Question 1

Two methods of computing equivalent units are the LIFO and the weighted average methods.

Accepted Answer

The two methods of computing equivalent units are the FIFO (First-In, First-Out) method and the weighted average method, not LIFO (Last-In, First-Out).

Question 2

Why does a company that uses a process costing system need to calculate equivalent units?

Accepted Answer

The answer of Why does a company that uses a...

Question 3

How should a company choose between a job-order costing system and a process costing system?

Accepted Answer

The answer of How should a company choose between a...

Question 4

What are job cost sheets,and how are they used in a job-order costing system?

Accepted Answer

The answer of What are job cost sheets,and how are...

Question 5

What source documents would be used in preparing a job cost sheet?

Accepted Answer

The answer of What source documents would be used in...

Question 6

Process costing systems do not distinguish the cost of one unit of product from another.

Accepted Answer

Process costing systems assign costs to each unit of product based on the average cost of all units produced in a given process. Therefore, all units are considered to have the same cost, and there is no distinction between the cost of one unit and another.

Question 7

Indicate whether each of the following statements about costing systems is true or false.
Job-order costing systems accumulate product costs by department.______
Job-order costing systems are used by many companies to determine the cost of services provided to customers.______
Companies use job-order costing systems when they need to determine the cost of individual batches of products.______
Job-order costing systems allocate costs to homogeneous products.______
With a process costing system,the cost per unit of product is calculated by dividing total product cost by number of units produced in a batch.______

Accepted Answer

The answer of Indicate whether each of the following statements...

Question 8

Why is the concept of equivalent units important for process costing?

Accepted Answer

The answer of Why is the concept of equivalent units...

Question 9

A company that uses a process costing system would calculate the cost per equivalent unit and then use that amount to allocate costs between the goods transferred out and the beginning work in process inventory.

Accepted Answer

In a process costing system, the cost per equivalent unit is used to allocate costs between the goods transferred out and the ending work in process inventory, not the beginning work in process inventory.

Question 10

The 10,000 units in Department B that are 30% complete are equivalent to 3,000 whole units.

Accepted Answer

If 10,000 units in Department B are 30% complete, it means that only 30% of the work required to complete those units has been done. Therefore, the actual number of "complete" units is 30% of 10,000, which is 3,000 units. So the statement is true.

Question 11

Describe how accumulation of costs in a job-order costing system parallels the manufacturing process.

Accepted Answer

The answer of Describe how accumulation of costs in a...

Question 12

In process costing systems,product costs flow through the same accounts as in a job-order costing system.

Accepted Answer

In both process and job-order costing systems, product costs flow through the same accounts such as raw materials, work-in-progress, and finished goods. The main difference is in how the costs are assigned to the products. In process costing, costs are assigned to a particular production department or process, while in job-order costing, costs are assigned to each individual job or order.

Question 13

The weighted average method of process costing does not account for the state of completion of units in beginning inventory.

Accepted Answer

The weighted average method combines beginning inventory costs with current period costs, averaging them without considering the completion state of beginning inventory units.

Question 14

Why is calculating the cost of services provided to customers important for a service business?

Accepted Answer

The answer of Why is calculating the cost of services...

Question 15

Under process costing,a cost of production report is prepared to determine the amount of costs that should be transferred to the next department or to finished goods.

Accepted Answer

This statement is true. A cost of production report is a key tool used in process costing to allocate costs of a production process to products, either to transfer them to the next department in the production process or to finished goods inventory. The report typically summarizes the manufacturing costs incurred during a specific period, including direct materials, direct labor, and manufacturing overhead, and calculates the total cost of production that should be assigned to each unit produced.

Question 16

A process costing system and a job-order costing system both use a predetermined overhead rate to apply estimated manufacturing overhead costs to work in process.

Accepted Answer

Both process costing and job-order costing systems use a predetermined overhead rate to allocate overhead costs to the products being manufactured. This rate is usually calculated by dividing estimated total overhead costs by an estimated level of activity, such as machine-hours or labor-hours, for the coming period.

Question 17

Company N manufactures machines to customer order.Why would the use of a process costing system not be appropriate for N?

Accepted Answer

The answer of Company N manufactures machines to customer order.Why...

Question 18

What are hybrid costing systems? Under what circumstances might a company use a hybrid system?

Accepted Answer

The answer of What are hybrid costing systems? Under what...

Question 19

What are materials requisition forms,and how are they used in a job-order costing system?

Accepted Answer

The answer of What are materials requisition forms,and how are...

Question 20

The primary advantage of process costing systems is that there is no underapplied or overapplied overhead to account for.

Accepted Answer

Process costing systems can still result in underapplied or overapplied overhead because they allocate overhead costs based on estimated rates, not actual costs incurred.

Quiz 12: Job-Order, process, and Hybrid Costing Systems