Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Chapter 18 Process Costing Answer Key
True / False Questions
1.
A process costing system is highly desirable when a company mass produces identical
goods.
2.
A company may choose to use process costing or job order costing, but never both
simultaneously.
3.
United Construction Company, which manufactures residential buildings, would most likely
use a process costing system.
4.
A process costing system is suitable for a company with a large volume of standard
products produced on a relatively continuous basis, for example, golf balls or petroleum.
5.
Job order costing involves averaging costs across products produced, and as such, the first
step in job order costing is to clearly understand the physical flows.
6.
Conversion costs include direct labor and direct materials associated with converting units,
so that they can be transferred out of Work in Process.
7.
Debiting Work in Process in Department Two and crediting Work in Process in Department
One represents costs transferred from Department Two to Department One.
8.
Jiffy Company has 3,000 units that are 70% complete. Jiffy's "equivalent units" are 3,000
completed units.
9.
Manufacturing overhead is
not
applied to products when a process costing system is used.
10.
Costs flow through a process costing system in the same sequence as actual products
move through the assembly process.
11.
In most process costing systems, the number of units "in process" at any one time is
usually significant relative to the total production output of the period.
12.
As costs flow from one production department to the next in a process costing system, one
Work in Process Inventory account shows all the changes to the units in production.
Topic: Process Costing
13.
An equivalent unit measures the percentage of a completed unit's cost that is present in a
partially finished unit.
14.
The number of equivalent units of production during a period may be greater than, equal to,
or smaller than the actual number of units completed and transferred to the finished goods
warehouse.
15.
Completing 3,000 units which were each 75% complete at the beginning of the period
represents 2,250 equivalent units of work during the current period.
16.
Equivalent units of production significantly differ from units completed and transferred
during the period only when no significant differences exist between beginning and ending
work in process.
17.
In a process costing system that uses equivalent units of production, the per-unit cost of
direct materials equals the total cost of materials used in the current month divided by the
number of units completed and transferred during the current month.
18.
The cost transferred to Cost of Goods Sold is equal to the total manufacturing costs
incurred for the units sold.
19.
In a production cost report, the units in beginning Work in Process are always expressed as
equivalent units.
20.
The production cost report is an estimate of the equivalent units completed during the
period.
21.
In a production cost report, the units transferred out refer to the equivalent units
completed during the period that have been moved to the next department or to Finished
Goods Inventory.
Multiple Choice Questions
22.
Process costing does
not
:
23.
Process costing would be suitable for:
24.
All of the following are characteristics of the products of process costing
except
:
25.
The best cost system to use for a company producing a continuous stream of similar items
would be a:
26.
Process costing systems:
27.
Which company would most likely
not
use a process costing system?
28.
Which of the following is
not
a characteristic of a process costing system?
29.
A process costing system differs from a job order costing system in that:
30.
In either a job order or a process costing system, credits to the Materials Inventory account
represent:
31.
The Work in Process - Assembly account would be credited and the Work in Process -
Packaging account would be debited when:
32.
For which of the following categories is it
not
important to know the number of units?
33.
Refer to the information above. In the production process described, what is the Work in
Process Inventory: Packaging Department debited for?
34.
Refer to the information above. In Duffy's operation, the Finished Goods Inventory account
is debited for:
Sue's Soup Products uses a process costing system with two processing departments: the
Mixing and Cooking Department and the Canning Department. Work in process inventories
are reduced to zero each month. In March, the Mixing and Cooking Department incurred
manufacturing costs of $63,000 to mix 42,000 gallons of soup. The Canning Department
incurred manufacturing costs of $9,000. A total of 170,000 cans of soup were transferred to
the finished goods warehouse during the month.
35.
Refer to the information above. The journal entry to record the transfer of soup out of the
Mixing and Cooking Department during March would include:
Topic: Process Costing
36.
Refer to the information above. The journal entry to record the transfer of soup out of the
Canning Department during March would include:
37.
Refer to the information above. The unit cost per gallon of soup transferred to the Canning
Department during March was:
Topic: Process Costing
38.
Refer to the information above. The unit cost per can of soup transferred to the finished
goods warehouse during March was:
Evans Products uses a process costing system with two processing departments: the
Mixing Department and the Finishing Department. In June, unit costs incurred by the
Mixing Department amounted to $4.00 per unit. Unit costs transferred to the finished
goods warehouse during the month amounted to $22. Work-in-process inventories are
reduced to zero each month.
39.
Refer to the information above. The transfer of 35,000 units to the Finishing Department in
June required:
40.
Refer to the information above. The entry to record the sale of 3,500 units in June would
include:
41.
Refer to the information above. If 80% of all inventory was sold at $32 per unit and 3,500
units were sold, what is the cost of the finished goods inventory at year-end?
42.
If 8,000 units were in beginning inventory, 26,000 units were started, and 6,000 units were
in the ending inventory, how many units were transferred out?
43.
Equivalent units of production are:
Topic: Process Costing
44.
Equivalent units are usually computed for:
45.
In most process costing systems, per-unit costs are determined by:
46.
In a process costing system, costs flow from one Work in Process Inventory account to the
next in the same sequence as:
47.
In a process costing system, the number of units started and completed for a period is
equal to:
