Question 1

In a process cost report,accounting for physical units excludes the physical units in beginning inventory to arrive at "units to be accounted for."

Accepted Answer

In a process cost report, accounting for physical units includes both the units in beginning inventory and the units started into production during the period to arrive at "units to be accounted for."

Question 2

Under the FIFO method,the equivalent units will always equal the actual units in beginning work in process inventory,plus the actual units started and completed during the current period,plus the actual units in ending work in process inventory during the current period.

Accepted Answer

Under the FIFO method, the equivalent units are calculated using the percentage of completion of work in process units, so the equivalent units may differ from the actual units in beginning and ending work in process inventory.

Question 3

Managers prepare process cost reports in the evaluating stage of the management process.

Accepted Answer

Managers prepare process cost reports in the controlling stage of the management process to track production costs and efficiency.

Question 4

The type of product costing system used by a company is dictated by the
A)project manager.
B)production process.
C)company president.
D)plant supervisor.

Accepted Answer

The type of product costing system needs to be tailored to the specific production process used by the company. Different systems may be more appropriate for job costing, process costing, or activity-based costing, for example. The other options listed are not typically involved in determining the product costing system used by a company.

Question 5

The FIFO process costing method assumes that the items in ending work in process inventory were started and completed during the current period.

Accepted Answer

The FIFO process costing method assumes that the items in ending work in process inventory are the units that were started first and completed during the current period. Any partially completed units from the previous period are included in beginning work in process inventory.

Question 6

Process costing is a system of
A)inventory management.
B)manufacturing.
C)product costing.
D)product placement.

Accepted Answer

Process costing is a system of product costing that assigns costs to each stage of a production process, rather than to individual units. It is commonly used in industries with high volumes of homogeneous products, such as chemical manufacturing or food processing. The purpose of process costing is to determine the cost of production per unit, which is useful for pricing decisions and inventory valuation. Therefore, the best choice is C) product costing.

Question 7

To decide the cost of a product,managers use information about past and projected product costing and customer preferences.

Accepted Answer

Managers use historical data and projections for product costing, as well as information on customer preferences, to determine the price of a product.

Question 8

The number of equivalent units for direct materials cost using the FIFO costing procedure is the units in beginning work in process inventory minus units started during the period plus units completed during the period.

Accepted Answer

The number of equivalent units for direct materials cost using the FIFO costing procedure is calculated by taking the units started and completed during the period plus the equivalent units in ending work in process inventory, minus the equivalent units related to the beginning work in process inventory.

Question 9

Under the FIFO costing method,separate unit cost analyses are not used for each accounting period because costs of different periods are averaged.

Accepted Answer

Under the FIFO (First-In, First-Out) costing method, costs are not averaged; instead, the costs of the earliest goods purchased or produced are the first to be recognized in determining cost of goods sold, keeping separate unit cost analyses for each accounting period.

Question 10

Under the average costing method in a process costing system,the costs in beginning inventory are combined with current period costs to compute an average product unit cost.

Accepted Answer

Under the average costing method in a process costing system, beginning inventory costs are combined with current period costs to calculate an average unit cost.

Question 11

When the average costing method is used in process costing,all costs incurred by a department or production process are divided by the equivalent units produced during the period to determine the average cost per unit produced.

Accepted Answer

This statement is true. The average costing method in process costing calculates the average cost per unit produced by dividing all costs incurred by a department or production process by the equivalent units produced during the period.

Question 12

In a process costing system,the equivalent units of production must be computed after determining the value of ending inventory.

Accepted Answer

In a process costing system, the equivalent units of production are computed before determining the value of ending inventory. This is because equivalent units of production represent a measure of the amount of production completed during the period, and they are used in the calculation of the cost per unit for the period. Once the equivalent units of production have been calculated, their associated costs can be assigned to either the units completed and transferred out or to the units still in process (i.e., ending inventory). Therefore, the value of ending inventory can be determined once the equivalent units of production have been calculated.

Question 13

It is necessary for managers to understand product and cost flow patterns,to use process costing.

Accepted Answer

Process costing is a method of cost accounting that is used to assign costs to homogeneous products produced in a continuous flow. In order to use process costing effectively, managers need to understand the product and cost flow patterns in their production process to accurately allocate costs to the products being produced. Therefore, it is essential for managers to have a good understanding of product and cost flow patterns to effectively utilize process costing.

