Managerial Accounting, 16e (Garrison)
Chapter 4 Process Costing
1) In a process costing system, costs are traced directly to jobs.
2) When materials are purchased in a process costing system, a work in process account is
debited with the cost of the materials.
3) In a process costing system, overhead is allocated to departments after being applied to units
of product.
4) In a process costing system, manufacturing overhead cost is also called conversion cost.
5) The units in beginning work in process inventory plus the units started into production must
equal the units transferred out of the department plus the units in ending work in process
inventory.
6) The following journal entry would be made in a processing costing system when units that
have been completed in the final processing department are transferred to the finished goods
warehouse:
Finished Goods
XXX
Materials
XXX
7) The equivalent units in beginning work in process inventory plus the equivalent units in
ending work in process inventory equals the units transferred out plus the equivalent units for the
work done during the period.
8) When all materials are added at the beginning of the production process, under a weighted-
average process costing system the equivalent units for materials is equal to the units completed
and transferred out.
9) In process costing, the equivalent units computed for materials is generally the same as that
computed for conversion costs.
10) When computing the cost per equivalent unit, it is necessary to consider the percentage
completion of the units in beginning inventory under the weighted-average method.
11) In calculating cost per equivalent unit under the weighted-average method, prior period costs
are combined with current period costs.
12) Under the weighted-average method, the cost of ending work in process inventory is
determined by dividing the equivalent units of production for ending inventory by the cost per
equivalent unit for each cost category and then summing the result.
13) In calculating cost per equivalent unit under the weighted-average method, prior period costs
are combined with current period costs.
14) The “costs to be accounted for” portion of the cost reconciliation report includes the cost of
beginning work in process inventory and the cost of units transferred out.
15) The “costs to be accounted for” portion of the cost reconciliation report includes the cost of
beginning work in process inventory and the costs added during the period.
16) Job-order costing would be more likely to be used than process costing in situations where
many different products or services are produced each period to customer specifications.
17) A job-order costing system would be best suited for production of a large quantity of a
homogeneous product.
18) A flour manufacturer is more likely to use process costing than job-order costing whereas a
manufacturer of customized leather jackets is more likely to use job-order costing than process
costing.
19) Process costing is employed in industries that produce basically homogeneous products such
as bricks, flour, or cement but would not be appropriate for assembly-type operations such as
those that manufacture computers.
20) In process costing, a separate work in process account is kept for each:
A) individual order.
B) equivalent unit.
C) processing department.
D) cost category (i.e., materials, conversion cost).
21) Which of the following journal entries would be used to record direct labor costs in a
company having two processing departments (Department A and Department B)?
A)
Work in Process
XXX
Salaries and Wages Payable
XXX
B)
Salaries and Wages Expense
XXX
Salaries and Wages Payable
XXX
C)
Work in Process-Department A
XXX
Work in Process-Department B
XXX
Salaries and Wages Payable
XXX
D)
Salaries and Wages Payable
XXX
Work in Process
XXX
22) Assume there was no beginning work in process inventory and the ending work in process
inventory is 70% complete with respect to conversion costs. Under the weighted-average
method, the number of equivalent units of production with respect to conversion costs would be:
A) the same as the units completed.
B) less than the units completed.
C) the same as the units started during the period.
D) less than the units started during the period.
23) Malcolm Company uses a weighted-average process costing system. All materials at
Malcolm are added at the beginning of the production process. The equivalent units for materials
at Malcolm would be the sum of:
A) units in ending work in process and the units started.
B) units in beginning work in process and the units started.
C) units in ending work in process and the units started and completed.
D) units in beginning work in process and the units started and completed.
24) When computing the cost per equivalent unit, the weighted-average method of process
costing considers:
A) costs incurred during the current period only.
B) costs incurred during the current period plus cost of ending work in process inventory.
C) costs incurred during the current period plus cost of beginning work in process inventory.
D) costs incurred during the current period less cost of beginning work in process inventory.
25) Under the weighted-average method, the cost of units transferred out of a department is
computed as follows for a cost category:
A) Costs added during the period + Cost of beginning work in process inventory
B) Units transferred to the next department × Cost per equivalent unit
C) Units in ending work in process inventory × Cost per equivalent unit
D) Cost of ending work in process inventory − Cost of beginning work in process inventory
26) In the cost reconciliation report under the weighted-average method, the “Total cost
accounted for” equals:
A) Cost of beginning work in process inventory + Cost of units transferred out
B) Cost of beginning work in process inventory + Cost of units transferred in
C) Cost of ending work in process inventory + Cost of units transferred out
D) Cost of ending work in process inventory + Cost added to production during the period
27) In the cost reconciliation report under the weighted-average method, the “Costs to be
accounted for” section contains which of the following items?
A) Cost of beginning work in process inventory
B) Cost of ending work in process inventory
C) Cost of units transferred out
D) Cost of ending finished goods inventory
28) All of the following statements are correct when referring to process costing except:
A) Process costing would be appropriate for a jeweler who makes custom jewelry to order.
