Deck 21: Process Costing

Question 1

In a process cost system costs are tracked through a series of connected manufacturing processes or departments rather than by individual jobs.

Answer 1

True

Question 2

In a process cost system materials labor and overhead are only added in the first production department.

Answer 2

False

Question 3

Equivalent units of production are used to determine the cost per unit of completed products.

Answer 3

True

Question 4

Equivalent units of production must be calculated before the unit production costs can be computed.

Question 5

Equivalent units of production is the sum of units completed and transferred out plus equivalent units of beginning work in process.

Question 6

The weighted-average method of computing equivalent units is the most widely used method in practice.

Question 7

The physical units in a department are another name for the equivalent units of production.

Question 8

Fewer materials requisitions are generally required in a process cost system than in a job order cost system.

Question 9

Process cost systems are used to apply costs to a specific job such as the manufacturing of a specialized machine.

Question 10

Separate work in process accounts are maintained for each production department or manufacturing process in a process cost system.

Question 11

A primary driver of overhead costs in continuous manufacturing operations is machine time used.

Question 12

Process cost accounting focuses on the process involved in mass-producing products that are very similar in nature.

Question 13

In a process cost system labor costs incurred may be captured on time tickets.

Question 14

Unit material cost is computed by taking total material costs charged to the department for the period and dividing by the physical units in the process during the period.

Question 15

In a process cost system total costs are determined at the end of a month or year.

Question 16

Equivalent units of production measure the work done during a period expressed in fully completed units.

Question 17

A company that produces motion pictures would likely use a process cost system.

Question 18

The first step performed in preparing a production cost report is computing the equivalent units of production.

Question 19

There are no units in process at the beginning of the period 1500 units in process at the end of the period that are 40% complete and 15000 units transferred out during the period. Based on this information there were 14400 equivalent units of production during the period.

Question 20

The assignment of the three manufacturing cost elements to Work in Process in a process cost system is the same as in a job order cost system.

Question 21

In order to compute the physical unit flow a company must first compute unit production costs.

Question 22

The flow of costs in a process costing system requires that materials be added in one department labor added in another department and manufacturing overhead in a third department.

Question 23

A characteristic of products that are mass-produced in a continuous fashion is that

A) the products are identical or very similar in nature.
B) they are grouped in batches.
C) they are produced at the time an order is received.
D) their costs are accumulated on job cost sheets.

Question 24

When finished goods are sold the entry to record the cost of goods sold is a debit to Finished Goods Inventory and a credit to Cost of Goods Sold.

Question 25

Large inventories of raw materials must be maintained in a just-in-time system.

Question 26

A production cost report is an internal document for management that shows production quantity and cost data for a particular job.

Question 27

A process cost system would be used for all of the following products except

A) chemicals.
B) computer chips.
C) motion pictures.
D) soft drinks.

Question 28

In continuous process manufacturing generally once the production begins it continues until the finished product emerges.

Question 29

When equivalent units of production are different for materials and conversion costs unit costs are computed for materials conversion and total manufacturing.

Question 30

One similarity of process cost accounting with job order cost accounting is that both determine total manufacturing costs after each job.

Question 31

Companies often use a combination of a process cost and a job order cost system called operations costing.

Question 32

Rework costs typically increase in just-in-time processing.

Question 33

Activity-based costing (ABC) can be used only with process cost systems.

Question 34

A process cost accounting system is most appropriate when

A) a variety of different products are produced each one requiring different types of materials labor and overhead.
B) the focus of attention is on a particular job or order.
C) similar products are mass-produced.
D) individual products are custom made to the specification of customers.

Question 35

Activity-based costing (ABC) eliminates arbitrary assignments of overhead.

Question 36

Just-in-time strives to eliminate inventories by using a pull approach.

Question 37

The total manufacturing cost per unit is used in costing the units completed and transferred during the period.

Question 38

In activity-based costing the focus is on the activities performed to produce specific products.

Question 39

Production cost reports provide a basis for evaluating the productivity of a department.

Question 40

When there is no beginning work in process and materials are entered at the beginning of the process equivalent units of materials are the same as the units started into production.

Question 41

In a process cost system

A) a Work in Process account is maintained for each product.
B) a materials requisition must identify the job on which the materials will be used.
C) a Work in Process account is maintained for each process.
D) one Work in Process account is maintained for all the processes similar to a job order cost system.

