Deck 6: Process Costing

Question 1

In process costing, the manufacturing costs assigned to the product must always follow the physical movement of the product.

Answer 1

True

Question 2

Conversion costs include direct labour and direct materials.

Answer 2

False

Question 3

Unique or custom-made goods use a job costing system.

Answer 3

True

Question 4

To simplify the accounting, the journal entry to record the transfer of costs from one WIP account to the next WIP account is generally made once a month to reflect all physical transfers that occurred during the month.

Question 5

In process costing, the cost for direct materials, direct labour and manufacturing overhead are assigned to each job.

Question 6

In process costing, the costs flow from Work in Process Inventory, to Raw Materials Inventory, to Finished Goods Inventory.

Question 7

What are the two basic types of product costing systems?

A) Department and plant
B) FIFO and weighted-average
C) Job and process
D) Variable and process

Question 8

Process costing is most likely used in which of the following industries?

A) Aircraft
B) Chemicals
C) Construction
D) Printing

Question 9

Indirect labour would be a component of conversion costs.

Question 10

Both process and job costing assign costs to units as they proceed through the process.

Question 11

Process costing is typically used for businesses that make unique goods in relatively small amounts.

Question 12

The costs moved from one processing department to the next processing department are called "transported-out" costs in the first department and "transported-in" costs in the next department.

Question 13

When units are moved from one processing department to the next, the cost associated with those units must also be moved from one WIP account to the next. These costs are called

A) transported costs.
B) transmitted costs.
C) conveyed costs.
D) transferred costs.

Question 14

In process costing, a separate work in process inventory account is maintained for each process.

Question 15

The product costing system normally used to assign costs to goods that are mass produced is

A) fixed costing.
B) job costing.
C) LIFO costing.
D) process costing.

Question 16

Conversion costs are the sum of direct labour and manufacturing overhead.

Question 17

Hallow Company produces ping-pong balls using a three-step sequential process that includes molding, colouring and finishing. At what stage would the Ping-Pong balls be allocated manufacturing overhead?

A) When the balls are in WIP inventory─molding
B) When the balls are in WIP inventory─finishing
C) When the balls are in WIP inventory─colouring
D) All of the above

Question 18

Hallow Company produces ping-pong balls using a three-step sequential process that includes molding, colouring and finishing. When the balls are completely finished, out of which account should their cost be transferred?

A) Finished goods inventory
B) WIP inventory─finishing
C) WIP inventory─colouring
D) WIP inventory─molding

Question 19

In a job cost system, all costs flow to a particular job.

Question 20

In a process costing system with a series of manufacturing processes, each manufacturing process will have a WIP inventory account.

Question 21

Conversion costs are generally added evenly throughout a process.

Question 22

Autodig mass-produces a single product using three sequential processing departments: Machining, Assembly, and Packaging. The following transactions occurred during February:
Note: No direct materials were used by the Baking Department.
Required:
A. Post each of these transactions to the company's inventory T-accounts provided below.
B. Determine the balance at month end in each of the T-accounts.
C. Assume that 640,000 units were completed and transferred out of the Packaging Department during the month. What was the cost per unit of making each unit?

Question 23

When a bakery transfers goods from the Decorating Department to the retail shelf, the accounting entry is

A)
B)
C)
D)

Question 24

Sweet Stuff Bakery mass-produces cakes using three sequential processing departments: Mixing, Baking, and Packaging. The following transactions occurred during February:
Note: No direct materials were used by the Baking Department.
Required:
A. Post each of these transactions to the company's inventory T-accounts provided below.
B. Determine the balance at month end in each of the T-accounts.
C. Assume that 1,440,000 cakes were completed and transferred out of the Packaging Department during the month. What was the cost per unit of making each cake?

Question 25

A system for assigning costs for products made in a continuous process is

A) job costing.
B) process costing.
C) equivalent units costing.
D) conversion cost costing.

Question 26

Equivalent units are the sum of direct materials and direct labour.

Question 27

The costing system used by a company making computer chips would be

A) job costing.
B) process costing.
C) equivalent units costing.
D) conversion cost costing.

Question 28

Direct labour costs plus manufacturing overhead costs equal

A) prime costs.
B) operating costs.
C) equivalent costs.
D) conversion costs.

Question 29

A company manufactures exterior paint. Last month's costs were:
What were the conversion costs for the month?

A) $260,000
B) $395,000
C) $285,000
D) $110,000

Question 30

Equivalent units express the amount of work done during a period of time in terms of fully completed units of output.

Question 31

A company manufactures organic juices. Last month's costs were:
What were the conversion costs for the month?

A) $250,000
B) $385,000
C) $460,000
D) $210,000

Question 32

Compare and contrast process costing and job order costing.

Question 33

Which of the following would use process costing?