B) A process costing system has the same basic purposes as a job-order costing system.
C) Units produced are indistinguishable from each other.
D) Costs are accumulated by department.
29) A process costing system is employed in those situations where:
A) many different products, jobs, or batches of production are being produced each period.
B) where manufacturing involves a single, homogeneous product that flows evenly through the
production process on a continuous basis.
C) a service is performed such as in a law firm or an accounting firm.
D) full or absorption cost approach is not employed.
30) Which of the following types of companies would typically use process costing rather than
job-order costing?
A) A small appliance repair shop.
B) A manufacturer of commercial passenger aircraft.
C) A specialty equipment manufacturer.
D) A breakfast cereal manufacturer.
31) The Werner Corporation uses the weighted-average method in its process costing system.
The company recorded 24,400 equivalent units for conversion costs for November in a particular
department. There were 6,000 units in the ending work in process inventory on November 30
which were 60% complete with respect to conversion costs. The November 1 work in process
inventory consisted of 5,000 units which were 40% complete with respect to conversion costs. A
total of 22,000 units were completed and transferred out of the department during the month. The
number of units started during November in the department was:
A) 22,000 units
B) 17,000 units
C) 26,000 units
D) 21,000 units
32) Jared Beverage Corporation uses a process costing system to collect costs related to the
production of its celery flavored cola. The cola is first processed in a Mixing Department and is
then transferred out and finished up in the Bottling Department. The finished cases of cola are
then transferred to Finished Goods Inventory. The following information relates to the
company’s two departments for the month of January:
Mixing
Cases of cola in work in process, January 1
10,000
5,000
Cases of cola completed/transferred out during January
65,000
?
Cases of cola in work in process, January 31
4,000
7,000
How many cases of cola were completed and transferred to Finished Goods Inventory during
January?
A) 70,000
B) 63,000
C) 58,000
D) 77,000
33) The Assembly Department started the month with 24,000 units in its beginning work in
process inventory. An additional 309,000 units were transferred in from the prior department
during the month to begin processing in the Assembly Department. There were 29,000 units in
the ending work in process inventory of the Assembly Department. How many units were
transferred to the next processing department during the month?
A) 333,000
B) 362,000
C) 304,000
D) 314,000
34) Jersey Corporation has a process costing system in which it uses the weighted-average
method. The equivalent units for conversion costs for the month were 47,500 units. The
beginning work in process inventory consisted of 15,000 units, 60% complete with respect to
conversion costs. The ending work in process inventory consisted of 10,000 units, 75% complete
with respect to conversion costs. The number of units started during the month was:
A) 25,000 units
B) 34,000 units
C) 35,000 units
D) 40,000 units
35) Bims Corporation uses the weighted-average method in its process costing system. The
Assembly Department started the month with 2,000 units in its beginning work in process
inventory that were 70% complete with respect to conversion costs. An additional 61,000 units
were transferred in from the prior department during the month to begin processing in the
Assembly Department. There were 18,000 units in the ending work in process inventory of the
Assembly Department that were 60% complete with respect to conversion costs.
What were the equivalent units for conversion costs in the Assembly Department for the month?
A) 45,000
B) 77,000
C) 54,400
D) 55,800
36) Janner Corporation uses the weighted-average method in its process costing system.
Operating data for the Painting Department for the month of April appear below:
Units
Percent
Complete with
Respect to
Conversion
Beginning work in process inventory
4,000
50
%
Transferred in from the prior department during April
90,400
Ending work in process inventory
1,600
60
%
What were the equivalent units for conversion costs in the Painting Department for April?
A) 93,760
B) 92,800
C) 91,360
D) 88,000
Conversion
Units transferred to the next department
92,800
Conversion: 1,600 units × 60%
Equivalent units of production
93,760
37) Nabais Corporation uses the weighted-average method in its process costing system.
Operating data for the Lubricating Department for the month of October appear below:
Units
Percent
Complete
with
Respect to
Conversion
Beginning work in process inventory
3,300
80
%
Transferred in from the prior department during October
30,700
Completed and transferred to the next department during
October
32,200
Ending work in process inventory
1,800
60
%
What were the equivalent units for conversion costs in the Lubricating Department for October?
A) 31,780
B) 33,280
C) 32,200
D) 29,200
Conversion
Units transferred to the next department
32,200
Ending work in process:
Conversion: 1,800 units × 60%
Equivalent units of production
33,280
38) Fabert Corporation uses the weighted-average method in its process costing system. The
Assembly Department started the month with 16,000 units in its beginning work in process
inventory that were 40% complete with respect to conversion costs. An additional 60,000 units
were transferred in from the prior department during the month to begin processing in the
Assembly Department. During the month 65,000 units were completed in the Assembly
Department and transferred to the next processing department. There were 11,000 units in the
ending work in process inventory of the Assembly Department that were 50% complete with
respect to conversion costs. What were the equivalent units for conversion costs in the Assembly
Department for the month?
A) 65,000
B) 70,500
C) 64,100
D) 55,000