Question 1

Which of the following is true concerning cost drivers for the predetermined overhead rate in a process-costing system?

Accepted Answer

A)  Predetermined overhead rates are not used in a process-costing system. 
B)  If direct material cost is the cost driver, direct labor and direct materials may be combined into the single element of prime cost. 
C)  If direct labor hours is the cost driver, direct labor and manufacturing overhead may be combined into the single element of conversion cost. 
D)  If direct labor cost is the cost driver, direct labor and manufacturing overhead may be combined into the single element of conversion cost. 
E)  Cost drivers are irrelevant in process-costing systems. 
A)  Predetermined overhead rates are not used in a process-costing system. 
B)  If direct material cost is the cost driver, direct labor and direct materials may be combined into the single element of prime cost. 
C)  If direct labor hours is the cost driver, direct labor and manufacturing overhead may be combined into the single element of conversion cost. 
D)  If direct labor cost is the cost driver, direct labor and manufacturing overhead may be combined into the single element of conversion cost. 
E)  Cost drivers are irrelevant in process-costing systems. D

Question 2

A predetermined application rate for conversion costs is based on actual conversion costs divided by a budgeted cost driver.

Accepted Answer

A) True 
 B)False  False

Question 3

Operation costing is a popular type of accounting system, one that combines selected features of job-order and process-cost accounting.
Required:
A. Briefly discuss the basic features that are associated with an operation-costing system.
B. Explain why a sweater manufacturer may have a need for an operation-costing system.

Accepted Answer

A. Operation costing is used by firms that produce different models of similar products. The products go through essentially the same manufacturing process, so conversion costs can be assigned in a manner similar to that used in process-costing systems. Materials, on the other hand, are unique to the individual goods being produced and, accordingly, the cost is assigned by batch (or in a manner similar to that used in job costing).
B. A sweater manufacturer produces multiple versions of its single product: sweaters. The garments likely incur roughly the same labor and overhead cost, with the major difference among models being in the areas of fabric, color, and patterns (i.e., materials). Thus, the material cost will often differ and the manufacturer should take these differences into account, not spread costs equally over all units produced as would be done in a process-costing type of procedure.

Question 4

Which of the following statements about operation costing is (are) true?
I. Conversion costs are accumulated by department.
II. Direct material costs are accumulated by batch.
III. Operation costing is a hybrid product-costing system.

Accepted Answer

A)  I only. 
B)  I and II only. 
C)  I and III only. 
D)  II and III only. 
E)  I, II, and III. 
A)  I only. 
B)  I and II only. 
C)  I and III only. 
D)  II and III only. 
E)  I, II, and III.

Question 5

When computing the conversion cost per equivalent unit under the weighted-average method of process costing, all of the following information would be needed except:

Accepted Answer

A)  the number of units completed during the current accounting period. 
B)  the conversion work performed during the current period on the ending work-in-process inventory. 
C)  the conversion work performed during the current period on the beginning work-in-process inventory. 
D)  the conversion cost in the beginning work-in-process inventory. 
E)  the conversion cost incurred during the current accounting period. 
A)  the number of units completed during the current accounting period. 
B)  the conversion work performed during the current period on the ending work-in-process inventory. 
C)  the conversion work performed during the current period on the beginning work-in-process inventory. 
D)  the conversion cost in the beginning work-in-process inventory. 
E)  the conversion cost incurred during the current accounting period.

Question 6

Bratton Corporation had 6,500 units of work in process on April 1. During April, 19,100 units were completed and as of April 30, 5,100 units remained in production. How many units were started during April?

Accepted Answer

A)  11,600. 
B)  17,700. 
C)  20,500. 
D)  30,700. 
E)  None of the answers is correct. 
A)  11,600. 
B)  17,700. 
C)  20,500. 
D)  30,700. 
E)  None of the answers is correct.

Question 7

Hornsby has a single production department, and uses a process-costing system. The balance in its Work-in-Process account on January 1 was $68,000. The account was charged with direct materials, direct labor, and manufacturing overhead of $450,000 throughout the year. If a review of the accounting records determined that $86,000 of goods were still in production at year-end, Hornsby should make a journal entry on December 31 that includes:

Accepted Answer

A)  a debit to Cost of Goods Sold for $432,000. 
B)  a debit to Finished-Goods Inventory for $432,000. 
C)  a debit to Work-in-Process Inventory for $432,000. 
D)  a debit to Finished-Goods Inventory for $86,000. 
E)  a credit to Work-in-Process Inventory for $86,000. 
A)  a debit to Cost of Goods Sold for $432,000. 
B)  a debit to Finished-Goods Inventory for $432,000. 
C)  a debit to Work-in-Process Inventory for $432,000. 
D)  a debit to Finished-Goods Inventory for $86,000. 
E)  a credit to Work-in-Process Inventory for $86,000.

