Question 1

In a process costing system, factory overhead costs are allocated to production departments by using a predetermined overhead allocation rate.

Accepted Answer

A) True 
 B)False  True

Question 2

In process costing, all indirect materials are charged directly to Work in Process Inventory.

Accepted Answer

A) True 
 B)False  False

Question 3

A materials consumption report is used instead of materials requisitions in companies where materials move continuously through the manufacturing process.

Accepted Answer

A) True 
 B)False  True

Question 4

The second step in accounting for production activity in a period, after determining the physical flow of units, is to compute ________.

Accepted Answer

The answer of The second step in accounting for production...

Question 5

When direct labor and overhead enter the production process at different rates, it is appropriate to use a conversion cost per equivalent unit.

Accepted Answer

A) True 
 B)False

Question 6

Richards Corporation uses the FIFO method of process costing. The following information is available for October in its Fabricating Department: Units:
Beginning Inventory: 80,000 units, 60% complete as to materials and 20% complete as to conversion.
Units started and completed: 250,000.
Units completed and transferred out: 330,000.
Ending Inventory: 30,000 units, 40% complete as to materials and 10% complete as to conversion.
Costs:
Costs in beginning Work in Process - Direct Materials: $37,200. Costs in beginning Work in Process - Conversion: $79,700.
Costs incurred in October - Direct Materials: $646,800. Costs incurred in October - Conversion: $919,300.
-
Calculate the cost per equivalent unit of materials.

Accepted Answer

A)  $2.33 
B)  $2.00 
C)  $2.20 
D)  $2.59 
E)  $1.89 
A)  $2.33 
B)  $2.00 
C)  $2.20 
D)  $2.59 
E)  $1.89

Question 7

In a process costing system, the entry to record cost of materials assigned to a production department requires a debit to the Raw Materials Inventory account and a credit to the Work in Process Inventory account for that department.

Accepted Answer

A) True 
 B)False

Question 8

Prepare the required general journal entry to record the following transactions for the O'Harra Company.
a. Used $78,000 of direct labor in the production department.
b. Used $17,000 of indirect labor.

Accepted Answer

\[\begin{array} { l | l | l | l } 
\text

Question 9

Briefly explain the conditions under which job order cost accounting systems and process costing systems are commonly applied.

Accepted Answer

Job order cost accounting systems are co

Question 10

An ________is the number of units that could have been started and completed given the costs incurred during the period.

Accepted Answer

The answer of An ________is the number of units that...

Question 11

At the beginning of the recent period, there were 900 units of product in a department, 35% completed. These units were finished and an additional 5,000 units were started and completed during the period. 800 units were still in process at the end of the period, 25% completed. Using the weighted average method, the equivalent units produced by the department were:

Accepted Answer

A)  6,100 units. 
B)  6,700 units. 
C)  5,900 units. 
D)  5,000 units. 
E)  5,500 units. 
A)  6,100 units. 
B)  6,700 units. 
C)  5,900 units. 
D)  5,000 units. 
E)  5,500 units.

Question 12

A key idea in process costing that refers to the number of units that could have been started and completed given the costs incurred during the period is known as:

Accepted Answer

A)  Equivalent units of production. 
B)  Process cost summary. 
C)  A job cost sheet. 
D)  Manufacturing overhead. 
E)  Units in process. 
A)  Equivalent units of production. 
B)  Process cost summary. 
C)  A job cost sheet. 
D)  Manufacturing overhead. 
E)  Units in process.

Question 13

If the predetermined overhead allocation rate is 245% of direct labor cost, and the Baking Department's direct labor cost for the reporting period is $10,000, the following entry would be made to record the allocation of overhead to the products processed in this department:
$\begin{array}{llr}
  \text { Work in Process Inventory, Baking Dept. } &24,500\
 \text {  Factory Overhead} &&24,500\
\end{array}$

Accepted Answer

A) True 
 B)False

Question 14

When the final production department completes goods, the cost of the completed goods are transferred to ________.

Accepted Answer

The answer of When the final production department completes goods,...

Question 15

Wyman Corporation uses a process costing system. The company manufactured certain goods at a cost of $800 and sold them on credit to Percy Corporation for $1,075. The complete journal entry to be made by Wyman at the time of this sale is:

Accepted Answer

A)  Debit Finished Goods Inventory $800; debit Sales $1,075; credit Accounts Receivable $1,075; credit Cost of Goods Sold $800. 
B)  Debit Accounts Receivable $1,075; debit Selling expense $800; credit Sales $1,075; credit Cost of Goods Sold $800. 
C)  Debit Cost of Goods Sold $1,075; credit Sales $1,075. 
D)  Debit Accounts Receivable $1,075; credit Sales $275; credit Finished Goods Inventory $800. 
E)  Debit Accounts Receivable $1,075; credit Sales $1,075; debit Cost of Goods Sold $800; credit Finished Goods Inventory $800. 
A)  Debit Finished Goods Inventory $800; debit Sales $1,075; credit Accounts Receivable $1,075; credit Cost of Goods Sold $800. 
B)  Debit Accounts Receivable $1,075; debit Selling expense $800; credit Sales $1,075; credit Cost of Goods Sold $800. 
C)  Debit Cost of Goods Sold $1,075; credit Sales $1,075. 
D)  Debit Accounts Receivable $1,075; credit Sales $275; credit Finished Goods Inventory $800. 
E)  Debit Accounts Receivable $1,075; credit Sales $1,075; debit Cost of Goods Sold $800; credit Finished Goods Inventory $800.

