Question 1

Equivalent units are defined as the number of units completed and sold during the current period.

Accepted Answer

A) True 
 B)False

Question 2

Processes in a process costing system must incur the same amount of costs.

Accepted Answer

A) True 
 B)False

Question 3

In a process costing system,each department's production costs are transferred to the next department and ultimately to the Finished Goods Inventory account.

Accepted Answer

A) True 
 B)False

Question 4

The number of equivalent units of production will always be lesser than the number of completed units during the period.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following costing methods combines the cost of units in beginning inventory with the current period costs to determine the unit production cost?

Accepted Answer

A) LIFO 
B) Average cost 
C) FIFO 
D) Direct 
A) LIFO 
B) Average cost 
C) FIFO 
D) Direct

Question 6

In a process costing system,unit cost is computed

Accepted Answer

A) on the basis of productive output for a period of time. 
B) for each job worked on. 
C) for direct materials costs only. 
D) only for the last production process. 
A) on the basis of productive output for a period of time. 
B) for each job worked on. 
C) for direct materials costs only. 
D) only for the last production process.

Question 7

During April,Department A started 400,000 units of product in a particular production process.The beginning work in process inventory was 40,000 units,and the ending inventory was 50,000 units.Direct materials are introduced at the start of processing,and beginning and ending inventories are considered to be 40 percent complete with respect to conversion costs.Department A uses the FIFO costing method. 
-Units transferred out from Department A during April were

Accepted Answer

A) 390,000. 
B) 400,000. 
C) 410,000. 
D) 490,000. 
A) 390,000. 
B) 400,000. 
C) 410,000. 
D) 490,000.

Question 8

Why are equivalent units of production used in process costing?

Accepted Answer

A) To determine the total of overhead costs 
B) To determine the number of units in work in process and finished goods inventories 
C) To determine the costs per unit and costs of inventories in each process 
D) To determine the length of the process 
A) To determine the total of overhead costs 
B) To determine the number of units in work in process and finished goods inventories 
C) To determine the costs per unit and costs of inventories in each process 
D) To determine the length of the process

Question 9

Equivalent units of production usually are determined for

Accepted Answer

A) direct materials costs only. 
B) direct materials and conversion costs. 
C) direct and indirect materials only. 
D) conversion costs only. 
A) direct materials costs only. 
B) direct materials and conversion costs. 
C) direct and indirect materials only. 
D) conversion costs only.

Question 10

Cloud Nine International uses a process costing system.Assume that direct materials are added at the beginning of the period and that direct labor and overhead are added continuously throughout the process.The company uses the average costing method.The following data are available for one of its accounting periods:   
-Equivalent units for direct materials of Cloud Nine International are

Accepted Answer

A) 180,000. 
B) 206,000. 
C) 176,000. 
D) 191,000. 
A) 180,000. 
B) 206,000. 
C) 176,000. 
D) 191,000.

Question 11

Natasha Corporation's Shaping Department had no beginning inventory and completed and transferred to finished goods 920 units during May.Ending inventory for May contained 80 units that were 30 percent complete as to conversion costs and 100 percent complete as to direct materials costs.The charges to the Shaping Department during May were $3,776 for conversion costs and $2,500 for direct materials costs.Compute the cost of work transferred out if Natasha Corporation uses the FIFO costing method.

Accepted Answer

A) $6,180 
B) $5,980 
C) $5,774 
D) $6,118 
A) $6,180 
B) $5,980 
C) $5,774 
D) $6,118

Question 12

Mention the two cost allocation methods used in a process costing system.

Accepted Answer

The two cost allocation methods used in

Question 13

In a process costing system,percentage-of-completion factors normally are obtained from

Accepted Answer

A) accounting records. 
B) job order cost cards. 
C) supervisors in the production departments. 
D) time cards. 
A) accounting records. 
B) job order cost cards. 
C) supervisors in the production departments. 
D) time cards.

Question 14

During October,Department A of Answer Inc.started 320,000 units of product in a particular manufacturing process.The beginning work in process inventory was 50,000 units,and the ending inventory was 30,000 units.Direct materials are introduced at the start of processing,and beginning and ending inventories are considered to be 50 percent complete with respect to conversion costs.Department A uses the FIFO costing method.
-Units transferred out of Department A of Answer during October were

Accepted Answer

A) 335,000. 
B) 370,000. 
C) 325,000. 
D) 340,000. 
A) 335,000. 
B) 370,000. 
C) 325,000. 
D) 340,000.

Question 15

Cloud Nine International uses a process costing system.Assume that direct materials are added at the beginning of the period and that direct labor and overhead are added continuously throughout the process.The company uses the average costing method.The following data are available for one of its accounting periods:   
-Assume that you have calculated a direct materials cost per unit of $5 and a conversion cost per unit of $8.Under this assumption,the ending balance for Work in Process Inventory of Cloud Nine International would be

Accepted Answer

A) $147,000. 
B) $165,000. 
C) $123,000. 
D) $195,000. 
A) $147,000. 
B) $165,000. 
C) $123,000. 
D) $195,000.

Question 16

It is necessary for managers to understand product and cost flow patterns,to use process costing.

Accepted Answer

A) True 
 B)False

Question 17

The number of equivalent units for direct materials cost using the FIFO costing procedure is the units in beginning work in process inventory minus units started during the period plus units completed during the period.

Accepted Answer

A) True 
 B)False

Question 18

One of the steps in preparing the process cost report requires dividing current costs charged to the Work in Process Inventory account of each department or production process by equivalent units to calculate the cost per equivalent unit.

Accepted Answer

A) True 
 B)False

Question 19

In a process costing system,all production costs are assigned to departments or processes.

Accepted Answer

A) True 
 B)False

Question 20

The average costing method matches cost flow with the physical flow of production.

Accepted Answer

A) True 
 B)False

Exam 17: Costing Systems: Process Costing

Equivalent units are defined as the number of units completed and sold during the current period.

Processes in a process costing system must incur the same amount of costs.

In a process costing system,each department's production costs are transferred to the next department and ultimately to the Finished Goods Inventory account.

The number of equivalent units of production will always be lesser than the number of completed units during the period.

Which of the following costing methods combines the cost of units in beginning inventory with the current period costs to determine the unit production cost?

In a process costing system,unit cost is computed

Why are equivalent units of production used in process costing?

Equivalent units of production usually are determined for

Mention the two cost allocation methods used in a process costing system.

In a process costing system,percentage-of-completion factors normally are obtained from

It is necessary for managers to understand product and cost flow patterns,to use process costing.

The number of equivalent units for direct materials cost using the FIFO costing procedure is the units in beginning work in process inventory minus units started during the period plus units completed during the period.

One of the steps in preparing the process cost report requires dividing current costs charged to the Work in Process Inventory account of each department or production process by equivalent units to calculate the cost per equivalent unit.

In a process costing system,all production costs are assigned to departments or processes.

The average costing method matches cost flow with the physical flow of production.

Uses of Accounting Information and the Financial Statements

Measurement Concepts: Recording Business Transactions

Measuring Business Income: Adjusting the Accounts

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long-Term Assets

Current Liabilities and Fair Value Accounting

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, including Target Costing and Transfer Pricing

Quality Management and Measurement

Accounting for Unincorporated Businesses

Accounting for Investments

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