Question 1

The amount of equivalent production units for direct materials is always the same as that for conversion costs.

Accepted Answer

The amount of equivalent production units for direct materials is typically different than that for conversion costs. Direct materials are typically added to a product at the beginning of the production process, while conversion costs (such as labor and overhead) are incurred throughout the production process. Therefore, different methods may be used to calculate the equivalent production units for each category of costs.

Question 2

When the FIFO cost flow assumption is used,the equivalent units will always equal the actual units in beginning work in process inventory,plus the actual units started and completed during the current period plus the percent of ending work in process inventory completed during the current period.

Accepted Answer

When the FIFO cost flow assumption is used, the equivalent units may not always equal the actual units. This is because FIFO assumes that the first units to be added to inventory are the first units to be used, while in reality it may be a mixture of units from beginning work in process inventory and newly started units that are completed during the period. Therefore, it is possible for the equivalent units to be higher or lower than the actual units.

Question 3

In many instances,direct materials are added at the beginning of the process.

Accepted Answer

Direct materials are typically added at the beginning of the production process so that they can be transformed and manipulated into the finished product.

Question 4

The FIFO process costing method assumes that the items in ending work in process inventory were started and completed during the current period.

Accepted Answer

The FIFO process costing method assumes that the units completed during the current period are taken from the beginning work in process inventory and the units started and completed during the current period. The ending work in process inventory is made up of units that were started but not completed in the current period. Therefore, the assumption that all items in ending work in process inventory were started AND completed during the current period is false.

Question 5

The number of equivalent units produced for direct materials cost using the FIFO costing procedure is the sum of the units in beginning work in process inventory,units started and completed during the period,and the productive effort applied to ending work in process inventory.

Accepted Answer

The answer of The number of equivalent units produced for...

Question 6

Because process costing is normally associated with a continuous production flow,products that are in process at the beginning of the period are assumed to be the first products completed during the current period.

Accepted Answer

This is true because process costing involves calculating the cost of producing large quantities of identical products over a period of time. Therefore, products that are in process at the beginning of the period are assumed to have been worked on first and completed during the current period.

Question 7

Equivalent units are defined as the number of units completed and transferred out of work in process inventory during the current period.

Accepted Answer

Equivalent units are defined as the number of units that are partially completed and still in work in process inventory, not the number of units completed and transferred out.

Question 8

Equivalent production is a measure of productive output of units for a period of time,expressed in terms of fully completed or equivalent whole units produced.

Accepted Answer

The definition given in the statement is correct and describes equivalent production accurately.

Question 9

Conversion costs are defined as the combined total of direct materials costs and direct labor costs incurred by a production department.

Accepted Answer

Conversion costs are defined as the combined total of direct labor costs and manufacturing overhead costs incurred by a production department.

Question 10

The product unit cost is the sum of the cost elements added in all production department processes.

Accepted Answer

The product unit cost includes all cost elements that affect the production of a product, including direct materials, direct labor, and manufacturing overhead. The cost elements accumulate in each production department process, and the product unit cost is the sum of these costs divided by the number of units produced. Therefore, the statement is true.

Question 11

In a process costing system,each department's production costs are transferred to the next department and ultimately to the Finished Goods Inventory account.

Accepted Answer

This statement accurately describes the flow of costs in a process costing system. Costs are transferred from one department to the next until they are ultimately combined in the Finished Goods Inventory account.

Question 12

Under the FIFO cost flow assumption,separate unit cost analyses are not used for each accounting period because costs of different periods are averaged.

Accepted Answer

The answer of Under the FIFO cost flow assumption,separate unit...

Question 13

The number of equivalent units of production may be larger than the number of completed units during the period.

Accepted Answer

Equivalent units of production take into account partially completed units, so the total number of equivalent units produced may be greater than the number of fully completed units during the period.

Question 14

In a process costing system,all production costs are assigned to departments.

Accepted Answer

In a process costing system, production costs are assigned to departments or cost centers, rather than individual products or jobs. This allows for the accumulation of costs and their allocation to the products or services that pass through the production process.

Question 15

When the FIFO costing method is used in process costing,the number of units in beginning inventory is multiplied by 100 percent to determine the equivalent units.

Accepted Answer

In the FIFO costing method, only the work done during the current period is considered for calculating equivalent units, so the units in beginning inventory are not simply multiplied by 100 percent. The focus is on what was added to those beginning units during the current period to complete them.

Question 16

In a process costing system,products flow in a LIFO manner,from department to department.

Accepted Answer

In a process costing system, products flow in a FIFO (first-in, first-out) manner, from department to department.

Question 17

In process costing,all costs incurred by a department or production process are divided by the equivalent units produced during the period to determine the average cost per unit produced.

Accepted Answer

This is the correct definition of process costing.

Question 18

Regardless of the cost approach used,in a process costing system,costs attached to units in beginning inventory are included in the computation of costs per equivalent unit.

Accepted Answer

The answer of Regardless of the cost approach used,in a...

Question 19

If 45,000 units of ending work in process inventory are 60 percent complete as to conversion costs,27,000 equivalent units of conversion costs must be incurred to complete these units during the next period.

Accepted Answer

The equivalent units for the ending work in process inventory would be 45,000 units * 60% = 27,000 equivalent units, which means these units have already incurred 27,000 equivalent units of conversion costs, not that 27,000 more are needed to complete them.

Question 20

Separate equivalent units of production usually are calculated for materials and conversion costs.

Accepted Answer

Separate equivalent units of production are calculated for materials and conversion costs because they have different stages of completion and require different manufacturing processes. Materials are usually measured in physical units, while conversion costs are measured in terms of the labor and overhead costs incurred to transform the raw materials into finished products. By calculating separate equivalent units for materials and conversion costs, manufacturers can more accurately allocate costs and assess their production efficiency.

Quiz 18: Costing Systems- Process Costing