Question 1

Refer to the following table of cost information:

-If the allocated overhead equaled the actual overhead, then total manufacturing costs incurred in both departments during the reporting period were $35,300.

Accepted Answer

The statement confirms that the allocated overhead is equal to the actual overhead. Therefore, the total manufacturing costs incurred in both departments during the reporting period were $35,300, which is the sum of all costs added for both departments. Hence, option A is correct.

Question 2

If the predetermined overhead allocation rate is 225% of direct labor cost, and the Mixing Department's direct labor cost for the reporting period is $10,000, the following entry would be made to record the allocation of overhead to the products processed in this department:

Accepted Answer

The answer of If the predetermined overhead allocation rate is...

Question 3

Since the process cost summary describes the activities of a production department for a specified reporting period, it does not present information about any costs incurred in prior periods.

Accepted Answer

The answer of Since the process cost summary describes the...

Question 4

A process cost accounting system records all factory overhead costs directly in the Goods in Process Inventory accounts.

Accepted Answer

In a process cost accounting system, factory overhead costs are typically recorded in a separate Factory Overhead account and then allocated to the Goods in Process Inventory accounts through a predetermined overhead rate.

Question 5

If a production department has 100 equivalent units of production with respect to direct materials in a given reporting period, the equivalent units of production with respect to direct labor also must be 100.

Accepted Answer

Equivalent units of production for direct materials and direct labor are not necessarily the same, as they are based on different factors such as the number of units completed and the amount of direct materials and labor used in each unit.

Question 6

Refer to the following table of cost information:

-The company uses the same predetermined overhead allocation rate (based on direct labor) for the Pickling and Canning Departments.

Accepted Answer

The statement implies that both departments use the same overhead allocation rate, but typically, different departments may have different overhead rates due to varying processes and costs.

Question 7

Refer to the following table of cost information:

-If the predetermined overhead allocation rates were based on direct labor costs, the rates for the Pushing and Shoving Departments were 50% and 150%, respectively.

Accepted Answer

The answer of  Refer to the following table of...

Question 8

One section of the process cost summary describes the equivalent units of production for the department during the reporting period and presents the calculations of the costs per equivalent unit.

Accepted Answer

This statement accurately describes one section of the process cost summary.

Question 9

In process costing, indirect materials are charged directly to Goods in Process Inventory.

Accepted Answer

In process costing, indirect materials are part of manufacturing overhead and are allocated to products, not charged directly to Goods in Process Inventory.

Question 10

If a department that applies process costing starts the reporting period with 50,000 physical units that were 25% complete with respect to direct materials and 40% complete with respect to direct labor, it must add 12,500 equivalent units of direct materials and 20,000 equivalent units of direct labor to complete them.

Accepted Answer

The answer of If a department that applies process costing...

Question 11

The number of equivalent units of production assigned to ending goods in process inventory should usually be equal to or less than the number of physical units in ending goods in process inventory.

Accepted Answer

This is because the equivalent units of production calculation takes into account the percentage of completion of each unit in ending goods in process inventory. This percentage of completion is usually less than 100%, meaning that the equivalent units of production will be less than the physical units. However, in certain cases where all units in ending goods in process inventory are 100% complete, the equivalent units of production may be equal to the physical units.

Question 12

Refer to the following table of cost information:

-The following journal entry would be made to record the use of direct labor in the reporting period covered by the information:

Accepted Answer

Direct labor is a cost incurred by a company during the production process, and therefore, it needs to be recorded in the company's books of accounts. A journal entry is required to record the use of direct labor in the reporting period.

Question 13

If a department that applies process costing starts the reporting period with 100,000 physical units that were 20% complete with respect to direct labor, it must add 80,000 equivalent units of labor to complete them.

Accepted Answer

Since process costing accounts for the average cost of all units in a given department, it is necessary to account for the cost of the 100,000 units that were in progress at the beginning of the period. This is done by adding the equivalent units of completed work (80,000 units in this case) to account for the physical units that were partially completed at the beginning of the period.

Question 14

If the predetermined overhead allocation rate is 85% of direct labor cost, and the Polishing Department's direct labor cost for the reporting period is $20,000, the following entry would be made to record the allocation of overhead to the products processed in this department:

Accepted Answer

The answer of If the predetermined overhead allocation rate is...

Question 15

All costs of the processes in a process costing system ultimately pass through the Cost of Goods Sold account.

