates unit cost from:

A) conversion costs and indirect labor.
B) the total output of a period and the total costs for that period.
C) the total prime cost for a period and the direct materials used in that period.
D) direct labor and manufacturing overhead.

Question 78

Two methods used to determine equivalent units of production in process costing are

A) weighted average and FIFO
B) FIFO and LIFO
C) weighted average and LIFO
D) weighted average and exact costing

Question 79

In process manufacturing, partially completed goods received from prior departments are referred to as:

A) transferred-in goods.
B) finished goods
C) equivalent units.
D) units in ending work-in-process.

Question 80

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