Question 8

Which of the following manufacturers would most likely not use a process-cost accounting system?

Accepted Answer

A)  A producer of computer monitors. 
B)  A paint manufacturer. 
C)  A producer of frozen orange juice. 
D)  A builder of customized yachts. 
E)  A lumber mill. 
A)  A producer of computer monitors. 
B)  A paint manufacturer. 
C)  A producer of frozen orange juice. 
D)  A builder of customized yachts. 
E)  A lumber mill.

Question 9

Which method of process costing is almost always used in practice?

Accepted Answer

A)  Weighted average method 
B)  LIFO method 
C)  Straight-line method 
D)  Accelerated method 
E)  None of these answers is correct. 
A)  Weighted average method 
B)  LIFO method 
C)  Straight-line method 
D)  Accelerated method 
E)  None of these answers is correct.

Question 10

Basil Manufacturing uses a weighted-average process-costing system. The following figures pertain to July:
   
All materials are introduced at the start of the process, and conversion cost is incurred evenly throughout production. The company used direct materials that cost $640,000; conversion amounted to $8 per equivalent unit. 
Required:
A. Calculate the direct materials cost per equivalent unit.
B. Calculate the cost of units completed and transferred.
C. What percentage of conversion work will be performed on the 40,000-unit ending work-in-process inventory during August?
D. In all likelihood, were all of the 120,000 completed units begun in July? Explain.

Accepted Answer

A. $640,000 / (120,000 + 40,000) = $4
B.

Question 11

Use the following information to answer the following Questions
Lakeland Chemical manufactures a product called Zing. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 60% complete with respect to conversion; the ending work-in-process inventory is 20% complete. The following data pertain to May:

-Using the weighted-average method of process costing, the equivalent units of direct materials total:

Accepted Answer

A)  68,000. 
B)  69,400. 
C)  74,000. 
D)  75,000. 
E)  None of the answers is correct. 
A)  68,000. 
B)  69,400. 
C)  74,000. 
D)  75,000. 
E)  None of the answers is correct.

Question 12

Unit costs in a process-costing system are derived by using:

Accepted Answer

A)  in-process units. 
B)  completed units. 
C)  physical units. 
D)  equivalent units. 
E)  a measure of activity other than those listed above. 
A)  in-process units. 
B)  completed units. 
C)  physical units. 
D)  equivalent units. 
E)  a measure of activity other than those listed above.

Question 13

Barton Corporation, which adds materials at the beginning of production, uses a weighted-average process-costing system. Consider the data that follow.
 
The company's cost per equivalent unit for materials is:

Accepted Answer

A)  $1.24. 
B)  $1.66. 
C)  $1.67. 
D)  $2.05. 
E)  None of the answers is correct. 
A)  $1.24. 
B)  $1.66. 
C)  $1.67. 
D)  $2.05. 
E)  None of the answers is correct.

Question 14

Alton Company uses a process-costing system for its single product. Material A is added at the beginning of the process; in contrast, material B is added when the units are 75% complete. The firm's ending work-in-process inventory consists of 6,000 units that are 80% complete. Which of the following correctly expresses the equivalent units of production with respect to materials A and B in the ending work-in-process inventory?

Accepted Answer

A)  A, 4,800; B, 0. 
B)  A, 4,800; B, 4,800. 
C)  A, 6,000; B, 0. 
D)  A, 6,000; B, 4,800. 
E)  A, 6,000; B, 6,000. 
A)  A, 4,800; B, 0. 
B)  A, 4,800; B, 4,800. 
C)  A, 6,000; B, 0. 
D)  A, 6,000; B, 4,800. 
E)  A, 6,000; B, 6,000.

Question 15

In a process-costing system, manufacturing costs are accumulated by:

Accepted Answer

A)  batch. 
B)  batch and time period. 
C)  department, only. 
D)  department and time period, only. 
E)  department or process, and time period. 
A)  batch. 
B)  batch and time period. 
C)  department, only. 
D)  department and time period, only. 
E)  department or process, and time period.

Question 16

Operation costing is a hybrid type of accounting system that combines features of job-order and process-cost accounting.
Required:
A. Briefly discuss the similarities and differences of an operation-costing system and a job-order costing system.
B. Briefly discuss the similarities and differences of an operation-costing system and a process-costing system.

Accepted Answer

A. Similarities: Materials are unique to

Question 17

Use the following information to answer the following Questions
Lakeland Chemical manufactures a product called Zing. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 60% complete with respect to conversion; the ending work-in-process inventory is 20% complete. The following data pertain to May:

-Using the weighted-average method of process costing, the cost per unit of direct materials is:

Accepted Answer

A)  $1.17. 
B)  $1.18. 
C)  $1.20. 
D)  $1.28. 
E)  None of the answers is correct. 
A)  $1.17. 
B)  $1.18. 
C)  $1.20. 
D)  $1.28. 
E)  None of the answers is correct.