A) Clear Channel advertising
B) PIP Printing
C) Pepsi
D) DBA Management Consultants

Question 34

Baoding mass-produces a single product using three sequential processing departments: Machining, Assembly, and Packaging. The following transactions occurred during February:
Note: No direct materials were used by the Baking Department.
Required:
A. Post each of these transactions to the company's inventory T-accounts provided below.
B. Determine the balance at month end in each of the T-accounts.
C. Assume that 1,075,000 units were completed and transferred out of the Packaging Department during the month. What was the cost per unit of making each unit?

Question 35

The costing system used by a company producing custom window treatments would be

A) job costing.
B) process costing.
C) equivalent units costing.
D) conversion cost costing.

Question 36

When a bakery transfers goods from the Baking Department to the Decorating Department, the accounting entry is

A)
B)
C)
D)

Question 37

Sweet Stuff Bakery mass-produces cakes using three sequential processing departments: Mixing, Baking, and Packaging. The following transactions occurred during February:

Note: No direct materials were used by the Baking Department.
Required:
A. Post each of these transactions to the company's inventory T-accounts provided below.
B. Determine the balance at month end in each of the T-accounts.
C. Assume that 1,600,000 cakes were completed and transferred out of the Packaging Department during the month. What was the cost per unit of making each cake?

Question 38

If a company has 5,000 units that are 60% complete, the equivalent unit figure is 3,000.

Question 39

Equivalent units should be computed separately for direct materials and conversion costs.

Question 40

The number of partially completed units multiplied by the percentage of process started equals the number of equivalent units.

Question 41

If all direct materials are added at the end of the production process, and the units have made it 50% of the way through the production process, then the percentage completion for direct materials is

A) 0%.
B) 100%.
C) 50%.
D) none of the above.

Question 42

In a process costing environment, direct materials and direct labour are usually combined into one cost category called "conversion costs."

Question 43

If all direct materials are added at the beginning of the production process, and the units have made it 50% of the way through the production process, then the percentage completion for direct materials is 100%.

Question 44

Direct materials are usually added evenly throughout the production process.

Question 45

The number of equivalent units is usually the same for direct materials and conversion costs.

Question 46

If conversion costs are added evenly throughout the production process, and the units have made it 50% of the way through the production process, then the percentage completion for conversion costs is

A) 0%.
B) 100%.
C) 50%.
D) none of the above.

Question 47

If all direct materials are added at the beginning of the production process, and the units have made it 50% of the way through the production process, then the percentage completion for direct materials is 50%.

Question 48

In a process costing environment, direct labour and manufacturing overhead are usually combined into one cost category called "conversion cost."

Question 49

If conversion costs are added evenly throughout the production process, and the units have made it 50% of the way through the production process, then the percentage completion for conversion costs is 50%.

Question 50

If all direct materials are added at the beginning of the production process, and the units have made it 50% of the way through the production process, then the percentage completion for direct materials is

A) 0%.
B) 100%.
C) 50%.
D) none of the above.

Question 51

The weighted-average method of process costing is simpler than the FIFO method.

Question 52

If all direct materials are added at the beginning of the production process, and the units have made it 50% of the way through the production process, then the percentage completion for direct materials is 0%.

Question 53

Companies that use automated production processes often condense the three manufacturing costs into two categories: direct labour and conversion costs.

Question 54

The FIFO method requires that any units in beginning inventory be costed separately from any units started in the current period.

Question 55

Conversion costs and direct materials costs are generally both added at the end of the production process.

Question 56

If all direct materials are added at the end of the production process, and the units have made it 50% of the way through the production process, then the percentage completion for direct materials is 0%.

Question 57

The weighted average and FIFO methods differ only in how they treat beginning inventory.

Question 58

If all direct materials are added at the end of the production process, and the units have made it 50% of the way through the production process, then the percentage completion for direct materials is 100%.

Question 59

If all direct materials are added at the end of the production process, and the units have made it 50% of the way through the production process, then the percentage completion for direct materials is 50%.

Question 60

Companies that use automated production processes often condense the three manufacturing costs into two categories: direct materials and conversion costs.

Question 61

Use the information below to answer the following questions:
Pizza Company produces frozen pizzas in three departments: assembly, freezing and packaging. In assembly, crust ingredients are added at the beginning of the process. After the crust is made, the sauce, cheese, and toppings are added at the end of the process. Conversion costs are added evenly. Data for the assembly department includes:

What are the total equivalent units to account for crust ingredients?

A) 19,800
B) 24,400
C) 2,200
D) 22,000

Question 62

Use the information below to answer the following questions:
The following information is provided by Abbott Corporation:

The units in ending WIP inventory were 80% complete for materials and 40% complete for conversion costs.

-At the end of the year, what are the equivalent units for conversion costs for the Abbott Corporation if all manufacturing costs are added during the process?

A) 8,000
B) 9,600
C) 1,600
D) 4,800

Question 63

Use the information below to answer the following questions:
Pizza Company produces frozen pizzas in three departments: assembly, freezing and packaging. In assembly, crust ingredients are added at the beginning of the process. After the crust is made, the sauce, cheese, and toppings are added at the end of the process. Conversion costs are added evenly. Data for the assembly department includes:

What are the total equivalent units for conversion costs?