Question 42

When manufacturing overhead costs are assigned to production in a process cost system they are debited to

A) the Finished Goods Inventory account.
B) Cost of Goods Sold.
C) a Manufacturing Overhead account.
D) a Work in Process account.

Question 43

A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of January there were no units in the beginning work in process inventory; 90000 units were started into production in January; and there were 20000 units that were 40% complete in the ending work in process inventory at the end of January. What were the equivalent units of production for conversion costs for the month of January?

A) 70000 equivalent units.
B) 82000 equivalent units.
C) 78000 equivalent units.
D) 90000 equivalent units.

Question 44

In process cost accounting manufacturing costs are summarized on a

A) job order cost sheet.
B) process order cost sheet.
C) production cost report.
D) manufacturing cost sheet.

Question 45

Which of the following is correct regarding cost systems? $\begin{array}{lll}&&&&&&&&&&&& \underline{\text { Job Order}}& &\underline{\text { Process}}\\\end{array}$

A) $\begin{array}{lll}\text { Work in process account } & \text { several } & \text { one for each process } \\\end{array}$
B) $\begin{array}{lll}\text { Work in process account } && \text { one } && \text { one } \\\end{array}$
C) $\begin{array}{lll}\text { Work in process account } && \text { one } && \text { one for each process } \\\end{array}$
D) $\begin{array}{lll}\text { Work in process account } & \text { several } && \text { one }\end{array}$

Question 46

Differences between a job order cost system and a process cost system include all of the following except the

A) documents used to track costs.
B) point at which costs are totaled.
C) unit cost computations.
D) flow of costs.

Question 47

Equivalent units are calculated by

A) multiplying the percentage of work done by the equivalent units of output.
B) dividing physical units by the percentage of work done.
C) multiplying the percentage of work done by the physical units.
D) dividing equivalent units by the percentage of work done.

Question 48

Which of these best reflects a distinguishing factor between a job order cost system and a process cost system?

A) The detail at which costs are calculated.
B) The time period each covers.
C) The number of work in process accounts.
D) The manufacturing cost elements included.

Question 49

In a process cost system unit costs are determined using a

A) numerator of costs of each job.
B) denominator of units produced during the period.
C) denominator of units produced for the job.
D) denominator of units produced for the day.

Question 50

Which of the following manufacturing cost elements occurs in a process cost system?

A) Direct materials.
B) Direct labor.
C) Manufacturing overhead.
D) All of these.

Question 51

A product requires processing in two departments the Baking Department and then the Packaging Department before it is completed. Costs transferred out of the Baking Department will be transferred to:

A) Finished Goods Inventory.
B) Cost of Goods Sold.
C) Work in Process-Packaging Department.
D) Manufacturing Overhead.

Question 52

Which of the following is a true statement about process cost systems?

A) In process cost systems costs are accumulated but not assigned.
B) A process cost system has one work in process account for each process.
C) In process cost systems costs are summarized on job cost sheets.
D) Unit costs are not computed in process cost systems.

Question 53

Price Company assigns overhead based on machine hours. The Milling Department logs 2400 machine hours and Cutting Department shows 4000 machine hours for the period. If the overhead rate is $5 per machine hour the entry to assign overhead will show a

A) debit to Manufacturing Overhead for $32000.
B) credit to Work in Process-Cutting Department for $20000.
C) debit to Work in Process for $20000.
D) credit to Manufacturing Overhead for $32000.

Question 54

Which of the following would not appear as a debit in the Work in Process account of a second department in a two stage production process?

A) Materials used.
B) Overhead applied.
C) Labor assigned.
D) Cost of products transferred out.

Question 55

Materials requisitions are:

A) not used in process costing.
B) generally used more frequently in process costing than job order costing.
C) generally used less frequently in process costing than job order costing.
D) used more frequently by latter stage production departments.

Question 56

A process with no beginning work in process completed and transferred out 85000 units during a period and had 50000 units in the ending work in process inventory that were 30% complete. The equivalent units of production for the period were:

A) 85000 equivalent units.
B) 135000 equivalent units.
C) 100000 equivalent units.
D) 70000 equivalent units.

Question 57

Barnes and Miller Manufacturing is trying to determine the equivalent units for conversion costs with 10000 units of ending work in process at 80% completion and 32000 physical units. There are no beginning units in the department. Conversion costs occur evenly throughout the entire production period. What are the equivalent units for conversion costs for the current period?