Question 18

Mohawk Machining, which uses a process-costing system, adds material at the beginning of production and incurs conversion cost evenly throughout manufacturing. The following selected information was taken from the company's accounting records:
Total equivalent units of materials: 8,000
Total equivalent units of conversion: 7,400
Units started and completed during the period: 6,500
On the basis of this information, the ending work-in-process inventory's stage of completion is:

Accepted Answer

A)  80%. 
B)  70%. 
C)  60%. 
D)  40%. 
E)  Some other percentage. 
A)  80%. 
B)  70%. 
C)  60%. 
D)  40%. 
E)  Some other percentage.

Question 19

Equivalent-unit calculations are necessary to allocate manufacturing costs between:

Accepted Answer

A)  units completed and ending work in process. 
B)  beginning work in process and units completed. 
C)  units sold and ending work in process. 
D)  cost of goods manufactured and beginning work in process. 
E)  cost of goods manufactured and cost of goods sold. 
A)  units completed and ending work in process. 
B)  beginning work in process and units completed. 
C)  units sold and ending work in process. 
D)  cost of goods manufactured and beginning work in process. 
E)  cost of goods manufactured and cost of goods sold.

Question 20

Use the following information to answer the following Questions
Lakeland Chemical manufactures a product called Zing. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 60% complete with respect to conversion; the ending work-in-process inventory is 20% complete. The following data pertain to May:

-Using the weighted-average method of process costing, the total costs remaining in work in process on May 31 are:

Accepted Answer

A)  $0. 
B)  $12,040. 
C)  $17,480. 
D)  $25,640. 
E)  None of the answers is correct. 
A)  $0. 
B)  $12,040. 
C)  $17,480. 
D)  $25,640. 
E)  None of the answers is correct.

Which of the following is true concerning cost drivers for the predetermined overhead rate in a process-costing system?

A predetermined application rate for conversion costs is based on actual conversion costs divided by a budgeted cost driver.

Which of the following statements about operation costing is (are) true? I. Conversion costs are accumulated by department. II. Direct material costs are accumulated by batch. III. Operation costing is a hybrid product-costing system.

When computing the conversion cost per equivalent unit under the weighted-average method of process costing, all of the following information would be needed except:

Bratton Corporation had 6,500 units of work in process on April 1. During April, 19,100 units were completed and as of April 30, 5,100 units remained in production. How many units were started during April?

Which of the following manufacturers would most likely not use a process-cost accounting system?

Which method of process costing is almost always used in practice?

Unit costs in a process-costing system are derived by using:

Barton Corporation, which adds materials at the beginning of production, uses a weighted-average process-costing system. Consider the data that follow. The company's cost per equivalent unit for materials is:

In a process-costing system, manufacturing costs are accumulated by:

Equivalent-unit calculations are necessary to allocate manufacturing costs between:

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts

Product Costing and Cost Accumulation in a Batch Production Environment

Activity-Based Costing and Management

Activity Analysis, Cost Behavior, and Cost Estimation

Cost-Volume-Profit Analysis

Variable Costing and the Costs of Quality and Sustainability

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Compound Interest and the Concept of Present Value

Inventory Management

Filters

Exam 4: Process Costing and Hybrid Product-Costing Systems

Which of the following is true concerning cost drivers for the predetermined overhead rate in a process-costing system?

A predetermined application rate for conversion costs is based on actual conversion costs divided by a budgeted cost driver.

Which of the following statements about operation costing is (are) true? I. Conversion costs are accumulated by department. II. Direct material costs are accumulated by batch. III. Operation costing is a hybrid product-costing system.

When computing the conversion cost per equivalent unit under the weighted-average method of process costing, all of the following information would be needed except:

Bratton Corporation had 6,500 units of work in process on April 1. During April, 19,100 units were completed and as of April 30, 5,100 units remained in production. How many units were started during April?

Which of the following manufacturers would most likely not use a process-cost accounting system?

Which method of process costing is almost always used in practice?

Unit costs in a process-costing system are derived by using:

Barton Corporation, which adds materials at the beginning of production, uses a weighted-average process-costing system. Consider the data that follow. The company's cost per equivalent unit for materials is:

In a process-costing system, manufacturing costs are accumulated by:

Equivalent-unit calculations are necessary to allocate manufacturing costs between:

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts

Product Costing and Cost Accumulation in a Batch Production Environment

Activity-Based Costing and Management

Activity Analysis, Cost Behavior, and Cost Estimation

Cost-Volume-Profit Analysis

Variable Costing and the Costs of Quality and Sustainability

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Compound Interest and the Concept of Present Value

Inventory Management

Filters