Question 1

When goods are sold, their costs are transferred to Finished Goods Inventory.

Accepted Answer

When goods are sold, their costs are transferred from Finished Goods Inventory to Cost of Goods Sold.

Question 2

Under weighted-average process costing, unit-cost ﬁgures are weighted averages of costs incurred over two or more accounting periods.

Accepted Answer

This is the definition of weighted-average process costing.

Question 3

A departmental production report under weighted-average process costing would most likely present total costs for two different processes.

Accepted Answer

A departmental production report under weighted-average process costing typically presents the total costs for a single process or department, not for two different processes.

Question 4

Equivalent units and physical units are the same in manufacturing inventories.

Accepted Answer

Equivalent units and physical units are not the same in manufacturing inventories. Equivalent units refers to the calculation that converts partially completed units into the equivalent of full completed units, while physical units simply refer to the actual number of units present in inventory.

Question 5

Which method of process costing is almost always used in practice?

Accepted Answer

The weighted average method of process costing is almost always used in practice because it is more practical and easier to use than other methods. It also provides a more accurate calculation of the cost per unit by considering the costs incurred during the current period and the costs carried over from the previous period.

Question 6

When computing the cost per equivalent unit under the weighted-average method of process costing, the cost per equivalent unit for direct material is computed by dividing the total direct-material cost by the total equivalent units.

Accepted Answer

This statement correctly describes the calculation method for determining the cost per equivalent unit for direct materials under the weighted-average method of process costing.

Question 7

When the cutting process in a manufacturing ﬁrm has been ﬁnished and the goods are transferred into the assembly department, the journal entry to record the transfer will debit Finished Goods Inventory and credit Work in Process - Assembly.

Accepted Answer

The correct journal entry would debit Work in Process - Assembly and credit Work in Process - Cutting, as the goods are moving from one stage of production to another, not to Finished Goods Inventory.

Question 8

What is the missing amount in this physical ﬂow of units? Work in process, August 1 9,000 tons Units started in August ? Units completed during August 19,000 Work in process, August 31 2,000 tons

Accepted Answer

The flow of units can be determined by using the formula: Units started = Starting WIP + Units added - Ending WIP. 
Substituting the given values, we get: Units started = 9,000 + Units added - 2,000. 
Solving for Units added, we get: Units added = 12,000 tons. Therefore, the missing amount in the physical flow of units is 12,000 tons.

Question 9

A predetermined application rate for conversion costs is based on actual conversion costs divided by a budgeted cost driver.

Accepted Answer

A predetermined application rate for conversion costs is typically based on budgeted conversion costs divided by a budgeted cost driver, not actual conversion costs.

Question 10

What is the missing amount in this physical ﬂow of units?

Accepted Answer

The answer of What is the missing amount in this...

Question 11

Which of the following is a nonmanufacturing business where process costing would most likely be used?

Accepted Answer

A laboratory that tests water samples for lead is a nonmanufacturing business that would most likely use process costing since it involves a repetitive process of testing the same type of samples in large quantities. Process costing is a cost accounting method used in industries where goods are produced in large quantities through a series of repetitive processes. Other businesses listed in the options involve customization or repair of products which do not involve the same level of standardization required for process costing.

Question 12

Only normal costing may be used in conjunction with a process-costing system.

Accepted Answer

Both normal costing and actual costing can be used in conjunction with a process-costing system.

Question 13

Operation costing tends to parallel job-order costing with respect to the treatment of conversion cost.

Accepted Answer

The answer of Operation costing tends to parallel job-order costing...

Question 14

The ﬂow of costs through the manufacturing accounts is essentially the same in both process costing and job-order costing.

Accepted Answer

In both process costing and job-order costing, costs flow through the same manufacturing accounts including raw materials, work in progress, and finished goods. However, the key difference between the two is how costs are accumulated and assigned to the products being produced.

Question 15

Companies that use a process-cost accounting system would establish a separate Work-in-Process Inventory account for each manufacturing department.

Accepted Answer

In a process-cost accounting system, companies typically establish separate Work-in-Process Inventory accounts for each department or process involved in the manufacturing process. This allows for the tracking of costs and inventory levels for each specific stage of production.

Question 16

California Corporation overstated the percentage of work completed with respect to conversion cost on the ending work-in-process inventory.This overstatement caused conversion-cost equivalent units to be overstated.

Accepted Answer

Overstating the percentage of work completed on ending work-in-process inventory would lead to an overstatement of equivalent units and ultimately an overstatement of conversion costs associated with those units. Therefore, the statement is true.

Question 17

Equivalent-unit calculations are necessary to allocate manufacturing costs between units sold and ending work in process.

Accepted Answer

The answer of Equivalent-unit calculations are necessary to allocate manufacturing...

Question 18

When calculating equivalent units using the weighted average method, the number of equivalent units of activity is calculated without making a distinction as to whether the activity occurred in the current accounting period or the preceding period.

Accepted Answer

The weighted average method considers all units completed during a period, whether they were started and completed within that period or started in a previous period and completed in the current period. Therefore, the calculation of equivalent units does not distinguish between activities in the current or preceding period.

Question 19

Direct labor and manufacturing overhead often are combined into a single cost category termed conversion costs.

Accepted Answer

This statement is true. Direct labor and manufacturing overhead are both considered indirect costs and are combined into the conversion cost category, along with any other costs related to converting raw materials into finished goods.

Question 20

What is the missing amount in this physical ﬂow of units?

Accepted Answer

The answer of What is the missing amount in this...

Quiz 4: Process Costing and Hybrid Product-Costing Systems

When goods are sold, their costs are transferred to Finished Goods Inventory.

Under weighted-average process costing, unit-cost ﬁgures are weighted averages of costs incurred over two or more accounting periods.

A departmental production report under weighted-average process costing would most likely present total costs for two different processes.

Equivalent units and physical units are the same in manufacturing inventories.

Which method of process costing is almost always used in practice?

When computing the cost per equivalent unit under the weighted-average method of process costing, the cost per equivalent unit for direct material is computed by dividing the total direct-material cost by the total equivalent units.

When the cutting process in a manufacturing ﬁrm has been ﬁnished and the goods are transferred into the assembly department, the journal entry to record the transfer will debit Finished Goods Inventory and credit Work in Process - Assembly.

What is the missing amount in this physical ﬂow of units? Work in process, August 1 9,000 tons Units started in August ? Units completed during August 19,000 Work in process, August 31 2,000 tons

A predetermined application rate for conversion costs is based on actual conversion costs divided by a budgeted cost driver.

What is the missing amount in this physical ﬂow of units?

Which of the following is a nonmanufacturing business where process costing would most likely be used?

Only normal costing may be used in conjunction with a process-costing system.

Operation costing tends to parallel job-order costing with respect to the treatment of conversion cost.

The ﬂow of costs through the manufacturing accounts is essentially the same in both process costing and job-order costing.

Companies that use a process-cost accounting system would establish a separate Work-in-Process Inventory account for each manufacturing department.

California Corporation overstated the percentage of work completed with respect to conversion cost on the ending work-in-process inventory.This overstatement caused conversion-cost equivalent units to be overstated.

Equivalent-unit calculations are necessary to allocate manufacturing costs between units sold and ending work in process.

When calculating equivalent units using the weighted average method, the number of equivalent units of activity is calculated without making a distinction as to whether the activity occurred in the current accounting period or the preceding period.

Direct labor and manufacturing overhead often are combined into a single cost category termed conversion costs.

What is the missing amount in this physical ﬂow of units?