Question 16

Sparky Corporation uses the weighted-average method of process costing. The following information is available for February in its Molding Department: Units:
Beginning Inventory: 25,000 units, 100% complete as to materials and 55% complete as to conversion.
Units started and completed: 110,000.
Units completed and transferred out: 135,000.
Ending Inventory: 30,000 units, 100% complete as to materials and 30% complete as to conversion.
Costs:
Costs in beginning Work in Process - Direct Materials: $43,000.
Costs in beginning Work in Process - Conversion: $48,850. Costs incurred in February - Direct Materials: $287,000.
Costs incurred in February - Conversion: $599,150.
-
Calculate the cost per equivalent unit of conversion.

Accepted Answer

A)  $5.45 
B)  $4.98 
C)  $4.50 
D)  $4.16 
E)  $4.60 
A)  $5.45 
B)  $4.98 
C)  $4.50 
D)  $4.16 
E)  $4.60

Question 17

Dazzle, Inc. produces beads for jewelry making use. The following information summarizes production operations for June. The journal entry to record June production activities for direct labor usage is: $\begin{array} { | l | r | } 
\hline \text { Direct materials used } & \$ 87,000 \
\hline \text { Direct labor used } & 160,000 \
\hline \text { Predetermined overhead rate (based on direct labor) } & 155 \% \
\hline \text { Goods transferred to finished goods } & 432,000 \
\hline \text { Cost of goods sold } & 444,000 \
\hline \text { Credit sales } & 810,000 \
\hline
\end{array}$

Accepted Answer

A)  Debit Work in Process Inventory $160,000; credit Raw Materials Inventory $160,000. 
B)  Debit Cost of Goods Sold $160,000; credit Factory Payroll Payable $160,000. 
C)  Debit Work in Process Inventory $160,000; credit Factory Payroll Payable $160,000. 
D)  Debit Work in Process Inventory $160,000; credit Cash $160,000. 
E)  Debit Factory Payroll Payable $160,000; credit Cash $160,000. 
A)  Debit Work in Process Inventory $160,000; credit Raw Materials Inventory $160,000. 
B)  Debit Cost of Goods Sold $160,000; credit Factory Payroll Payable $160,000. 
C)  Debit Work in Process Inventory $160,000; credit Factory Payroll Payable $160,000. 
D)  Debit Work in Process Inventory $160,000; credit Cash $160,000. 
E)  Debit Factory Payroll Payable $160,000; credit Cash $160,000.

Question 18

Process costing systems are commonly used by companies that produce a large volume of standardized units on a continuous basis.

Accepted Answer

A) True 
 B)False

Question 19

When direct labor and overhead enter the production process at the same rates, it is appropriate to use a conversion cost per equivalent unit.

Accepted Answer

A) True 
 B)False

Question 20

A company uses the FIFO method for inventory costing. At the start of the period the production department had 20,000 units in beginning Work in Process inventory which were 40% complete; the department completed and transferred 165,000 units. At the end of the period, 22,000 units were in the ending Work in Process inventory and are 75% complete. The production department had labor costs in the beginning goods is process inventory of $99,000 and total labor costs added during the period are $726,825. Compute the equivalent cost per unit for labor.

Accepted Answer

A)  $4.19. 
B)  $4.40. 
C)  $4.55. 
D)  $4.61. 
E)  $4.76. 
A)  $4.19. 
B)  $4.40. 
C)  $4.55. 
D)  $4.61. 
E)  $4.76.

Exam 20: Process Costing

In a process costing system, factory overhead costs are allocated to production departments by using a predetermined overhead allocation rate.

In process costing, all indirect materials are charged directly to Work in Process Inventory.

A materials consumption report is used instead of materials requisitions in companies where materials move continuously through the manufacturing process.

The second step in accounting for production activity in a period, after determining the physical flow of units, is to compute ________.

When direct labor and overhead enter the production process at different rates, it is appropriate to use a conversion cost per equivalent unit.

In a process costing system, the entry to record cost of materials assigned to a production department requires a debit to the Raw Materials Inventory account and a credit to the Work in Process Inventory account for that department.

Prepare the required general journal entry to record the following transactions for the O'Harra Company. a. Used $78,000 of direct labor in the production department. b. Used $17,000 of indirect labor.

Briefly explain the conditions under which job order cost accounting systems and process costing systems are commonly applied.

An ________is the number of units that could have been started and completed given the costs incurred during the period.

A key idea in process costing that refers to the number of units that could have been started and completed given the costs incurred during the period is known as:

When the final production department completes goods, the cost of the completed goods are transferred to ________.

Wyman Corporation uses a process costing system. The company manufactured certain goods at a cost of $800 and sold them on credit to Percy Corporation for $1,075. The complete journal entry to be made by Wyman at the time of this sale is:

Process costing systems are commonly used by companies that produce a large volume of standardized units on a continuous basis.

When direct labor and overhead enter the production process at the same rates, it is appropriate to use a conversion cost per equivalent unit.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Present and Future Values in Accounting

Activity-Based Costing

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