Question 1

In most process costing systems, the number of units "in process" at any one time is usually significant relative to the total production output of the period.

Accepted Answer

A) True 
 B)False

Question 2

Costs flow through a process costing system in the same sequence as actual products move through the assembly process.

Accepted Answer

A) True 
 B)False

Question 3

For the month of June, the number of equivalent units of labor and overhead produced was:

Accepted Answer

A)  750. 
B)  600. 
C)  645. 
D)  595. 
A)  750. 
B)  600. 
C)  645. 
D)  595.

Question 4

In a process costing system, the number of units started and completed for a period is equal to:

Accepted Answer

A)  Units transferred out less units in beginning work in process. 
B)  Units transferred out less units in ending work in process. 
C)  Units transferred out plus units of beginning work in process. 
D)  Units transferred out plus units in ending work in process. 
A)  Units transferred out less units in beginning work in process. 
B)  Units transferred out less units in ending work in process. 
C)  Units transferred out plus units of beginning work in process. 
D)  Units transferred out plus units in ending work in process.

Question 5

Department A started 3,000 units in February. Department A completed and transferred 3,100 units to Department B in February. On February 28, Department A had 300 units remaining in Work in Process. The number of units in Work in Process on February 1 was:

Accepted Answer

A)  6,300. 
B)  400. 
C)  100. 
D)  0. 
A)  6,300. 
B)  400. 
C)  100. 
D)  0.

Question 6

The number of equivalent full units of production:

Accepted Answer

A)  Is equal to the number of units completed by a department. 
B)  May not be greater than the number of units completed by a department. 
C)  Is used to complete the overhead application rate. 
D)  May be less than, equal to, or greater than the number of physical units completed during the period. 
A)  Is equal to the number of units completed by a department. 
B)  May not be greater than the number of units completed by a department. 
C)  Is used to complete the overhead application rate. 
D)  May be less than, equal to, or greater than the number of physical units completed during the period.

Question 7

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

Accepted Answer

A)  The costs incurred in each process are accumulated in separate Work-in-Process Inventory accounts. 
B)  It is suitable for mass-produced operations. 
C)  Costs are accumulated separately for each unit of production as it moves through the factory. 
D)  The cost of a finished unit is the sum of the unit costs of performing each manufacturing process. 
A)  The costs incurred in each process are accumulated in separate Work-in-Process Inventory accounts. 
B)  It is suitable for mass-produced operations. 
C)  Costs are accumulated separately for each unit of production as it moves through the factory. 
D)  The cost of a finished unit is the sum of the unit costs of performing each manufacturing process.

Question 8

The unit cost of a case processed in the Mixing Department in May was:

Accepted Answer

A)  $230. 
B)  $57.50. 
C)  $73.50. 
D)  Some other amount. 
A)  $230. 
B)  $57.50. 
C)  $73.50. 
D)  Some other amount.

Question 9

On the basis of this information only:

Accepted Answer

A)  The number of units transferred in May from Department Q to the next process or department was 34,000. 
B)  There were more units in Department Q's ending inventory than in Department Q's beginning inventory for May. 
C)  Department Q completed 48,000 units of product during May. 
D)  Department Q used enough materials during May to produce 48,000 completed units. 
A)  The number of units transferred in May from Department Q to the next process or department was 34,000. 
B)  There were more units in Department Q's ending inventory than in Department Q's beginning inventory for May. 
C)  Department Q completed 48,000 units of product during May. 
D)  Department Q used enough materials during May to produce 48,000 completed units.

Question 10

Selecting an appropriate cost accounting system
Listed below are seven businesses. In the spaces provided, identify whether a job order costing system or a process costing system would most likely be appropriate.
(a) _____ Nancy's Paper Plate Company
(b) _____ Two Leg Pants Manufacturers, Inc.
(c) _____ Solid Residential Contractors
(d) _____ Float's Boats
(e) _____ Big Heart Hospital
(f) _____ Fizz Soda, Inc.
(g) _____ Sugarmore Candies, Inc.

Accepted Answer

(a) Process costing system (b)

Question 11

If Power Products uses process costing which of the following is likely to be true?

Accepted Answer

A)  The production process are high volume. 
B)  The products use different amounts of direct labor. 
C)  The products are different amounts of manufacturing overhead. 
D)  The products are created to customer specifications. 
A)  The production process are high volume. 
B)  The products use different amounts of direct labor. 
C)  The products are different amounts of manufacturing overhead. 
D)  The products are created to customer specifications.

Question 12

For the month of December, its first month of operations, the Radcliffe Corporation completed and transferred 800 units of product costing $80,000 to produce to Finished Goods Inventory. If Radcliffe sold 650 units during the same month, how much was cost of goods sold for the same period?

Accepted Answer

A)  $80,000. 
B)  $8,000. 
C)  $6,500. 
D)  $65,000. 
A)  $80,000. 
B)  $8,000. 
C)  $6,500. 
D)  $65,000.