Accepted Answer

In a process costing system, the costs of each process are accumulated and transferred to the Cost of Goods Sold account as the finished goods are completed. Therefore, all costs ultimately pass through the Cost of Goods Sold account.

Question 16

If the predetermined overhead allocation rate is 350% of direct labor cost and the Painting Department's direct labor cost for the reporting period is $20,000, the following entry would record the allocation of overhead to the products processed in this department:
 $\begin{array}{l}
\text { Goods in Process Inventory, Painting Dept } &70,000\
\text { Factory Overhead }&&70,000
\end{array}$

Accepted Answer

The overhead allocation is calculated as 350% of the direct labor cost, which is $20,000. Therefore, the overhead allocated is 350% of $20,000, which equals $70,000. The journal entry correctly reflects this allocation.

Question 17

The Packing Department transferred out completed units with a cost of $74,000. This transfer should be recorded with the following entry:

Accepted Answer

The transfer of completed units from one department to another should be recorded as a journal entry debiting the receiving department's work in process account and crediting the transferring department's work in process account for the same amount. Therefore, this transfer should be recorded with an entry to debit the Packing Department's finished goods account and credit the Work in Process account of the department receiving the completed units, with a total amount of $74,000.

Question 18

Once equivalent units are calculated for materials, this number will also be used for direct labor and factory overhead.

Accepted Answer

Equivalent units for materials, direct labor, and factory overhead may differ because they can be added at different stages of the production process.

Question 19

In the same time period, it is possible that a production department can produce 1,000 equivalent finished units with respect to direct materials and 1,200 equivalent finished units with respect to direct labor.

Accepted Answer

It is possible for a production department to produce different numbers of equivalent finished units with respect to direct materials and direct labor as they are calculated based on different factors.

Question 20

In process costing there is never a balance remaining in Factory Overhead that needs to be closed at period end.

Accepted Answer

In process costing, a balance can remain in Factory Overhead at the end of the period if the actual overhead costs incurred differ from the amount allocated to the goods in process. This balance must be closed by either adjusting the cost of goods sold or allocating the balance to the goods still in process.

Quiz 16: Process Costing and Analysis

Refer to the following table of cost information: -If the allocated overhead equaled the actual overhead, then total manufacturing costs incurred in both departments during the reporting period were $35,300.

If the predetermined overhead allocation rate is 225% of direct labor cost, and the Mixing Department's direct labor cost for the reporting period is $10,000, the following entry would be made to record the allocation of overhead to the products processed in this department:

Since the process cost summary describes the activities of a production department for a specified reporting period, it does not present information about any costs incurred in prior periods.

A process cost accounting system records all factory overhead costs directly in the Goods in Process Inventory accounts.

If a production department has 100 equivalent units of production with respect to direct materials in a given reporting period, the equivalent units of production with respect to direct labor also must be 100.

Refer to the following table of cost information: -The company uses the same predetermined overhead allocation rate (based on direct labor) for the Pickling and Canning Departments.

Refer to the following table of cost information: -If the predetermined overhead allocation rates were based on direct labor costs, the rates for the Pushing and Shoving Departments were 50% and 150%, respectively.

One section of the process cost summary describes the equivalent units of production for the department during the reporting period and presents the calculations of the costs per equivalent unit.

In process costing, indirect materials are charged directly to Goods in Process Inventory.

The number of equivalent units of production assigned to ending goods in process inventory should usually be equal to or less than the number of physical units in ending goods in process inventory.

Refer to the following table of cost information: -The following journal entry would be made to record the use of direct labor in the reporting period covered by the information:

If a department that applies process costing starts the reporting period with 100,000 physical units that were 20% complete with respect to direct labor, it must add 80,000 equivalent units of labor to complete them.

If the predetermined overhead allocation rate is 85% of direct labor cost, and the Polishing Department's direct labor cost for the reporting period is $20,000, the following entry would be made to record the allocation of overhead to the products processed in this department:

All costs of the processes in a process costing system ultimately pass through the Cost of Goods Sold account.

The Packing Department transferred out completed units with a cost of $74,000. This transfer should be recorded with the following entry:

Once equivalent units are calculated for materials, this number will also be used for direct labor and factory overhead.

In the same time period, it is possible that a production department can produce 1,000 equivalent finished units with respect to direct materials and 1,200 equivalent finished units with respect to direct labor.

In process costing there is never a balance remaining in Factory Overhead that needs to be closed at period end.