A) 42000.
B) 40000.
C) 8000.
D) 30000.

Question 58

In a process cost system product costs are summarized:

A) on job cost sheets.
B) on production cost reports.
C) after each unit is produced.
D) when the products are sold.

Question 59

A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of January there were no units in the beginning work in process inventory; 90000 units were started into production in January; and there were 20000 units that were 40% complete in the ending work in process inventory at the end of January. What were the equivalent units of production for materials for the month of January?

A) 98000 equivalent units.
B) 82000 equivalent units.
C) 70000 equivalent units.
D) 90000 equivalent units.

Question 60

A primary driver of overhead costs in continuous manufacturing operations is:

A) direct labor dollars.
B) direct labor hours.
C) machine hours.
D) machine maintenance dollars.

Question 61

A process with 1600 units of beginning work in process completed and transferred out 25000 units during a period. There were 10000 units in the ending work in process that were 50% complete as to conversion costs. Materials are added 80% at the beginning of the process and 20% when the units are 90% complete. How much is equivalent units of production for the period for material costs?

A) 29000 equivalent units.
B) 35000 equivalent units.
C) 27000 equivalent units.
D) 33000 equivalent units.

Question 62

The Molding Department of Boswell Company has the following production data: beginning work process 40000 units (60% complete) started into production 730000 units completed and transferred out 690000 units and ending work in process 80000 units (40% complete). Assuming conversion costs are incurred uniformly during the process the equivalent units for conversion costs are:

A) 770000.
B) 810000.
C) 722000.
D) 650000.

Question 63

Gantner Company had the following department information about physical units and percentage of completion: $$\begin{array} { l r } & \text { Physical Units } \\\text { Work in process, May } 1 ( 60 \% ) & 60,000 \\\text { Completed and transferred out } & 180,000 \\\text { Work in process, May } 31 ( 40 \% ) &50,000\end{array}$$ If materials are added at the beginning of the production process what is the total number of equivalent units for materials during May?

A) 240000.
B) 230000.
C) 224000.
D) 200000.

Question 64

It is necessary to calculate equivalent units of production in a department because

A) a physical count of units is impossible.
B) some units worked on in the department are not fully complete.
C) the physical units in the department are always 100% complete.
D) at times a department may use a job order cost system and then switch to a process cost system.

Question 65

A process with no beginning work in process completed and transferred out 35000 units during a period and had 14000 units in the ending work in process that were 50% complete. How much is equivalent units of production for the period for conversion costs?

A) 42000 equivalent units.
B) 49000 equivalent units.
C) 56000 equivalent units.
D) 28000 equivalent units.

Question 66

Crawford Company has the following equivalent units for July: materials 20000 and conversion costs 18000. Production cost data are: $\begin{array}{l}\begin{array} { l r c } &\text { Materials } & \text { Conversion } \\\text { Work in process, July } 1 & \$ 6,400 & \$ 3,000 \\\text { Costs added in July } & 50,400 & 42,000\end{array}\\\\\text { The unit production costs for July are: }\end{array}$
$\begin{array}{lrr} & \text { Materials } & \text { Conversion Costs } \\\end{array}$

A) $\begin{array}{lrr} & \$ 2.52 &&&& \$ 2.50 \\\end{array}$
B) $\begin{array}{lrr} & 2.84 &&&&& 2.33 \\\end{array}$
C) $\begin{array}{lrr} & 2.52 &&&&& 2.33 \\\end{array}$
D) $\begin{array}{lrr} & 2.84 &&&&& 2.50\end{array}$

Question 67

Super-Tech Industries had the following department information about physical units and percentage of completion: $$\begin{array} { l c } & \text { Physical Units } \\\text { Work in process, June } 1 ( 75 \% ) & 8,000 \\\text { Completed and transferred out } & 22,000 \\\text { Work in process, June } 30 ( 50 \% ) & 12,000\end{array}$$ If materials are added at the beginning of the production process what is the total number of equivalent units for materials during June?

A) 19000.
B) 34000.
C) 36000.
D) 28000.

Question 68

In the month of June a department had 20000 units in beginning work in process that were 70% complete. During June 90000 units were transferred into production from another department. At the end of June there were 10000 units in ending work in process that were 40% complete. Materials are added at the beginning of the process while conversion costs are incurred uniformly throughout the process. The equivalent units of production for conversion costs for June were

A) 90000 equivalent units.
B) 104000 equivalent units.
C) 100000 equivalent units.
D) 110000 equivalent units.

