Question 1

A process cost summary includes the amounts of equivalent units of production for the period.

Accepted Answer

A) True 
 B)False

Question 2

The purchase of raw materials on account in a process costing system is recorded with a:

Accepted Answer

A)  Debit to Purchases and credit to Cash. 
B)  Debit to Purchases and a credit to Accounts Payable. 
C)  Debit to Raw Materials Inventory and a credit to Accounts Payable. 
D)  Debit to Accounts Payable and a credit to Raw Materials Inventory. 
E)  Debit to Goods in Process Inventory and a credit to Accounts Payable. 
A)  Debit to Purchases and credit to Cash. 
B)  Debit to Purchases and a credit to Accounts Payable. 
C)  Debit to Raw Materials Inventory and a credit to Accounts Payable. 
D)  Debit to Accounts Payable and a credit to Raw Materials Inventory. 
E)  Debit to Goods in Process Inventory and a credit to Accounts Payable.

Question 3

A company uses the FIFO method for inventory costing. During a period, a production department had 20,000 units in beginning goods 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 goods in process inventory and are 75% complete. Compute the number of equivalent units produced by the department.

Accepted Answer

A)  181,500. 
B)  165,000. 
C)  173,500. 
D)  145,000. 
E)  187,000. 
A)  181,500. 
B)  165,000. 
C)  173,500. 
D)  145,000. 
E)  187,000.

Question 4

Accountants use the term process cost accounting system because this system uses a number of trained individuals and computers to process the collected cost information.

Accepted Answer

A) True 
 B)False

Question 5

Refer to the following information about the Dipping Department of the Indiana Factory for the month of August. Indiana Factory uses the FIFO method of inventory costing.   The cost per equivalent unit of materials is $10.00, and the cost per equivalent unit of labor and overhead is $22.00. Compute the cost that should be assigned all units that were completed and transferred during August.

Accepted Answer

The answer of Refer to the following information about the...

Question 6

In process cost accounting, materials are always classified as indirect if they are not physically incorporated into the final product.

Accepted Answer

A) True 
 B)False

Question 7

Job order manufacturing and process manufacturing are two major costing systems used in manufacturing. Briefly contrast the characteristics of these two systems.

Accepted Answer

The answer of Job order manufacturing and process manufacturing are...

Question 8

Process cost accounting 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 9

Which of the following characteristics does not usually apply to process manufacturing systems?

Accepted Answer

A)  Each unit of product is separately identifiable. 
B)  Partially completed products are transferred between processes. 
C)  Different managers are responsible for different processes. 
D)  The output of all processes except the final process is an input to the next process. 
E)  All of these are characteristics of process manufacturing systems. 
A)  Each unit of product is separately identifiable. 
B)  Partially completed products are transferred between processes. 
C)  Different managers are responsible for different processes. 
D)  The output of all processes except the final process is an input to the next process. 
E)  All of these are characteristics of process manufacturing systems.

Question 10

Embark produces mulch for landscaping use. The following information summarizes production operations for June. The journal entry to record June production activities for direct labor usage is:

Accepted Answer

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

Question 11

In process costing, factory overhead incurred does not usually equal that applied, which yields either ____________________ or ___________________ overhead.

Accepted Answer

Overapplie

Question 12

An equivalent unit of production is an estimate of efforts that is used to calculate the ______________ of each production component.

Accepted Answer

The answer of An equivalent unit of production is an...

Question 13

Materials and labor costs that are clearly associated with a specific process are known as _________________. Those costs that are not clearly associated with a specific process are called ______________.

Accepted Answer

Direct cos

Question 14

The first step in accounting for production activity in a period, ______________, is a reconciliation of the physical units started in a period with the physical units completed in that period.

Accepted Answer

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

Question 15

The fourth step in accounting for production activity in a period is to prepare a cost reconciliation, which reconciles _____________________ with the ___________________.

Accepted Answer

Costs to a

Question 16

A company that applies process costing is most frequently characterized by:

Accepted Answer

A)  Low standardization and high production volume. 
B)  Custom orders and homogeneous products. 
C)  Repetitive production and heterogeneous products. 
D)  Repetitive production and low production volume. 
E)  Homogeneous product and high production volume. 
A)  Low standardization and high production volume. 
B)  Custom orders and homogeneous products. 
C)  Repetitive production and heterogeneous products. 
D)  Repetitive production and low production volume. 
E)  Homogeneous product and high production volume.

Question 17

During March, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of the units transferred, 25,000 were in process at the beginning of March and 110,000 were started and completed in March. March's beginning inventory units were 100% complete with respect to materials and 55% complete with respect to labor. At the end of March, 30,000 additional units were in process in the production department and were 100% complete with respect to materials and 30% complete with respect to labor. Compute the number of units transferred to finished goods.

Accepted Answer

A)  110,000. 
B)  135,000. 
C)  105,000. 
D)  165,000. 
E)  144,000. 
A)  110,000. 
B)  135,000. 
C)  105,000. 
D)  165,000. 
E)  144,000.

Question 18

Process costing is applied to operations with repetitive production and heterogeneous products.

Accepted Answer

A) True 
 B)False

Question 19

In process costing there is never a balance remaining in Factory Overhead that needs to be closed at period end.

Accepted Answer

A) True 
 B)False

Question 20

In some circumstances, a process cost accounting system can classify wages paid to maintenance workers as direct labor costs instead of factory overhead.

Accepted Answer

A) True 
 B)False

Exam 20: Process Cost Accounting

A process cost summary includes the amounts of equivalent units of production for the period.

The purchase of raw materials on account in a process costing system is recorded with a:

Accountants use the term process cost accounting system because this system uses a number of trained individuals and computers to process the collected cost information.

In process cost accounting, materials are always classified as indirect if they are not physically incorporated into the final product.

Job order manufacturing and process manufacturing are two major costing systems used in manufacturing. Briefly contrast the characteristics of these two systems.

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

Which of the following characteristics does not usually apply to process manufacturing systems?

Embark produces mulch for landscaping use. The following information summarizes production operations for June. The journal entry to record June production activities for direct labor usage is:

In process costing, factory overhead incurred does not usually equal that applied, which yields either ____________________ or ___________________ overhead.

An equivalent unit of production is an estimate of efforts that is used to calculate the ______________ of each production component.

Materials and labor costs that are clearly associated with a specific process are known as _________________. Those costs that are not clearly associated with a specific process are called ______________.

The first step in accounting for production activity in a period, ______________, is a reconciliation of the physical units started in a period with the physical units completed in that period.

The fourth step in accounting for production activity in a period is to prepare a cost reconciliation, which reconciles _____________________ with the ___________________.

A company that applies process costing is most frequently characterized by:

Process costing is applied to operations with repetitive production and heterogeneous products.

In process costing there is never a balance remaining in Factory Overhead that needs to be closed at period end.

In some circumstances, a process cost accounting system can classify wages paid to maintenance workers as direct labor costs instead of factory overhead.

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 Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Time Value of Money

Filters

In process costing, factory overhead incurred does not usually equal that applied, which yields either __ or _ overhead.

Materials and labor costs that are clearly associated with a specific process are known as ___. Those costs that are not clearly associated with a specific process are called .

The fourth step in accounting for production activity in a period is to prepare a cost reconciliation, which reconciles ___ with the _.