Question 1

Hammett has a single production department,and uses a process-costing system.The balance in its Work-in-Process account on January 1 was $68,000.The account was charged with direct materials,direct labor,and manufacturing overhead of $450,000 throughout the year.If a review of the accounting records determined that $86,000 of goods were still in production at year-end,Hammett should make a journal entry on December 31 that includes:

Accepted Answer

B

Question 2

Which of the following statements is false?

Accepted Answer

In process costing, the total cost of each unit is not found by dividing the total factory costs by the number of units completed. Instead, the cost per unit in each department is found by dividing the period's manufacturing costs over the production activity, and then the total cost of each unit is determined by multiplying the cost per unit by the number of units completed.

Question 3

CFF,Inc.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 with respect to conversion cost on the ending work-in-process inventory would cause an overstatement of conversion-cost equivalent units. This is because the calculation of equivalent units involves multiplying the units in ending work-in-process inventory by the percentage of completion, so if this percentage is overstated, the equivalent units will be overstated as well.

Question 4

Barrett Corporation had 6,500 units of work in process on April 1.During April,19,100 units were completed and as of April 30,5,100 units remained in production.How many units were started during April?

Accepted Answer

To determine the units started during April, we need to use the following formula:
Units started during April = Units in process on April 1 + Units completed during April - Units in process on April 30
Units started during April = 6,500 + 19,100 - 5,100
Units started during April = 20,500

Question 5

Process costing would likely be used in all of the following industries except:

Accepted Answer

Process costing is used in industries that produce large quantities of homogeneous products, such as petroleum, chemicals, and wood pulp. On the other hand, automobile repair involves customized services for individual customers, which is not suitable for process costing.

Question 6

Hamilton,which uses a process-costing system,had a balance in its Work-in-Process account of $68,000 on January 1.The account was charged with direct materials,direct labor,and manufacturing overhead of $450,000 throughout the year.If a review of the accounting records determined that $86,000 of goods were still in production at year-end,Hamilton should make a journal entry on December 31 that includes:

Accepted Answer

The balance of Work-in-Process inventory on January 1 indicates that some goods were still in production and the $450,000 of manufacturing costs incurred during the year must have been applied to this inventory. Therefore, the entry on December 31 must credit the Work-in-Process inventory account for the cost of goods in the ending Work-in-Process inventory ($86,000).

Question 7

Barnett,Inc. ,which uses a process-costing system,transfers completed production from Department no.1 to Department no.2 for further work.Which of the following best describes the account that would be credited to record this transfer?

Accepted Answer

The answer of Barnett,Inc. ,which uses a process-costing system,transfers completed...

Question 8

Griswold,Inc. ,which uses a process-costing system,transfers completed production from Department no.1 to Department no.2 for further work.Which of the following best describes the account that would be debited to record this transfer?

Accepted Answer

The account that would be debited to record the transfer would be Work-in-Process Inventory: Department no.1, as the units of production have been transferred from Department no.1 to Department no.2 for further work.

Question 9

In a process-costing system,manufacturing costs are accumulated by:

Accepted Answer

In a process-costing system, manufacturing costs are accumulated by department or process and time period, as it tracks costs for each department or process over a specific time frame.

Question 10

Unit costs in a process-costing system are derived by using:

Accepted Answer

Unit costs in process-costing system are derived using equivalent units, which take into account both completed units and units in process at the end of a period. This method is used to allocate the total cost of production evenly across all units of output produced, including ones that are partially complete at the end of the period. Using in-process units, completed units, or physical units alone would not accurately reflect the true cost of production for a partially completed unit.

Question 11

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 12

Which of the following companies would likely use a process-costing system?

Accepted Answer

The answer of Which of the following companies would likely...

Question 13

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

Accepted Answer

Companies that use a process-cost accounting system would establish a separate Work-in-Process Inventory account for each manufacturing department to track the manufacturing costs of products in progress as they move through each department.

Question 14

Companies that use a process-cost accounting system would:

Accepted Answer

Companies that use a process-cost accounting system would establish a separate Work-in-Process Inventory account for each manufacturing department to track the costs of partially completed goods in each stage of production.

Question 15

Which of the following statements about similarities between process costing and job-order costing are true?
I.Both systems assign production costs to units of output.
II.Both systems require extensive knowledge of financial accounting.
III.The flow of costs through the manufacturing accounts is essentially the same.

Accepted Answer

Statement I is true for both process costing and job-order costing.
Statement III is also true for both systems, as costs flow through the manufacturing accounts in a similar way.
However, statement II is not true, as while both systems require knowledge of cost accounting, job-order costing may require more knowledge of managerial accounting rather than financial accounting.

Question 16

Process costing is used to account for:

Accepted Answer

Process costing is used when large quantities of identical products are produced in a continuing process, such as in a chemical or food processing plant. The cost of producing each unit is averaged over the total number of units produced, making it easier to determine the cost per unit. Option B is incorrect because batch production involves producing a limited number of products at one time, not a continuous process. Option C is incorrect because process costing applies to materials that are converted into finished products, not raw materials. Option D is incorrect because process costing is used before the refining and processing of finished goods. Option E is incorrect because process costing is used for repetitive processes, not non-repetitive ones.

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

Which of the following manufacturers would most likely not use a process-cost accounting system?

Accepted Answer

A builder of customized yachts is less likely to use a process-cost accounting system as each yacht is unique and may have different materials, labor costs, and overhead expenses. In contrast, manufacturers like computer monitors, paint, frozen orange juice, and lumber typically produce similar or identical products using a continuous production process, making process-cost accounting necessary to accurately determine the cost of each unit.

Question 19

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

Accepted Answer

The flow of costs through manufacturing accounts, such as the cost of goods manufactured and the finished goods inventory, follows similar steps in both process costing and job-order costing. Both systems involve accumulating direct materials, direct labor, and manufacturing overhead costs, assigning these costs to work in process inventory, and transferring them to either finished goods inventory (in job-order costing) or to cost of goods sold (in process costing). However, there are some differences in how the costs are assigned to the products, such as the use of equivalent units in process costing and job cost sheets in job-order costing.

Question 20

Which of the following choices correctly shows how costs are accumulated in a process-costing system?

Accepted Answer

The answer of Which of the following choices correctly shows...

Quiz 4: Process Costing and Hybrid Product-Costing Systems