Question 1

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 2

Which of the following items most likely would be manufactured using a process costing system?

Accepted Answer

A) Advertising services 
B) Fruit juices 
C) Construction of a shopping mall 
D) Wedding gowns 
A) Advertising services 
B) Fruit juices 
C) Construction of a shopping mall 
D) Wedding gowns

Question 3

Unit costs are determined by dividing the total costs of the period by the equivalent units.

Accepted Answer

A) True 
 B)False

Question 4

It is not necessary to ascertain the portion of ending Work in Process Inventory applicable to direct materials costs versus conversion costs.

Accepted Answer

A) True 
 B)False

Question 5

The reason for combining direct labor and overhead costs together and calling them "conversion costs" is that

Accepted Answer

A) they both are direct costs of production. 
B) the equivalent unit amount for direct materials will be the same as that for direct labor and overhead costs. 
C) both these types of costs usually are incurred uniformly throughout the production process. 
D) the costs for direct labor and overhead are not accounted for separately. 
A) they both are direct costs of production. 
B) the equivalent unit amount for direct materials will be the same as that for direct labor and overhead costs. 
C) both these types of costs usually are incurred uniformly throughout the production process. 
D) the costs for direct labor and overhead are not accounted for separately.

Question 6

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 7

Process costing is a system of

Accepted Answer

A) inventory management. 
B) manufacturing. 
C) product costing. 
D) product placement. 
A) inventory management. 
B) manufacturing. 
C) product costing. 
D) product placement.

Question 8

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 9

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 10

Managers prepare process cost reports in the evaluating stage of the management process.

Accepted Answer

A) True 
 B)False

Question 11

Use the following data provided by Star Inc.to answer the questions below.The company uses a process costing system.   The FIFO costing method is used by the company.
-Units completed and transferred out of the department of Star Inc.during the month totaled

Accepted Answer

A) 6,600. 
B) 6,400. 
C) 6,200. 
D) 5,200. 
A) 6,600. 
B) 6,400. 
C) 6,200. 
D) 5,200.

Question 12

Use the following data from Dusk International,a company using a process costing system,to answer the questions below.   The company uses average process costing method.
Units completed and transferred out of the department during the month totaled

Accepted Answer

A) 12,000. 
B) 12,500. 
C) 11,250. 
D) 9,500. 
A) 12,000. 
B) 12,500. 
C) 11,250. 
D) 9,500.

Question 13

A company should use process costing rather than job order costing if

Accepted Answer

A) production is only partially completed during the accounting period. 
B) the product is produced in batches only as orders are received. 
C) the product is composed of mass-produced homogeneous units. 
D) the product goes through a single stage of production. 
A) production is only partially completed during the accounting period. 
B) the product is produced in batches only as orders are received. 
C) the product is composed of mass-produced homogeneous units. 
D) the product goes through a single stage of production.

Question 14

Information for the current month for the Polishing Department is shown below.   Direct materials are added at the beginning of the process.Beginning work in process is 30 percent complete as to conversion costs;ending work in process inventory is 80 percent complete.Determine the cost of ending work in process inventory.

Accepted Answer

A) $7,200 
B) $3,552 
C) $5,760 
D) $6,288 
A) $7,200 
B) $3,552 
C) $5,760 
D) $6,288

Question 15

The number of equivalent units for direct materials is the same as the number for conversion costs.

Accepted Answer

A) True 
 B)False

Question 16

Use the following data of Daylight Incorporation,a company using a process costing system,to answer the questions below.   The company uses average process costing method.
-Equivalent units for direct materials of Daylight during the month totaled

Accepted Answer

A) 9,300. 
B) 7,500. 
C) 7,700. 
D) 9,500. 
A) 9,300. 
B) 7,500. 
C) 7,700. 
D) 9,500.

Question 17

The Bakersfield Company has the following information available:   At the beginning of the period,there were 800 units in process that were 60 percent complete as to conversion costs and 100 percent complete as to direct materials costs.During the current period,5,800 units were started and completed.Ending inventory contained 400 units that were 60 percent complete as to conversion costs and 100 percent complete as to direct materials costs.(Assume that the company uses the FIFO process costing method. )
-The total costs that will be transferred into the Finished Goods Inventory account of Bakersfield during the current period are

Accepted Answer

A) $144,768. 
B) $180,050. 
C) $164,736. 
D) $160,080. 
A) $144,768. 
B) $180,050. 
C) $164,736. 
D) $160,080.

Question 18

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 19

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 20

Which of the following is not a characteristic of a process costing system?

Accepted Answer

A) A specific time period is used 
B) Several Work in Process Inventory accounts are used 
C) Product costs are grouped by processes,departments,or work cells 
D) More suitable when customized products are manufactured 
A) A specific time period is used 
B) Several Work in Process Inventory accounts are used 
C) Product costs are grouped by processes,departments,or work cells 
D) More suitable when customized products are manufactured

Exam 19: Costing Systems Process Costing

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

Which of the following items most likely would be manufactured using a process costing system?

Unit costs are determined by dividing the total costs of the period by the equivalent units.

It is not necessary to ascertain the portion of ending Work in Process Inventory applicable to direct materials costs versus conversion costs.

The reason for combining direct labor and overhead costs together and calling them "conversion costs" is that

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

Process costing is a system of

Why are equivalent units of production used in process costing?

Managers prepare process cost reports in the evaluating stage of the management process.

Use the following data provided by Star Inc.to answer the questions below.The company uses a process costing system. The FIFO costing method is used by the company. -Units completed and transferred out of the department of Star Inc.during the month totaled

Use the following data from Dusk International,a company using a process costing system,to answer the questions below. The company uses average process costing method. Units completed and transferred out of the department during the month totaled

A company should use process costing rather than job order costing if

The number of equivalent units for direct materials is the same as the number for conversion costs.

Use the following data of Daylight Incorporation,a company using a process costing system,to answer the questions below. The company uses average process costing method. -Equivalent units for direct materials of Daylight during the month totaled

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

Which of the following is not a characteristic of a process costing system?

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

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

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

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 and Capital Budgeting

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