Question 13

For the month of July, the number of equivalent units of labor and overhead produced was:

Accepted Answer

A)  830. 
B)  320. 
C)  955. 
D)  Some other amount. 
A)  830. 
B)  320. 
C)  955. 
D)  Some other amount.

Question 14

Nut House manufactures and sells jars of peanut butter. All of the company's output passes through five production processes, which are performed in sequential order. Identify the correct answer assuming that process costing is in use.

Accepted Answer

A)  The processing departments may define "units of output" differently. 
B)  Costs transferred from one processing department are not charged to the next processing department (or to finished goods). 
C)  The cost accounting system does not separately measure the per-unit cost of each manufacturing process. 
D)  Some portion of total manufacturing overhead should be charged to each processing department. 
A)  The processing departments may define "units of output" differently. 
B)  Costs transferred from one processing department are not charged to the next processing department (or to finished goods). 
C)  The cost accounting system does not separately measure the per-unit cost of each manufacturing process. 
D)  Some portion of total manufacturing overhead should be charged to each processing department.

Question 15

Assume that $9,000 of finished goods were on hand at May 1. Under the LIFO method of inventory valuation, finished goods inventory at May 31 was $___________ if 9,500 cases of mustard were sold in May.

Accepted Answer

The answer of Assume that $9,000 of finished goods were...

Question 16

Manufacturing overhead is not applied to products when a process costing system is used.

Accepted Answer

A) True 
 B)False

Question 17

Which company would most likely use a process costing system?

Accepted Answer

A)  Bic Pens. 
B)  Pepsi Cola. 
C)  Mars Candy. 
D)  All three. 
A)  Bic Pens. 
B)  Pepsi Cola. 
C)  Mars Candy. 
D)  All three.

Question 18

Process costing with equivalent units and beginning inventory
The records of Westminster Manufacturing Company for the month of May show the following costs in Department A:
$$\begin{array} { | l | r | } 
\hline \text { Beginning Inventory } & \$ 120,750 \
\hline \text { Direct Materials } & 405,000 \
\hline \text { Direct Labor } & 535,500 \
\hline \text { Overhead (150\% of Direct Labor Cost) } & 803,250 \
\hline \text { Total } & \$ 1,864,500 \
\hline & \
\hline
\end{array}$$
The beginning inventory for May consisted of 10,000 units which were 80% complete as to direct materials and 60% complete as to labor and overhead. A total of 100,000 units were completed and transferred out during May, and 20,000 units remained in the work in process inventory. The ending inventory was 80% complete as to direct materials and 40% complete as to labor and overhead. Compute the following:
(a) Direct materials cost per equivalent unit: $________________ (b) Equivalent full units of production for direct labor and overhead: ________________ (c) Total cost of 100,000 units completed: $_________________ (d) Total cost of 20,000 units in process at the end of the month: $_________________

Accepted Answer

(a) Direct material cost per equivalent

Question 19

When either a job order costing system or a process costing system is in use, the Direct Labor account is debited:

Accepted Answer

A)  When work is performed, even if not paid immediately. 
B)  When direct labor charges are assigned to work in process. 
C)  When employees are paid. 
D)  Instead of using a Salaries Expense account. 
A)  When work is performed, even if not paid immediately. 
B)  When direct labor charges are assigned to work in process. 
C)  When employees are paid. 
D)  Instead of using a Salaries Expense account.

Question 20

For the month of July, the number of equivalent units of direct materials produced was:

Accepted Answer

A)  700. 
B)  800. 
C)  900. 
D)  950. 
A)  700. 
B)  800. 
C)  900. 
D)  950.

Exam 18: Process Costing

In most process costing systems, the number of units "in process" at any one time is usually significant relative to the total production output of the period.

Costs flow through a process costing system in the same sequence as actual products move through the assembly process.

For the month of June, the number of equivalent units of labor and overhead produced was:

In a process costing system, the number of units started and completed for a period is equal to:

Department A started 3,000 units in February. Department A completed and transferred 3,100 units to Department B in February. On February 28, Department A had 300 units remaining in Work in Process. The number of units in Work in Process on February 1 was:

The number of equivalent full units of production:

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

The unit cost of a case processed in the Mixing Department in May was:

On the basis of this information only:

If Power Products uses process costing which of the following is likely to be true?

For the month of December, its first month of operations, the Radcliffe Corporation completed and transferred 800 units of product costing $80,000 to produce to Finished Goods Inventory. If Radcliffe sold 650 units during the same month, how much was cost of goods sold for the same period?

For the month of July, the number of equivalent units of labor and overhead produced was:

Nut House manufactures and sells jars of peanut butter. All of the company's output passes through five production processes, which are performed in sequential order. Identify the correct answer assuming that process costing is in use.

Assume that $9,000 of finished goods were on hand at May 1. Under the LIFO method of inventory valuation, finished goods inventory at May 31 was $___________ if 9,500 cases of mustard were sold in May.

Manufacturing overhead is not applied to products when a process costing system is used.

Which company would most likely use a process costing system?

When either a job order costing system or a process costing system is in use, the Direct Labor account is debited:

For the month of July, the number of equivalent units of direct materials produced was:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values Answer Key

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