Question 1

The first-in,first-out (FIFO)process-costing method assigns the cost of the previous accounting period's equivalent units in beginning work-in-process inventory to the first units completed and transferred out of the process.

Accepted Answer

This statement is true. Under the FIFO process-costing method, the cost of the previous accounting period's equivalent units in beginning work-in-process inventory is assigned to the first units completed and transferred out of the process, followed by the cost of the current period's equivalent units in ending work-in-process inventory.

Question 2

Ford Motor Company is said to use a hybrid-costing system.What is a hybrid-costing system,and what would be the advantage to Ford of such a system?
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Accepted Answer

The answer of Ford Motor Company is said to use...

Question 3

What is the difference between a weighted-average method of process costing and a first-in,first-out method of process costing?
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Accepted Answer

The answer of What is the difference between a weighted-average...

Question 4

To calculate weighted-average conversion cost per equivalent unit,you divide total conversion costs to date by total equivalent units of work done to date.

Accepted Answer

This statement correctly explains the formula for calculating the weighted-average conversion cost per equivalent unit.

Question 5

A distinctive feature of the FIFO process-costing method is that the work done on beginning inventory before the current period is averaged with work done in the current period.

Accepted Answer

The FIFO (First-In, First-Out) process-costing method separates the work done on beginning inventory from the work done in the current period, ensuring that costs are only averaged for work done in the current period.

Question 6

Process-costing FIFO is usually applied to both the units entering a department and the units leaving a department.

Accepted Answer

Process-costing FIFO (First-In, First-Out) method is applied to the units and costs in the beginning inventory and the units and costs added during the period; it does not directly apply to units leaving the department, as it focuses on how costs are added and processed through the stages of production.

Question 7

The weighted-average process costing method does not distinguish between units started in the previous period but completed during the current period and units started and completed during the current period.

Accepted Answer

The weighted-average method calculates the cost per equivalent unit for a period by combining the costs incurred in the period with the costs carried over from the prior period, so it does not distinguish between the two types of units mentioned.

Question 8

A major advantage of the weighted average process costing is that it provides managers with information about changes in the costs per unit from one period to the next.

Accepted Answer

The weighted average process costing method combines the costs of the current and previous periods without distinguishing between them, making it difficult to track changes in costs per unit from one period to the next.

Question 9

Transferred-in costs are incurred in previous departments that are carried forward as the product's cost as it moves to a subsequent process in the production cycle.

Accepted Answer

Transferred-in costs refer to costs incurred in previous departments that are added to the cost of a product as it moves through the production cycle. These costs are not incurred in the subsequent process, but rather transferred from a previous department. Therefore, the statement is true.

Question 10

In the weighted-average costing method,the costs of direct materials in beginning inventory are not included in the cost per unit calculation since direct materials are added at the start of the production process.

Accepted Answer

In the weighted-average costing method, the costs of direct materials in beginning inventory are included in the cost per unit calculation, as it combines the costs of beginning inventory and current period costs to calculate an average cost for all units.

Question 11

The first-in,first-out process-costing method assumes that units in beginning inventory are completed during the current accounting period.

Accepted Answer

The FIFO process-costing method assumes that units in beginning inventory are completed first, before any new units are started or completed during the current accounting period.

Question 12

The FIFO process-costing method merges the work and the costs of the beginning inventory with the work and the costs done during the current period.

Accepted Answer

The FIFO (First-In, First-Out) process-costing method separates the work and costs of the beginning inventory from the work and costs done during the current period, focusing on the costs added to the production process during the current period.

Question 13

The equivalent units are not needed in a weighted-average system,because all costs are just averaged.

Accepted Answer

In a weighted-average system, equivalent units are needed to average the costs of both completed and partially completed units at the end of a period, ensuring an accurate calculation of cost per unit.

Question 14

Hybrid-costing systems are developed to cost products that are produced in a standardised environment,but which are often customised to meet the needs of some of its customers.

Accepted Answer

The answer of Hybrid-costing systems are developed to cost products...

Question 15

The weighted-average cost is the total of all costs entering the Work-in-Process account (whether they are from beginning work in process or from work started during the current period)divided by total equivalent units of work done to date.

Accepted Answer

The statement accurately describes the calculation for weighted-average cost.

Question 16

The percentage complete for beginning work in process is used in the weighted-average method.

Accepted Answer

The answer of The percentage complete for beginning work in...

Question 17

Under the weighted-average method,the stage of completion of beginning work in process:

Accepted Answer

The weighted-average method combines the work of the current period with the work in process at the beginning of the period, treating them as a single pool of work. Therefore, the specific stage of completion of the beginning work in process is considered irrelevant for calculating equivalent units.

Question 18

As companies move towards long-run procurement contracts that reduce differences in unit costs from period to period and reduce inventory levels,the difference in cost of units completed under the weighted-average and FIFO methods will increase.

Accepted Answer

Long-run procurement contracts that stabilize unit costs and reduce inventory levels make the cost of units more uniform across periods, thereby reducing the difference in cost of units completed under the weighted-average and FIFO methods.

Question 19

Many large companies with multiple production methods and processes have hybrid-costing systems that are:

Accepted Answer

Large companies with multiple production methods often have a mix of job costing and process costing systems. Job costing is used when the production is customized or unique, while process costing is used for standard, mass-produced items. A hybrid-costing system allows the company to assign costs accurately across different production methods and processes, providing a more comprehensive view of their operations.

Question 20

Transferred-in costs are treated as if they are a separate type of indirect material added at the beginning of the process.

Accepted Answer

Transferred-in costs are considered direct costs of the receiving department and are treated as if they were added at the beginning of the process in the receiving department, not as indirect materials.

Quiz 6: Estimating the Costs of Products and Inventory