Chapter 6
1. Process costing accumulates costs by individual jobs.
a. True
b. False
2. Process costing is most appropriate for manufacturers of homogeneous products.
a. True
b. False
3. Process costing is appropriate for companies providing services.
a. True
b. False
Chapter 6
4. Process costing is most useful in situations when relatively homogeneous products are produced.
a. True
b. False
5. Large manufacturing plants, such as chemical, food, and tire manufacturers, use process costing.
a. True
b. False
Chapter 6
6. Parallel processing requires that units pass through one process before they can be worked on in the next process.
a. True
b. False
7. In process costing, each producing department has its own work-in–process account.
a. True
b. False
Chapter 6
8. A production report contains information on costs transferred in from prior departments as well as costs added in the
department such as direct materials, direct labor, and overhead.
a. True
b. False
9. Any product or service that is basically homogeneous and repetitively produced can take advantage of a process-costing
approach.
a. True
b. False
Chapter 6
10. Firms that offer services cannot have work-in-process inventories.
a. True
b. False
11. Manufacturing firms may operate without significant work-in-process inventories.
a. True
b. False
12. Process-costing systems are specifically designed to support costing of mass-produced homogeneous products.
a. True
b. False
Chapter 6
13. The presence of beginning and ending work-in-process inventories leads to much of the complication surrounding
process costing.
a. True
b. False
14. The costs transferred from a prior process to a subsequent process are referred to as transferred-in costs.
a. True
b. False
Chapter 6
15. Transferred-in costs are a type of raw material cost.
a. True
b. False
16. A production report provides information about the physical units processed in a department and also about the
manufacturing costs associated with them.
a. True
b. False
Chapter 6
17. The unit information section of the production report has two major subdivisions: (1) units to account for and (2) units
accounted for.
a. True
b. False
18. The cost information section of the production report has two major subdivisions: (1) costs to account for and (2) costs
accounted for.
a. True
b. False
Chapter 6
19. The FIFO costing method separates work and costs of the equivalent units in beginning inventory from work and costs
of the equivalent units produced during the current period. Only current work and costs are used to calculate this period’s
unit cost.
a. True
b. False
20. The FIFO method is the only method used to calculate equivalent units in process costing.
a. True
b. False
Chapter 6
21. To calculate the equivalent units of production, the number of physical units is multiplied by the percentage of
completion.
a. True
b. False
22. Equivalent units of output are the complete units that could have been produced given the total amount of
manufacturing effort expended during the period.
a. True
b. False
Chapter 6
23. There are two approaches for dealing with the prior-period output and prior-period costs found in beginning work in
process: the weighted average method and the FIFO method.
a. True
b. False
24. The weighted average costing method combines beginning inventory costs and work done with current period costs
and work to calculate this period’s unit cost.
a. True
b. False
Chapter 6
25. The production report is the document that summarizes the manufacturing activity that takes place in a process
department for a given period of time.
a. True
b. False
26. The major benefit of the FIFO method is simplicity.
a. True
b. False
27. In process costing, it is unreasonable to assume uniform application of material costs.
Chapter 6
a. True
b. False
28. Different percentage completion figures for manufacturing inputs pose a problem for the calculation of equivalent
units, unit cost, and valuation of ending work in process.
a. True
b. False
29. The solution for different percentage completion figures for manufacturing inputs is to calculate equivalent units as if
there were uniform manufacturing inputs.
a. True
b. False
Chapter 6
30. The usual approach is to treat transferred-in goods as a separate conversion category when calculating equivalent
units.
a. True
b. False
31. If changes occur in the prices of the manufacturing inputs from one period to the next, then the weighted average
method produces a more accurate unit cost than does the FIFO method.
a. True
b. False
Chapter 6
32. Since FIFO excludes prior-period work and costs, it is necessary to create three categories of completed units.
a. True
b. False
33. FIFO assumes that units in beginning work in process are completed last.
a. True
b. False
Chapter 6
34. Under the FIFO method, for the beginning work–in-process units, the total associated manufacturing costs are the sum
of the prior-period costs plus the costs incurred in the current period to finish the units.
a. True
b. False
35. ___________________ requires that units pass through one process before they can be worked on in the next process.
Chapter 6
36. _________________ works well whenever relatively homogeneous products pass through a series of processes and
receive similar amounts of manufacturing costs.
37. Firms that have adopted a __________ approach try to reduce WIP inventories to very low levels.
Chapter 6
38. The processing pattern in which partially completed units can be worked on simultaneously in different processes and
then brought together in a final process for completion is known as ____________________.
39. In process costing, each producing department has its own ________________ account.
Chapter 6
40. Direct materials used in production, direct labor, and applied overhead are charged to the _______________ account.
41. _________________________ are costs transferred from a prior process to a subsequent process.
42. The _______________________ is the document that summarizes the manufacturing activity that takes place in a
process department for a given period of time.
Chapter 6
43. ___________ costs are a type of raw material cost.
44. __________________________ are the complete units that could have been produced given the total amount of
manufacturing effort expended for the period under consideration.