Chapter 6—Process Costing Key
1. A process is a series of activities or operations, which are linked to perform a specific objective.
2. The cost flows for a process-costing system are totally different from those of a job order costing system.
3. Process systems are characterized by a larger number of homogeneous products passing through a series of
processes.
4. The production report is the document that summarizes the manufacturing activity that takes place in a work–
in-process department.
5. Many service organizations and just-in-time (JIT) manufacturing firms operate in an environment without
work-in-process inventories.
6. Services that are basically homogeneous and repetitive cannot take advantage of a process-costing approach.
7. In JIT manufacturing, work cells are created that produce a product from start to finish.
8. In firms with ending work-in-process inventories, output is measured using equivalent units.
9. Equivalent units are the incomplete units that could have been produced given the total amount of effort
expended.
10. In a process-costing system, work-in-process inventory, materials are added uniformly so that multiple
calculations of equivalent units are needed for each type of input.
11. The FIFO costing method recognizes that the work and costs carried over from the prior period legitimately
belong to that period.
12. FIFO follows the job-order costing principle.
13. The FIFO method unit costs are used to value output that is related to future periods.
14. The weighted average method treats the equivalent output and costs in beginning work-in-process
inventories as if they belong to the current period when calculating unit cost.
15. In a process-costing system, the costing of goods transferred out in BWIP inventory is difficult because
there are multiple categories of completed units.
16. The major benefit of the weighted average method is simplicity. The major disadvantage is that accuracy
and performance measurements are impaired.
17. Transferred-in goods, must be converted to the units of measure used by the current department.
18. For the receiving department of a process-costing manufacturer, transferred-in goods are materials that are
added at the end of the process.
19. In calculating equivalent units of production using the weighted average method, the transferred-in goods
are treated as materials added at the beginning of the process.
20. When manufacturing companies exhibit characteristics of both job and process environments, they use batch
production processes.
21. Operation costing uses a blend of job-order and process-costing procedures whenever batches of dissimilar
products are produced.
22. In operation costing, job-order procedures are used to assign direct materials costs and process procedures
are used to assign conversion costs.
23. When spoilage is assumed to be normal, it is not tracked separately, it is simply included in the total cost of
good units.
24. Spoilage in a process costing process means that more units enter the process than leave it.
25. Abnormal spoilage costs are treated the same as normal spoilage for process costing.
26. The accounting system which accumulates production costs by process and uses a work–in-process account
for each process is called __________ .
27. The basic characteristics of process costing include: cost flows, journal entries, and
the __________ report.
28. A key input to the cost of production report is __________ costs.
29. Companies using JIT manufacturing do not use __________ inventories for their process costing.
30. In a __________ costing system, production costs are accumulated by process.
31. In process costing, __________ costing can be used to assign shared overhead to processes.
32. The units that could have been produced in a period given the amount of manufacturing inputs used are
called __________ .
33. The process that determines the equality of the costs in beginning work in process and the costs incurred
during the period is called __________ .
34. When materials are not added uniformly using a work-in-process system, __________ of equivalent units
are needed, one for each type of input.
35. The unit-costing method that excludes prior-period work and costs in computing current-period unit work
and costs is called the __________ costing method.
36. FIFO follows the __________ principle.
37. For beginning work-in-process category using FIFO, the manufacturing cost is the sum of the current-period
__________ and the current __________ to complete the BWIP.
38. The __________ method is a unit-costing method that merges prior-period work and costs with current
period work and costs.
39. The weighted average costing method picks up __________ inventory costs and outputs and treats them as
if they belong in the current period.
40. Using the weighted average costing method, the costing of goods transferred out is __________ since there
is only one category of completed units.
41. The cost assigned to goods from a prior process is called the __________ cost.
42. For the receiving department, transferred in goods are added at the __________ of the process.
43. The usual approach in process manufacturing is to treat transferred-in goods as a separate material category
when calculating __________ .
44. The costing system that uses job-order procedures to assign direct material costs to batches and process
procedures to assign conversion costs is called __________ costing.
45. In operation costing, the process which produces batches of different products which are identical in many
ways but differ in others is called __________ process
46. The documents used to collect production costs for each batch in operation costing are called __________ .
47. Manufacturing firms that have characteristics of both job and process environments often use __________
processes.
48. __________ is a costing system that blends job-order and process-costing procedures applied to batches of
homogeneous products.
49. When spoilage is assumed to be __________ it is embedded in the total cost of good units.
50. When spoilage is due to the exacting nature of a particular job it is called __________ spoilage.
51. What system would a manufacturer of unique special orders or batch processes most likely use to
accumulate costs?