Question 14

A company should use process costing rather than job order costing if
A)production is only partially completed during the accounting period.
B)the product is produced in batches only as orders are received.
C)the product is composed of mass-produced homogeneous units.
D)the product goes through a single stage of production.

Accepted Answer

Process costing is used when a product is composed of mass-produced homogeneous units. Job order costing is used when the product is customized or unique, and goes through various stages of production. Therefore, since the product is homogeneous, it is best for the company to use process costing.

Question 15

Under the average costing method in a process costing system,the costs in beginning inventory are combined with current period costs to compute an average product unit cost.

Accepted Answer

The statement is true. Under the average costing method in a process costing system, the cost of beginning inventory is combined with the cost of the current production to determine an average cost per unit.

Question 16

In a process costing system,the average costing method assumes that cost flows mirror the logical physical flow of production.

Accepted Answer

In a process costing system, the average costing method (or weighted-average method) combines costs of the current and prior periods without specifically assuming that costs follow the physical flow of products; it calculates an average cost for all units.

Question 17

When the FIFO costing method is used in process costing,the number of units in beginning inventory is multiplied by 100 percent to determine the equivalent units.

Accepted Answer

In the FIFO costing method, only the work done during the current period is considered for calculating equivalent units, so the units in beginning inventory are not simply multiplied by 100 percent. The focus is on what was added to those beginning units during the current period to complete them.

Question 18

The average costing method in process costing disregards the ending inventory assuming that direct material costs and conversion costs are pertaining to the immediate next period.

Accepted Answer

The average costing method in process costing takes into account the ending inventory by averaging the total costs of the current period with the costs of the previous period, thus assuming that the ending inventory contains costs both from the current and previous period.

Question 19

In a process costing system,the amount of total costs to be accounted for is made up of direct materials and conversion costs incurred during the current period plus those costs included in the beginning Work in Process Inventory account.

Accepted Answer

In process costing system, the total costs to be accounted for include direct materials and conversion costs incurred during the current period as well as the costs included in the beginning Work in Process Inventory account.

Question 20

One reason for preparing a process cost report for a particular department is to determine the amount of costs to transfer to the next department or to the Finished Goods Inventory account at the end of the period.

Accepted Answer

The process cost report summarizes the total costs incurred in a particular department and calculates the cost per unit produced. This information is used to transfer costs to the next department or to the Finished Goods Inventory account based on the number of units produced. Therefore, the statement is true.

Quiz 19: Costing Systems Process Costing

In a process cost report,accounting for physical units excludes the physical units in beginning inventory to arrive at "units to be accounted for."

Under the FIFO method,the equivalent units will always equal the actual units in beginning work in process inventory,plus the actual units started and completed during the current period,plus the actual units in ending work in process inventory during the current period.

Managers prepare process cost reports in the evaluating stage of the management process.

The type of product costing system used by a company is dictated by the

The FIFO process costing method assumes that the items in ending work in process inventory were started and completed during the current period.

Process costing is a system of

To decide the cost of a product,managers use information about past and projected product costing and customer preferences.

The number of equivalent units for direct materials cost using the FIFO costing procedure is the units in beginning work in process inventory minus units started during the period plus units completed during the period.

Under the FIFO costing method,separate unit cost analyses are not used for each accounting period because costs of different periods are averaged.

Under the average costing method in a process costing system,the costs in beginning inventory are combined with current period costs to compute an average product unit cost.

When the average costing method is used in process costing,all costs incurred by a department or production process are divided by the equivalent units produced during the period to determine the average cost per unit produced.

In a process costing system,the equivalent units of production must be computed after determining the value of ending inventory.

It is necessary for managers to understand product and cost flow patterns,to use process costing.

A company should use process costing rather than job order costing if

Under the average costing method in a process costing system,the costs in beginning inventory are combined with current period costs to compute an average product unit cost.

In a process costing system,the average costing method assumes that cost flows mirror the logical physical flow of production.

When the FIFO costing method is used in process costing,the number of units in beginning inventory is multiplied by 100 percent to determine the equivalent units.

The average costing method in process costing disregards the ending inventory assuming that direct material costs and conversion costs are pertaining to the immediate next period.

In a process costing system,the amount of total costs to be accounted for is made up of direct materials and conversion costs incurred during the current period plus those costs included in the beginning Work in Process Inventory account.

One reason for preparing a process cost report for a particular department is to determine the amount of costs to transfer to the next department or to the Finished Goods Inventory account at the end of the period.