Question 1

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

Accepted Answer

In process costing, indirect materials are first accumulated in a separate account known as Manufacturing Overhead. Then, they are allocated to Work in Process Inventory along with other manufacturing overhead costs using a predetermined overhead rate.

Question 2

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

The number of equivalent units of production with respect to direct labor may not necessarily be the same as the number of equivalent units of production with respect to direct materials. It depends on the production process and the amount of direct labor involved in the process.

Question 3

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 direct materials and conversion costs per equivalent unit.

Accepted Answer

This statement is true. The process cost summary typically includes a section that details the equivalent units of production for each department during the reporting period and calculates the direct materials and conversion costs per equivalent unit.

Question 4

In a process costing system,factory labor costs incurred in a reporting period are presented on the income statement as Factory Labor Expense.

Accepted Answer

The answer of In a process costing system,factory labor costs...

Question 5

If Department R uses $60,000 of direct materials and Department S uses $15,000 of direct materials,the following journal entry would be recorded by the process costing system

Accepted Answer

This is because the journal entry in a process costing system would include the debiting of the direct materials account for the total amount of direct materials used in both departments (in this case, $75,000) and the crediting of the work in process inventory account for the same amount.

Question 6

The process cost summary presents calculations of the cost of units completed during the reporting period,but does not present any information about the ending Work in Process inventory.

Accepted Answer

The answer of The process cost summary presents calculations of...

Question 7

In a process costing system,factory overhead costs can be allocated to production departments by using a predetermined overhead allocation rate.

Accepted Answer

In a process costing system, it is common practice to allocate factory overhead costs to production departments by using a predetermined overhead allocation rate. This rate is usually based on an estimate of the total overhead costs to be incurred and the total number of units expected to be produced during the period. By using this method, the factory overhead costs can be assigned to each unit of production, which helps in determining the total cost of production and the selling price of each product.

Question 8

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 quantities of equivalent finished units with respect to direct materials and direct labor as they are two different factors that can impact production output.

Question 9

In process costing,direct labor includes only the labor that is applied directly to individual units of product.

Accepted Answer

In process costing, direct labor includes all labor costs associated with converting raw materials into finished products, including indirect labor such as maintenance and machine setup labor.

Question 10

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 11

The following journal entry would be made to record the use of $6,100 of direct labor in a production department during the reporting period

Accepted Answer

The journal entry to record the use of direct labor would typically involve debiting the Work in Process Inventory account and crediting the Wages Payable or Cash account, specifying the amount used. The question does not provide the specific journal entry details.

Question 12

A process cost summary for a production department accounts for all costs assigned to that department during the period plus costs that were in the department's Work in Process Inventory account at the beginning of the period.

Accepted Answer

A process cost summary includes all costs assigned to the department during the period as well as costs in the department's Work in Process Inventory account at the beginning of the period.

Question 13

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 14

If a department that applies process costing starts the reporting period with 40,000 physical units that were 80% complete with respect to direct materials and 50% complete with respect to direct labor,it must add 8,000 equivalent units of direct materials and 20,000 equivalent units of direct labor to complete them.

Accepted Answer

This is correct because in process costing, equivalent units are calculated to account for partially completed units. In this case, the 40,000 physical units are not 100% complete with respect to direct materials and direct labor, so equivalent units must be added to account for the work that still needs to be done. The given amounts of 8,000 equivalent units of direct materials and 20,000 equivalent units of direct labor reflect the additional work needed to complete the partially finished units.

Question 15

If the indirect labor cost in August for clerical and maintenance that help production in all departments was $123,000,the following journal entry would be recorded in a process costing system

Accepted Answer

The journal entry for indirect labor cost would be recorded in a process costing system to allocate the cost to all departments that benefit from the labor. Therefore, the statement is true.

Question 16

In some circumstances,a process costing system can classify wages paid to maintenance workers as direct labor costs instead of factory overhead.

Accepted Answer

If maintenance workers are directly involved in the production process, their wages can be classified as direct labor costs rather than factory overhead costs. This depends on the specific circumstances and the level of involvement in the production process.

Question 17

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

Accepted Answer

This is because the number of equivalent units of production refers to the number of units that are completed in ending Work in Process inventory. This includes partially completed units, and as such, it is equal to or less than the number of physical units in ending Work in Process inventory.

Question 18

A process costing system records all factory overhead costs directly in the Work in Process Inventory accounts.

Accepted Answer

Factory overhead costs are not recorded directly in the Work in Process Inventory accounts in a process costing system. Instead, they are allocated to each production department and then applied to the Work in Process Inventory accounts based on a predetermined overhead rate. This helps to more accurately assign costs to specific units of product.

Question 19

If Grayson Manufacturing incurred $17,400 for direct labor in the assembly department and $10,300 for direct labor in the painting department,the journal entry to record the labor used is

Accepted Answer

The question only provides information about the direct labor costs incurred in each department. It does not provide information about the amount of labor used. Therefore, a journal entry cannot be recorded based on this information alone.

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, there may be a balance remaining in the Factory Overhead account at the end of a period. This balance is usually closed out by prorating it among the units completed during the period or carrying it forward to the next period.

Quiz 20: Process Cost Accounting