52. In process costing, costs are accounted for by
53. The appropriate cost accounting system to use when inventory items are produced on an assembly line is
54. The process that accumulates production costs by process and uses a work-in-process account for each
process is called:
55. Figure 6-1
The Sinbad Company has the following information for the Assembly Department for October 2014:
Materials purchased
$ 45,000
Materials used
49,000
Direct labor
30,000
Actual manufacturing overhead
56,000
Cost of goods completed and transferred to the Finishing Dept.
125,000
Overhead rate is 200 percent of direct labor costs.
Allen Company uses a process costing system for the Assembly Department.
Refer to Figure 6-1. The journal entry to record materials purchased would include a
56. Figure 6-1
The Sinbad Company has the following information for the Assembly Department for October 2014:
Materials purchased
$ 45,000
Materials used
49,000
Direct labor
30,000
Actual manufacturing overhead
56,000
Cost of goods completed and transferred to the Finishing Dept.
125,000
Overhead rate is 200 percent of direct labor costs.
Allen Company uses a process costing system for the Assembly Department.
Refer to Figure 6-1. What is the total amount of debits to Work in Process-Assembly Department for October?
57. Figure 6-1
The Sinbad Company has the following information for the Assembly Department for October 2014:
Materials purchased
$ 45,000
Materials used
49,000
Direct labor
30,000
Actual manufacturing overhead
56,000
Cost of goods completed and transferred to the Finishing Dept.
125,000
Overhead rate is 200 percent of direct labor costs.
Allen Company uses a process costing system for the Assembly Department.
Refer to Figure 6-1. The journal entry to record goods completed and transferred out of the Assembly Department would include a
58. When products and their costs are moved from one process to the next process, these costs are referred to as
59. Which is NOT a difference between the job-order costing system and the process costing system?
60. Figure 6-2
Leandro Corp. manufactures wooden desks. Production consists of three processes: cutting, assembly, and
finishing. The following costs are given for April:
Cutting
Assembly
Finishing
$7,000
$10,000
$3,000
3,000
14,000
2,000
4,000
5,000
6,000
There were no work in process inventories and 1,000 podiums were produced.
Refer to Figure 6-2. What is the cost transferred out of the assembly department.
61. Figure 6-2
Leandro Corp. manufactures wooden desks. Production consists of three processes: cutting, assembly, and
finishing. The following costs are given for April:
Cutting
Assembly
Finishing
$7,000
$10,000
$3,000
3,000
14,000
2,000
4,000
5,000
6,000
There were no work in process inventories and 1,000 podiums were produced.
Refer to Figure 6-2. Record the journal entries to record the transfer of goods from process to process.
D. none of the above
62. Figure 6-2
Leandro Corp. manufactures wooden desks. Production consists of three processes: cutting, assembly, and
finishing. The following costs are given for April:
Cutting
Assembly
Finishing
$7,000
$10,000
$3,000
3,000
14,000
2,000
4,000
5,000
6,000
There were no work in process inventories and 1,000 podiums were produced.
Refer to Figure 6-2. The journal entry to assign costs to the Assembly process would be
63. In a process costing system, which of the following would be TRUE?
64. As production occurs, materials, direct labor, and applied manufacturing overhead are recorded in
65. Which is TRUE about services?
66. Which is NOT a feature of a process costing system?
67. Figure 6-3
Jamie Hopen, CPA, prepares tax returns. The production costs and the number of tax returns prepared for the
month of September are as follows:
Direct materials
$ 200
CPA staff salaries
4,000
Overhead
1,800
Total
$6,000
Number of tax returns 300
What is the unit cost per tax return?
68. Figure 6-3
Jamie Hopen, CPA, prepares tax returns. The production costs and the number of tax returns prepared for the
month of September are as follows:
Direct materials
$ 200
CPA staff salaries
4,000
Overhead
1,800
Total
$6,000
Number of tax returns 300
Refer to Figure 6-3. What is the cost of services sold?
69. In order to determine product costs, JIT firms are usually structured so they can use:
70. JIT manufacturing emphasizes
71. Activity-based costing might have a role in process costing settings under what conditions?
72. The whole units that could have been produced in a period given the amount of manufacturing inputs used
is(are) called:
73. That which determine(s) whether the costs assigned to units transferred out and to units in ending work in
process are equal to the costs in beginning work in process, plus the manufacturing costs incurred in the current
period is(are) called:
74. Equivalent units expresses all activity of the period in terms of
75. The term given to units that represents the number of completed units that is equal, in terms of production
inputs, to a given number of partially completed units is:
76. Figure 6-4
The following information is available from the records of Diamond Cut, Inc.:
Direct Materials-Assembly Department
$10,000
Direct Materials-Finishing Department
15,000
Direct Labor-Assembly Department
11,000
Direct Labor-Finishing Department
20,000
Applied Overhead-Assembly Department
11,000
Applied Overhead-Finishing Department
20,000
Actual Overhead-Assembly Department
12,500
Actual Overhead-Finishing Department
17,500
Refer to Figure 6-4. What are the “total costs to account for” in the Assembly Department?