Question 69

Cohen Company is trying to determine the equivalent units for conversion costs with 5000 units of ending work in process at 80% completion and 45000 units that are 100% complete as to materials. There are no beginning units in the department. Materials are added at the beginning of the process and conversion costs occur evenly throughout the entire production period. What is the equivalent units of production for conversion costs for the current period?

A) 50000.
B) 49000.
C) 4000.
D) 44000.

Question 70

Hanker Company had the following department data on physical units: $\begin{array}{lr}\text { Work in process, beginning } & 3,000 \\\text { Completed and transferred out } & 18,000 \\\text { Work in process, ending } & 2,400\end{array}$ Materials are added at the beginning of the process. What is the total number of equivalent units for materials during the period?

A) 18600.
B) 2400.
C) 20400.
D) 15000.

Question 71

The Molding Department of Kennett Company has the following production data: beginning work in process 25000 units (60% complete) started into production 475000 units completed and transferred out 450000 units and ending work in process 50000 units (40% complete). Assuming materials are entered at the beginning of the process equivalent units for materials are:

A) 500000.
B) 425000.
C) 450000.
D) 525000.

Question 72

Gloria Company had no beginning work in process. During the period 16000 units were completed and there were 1200 units of ending work in process. How many units were started into production?

A) 17200.
B) 16000.
C) 14800.
D) 1200.

Question 73

The Molding Department of Kennett Company has the following production data: beginning work in process 25000 units (60% complete) started into production 475000 units completed and transferred out 450000 units and ending work in process 50000 units (40% complete). Assuming conversion costs are incurred uniformly during the process the equivalent units for conversion costs are:

A) 500000.
B) 455000.
C) 470000.
D) 450000.

Question 74

The Molding Department of Boswell Company has the following production data: beginning work process 40000 units (60% complete) started into production 730000 units completed and transferred out 690000 units and ending work in process 80000 units (40% complete). Assuming materials are entered at the beginning of the process equivalent units for materials are:

A) 770000.
B) 650000.
C) 690000.
D) 810000.

Question 75

Corsi Company had the following department data: $$\begin{array} { l c } & \underline{ \text { Physical Units } } \\\text { Work in process, beginning } &-0-\\\text { Completed and transferred out } & 90,000 \\\text { Work in process, ending } & 7,000\end{array}$$ Materials are added at the beginning of the process. What is the total number of equivalent units for materials during the period?

A) 90000.
B) 9000.
C) 97000.
D) 83000.

Question 76

In Moyer Company the Cutting Department had beginning work in process of 6000 units transferred out 24000 units and had an ending work in process of 3000 units. How many units were started by Moyer during the month?

A) 18000.
B) 21000.
C) 24000.
D) 27000.

Question 77

In the month of June a department had 20000 units in beginning work in process that were 70% complete. During June 90000 units were transferred into production from another department. At the end of June there were 10000 units in ending work in process that were 40% complete. Materials are added at the beginning of the process while conversion costs are incurred uniformly throughout the process. The equivalent units of production for materials for June were

A) 100000 equivalent units.
B) 110000 equivalent units.
C) 114000 equivalent units.
D) 90000 equivalent units.

Question 78

In the month of June a department had 20000 units in beginning work in process that were 70% complete. During June 90000 units were transferred into production from another department. At the end of June there were 10000 units in ending work in process that were 40% complete. Materials are added at the beginning of the process while conversion costs are incurred uniformly throughout the process. How many units were transferred out of the process in June?

A) 90000 units.
B) 80000 units.
C) 100000 units.
D) 110000 units.

Question 79

Minor Company had the following department data: $\begin{array}{lr}&\text { Physical Units }\\\text { Work in process, July } 1 & 30,000 \\\text { Completed and transferred out } & 165,000 \\\text { Work in process, July } 31 & 45,000\end{array}$ Materials are added at the beginning of the process. What is the total number of equivalent units for materials in July?

A) 165000.
B) 180000.
C) 240000.
D) 210000.

Question 80

If beginning work in process is 4000 units ending work in process is 2000 units and the units accounted for equals 15000 units what must units started into production be?

A) 19000.
B) 17000.
C) 11000.
D) 13000.