A) 2,200
B) 22,000
C) 21,340
D) 23,540

Question 64

Natural Desserts has 2,500 gallons of paint in WIP inventory, with all materials already added. The paint is 60% through the process. Assuming all conversion costs are added evenly throughout the process, what are the equivalent units for conversion costs?

A) 0
B) 1,500
C) 2,000
D) 500

Question 65

The full-time employees at Percy Enterprises work 8 hours per day, while the part-time employees work 4 hours per day. Percy has 2,000 full-time employees and 800 part-time employees. What is the number of full-time equivalent employees?

A) 2,000
B) 1,400
C) 2,400
D) 2,800

Question 66

A measure of the amount of work done, expressed in complete units of output is

A) job costing.
B) process costing.
C) equivalent units.
D) conversion costs.

Question 67

Use the information below to answer the following questions:
The following information is provided by Abbott Corporation:

The units in ending WIP inventory were 80% complete for materials and 40% complete for conversion costs.

-What are the total equivalent units for direct materials for the Abbott Corporation if all manufacturing costs are added during the process?

A) 4,000
B) 3,200
C) 11,200
D) 12,000

Question 68

Green Paints has 4,000 gallons of paint in WIP inventory, with all materials already added. The paint is 80% through the process. Assuming all conversion costs are added evenly throughout the process, what are the equivalent units for conversion costs?

A) 800
B) 0
C) 3,200
D) 4,000

Question 69

Natural Desserts has 2,500 gallons of paint in WIP inventory, with all materials already added. What are equivalent units in ending WIP inventory for materials if the paint is 80% through the process?

A) 0
B) 2,500
C) 500
D) 2,000

Question 70

Use the information below to answer the following questions:
The following information is provided by Dart Manufacturing:

The units in ending WIP inventory were 90% complete for materials and 60% complete for conversion costs.

-What are the total equivalent units for direct materials for Dart Manufacturing if all manufacturing costs are added during the process?

A) 5,000
B) 2,700
C) 3,000
D) 4,700

Question 71

Use the information below to answer the following questions:
The following information is provided by Zander Corporation:

The units in ending WIP Inventory were 80% complete for materials and 45% complete for conversion costs.

-What are the total equivalent units for direct materials at Zander Corporation?

A) 14,000
B) 5,000
C) 4,000
D) 13,000

Question 72

Use the information below to answer the following questions:
Pizza Company produces frozen pizzas in three departments: assembly, freezing and packaging. In assembly, crust ingredients are added at the beginning of the process. After the crust is made, the sauce, cheese, and toppings are added at the end of the process. Conversion costs are added evenly. Data for the assembly department includes:

At the end of the period, what are the total equivalent units for cheese, sauce and toppings?

A) 19,800
B) 22,000
C) 21,340
D) 2,200

Question 73

A company uses a process system. The number of equivalent units in ending WIP inventory regarding direct materials costs and conversion costs is

A) always lower for direct materials.
B) always equal.
C) always lower for conversion costs.
D) none of the above.

Question 74

Use the information below to answer the following questions:
The following information is provided by Alexandria Corporation:

The units in ending WIP Inventory were 75% complete for materials and 50% complete for conversion costs.

-What are the total equivalent units for direct materials at Alexandria Corporation?

A) 12,750
B) 3,750
C) 5,000
D) 14,000

Question 75

Use the information below to answer the following questions:
The following information is provided by Alexandria Corporation:

The units in ending WIP Inventory were 75% complete for materials and 50% complete for conversion costs.

-At Alexandria Corporation, what are the equivalent units for conversion costs?

A) 7,000
B) 9,000
C) 2,500
D) 11,500

Question 76

Use the information below to answer the following questions:
The following information is provided by Zander Corporation:

The units in ending WIP Inventory were 80% complete for materials and 45% complete for conversion costs.

-At Zander Corporation, what are the equivalent units for conversion costs?

A) 11,250
B) 6,300
C) 2,250
D) 9,000

Question 77

In a process system, direct labour and manufacturing overhead are normally

A) incurred at the end of the process.
B) incurred in full at the beginning of the process.
C) incurred evenly throughout the process.
D) not recorded.

Question 78

Use the information below to answer the following questions:
The following information is provided by Dart Manufacturing:

The units in ending WIP inventory were 90% complete for materials and 60% complete for conversion costs.

-At the end of the year, what are the equivalent units for conversion costs for Dart Manufacturing if all manufacturing costs are added during the process?

A) 3,000
B) 3,800
C) 2,000
D) 1,800

Question 79

Green Paints has 4,000 gallons of paint in WIP inventory, with all materials already added. What are equivalent units in ending WIP inventory for materials if the paint is 80% through the process?

A) 0
B) 800
C) 3,200
D) 4,000

Question 80

A business has 200 full-time workers who work 8 hours per day. They have 100 part-time workers who work 5 hours per day. What is the number of full-time equivalent employees?

A) 263
B) 300
C) 200
D) 188