77. Figure 6-4
The following information is available from the records of Diamond Cut, Inc.:
Direct Materials-Assembly Department
$10,000
Direct Materials-Finishing Department
15,000
Direct Labor-Assembly Department
11,000
Direct Labor-Finishing Department
20,000
Applied Overhead-Assembly Department
11,000
Applied Overhead-Finishing Department
20,000
Actual Overhead-Assembly Department
12,500
Actual Overhead-Finishing Department
17,500
Refer to Figure 6-4. What are the conversion costs in the Finishing Department?
78. When conversion costs are uniform,
79. Figure 6-5
Maynard Inc. manufactures desks. The following data was given for production in February:
units, beginning work in process
0
units started
200
units completed
?
units, ending work in process (40% complete)
50
Refer to figure 6-5. What were the total number of units to account for?
80. Figure 6-5
Maynard Inc. manufactures desks. The following data was given for production in February:
units, beginning work in process
0
units started
200
units completed
?
units, ending work in process (40% complete)
50
Refer to Figure 6-5. How many units were completed?
81. Figure 6-5
Maynard Inc. manufactures desks. The following data was given for production in February:
units, beginning work in process
0
units started
200
units completed
?
units, ending work in process (40% complete)
50
Refer to Figure 6-5. What are the equivalent units?
82. Figure 6-5
Maynard Inc. manufactures desks. The following data was given for production in February:
units, beginning work in process
0
units started
200
units completed
?
units, ending work in process (40% complete)
50
Refer to Figure 6-5. If a total of $11,050 in production costs were incurred, what is the unit cost in February?
83. Figure 6-5
Maynard Inc. manufactures desks. The following data was given for production in February:
units, beginning work in process
0
units started
200
units completed
?
units, ending work in process (40% complete)
50
Refer to Figure 6-5. If a total of $11,050 in production costs were incurred, how much cost is assigned to the units completed?
84. “Total costs to account for” does NOT include which of the following costs?
85. Figure 6-6
Mannassass Company manufactures chairs. The following information was given for the company:
units, beginning work in process
0
units started
20,000
units completed
?
units, ending work in process
5,000
cost of direct materials
$440,000
cost of conversion
$ 64,000
Materials in the ending inventory were 100 percent complete and conversion in the ending inventory was 20 percent complete.
Refer to Figure 6-6. What are the units started and completed?
86. Figure 6-6
Mannassass Company manufactures chairs. The following information was given for the company:
units, beginning work in process
0
units started
20,000
units completed
?
units, ending work in process
5,000
cost of direct materials
$440,000
cost of conversion
$ 64,000
Materials in the ending inventory were 100 percent complete and conversion in the ending inventory was 20 percent complete.
Refer to Figure 6-6. What are the equivalent units for materials and conversion respectively?
87. Figure 6-6
Mannassass Company manufactures chairs. The following information was given for the company:
units, beginning work in process
0
units started
20,000
units completed
?
units, ending work in process
5,000
cost of direct materials
$440,000
cost of conversion
$ 64,000
Materials in the ending inventory were 100 percent complete and conversion in the ending inventory was 20 percent complete.
Refer to Figure 6-6. What are the costs per unit for materials and conversion respectively?
88. Figure 6-6
Mannassass Company manufactures chairs. The following information was given for the company:
units, beginning work in process
0
units started
20,000
units completed
?
units, ending work in process
5,000
cost of direct materials
$440,000
cost of conversion
$ 64,000
Materials in the ending inventory were 100 percent complete and conversion in the ending inventory was 20 percent complete.
Refer to Figure 6-6. What cost is assigned to ending work in process?
89. The following information pertains to Firewire Corporation:
Units
Work in process, November 1 (20% complete)
3,000
Started in November
24,000
Materials are added at the beginning of the process.
If 18,000 units were completed during the month, ending work in process at November 30 is
90. The two methods used to determine equivalent units of production are
91. Figure 6-7
Edelstein Company had the following data for 2014:
Units in process at the beginning of the month
4,000
Units in process at the end of the month
10,000
Units started during the month
40,000
Materials are added at the beginning of the process. Beginning work in process was 40 percent complete as to conversion. Ending work in process
was 70 percent complete as to conversion.
Refer to Figure 6-7. What is the number of units completed and transferred out during the period?