Question 1

Which of the following manufactured products should use process costing?

Accepted Answer

Bags of cement are a consistent and uniform product produced in large quantities, making them an ideal candidate for process costing. The other products listed are either unique and/or have a significant amount of customization, making them better suited for job costing.

Question 2

The primary difference between job costing and process costing is the extent of averaging used to compute unit costs of products or services.

Accepted Answer

Job costing calculates the cost of each individual job or order, while process costing averages the cost of identical units produced in a continuous process.

Question 3

Process-costing journal entries and job-costing journal entries are similar with respect to direct materials and conversion costs.

Accepted Answer

Both process-costing and job-costing involve recording direct materials and conversion costs in journal entries. However, there are differences in how overhead costs are allocated and recorded in the journal entries for each system.

Question 4

Which of the following is FALSE concerning process costing?

Accepted Answer

Process costing can be used in both manufacturing and service industries.

Question 5

Standard costing can be used in process costing systems.

Accepted Answer

Standard costing can be used in process costing systems to establish predetermined manufacturing costs for each unit produced. This helps in budgeting, cost control, and profit planning.

Question 6

Production costs are divided into three classifications: administrative costs, direct materials, and conversion costs in process costing.

Accepted Answer

Production costs are typically divided into direct materials, direct labor, and manufacturing overhead in process costing. Administrative costs are not included in production costs.

Question 7

Why do we need to accumulate and calculate unit costs in process costing (and also job costing)?

Accepted Answer

The answer of Why do we need to accumulate and...

Question 8

Process-costing systems separate costs into cost categories according to the timing of when costs are introduced into the process.

Accepted Answer

Process-costing systems trace and allocate costs according to the production process and timing of when costs are introduced into the process. The costs are typically categorized into materials, labor, and overhead.

Question 9

Process costing is extremely useful when there are a variety of products produced, as compared to the production of a single product.

Accepted Answer

Process costing is more suitable for industries where a single product is produced continuously, not for a variety of products.

Question 10

Costing systems that are used for costing like or similar units of products in mass production are called

Accepted Answer

Process-costing systems are used for costing similar units of products in mass production, where the products go through a series of processes and each unit receives the same amount of materials, labor, and overhead costs. Therefore, a process-costing system is the best choice for costing like or similar units of products in mass production. Inventory-costing systems, job-costing systems, and weighted-average costing systems are used for different types of costing. Bulk costing systems are not a commonly used term in the field of accounting and costing.

Question 11

What is meant by the term "prime cost pool"?

Accepted Answer

The answer of What is meant by the term "prime...

Question 12

The president of the Gulf Coast Refining Corporation wants to know why his golfing partner, who is the chief financial officer of a large construction company, calculates his costs by the job, but his own corporation calculates costs by large units rather than by individual barrel of oil.

Accepted Answer

The answer of The president of the Gulf Coast Refining...

Question 13

When identical or similar units of products or services are mass produced, job-costing is used to calculate an average production cost for all units produced.

Accepted Answer

When identical or similar units of products or services are mass produced, process costing is usually used to calculate the average production cost per unit. Job costing is used when products or services are unique and produced in small quantities, with the cost of each job being tracked separately.

Question 14

Examples of industries that would use process costing include the pharmaceutical and semiconductor industry.

Accepted Answer

Process costing is commonly used in industries where products are produced in large quantities through a continuous flow process, such as the pharmaceutical and semiconductor industry.

Question 15

Operating personnel must be able to estimate the percentage of work-in-process completed in process costing.

Accepted Answer

Operating personnel must have the ability to estimate the percentage of work-in-process completed in process costing in order to determine the total cost of production and calculate the cost per unit. This estimation is necessary to determine the degree of completion of products and the amount of cost to be assigned to the products in process.

Question 16

Equivalent units measure output in terms of the physical quantities of each of the inputs (factors of production)that have been consumed by the units.

Accepted Answer

Equivalent units measure output in terms of the physical quantities of each of the inputs that have been consumed by the units.

Question 17

In process costing only the weighted average and FIFO methods are IFRS/ASPE compliant.

Accepted Answer

The answer of In process costing only the weighted average...

Question 18

Compare and contrast process costing and job order costing.

Accepted Answer

The answer of Compare and contrast process costing and job...

Question 19

When there are insignificant amounts of beginning and ending inventory then the weighted-average and FIFO process costing methods will generate results that are not materially different.

Accepted Answer

When there are insignificant amounts of beginning and ending inventory, the weighted-average and FIFO methods will yield similar results because there is no significant amount of inventory to allocate costs to at the beginning or end of the period.

Question 20

Discuss some typical products which would likely use process costing.

Accepted Answer

The answer of Discuss some typical products which would likely...

Quiz 17: Process Costing